Over the years since its incorporation, Google Inc. has invested greatly in advertising, cloud computing, internet search technologies as well as developing and hosting a number of products and internet based services. It has transcended beyond its core web search engine to a chain of partnerships, acquisitions and products as part of its long term growth agenda.
Its Initial Public Offering (IPO) in 2004 followed its incorporation that took place earlier in September, 1998. The company has been working tirelessly hard to keep up with its mission of organizing information so that it can be useful to its end users as well as ensure that information is easily accessed by all in a world that has turned into a global village.
To date, Google has made an impressive $8.4 billion in revenue from its You Tube property, Android mobile operating system and its strong search advertising business (Girard, 2009). In addition, due to its superior search results, it has become popular and beloved by its many partners as well as the public.
However, it is important to note that the search engine online firm faces a number of challenges and problems that threaten to marginalize, outwit or crush it like Sun Microsystems, Silicon Graphics or Netscape. This essay will succinctly diagnose issues and challenges facing Google Inc., analyze the core strategic concepts that may be facing the company, evaluate the pros and cons of alternative actions that Google Inc. can take as well as propose working recommendation that may jumpstart the firm against its competitors in a highly volatile and dynamic online market.
Google has faced quite a number of challenges in its operation ranging from cut-throat competition to efforts aimed at building a lasting public image. These issues have affected its growth and performance in a variety of ways as will be systematically diagnosed.
To begin with, Google has faced stiff competition from other companies like Teoma, WiseNut, Inktomi and AltaVista among others (Girard, 2009). It has been putting more effort to increase its dominance in internet advertising through focused Research and Development (R&D) activities.
It has added more applications and services to its site to serve its internet users such as Blogger, Gmail, Book Search, Weather, airline travel information, local search and Google Maps. Besides, Google has been able to diversify its internet advertising through its acquisition of the Double Click in 2008 (Girard, 2009).
However, not all its innovations and acquisitions have positively impacted on revenue growth for the company. For instance, in 2007, the company made less than $200 million even after having displayed over 5 billion videos on You Tube on a monthly basis (Bonk, 2009).
On the other hand, social network sites like Facebook.com and Myspace.com had great business and significant revenue growth compared to Google’s Orkut. Furthermore, comparatively to Google News which stayed static last year at 1.4%, Facebook’s Proportion of traffic to US news site tripled from around i.2% to 3.52% (Girard, 2009).
Today, Google news is being supplanted by other social networks including Twitter and Facebook as more people are turning to these sites for news. Earlier on, reports from research by the metrics company Hitwise had indicated that Google had been a preferred choice for many and one of the primary sources of readers.
Therefore, this indicates that Google news is almost facing a lock out from many publishers who are turning their attention to Facebook which is gaining strength everyday (Bonk, 2009). In addition, Facebook’s has tremendously increased its number of users to 400 million.
This is an unexpected and yet new threat to Google. Recently on a TV advert during a Superbowl, the search engine spent over $5 million on advertisement. In fact, they have turned to Facebook which is a perfect counterweight that displays the contents of the publishers as they require. This makes it draw hundreds of thousands of viewers from other sites and from different nations.
Moreover, some analysts and the founder of the software code repository Freepository, explains that Google has tried several times using its Orkut product to create a world scale social network but failed thereby showing that Facebook, whose content is beyond reach, is now one of the biggest threats to Google on the web.
In addition, Google faces a threat of web popularity contest from its competitors like Teoma, WiseNut, Inktomi and AltaVista which have imitated Google’s popularity placement methodology (Anon., 2011, May). These sites have linked themselves to others and have adopted some winning methods of Google technology and improved the quality of service they are offering. This has posed a threat to the search engine that is owned by Google (Anon., 2011, May 4). Similarly, it has faced unobtrusive advertisement coming from these sites.
These advertisers place searches using the keywords they own and which allows them to place simple text spots on pages containing the keywords (Kourdi, 2009). These advertisements become unobtrusive on Google.com. The company prefers having its adverts without screen effects or flash instead of positioning them on the side of the screen to a small box (Bonk, 2009).
