Analysis of Google’s Corporate Strategy

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Table of Contents

Introduction
Choice of Company
Introduction of Strategy
Explanation of the Company’s Strategy
What did it do?
Why is this Interesting?
Personal Thoughts
The Results of the Strategic Move
Conclusion
Works Cited

Introduction

Google Inc. (Google) is a relatively new company that started as a project by Larry Page and Sergey Brin to organize websites (Duthel 27). After the company’s incorporation in 1998, Google set up its headquarters in Mountain View California.

Although Google’s initial business strategy focused on the search engine business, its success has surpassed this business niche. The company’s success stems from its business growth, which has been synonymous with the introduction of new products such as online productivity software, cloud computing services, online advertising technologies, social networking services and the likes.

The company’s product and service offing also stretch across the provision of desktop services (such as web browsing, photo editing, and instant messaging) and the development of the popular Android operating system (Duthel 204). The provision of the browser-only Google chrome is also a key product that characterizes Google’s success.

Recently, Google made a spirited attempt to venture into the production of communication hardware. This venture informs the company’s partnership with hardware production companies that have developed some of its latest brands such as its high-end nexus devices. Similarly, its 2012 strategic move to acquire Motorola forms part of the company’s strategy.

Google’s scope in the technology market is massive. Duthel (20) estimates that the company runs thousands of data centers globally. Similarly, the company’s search engine capability is impressive as it processes about one billion search engine requests daily (Katz 3).

From its expansive scope, observers are not shy to say Google is among the most visited websites globally (Katz 3). Similar Google websites that run in non-English languages also feature among the most highly visited websites. Lastly, other Google-owned websites, such as YouTube and blogger rank as the most visited websites in the world.

Choice of Company

“It is a position all business leaders would love to find themselves in—a massive IPO, dominance in the marketplace, and a blank slate from policy makers to do practically anything they please” (Katz 1). This statement characterizes the market and company environment that informs Google’s operation.

Indeed, the company enjoys a massive IPO with unlimited freedom on the types of operations it may pursue. These conditions also help to explain why Google has a firm control in the technology market. Google’s success in the technology market informs the focus of this paper because even after its relatively recent entry into the market, Google has achieved tremendous success that has taken most companies decades to achieve.

Google surfaces as an interesting case study because despite its operational challenges, the company has been able to enjoy an unrivaled position in its market segment for nearly ten years.

Moreover, subject to the short time the company has operated, it has been able to control more than 80% of the global search engine market (Katz 3). Google also controls more than 90% of the global mobile search market (Katz 3). This dominant market share has elevated the Californian-based giant to be the most popular search engine company in the world.

Google’s closest competitor, Microsoft’s Bling, does not have a strong market share, or revenue growth, that rivals Google’s revenue. In fact, Katz says, “Google’s annual revenue is larger than the economies of the world’s 28 poorest countries combined” (2). Bling’s failure to command a strong market share has given Google an unrivaled monopoly in the search engine market.

Through its market dominance, Google has found it easy to manipulate the existing rules of operation to advance its corporate agendas without much opposition. For example, the company has used sophisticated algorithms to draw more attention to the company’s products, as opposed to the relevant items that are supposed to characterize its search results (Katz 3).

Albeit Google is a United States (US) company, the company’s growing power and influence in the world has caused fears within the European Union (EU), which has threatened the company to change its powerful business practices, or else the EU would assume the company has contravened antitrust laws (Katz 3). This caution comes from the power that Google has to “make” or “break” brands since it wields immense advertising power that may build or destroy certain brands.

For example, through the manipulation of the algorithm system, Google can develop brands that pay for privileged searches, such that when people “Google” a certain product, the company with the privileged brand pops first. Relative to the above dynamics, Katz says “Google has spent years trying to monopolize every avenue through which a company can reach users online—if it is through search, advertising, email, mobile devices or browsers” (7). This way, Google enjoys an unrivaled monopoly in the market.

From Google’s simple mission statement that reads, “To organize the world’s information and make it universally accessible and useful” (Duthel 393), this paper finds it of great interest to understand how Google has achieved its tremendous corporate success.

Indeed, as opposed to the expectation that Google may just achieve corporate success, as its mission states, this paper chooses this company because it has achieved tremendous commercial success by overshadowing its competitors and exercising an almost impervious monopoly in the search engine market.

