case study analysis of google
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Case Study Analysis
Anh Nguyen
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Case Study Road Map
• Industry Situational Analysis
• Company Situational Analysis
• Strategy Recommendation
• Implementation Recommendation
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Industry Situational Analysis
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Dominant Economic Characteristics
• Market size & Growth Rate– Revenue: $39 billion (2004)– Revenue: $50 billion (2005)– Predicted growth rate (2007) 27%
• Main Rivals– Google, Yahoo!, Time Warner, AOL, Microsoft,
Ask.com, Paid search providers
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Dominant Economic Characteristics
• Scope of Competition– Global Presence – Stronger competition
• Degree of Product Differentiation
• Product Innovation– Google = Domino effect
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Competition Analysis
• Rivalry among competing sellers– Strong– Google’s market share dominance
• Threat of potential entry– Strong– Inexpensive start-up costs– Risk of brand new technologies coming in the
market
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Competition Analysis
• Power of substitutes– Strong– Zero switching costs
• Power of Suppliers– Inexistent
• Power of Buyers (advertisers)– Moderate
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Driving Forces
• Increasing Globalization
• Product Innovation
• Regulatory influences & Government Policies– Privacy Issues– Chinese Government censor
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Competitive Position of Main Companies
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Competitor Analysis
• Profile Competitors/Predict Moves
CompanyCompetitive
ScopeStrategic
IntentMarket Share
Objective
CompetitivePosition/Situation
Strategic Posture Competitive Strategy
Google Global
Maintain the position of leader of the search engine market
Expand through more advertisers and user access
Strongest competitor in the market
Combination of Offense and Defense Broad Differentiation
Yahoo! Global
Be among the top in the industry
Expand through new search technology (Panama) Getting Stronger
Combination of offense and defense Broad Differentiation
Ask.com Global
Be among the top in the industry
Expand through advertisement and development of brand name Still weak
Combination of offense and defense Broad Differentiation
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Key Success Factors
• Technology-Related: Expertise in a particular technology
• Marketing- Related: A well-known and respected brand
• Skills and Capability Related: Product Innovation
• Skills Related: Global Distribution Capabilities
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Overall Attractiveness of Industry
• Attractive Factors– Increased number of users
• Unattractive Factors– Very competitive
• Issues– Privacy
• Profit Outlook– Favorable
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Company Situational Analysis
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• Qualitatively: Google is a focused differentiation (or market niche) strategy • Complementary strategic strategy: offensive strategic moves, outsourcing value chain activities, and unique website strategies
Evaluation of the Current Strategy
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Financial Performance Analysis
2003 2004 2005 2006
Net Revenues $1.5billion
$3.2billion
$6.1 billion $10.6 billion
Net Earning $106million
$399 million $1.5billion
$3 billion
Shareholders’ Equity $588 million $2.9 billion $9.4 billion $17billion
Shares Outstanding 160million
275million
296million
309 million
Current Ratio 2.4 7.9 12.1 10.0
• Quantitatively
Evaluation of Current Strategy
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• Strong Market Position
• Proprietary Technology & Technological Infrastructure
• AdWorks and AdSense Programs
• Google Network Members
• Social Networking Domain
• Lack of Product Information
• Asia Internet Usage
• Online Ad Spending in the US
• Growth in Online Videos
• Competition from Microsoft and Yahoo
• Click Fraud and Invalid Clicks
• Data Scams
SWOT
ANALYSIS
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Analysis of Company’s Price & Cost Competitiveness
• Value Chain Diagram
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• Value Chain Analysis: Most vital are Sales & Marketing, Technology, and Systems Development
• Price Competitiveness comes from Delivering Online Advertising - AdWorks and AdSense
• Branching out into Different Product Lines - Google Books - Google Maps - YouTube - Google Earth - gPhone
Analysis of Company’s Price &Cost Competitiveness
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Weighted Competitive Strength Assessment
• Weighted Competitive Strength Matrix
Key Success Factor/Strength Measure
Importance
Weights
Yahoo
Microsoft
Ask.com
Expertise in a Particular Technology
.3 8/2.7 7/2.5 6/1.5 5/2.0
Well-Known and Respected Brand .2 8/1.8 7/1.4 6/1.4 5/1.0
Product Innovation .3 9/2.5 8/2.0 7/.8 7/1.5
Global Distribution Capabilities .2 9/1.7 8/1.7 6/1.5 6/1.6
Sum of Weights 1.00
Weighted overall Strength Rating
8.7 7.6 5.2 6.1
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Weighted Competitive Strength Assessment
• Weighted Competitive Strength Matrix Analysis
- Google has superior strength over competitors - Yahoo falls in second place due to name brand recognition - Ask.com is increasing product innovation - Microsoft came in last due to lack of product innovation
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Strategic Issues Analysis
• Will Google be able to compete with MySpace and Facebook to become the premier social networking site? • Will Google be able to capture the Asian Market and make China the leader in internet usage, especially by using Google as their main search engine site?
