Category: Company

The impact of a changing demographic structure on the price of financial assets, especially stock prices has been the subject of extensive research and discussion for some time (Quayes & Jamal, 2014). Data gathered from the U.S Census estimated there were 65 million US born baby boomers accounting for more than 20% of the US population in 2014 (Colby & Ortman, 2014). Thus, when we consider the vast stake the baby boomer generation have on the stock market, it is of no surprise it is questioned the impact this generation will have on stock prices while they begin to transition into the retirement phase of their lives (Shambora, 2006). Research suggests that the strength and the dramatic rise in the United States (US) stock prices, especially through the 1980s and 1990s (when baby boomers were in their peak savings) is predominantly attributed to the accumulation of assets from those of the baby boomer generation (Shambora, 2006). Therefore, as it is presumed when the baby boomers retire, they will divest themselves of the assets they have accumulated and liquidate their holdings, this will put a downward pressure on stock prices (Parker, 2001). It is important to understand the baby boomers’ presence in the stock market and examine the potential expected movement in stock prices which may arise from this generation entering retirement, as this can give individuals who are planning their anticipated retirement valuable insights on their projected capital longevity, as well as the policy makers behind social security reforms (Shambora, 2006).

When we define the baby boomer generation, they are described as the demographic cohort those born between 1946 and 1964 (Owram & Doug, 1997). Being that the baby boomers were born post war, they gained increased wealth and affluence, in comparison to any preceding generation due to the widespread post-war government subsidies in housing and education (Landon, 1980). Furthermore, given they were more active and physically fit than previous generations, amongst other variables this enabled them to peak in levels of income and benefit from superior retirement schemes, which thus generated a significant boom in the economy (Landon, 1980). Shambora (2006) suggest, as there is an increase in population “the number of consumers in their prime earning years require more imports, thus demand for domestic equity, more investment, thus supply of assets and demand for securities, thus higher securities prices”. In addition, frictions that challenge efficient market hypothesis suggest investor asset allocation. Investment advisors perpetually recommend an investment portfolio with 50% invested in fixed income and 50% investment in stocks given long standing rules that enforce this asset allocation (Benartzi & Thaler, 1995). This inflexible asset allocation strategy means that as new money becomes available for investment, a portion must be put into the stock market regardless of perceived aggregate value of the market. Despite this concept can create distortions between price and value of stocks, this further contributes to the natural accumulation of stocks for the baby boomers. This fits well with the idea that workers entering their prime earning years increase their savings and continue this pattern until retirement. Some of these savings are likely to be channelled into the stock market and thus creating an economy boom.

Whilst these factors and other variables this indeed may have motivated stock price increases; it is speculated this could also result in a drag in future stock price growth (Shambora, 2006). However, as it is suggested that the baby boomers in their prime age may accumulate their wealth especially through the stock market, when they come to retire, they will liquidate their savings and assets to supplement their retirement and as such convert their assets to fund consumption (Shambora, 2006). When we consider that equities are generally considered more risker than bonds, retirees may seek to sell their equities first, to preserve their capital for longevity which can in turn drive stock prices down (Shambora, 2006). Thus, this can present a downward pressure on asset prices (Parker, 2001). Because demand forces can determine securities prices, when a population demographic shift, such as when the baby boomers retire and liquidate their equities, this can create excess demand or supply for securities and in turn asset prices adjust to these market force, known as the meltdown hypothesis.

Shambora (2006) provides valuable research on such expected stock movement prices and his interest steams from the meltdown hypothesis. His research estimates that “although the baby boom glut may have indeed motivated stock price increases, they also will create a drag on future stock price growth and there will be a fall in asset prices when the baby boomers retire” as suggested by the meltdown hypothesis. Shambora (2006) argues that because Efficient markets hypothesis would have us believe that asset prices reflect only the current perception of firm valuation and that other factors will not affect the demand for or supply of securities and supply and demand therefore adjust simultaneously and immediately so that prices always reflect fundamentals, often in reality this can be somewhat untrue. He argues that because events continually test the rigidity of this theoretical price–value relationships, frictions can prevent the simultaneous adjustment of supply and demand and stock markets are viewed as only partially efficient because stock prices respond to a number of factors in addition to valuations based on fundamentals. Thus, he highlights the importance of the impact of the demographic shit the baby boomers transitioning into retirement will have on stock price because if efficient market hypothesis would have us believe that stock prices reflected only underlying value, the addition or subtraction of participants would have no effect (baby boomers liquidating their vast stake in the share market). Furthermore, we need to consider the change in various behavioral characterizes, such as risk tolerance (by liquidating equities into cash for readily available funds for consumption this reduces investors risk tolerance to elongate the longevity of capital through retirement). This part of Shambora (2006) research is important because if we considered that demand for equities were perfectly elastic, then underlying value would be the only factor affecting equity prices. Evidence suggests this is not the case and that investors change in asset allocation strategy is slow to change and that shocks to behavioral factors have a direct effect on stock prices and can often have a delayed reaction to the price of stocks.