Introduction of Strategy

Google’s strategy is complex and perplexing. Moran (1) says that assuming Google’s strategy is just “one thing” is a misinformed opinion. Relative to this assertion, some observers say that it is important for industry experts to understand where Google’s corporate strategy heads because if the company fails to achieve its vision, its failure may affect the industry (Moran 1). Nonetheless, despite the complexity of Google’s strategy, it is important to understand that the main component of the company’s strategy is advertising.

Therefore, regardless of the company’s actions, experts understand that Google’s main aim is to increase its advertising revenue and dominance in the advertising market. The focus on advertising as Google’s main corporate focus has manifested in the company’s partnership with Adsense Contextual (an advertising firm) (Duthel 393). Such strategic partnerships have helped Google to increase its advertising revenue, even in internet platforms that they do not own.

Explanation of the Company’s Strategy

As mentioned above, Google’s corporate strategy mainly focuses on advertising as its business niche. To support its excellence in this niche, Google has tried to learn a lot of information about its customers so that it can customize its advertisements to meet the needs of its customers. Indeed, if the company acquires a lot of information regarding its customers, it is able to fine-tune its adverts to reach the right customers. Through this strategy, it may equally be easy for the company to charge more money for its adverts.

Part of the evidence of Google’s commitment to this strategy manifests in its commitment to give its users free accounts, thereby giving it an opportunity to scan these accounts and identify keywords that it can use to customize its advertisement messages to reach its customers. Therefore, while it is important to acknowledge the complexity of Google’s company strategy, it is also important to understand that Google’s strategy stands out in a larger strategic framework of selling highly targeted advertisements.

What did it do?

Google has pursued many corporate strategies that have baffled many analysts (Mattera 2). Industry observers have seldom understood some of its actions.

For example, Google invested billions of dollars in developing the popular Android operating system only to sell it for a paltry sum of money (Mattera 2). This action has prompted some observers to say that Google has failed to match the success of other competitors in the mobile market because Android is the dominant global Smartphone platform and yet, the company gave away the product almost freely (Mattera 2).

A tech analyst, Roger McNamee (cited in Mattera 2) says Samsung has made a lot of money by developing Smartphones that use the Android platform. Consequently, Samsung is raking in billions of shillings by using a mobile platform (android) that Google Inc. spent a fortune to develop.

Nonetheless, beneficiary companies have not sidelined Google in the Android phenomenon. Its decision to give away the android platform is part of a larger strategy of maintaining and focusing on its advertising revenue model. Indeed, (Mattera 2) says, “People who use Android phones, for example, are highly likely to use Gmail, Google Maps, Google Docs, the Chrome web browser, Google’s search engine and maybe even Google+” (2). This way, Google still dominates the mobile market.

Through the dominance of Google apps in the Android platform, we can see how Google cleverly preserves its advertising model in the fast-growing mobile market. Some experts say that Google understands the bigger picture in the mobile phone market because the money lies in the web apps that characterize the mobile market and not the devices (mobile phones) (Mattera 2). Certainly, as the markets for smart phones continue to increase, the web services that characterize the devices will be worth more money than the devices.

Besides Google’s advertising strategy, the company has strived to ensure that it remains a market leader in futuristic technological interventions.

In other words, the company has strived to remain innovative and a step ahead of its peers by providing creative products that are ahead of their time. For example, the introduction of the Google chrome operating system (OS) is one such strategy that has led industry experts to believe that Google aims to dominate the future desktop OS system market by edging out traditional companies such as Microsoft (Mattera 3).

Since the inception of the Google Chrome product, the company has made tremendous strides in creating market awareness regarding the product. However, Google chrome OS is still incredibly limited. Moreover, any PC that intends to operate a Google chrome OS needs to have a strong internet connection, otherwise, the service would be useless.

Many observers would therefore criticize the Google Chrome OS for its inability to run non-web apps. However, what many people do not realize is the ability of the chrome OS to be the greatest threat to the traditional market dominance of Microsoft OS. This threat exists from the increased dominance and spread of cloud computing services in the tech world.