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Strategy Recommendation
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Strategic Inflection Point
• Government Reform• Structural Crisis• Information Explosion
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Strategic Vision
• Mission/ Vision:– Who– What – Where Google stands– Where Google is heading
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Strategic Objectives
• Key Strategic Objectives
– Gain 53% of U.S market share– Expand to China– Invest up to $ 20 million in
online ad spending– Diversify in mobile industry
• Key Financial Objectives
– Increase revenue in Chinese market by 19% first quarter 2007
– Double capital expenditure in 2007
– Increase in revenue by 38% in 2008 by online advertising
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Strategy Options
• Generic Competitive Strategy:– Focused Differentiation
• Complementary Strategies:– Strategic alliances– Collaborative partnership– Acquisition– Offensives moves– Outsourcing its value chain
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Functional Area Missions and Task Statements
• R&D Engineering• Production• Marketing & sales• Human resources• Finance
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Timing Initiatives
• Immediate (1st year)• Long range (2nd through 4 years)
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Implementation Recommendation
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Building a Capable Organization
• Strategy Critical Position• Recruit & Retain Talented Employees• Strategy Critical Core & Distinctive Competencies• Match Organizational Structure to Strategy
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Strategy Critical Positions
Managers Must:
• Thinking Clearly• Problem Solve• Positive Outcomes
Implementing:
• Solve Problems in Business• Training Day 1: Establish Problems• Training Day 2: Establish
Improvements
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Recruiting and Retaining Employees
Recruiting
• Screen applications thoroughly– Loyalty – Integrity– Intellect
Retaining
• Provide Reward System• Employee Empowerment
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Core & Distinctive Competencies
Core
• Hardware • Software• “Cutting Edge”
Distinctive
• Human Resource
Department
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Match Organizational Structure to Strategy
• Value Chain Activities• Strategy Activities• Authority• Cross-Unit Coordination• Collaboration
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Link Budget
• Supply Money to Research & Development
• Supply Money Internationally– China– India
• Human Resources
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Policies and Procedures
• Providing Handbooks to Employees
• Examination of Procedures
• Probation Period
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Best Practices &Continuous Improvement
• Competition: Yahoo!, Ask.com, MSN
• Prevent Competition from Benchmarking– Causing change in Information Technology
Department
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Information & Operation Systems
• Developing Updates for Technology
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Rewards Systems
• Full Benefits Plans• Health Insurance Plans• Fun Work Environment• Maternity Leave• Tuition Reimbursement• Gift Matching Program
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Supportive Corporate Culture
• Empowering Employees
• “Can-do” Attitudes
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Critical Management Behaviors
• Staying Involved with Employees• Constructive Pressure on Organization• Innovation of Core Competencies• Ethical Integrity• Corrective Adjustments
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Conclusion
• Bright Future
• Continued Expansion