Secondly, Google faces a problem of revenue growth. In the US, half of the social network ad revenues are covered by Facebook. According to eMarketer, a digital media researcher, Google has been, and will continue to be rivaled by Facebook in advertising revenues (Bonk, 2009).
The latter has proved itself as a major force in all online advertising posing which is a real threat to Google in terms of revenue growth. For instance, it has doubled its revenue from $0.74 billion in 2009 to $1.86 billion in 2010 and with a projection of quintupling it to $4.05 billion in 2011 in worldwide advertising revenue (Anon., 2011, May).
However, its revenue reports indicate that its revenue is increasingly coming from advertising. It was able to generate $2.20 billion using Google Adsense and $4.83 billion from Google owned sites which is about 67% and 30% respectively of the main advertising product raising revenue to Google of up to USD$28 billion in 2010 (Anon. 2011, May 4).
In 2005, Google Inc. came up with a strategy to broaden the scope of its services to end users and also develop new internet applications with more opportunities for advertising. It made a strategic acquisition from its cash reserves and in 2005 it launched Google Earth application followed by its companion that would allow users to search locations from anywhere in the world and view their satellite images using the applications called Google Maps. Additionally, it added and expanded more features that would do more than search functions.
These features included Google Talk, Picasa Web photo albums, web-based document and spreadsheet calendar and so on. In addition, Google released some applications for mobile phones such as Google News, Gmail, Blogger Mobile and so on.
To expand its business model, Google used its IPO to make acquisitions such as dMarc for radio bidding and advertising and Writely in 2006 for Web-based document and Spreadsheet software. Other acquisitions made between 2006 and 2008 included Double Click that generated revenues to Google through video advertising and banner ads, and the You Tube acquisition. Indeed, these additional features in the Google profile marked the threshold for the company’s 2009 business strategies.
Google’s main source of revenue is Adword (Anon., 2011, May).. In addition, Adword offers another important program which entails distribution of materials locally, nationally and internationally. This was a source of revenue (Sherman, 2005). However, it faced a challenge from PIXSTA which rather than using keywords like Google, allowed its users to search for relevant items and browse using images (Holden, 2008). This was an enhanced technology and a threat to the main source of revenue for Google.
Additionally, even though Google has made great steps in increasing its revenue, it is surrounded by critical legal issues which include a plan to digitize millions of books that was rejected by the US Circuit judge Denny Chin leaving Google’s privacy policy under the oversight of the FTC (Anon., 2011, May; Kourdi, 2009).
It was accused of trying to dominate libraries and thereby diverting the attention of the users of the libraries to Google. This was going to affect the businesses that were being carried out by these libraries. Furthermore, it was placing Google at a risk of facing other challenges like infringement of copyrights.
Moreover, Google has also faced privacy blunder and sharing other people’s documents without permission. The cloud based service offered by Google has committed numerous privacy errors forcing the company to write notices to most of its spreadsheets and documents users that it has inadvertently granted access to these documents to other unauthorized users. In addition, it has recently faced a torrent of criticism from Google Buzz as a part of Gmail (Bonk, 2009).
This Buzz allowed users to automatically have a circle of friends from whoever they e-mailed most. This means that Google Buzz lacks an opt-in consent that users can use to keep their privacy (Girard, 2009). The use of Google Street View van as a way of capturing Wi-Fi hidden words in addition to utilizing the Buzz application tool to display users’ names is also another blunder by the company that has grossly soiled its public image. These have caused Google to pay $8.5 million as fine to settle complaints stemming from interfering with other peoples privacy (Anon., 2011, May).
Google has effectively damaged is brand through most of its actions. The global business model of Google Inc. increasingly depends on how the public and its partners entrust their services like VOIP and Cloud Computing with their information (Bonk, 2009).
The company’s global business and image is affected the moment information database of its clients has been compromised. It is imperative to note that all theuser’s information which include messages, contacts, voice messages and e-mails are stored by Google.
However, the online firm has come under the gaze of privacy activists, consumes, congress and regulators who have accused it of not keeping the privacy of its users (Holden, 2008). People’s willingness to let Google handle their information has grown less each day even with the company announcing applications for more storage services.
In order for the company to revive its public image and overall goodwill from both its active and prospective users, Google has devised myriad of approaches and strategies to handle the various issues threatening and affecting its growth and revenue generation.