Google designed Google chrome to work best in the cloud-computing world, as opposed to the traditional OS such as Microsoft that may work in an offline environment. Indeed, as cloud computing continues to gain credence in the tech world, the need for a local-based offline OS like Microsoft OS may slowly disappear, thereby giving room for the reincarnation of Google chrome. Relative to this threat, Mattera says,

“Microsoft is making investments in web services (Bing, Sky Drive, Office Web Apps, and the likes) but Google still dominates the space. If Chrome can improve further, it could give Google’s service a foothold in the desktop arena, just as Android gives it a foothold in the mobile space” (4).

From the above dynamic, it is easy to see how Google has positioned itself in the tech world by introducing products that may exploit future market opportunities. This strategy supports the fact that Google’s corporate strategy is also innovative and precise. The company is therefore undisturbed by its current challenge of rivaling existing brands like Microsoft because its strategy is fixed on exploiting future market opportunities.

Why is this Interesting?

Google’s company strategy is interesting because the company always seems to adopt an indirect and sometime “wacky” approach to meet its strategic goals. In fact, most observers have criticized many of the company’s strategies, but they have failed to see that the company focuses on the bigger picture, which is to sell targeted adverts.

Therefore, while many of Google’s strategies seem ill-informed (like “giving away”) its Android platform, after investing billions of dollars to develop it, the company ultimately emerges as the winner because it is able to lock its target market to use its web apps. Therefore, Google interestingly maintains its lead as the leading advertising company.

Personal Thoughts

While Google’s strategy seems “clever,” the company exposes itself to several legal issues, especially regarding its scrutiny of personal information for the design of effective and targeted advertisements. The strategy of developing targeted adverts is an effective approach of increasing the efficiency of the company’s marketing strategy, but it exposes the company to privacy infringement claims.

The company therefore stands a high risk of receiving potential backlash from individuals and rival companies that may want to exploit the legal issues that may exist from gathering private information from customers to develop effective advertisements. Therefore, while Google may seem to be a largely successful company, the mere fact that it knows a lot of personal information about its customers may expose it to several litigation claims from customers who may be disturbed by this fact.

The Results of the Strategic Move

Google’s success never made headlines until the company started to receive a lot of money from its advertising revenues. From the wide array of products and services that Google offers, 99% of the company’s revenue comes from advertisements (Coy 1).

The increased revenue has equally increased the company’s market capitalization to more than $100 billion (Coy 1). The success of Google Inc., on the advertising front, has questioned the previous skepticism and criticism that shrouded the company’s strategy. Many experts now believe they were wrong in dismissing Google’s corporate strategy (Coy 2).

From Google’s success, some companies have imitated its advertising strategy. For example, the decision to allocate the top advertisement preference to the highest bidder is a genius effort by Google, which other companies have replicated. For example, Yahoo recently emulated this strategy and allocated the top advertisement slots in its search engine to the highest bidder.

Relative to this assertion, Coy says, “Google’s Ad-Words became so successful after its debut four years ago that some of its key features were quickly adopted by Yahoo” (1). Despite the attempt by competitors to replicate Google’s strategy, the company remains unique because of its innovative strategies (Coy 1).

Conclusion

After weighing the findings of this paper, Google’s strategy seems to center on increasing its advertisement revenue as the main pillar of the company’s financial success. Most of its competitors have played the catch-up role, with some companies such as Yahoo imitating the company’s effective corporate strategy.

Albeit the focus on advertisement is the company’s main preoccupation, it is equally important to appreciate the company’s zeal to be innovative and ahead of its time. Google’s quest to launch Google chrome and employ only web-based applications on this platform is a reliable show of the company’s commitment to stay ahead of its time.

This way, the company aims to exploit market opportunities that may arise from the increased adoption of cloud computing services. From this analysis, Google is not only set to be an industry-leader in the search engine market, but experts equally expect it to shake the dominance of other technological companies like Microsoft in the future (Coy 1).

Works Cited

Coy, Peter 2013, The Secret To Google’s Success. Web.

Duthel, Heinz. Google Inc. Services – Google Tools – What Is Google, New York: Lulu.com, 2008. Print.

Katz, Jeffrey 2012, Google’s Monopoly and Internet Freedom. Web.

Mattera, Salvatore 2013, Understanding Google’s Strategy. Web.

Moran, Mike 2008, What’s Google’s Strategy. Web.

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