Google is a multinational American company which offers internet search services. It has also developed to offer advertisement services through the internet. This paper seeks to discus the entrepreneurial aspects of the company from a case study. The paper will give an overview of the case study, answer application questions about the study and give the value of the case with respect to entrepreneurship.
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The Google Company was formed as a product of a collaboration of a project work of two university students who were undertaking their doctorate studies at Stamford University. Having met in the year 1995, the two students, Page and Brin, started a project work on a search engine technology a year later. They braced financial challenges that faced them as they had no money for even the facilities that they were supposed to be using in their project work.
Such was the extent of their financial strains that they were forced to put on hold their studies for a while and start their work in one of their hostel rooms as they looked for potential investors to fund their project. They finally succeeded to find an investor in the name of Bechtolsheim who gave them one hundred thousand dollars for the project. Further initiatives to raise capital from friends and relatives were successful and the duo managed in the end raise a million dollars to establish their company.
They then settled down in an office in Menlo Park in California which the company outgrew within a year. The company was steadily growing at the time and attracted the attention of companies two of which provided a venture capital to Google worth twenty five million dollars in the year 1999 (Case study 311).
Google used the funds to expand its staff and to make its settlement at their head office in Mountain View. The company has since then been into partnerships that included its agreement with Yahoo in the year 2000, a partnership with AOL in the year 2002 among others.
The company, however, never adopted external funding following its initial one million funding. Google was significantly characterized by a humble establishment and management which were evidenced at the time when the company experienced developments into financial boom through capital venture. Instead of changing its structure in terms of facilities and exorbitant salaries for its workers, Google maintained its status and only increased incentives to its employees (Case study 311).
The company also avoided public ventures until the year 2004 when it floated its shares into the market. Again, the company showed its distinction from the normal traditions as it adopted a completely new initial offer style that it imported from Dutch culture. Contrary to the tradition in which companies independently predetermine the prices of their share offers, Google opted for an auction system in which potential investors are given opportunity to influence the initial offer value.
Under this technique, investors privately give prescriptions in relation to the number and price of shares that they wish to purchase. A minimum share value is then determined by auction and those whose prices fall above the auction price are offered shares. This method was aimed at selling the company’s shares at its market value. The offer was successful though the share prices quickly rose indicating that the selling price could have been fairly below the market value at the time of the offer.
The company again reserved its expenditure after the offer in terms of its renovation and only spent on acquisition of companies that offered product and technologies that were of uttermost importance and interest of the Google Company at that time. This complemented the services offered by the company to include the currently available features such as “Gmail, Google maps, Froogle, Google Video, and Google Talk” (Case study 311).
The extent to which Google’s partners have helped the company to avoid the need for additional funding or financing
Google Company had a lot of opportunities for sourcing its finances as it grew. Such opportunities as individual’s savings, “family and friends, angels, seed capital, venture capital, banks and government programs, private placements and IPOs” (Kuratko and Hodgetts 210) are some of the financing options that the company had throughout its developments.
These sources can be grouped into two categories, “debt and equity” (Kuratko and Hodgetts 210). The major difference between these categories of sources of financing is the relationship between the entrepreneur and the source of finance or the company and the source.
Under equity, the financing source acquires interest in the business enterprise and might be given a percentage of the organization’s ownership subject to the agreement. Debt type of funding on the other hand is accompanied with the need for repayment of the amount of capital offered to the organization together with any form of interest subject to the debt (Kuratko and Hodgetts 210).
The sources of financing can also be categorized according to stages of development of an organization. Initial stages of an entrepreneurship which are not normally characterized by profit making, but by developing the enterprise which involves funding that are intended to help in establishing an enterprise rather that funding it for its productivity or profitability.
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Such was the initial funding that Google received from Bectolsheim together with the founder’s families and friends. At this stage, the funders are convinced that the enterprise has a potential of making profit and they therefore join in to help in its establishment.
Another stage of capital offer to an entity is the stage where the entity is venturing into offering its products to the market. At this level, the organization can be said to have established its base and has started to produce its goods or to offer its services. The funding is thus meant to help the business enter its market. Such can be identified to be the category of Google’s funding that were received from companies such as Sequoia capital and Kleiner Perkins in the year 1999.
Other categories of funding come after an entity has ventured into a market and are identifiable in terms of its profitability. This category of finances is required for growths of organizations that are already profitable. The case study of the Google Company indicates funding at its initial stages of development with only the initial public offer that came later in the year 2004 to its financing at a developed stage (Minniti, Zacharakis and Spinelli 271).
The partnerships that Google had with individuals and other organization was of great essence to the company in terms of funding. Though some credit can be attributed to the company’s management for being able to avoid seeking funding, the case study reveals that the company was always at its potential to expand at the times when each funding through the partners were realized. An example is the initial funding after which the organization established a new office in Menlo Park.
The next funding which was realized in the year 1999 from two companies saw Google move to another office, recruit more employees and the company’s provision of incentives to its workers. It also saw the company’s expansion of its services to developed technologies that introduced paid listings. The final funding which was the IPO also saw the development of more services by the company.