After long term speculation on the best and most viable strategies that would counter the effect of market competition, Google built another social network to challenge Facebook and Bing. It created a network product referred to as +1 which added to the other social sites like Adwords and Google. Recently, it added some special features to its social search results to allow comments from other social networking sites making it gain prominence.
Additionally, this is an advantage over its competitors since the users of +1 can meet online with chat buddies using signals having useful recommendations that also show in their friends results (Holden, 2008). This strategy counters Facebooks tools such as the Like button and also poses a threat to Bing (Sherman, 2005). Google still intends to improve its performance by making a few important changes in its search results.
Needless to say, Google has been working smart to boost its growth index in revenue. The model of doing business by Google has undergone several changes over the years since its inception, to include revenue on company internets and Websites for corporations who may be in need of utilizing Google search system.
This revenue included by the Google Company went beyond licensing fees. It expanded its ability to advertise and improve search results by developing a keyword targeted at expanding the business model through advertising (Holden, 2008).
The revenue earned by Google from the corporations using its company internet, website and advertising base increased to $86 million in 2001 from $220,000 in 1990. Google business model strategy has seen its growth in terms of revenue by 3% every year and this is due to the fact that the latter strategy seems to have protected it from the biting effects of recession in the wake of 2008 and 2009.
By the side, the company has also been compelled to thoroughly deal with te issue of privacy of its users, Google has come up with a mobile application to access personal information and identify stalkers. This application came with Neven Vision startup acquired from Neven in 2006 by Google (Anon., 2011, May 4).
It does a number of searches on a persons figure and image through Picasa, a photo sharing service and Like.com which was acquired in 2009. However, it has its limitations since it may go against an individuals wish to maintain his or her privacy. This has made Google to carefully improve its performance ability so as not to not face legal issues.
Reviving its good public image should be one of the top for Google. As already mentioned, the company brand has been soiled by regulatory slaps, privacy blunders and a series of antitrust probes. To solve this, Google should innovated better and sound strategies aimed at protecting the privacy of its users.
This will be a strategic merit that will not only solve its existing problems of brand trust but also build a more robust image for the company. The Google’s loophole on privacy will also seek to solve any likely future problems at the source before flaring up into uncontrollable levels.
A more stringent and user-friendly privacy policy will create a good leadership platform of trust that will leverage platforms for innovation in technology in a way that Twitter or Facebook won’t be able to match (Holden, 2008).
To sum up, it is vital to reiterate that Google has faced quite a number of challenges in the past that equally seem to transcend into the present business environment. For instance, stiff competition as well as privacy issues has been some of the worrying factors for the company.
While innovation of its products is key towards revenue growth and generation, other market rivals like Facebook and Yahoo are also on the bandwagon towards attaining a sustainable market share. As such, it is highly recommended for the company to consider continuous innovation of its products.
The will allow it achieve much needed growth by redefining a favorable marketplace. Inasmuch as achieving continuous innovation would be hard, it is important to note that this will be a potent competitive weapon that Google will have against its competitors and during times of tough economic situations.
Additionally, the company can hire and retain the best human capital resource alongside talent management for its human resource pool as well as engage in partnerships, mergers and acquisitions where it deems fit.
References
Anon. (2011, May 4).Microsoft’s Bing picked as BlackBerry search engine :Software maker trying to challenge Google. Toronto Star,B.4. Retrieved from ProQuest Newsstand.
Anon. (2011, May). Research and Markets: An Essential 2011 Analysis of Google Inc. . Investment Weekly News, 121. Retrieved from Banking Information Source.
Bonk, C. J. (2009). The world is open: how Web technology is revolutionizing education, San Francisco: Jossey Bass
Girard, B. (2009).The Google way: how one company is revolutionizing management as we know it, San Francisco: No Starch Press, Inc.
Holden, G. (2008). Go Google: 20 ways to reach more customers and build revenue with Google business tools, New York: AMACOM.
Kourdi, J. (2009). Business Strategy: A Guide to Taking Your Business Forward, London: Profile books ltd.
Sherman, C. (2005). Google power: unleash the full potential of Google, New York: The Mc Grow-Hills Company.