The trend of expansion of the company with simultaneous review of the funding that the company received gives a correlation between the needs of the company at the particular times that was met with corresponding sufficient funding. The partners who funded the company can therefore be said to have played a major role in helping the company not to seek further funding.
This is because if the partners had to the contrary offered fewer funds that the company wanted then Google could have been forced to seek more funding for its expansions. If the amount of money received by the founders by the year 1999 was not sufficient enough to meet the company’s needs at that time that involved establishing an office and employing workers at the time when the company was not yet making any profit then the founders would have been forced to look for more funding.
The same argument is applicable to the other instances in which the company received funding. The parties that partnered with Google during these funding can therefore be said to have been significantly responsible for the company’s ability to avoid further funding by providing enough capital that the company needed at those respective times (Case study 311).
The role played by Google’s partners in the company’s overall success
The success of Google can significantly be attributed to the partners that have supported the company at different stages of its growth. According to the Case study, major developments in the company were realized after funding was received from partners. The two founders were for example initially stranded in their initial project, which has turned out to be a multinational company, until they received one hundred thousand dollars from a partner and a further nine hundred thousand dollars that the project picked up.
The founders were for example stranded due to lack of capital and could not initially even purchase equipments that they needed for the project. Further involvements of other partners such as Sequoia capital and Kleiner Perkins companies and the final partnership with investors in the form of floating the company’s shares in the security market facilitated major developments that have been realized by the company.
The partners have therefore been influential to the company through offering funds to the company. Such support can be translated to a number of benefits to the company and its workers. One of such benefits is the motivational factor that is received by the company. This is particularly critical at the initial stages of development of an enterprise.
Receiving funds at a stage when the enterprise was not yet profitable and when the founders equivalently had no resources to invest in their project must have motivated them in two ways. The first motivation was the fact that someone had identified and appreciated their project to be realistic and worth funding while the other benefit was the availed funds that were able to bail them out of their financial strain thereby enabling them to concentrate on the project rather that looking for funds.
The provision of funds by the parties that partnered with Google Company helped in the successful establishment, development and expansion of the company to its current level at which it is a recognized multinational company. The partners through their funds that helped in developing the company through its different stages thus played an important role in driving the company to its currently recognized success. The partners’ major role was thus funding the company that further derived benefits to the success (Case study 311).
Facts about Google: challenges facing the company
Google, like any other company, has been faced with a number of challenges over time. Though the company has over time recorded significant expansion in terms of its products and geographical area of coverage, it has been faced with a number of problems some of which have been related to its expansion.
A number of significant challenges, for example, faced the company in the year 2004 with respect to its elements of profitability. The company was, for example, faced with the threat of reduced profit margin following its increased investment. Though the revenues of the company together with its gross and net profit could rise following the investments, it was feared that the degree of increased level of investment would not be proportionally reflected in the company’s profitability.
The company’s move to diversify its services to consumers is also reported to have not been very successful. According to a research that was conducted in the year 2004, the company encountered a lot of problems as it moved to introduce its new services to the market. These problems were so significant that they were expected to even negatively affect the company’s share praises.
The company was at the same time suffering from competition from other companies such as Yahoo which has been a long time competitor of Google. Such occurrences as the company realized had the potential of spilling the fears into the market and giving it a weak image that could cost it its market control among competitors (Standard and poor 1).
Summer 1995: birth of the goggle idea
15 September 1997: Google.com registered as a domain
September 1998: Google rents a Silicon Valley garage
February 1999: Google opens Palo Alto office
7 June 1999: Google funded by major venture capital firms (Sequoia capital and Kleiner Perkins)
2000: partnered with yahoo
2002: partnered with AOL
Another challenge that the company has been facing is its extensively wide market control that portrays it as a monopoly. However, advantageous this may look from outside, it has called for threats of control of the company which could not have been had the company not been in such control. This has an effect of inducing fear on the company to streamline its operations in order to avoid such regulations (Brew 1).
Entrepreneurship involves transformation of a person’s innovative ideas into economic worth. The case study reveals the innovation of two students who transformed an academic project work into a multinational company. In their move, the students started their project with absolutely no funds but were able to enter into partnerships with different parties that funded the organization and fuelled it to its current state. Such is the essence of entrepreneurship.
Brew, Simon. Google is dominant in its sector, yet its once-bulletproof brand exterior are showing a little bit of wear and tear. Google, 2009. Web. <https://www.itpro.co.uk/609794/the-problems-facing-google/page/0/1>
Case Study. Google: An Interesting and Instructive Funding Journey. New York: Cengage Learning. Print.
Kuratko, Donald and Hodgetts, Richard. Entrepreneurship: Theory, Process, and Practice. New York: Cengage Learning. Print.
Minniti, Maria., Zacharakis, Andrew and Spinelli, Stephen. Entrepreneurship: The Engine of Growth. WESTPORT, CT: Greenwood Publishing Group, 2007. Print.
Standard and poor. Google faces challenges as it expands. Rank for Sales, 2004. Web.