Shambora (2006) extensive research uses a semi-structural vector autoregression model based on a simple conceptual framework of equity price determination is estimated. He does this in order to capture linear independences through multiple time serious and allow an evolving variable. Shambora (2006) identifies that through the baby boomers prime earning years their capacity to save increases and these savings are directed to the stock market. He notes that while baby boomers continue with this pattern it increases stock prices due to increased workers in the labor force. Furthermore, once they start to leave the labor force and stop accumulating this wealth this will send a downward trend on stock prices. Although, his research suggested there is no major impact initially to stock prices because of its slow and consistent digression this has far more serious effects and will create a slow evaporation of stock prices, rather than a meltdown. His motivating variable through his research is the impact of the baby boomers retiring at the same time. He funds that if 50% of baby boomers at age 65 retire this impact has a slow crawl of growth under that of historical benchmarks. However, he also funds that if 75% of the baby boomers retire when they turn 65 the index dramatically slows and will unravel stock prices for many years. Thus, retiring baby boomers will produce a drag on the market. If retires postpone the reduces the immediate effect however due to the greater numbers the unravelling of stock prices would go on for many years. The effect is more pronounced as more works switch to a leisure life.

Some of the stellar movements of the stock markets over the last 20 years has been due to the participation of the baby boomers and an opposite pressure will prevail when these baby boomers decide to retire. While it is suggested that when baby boomers retire there may be no immediate shock in prices, eventually the impact will create a very slow digression on stock prices. This is due for behaviors effect that have a slow onset to stock prices and that market efficient hypothesis cannot be solely relied on. Therefore, it is critical that when people are planning their retirement, they consider these effects as well as policy makers to consider if they need to review social security policies.

Our company has decided to partner with a company from outside the country. As the head of HR, I am supposed to make proposals on how to harmonize employee benefits. Our company allows a 10 day vacation during the first year and each year there is an increase of a day till a maximum of 20 days is reached. The other company has 20 days and an increase of two more days each year till a maximum of 60 is reached. As the head of HR I have to ask myself certain questions, what decision best suits each group of employee? Which decision is not a breach of their rights? And lastly which decision is for the common good?.

The virtues and values in tension here is first, the right treatment of all employees. It’s not ethical to show bias or not put into consideration equality and just to employees. Another virtue is right use of the employee’s time. As a company, we have to consider this aspect as we reevaluate the choices. The last value is to see into it that those who have no access to information or resources have been protected. In this case any employee who’s not aware of his rights should not be taken advantage of but be protected.

After laying down all the choices I opted for European workers being given the same vacation as their American counterparts up to the extent which the law permits. On reversibility, I chose this cause of action since on putting myself on our employees situation, I wouldn’t want other company treated way better than us by being given more vacation days yet we are all under one management. The choice of allowing each person to receive customary vacations in the country they are working in is not only bias but unjust. Pertaining prior agreement, each employee signed papers that had their contract descriptions, it was agreed between the company what their vacation days would be and that’s why I decided to put into consideration the decision to let them have customary holidays in the countries they are in, but on second thought the virtue of equality had to be considered. This decision allows them to feel their rights are protected at the same time they are treated fairly

It is the general expectations of the company to promote justice, to help others and not hurt them and also to improve ourselves. By allowing the other company to have vacation days according to the employees of our company up to where their law permits, we are ensuring justice is served and our employees don’t feel that they have been treated unfairly in any way unlike the case where the vacation period of the other company was left unchanged.

Comparing the decision using the relationship lens, we have the basic liberty which states that everyone has a right to have their contract honored and have a voice in any matter that affects them. This decision ensures that the contract the employees made with the company is honored as the vacation period is not altered in a way that they feel compelled to accept the decision even if they are unsatisfied. The case where the other companies vacation is to be slashed in accordance to ours is a breach of their contract.

On reflective equilibrium we answer the question of whether the decision was made to suit the company’s needs or for dignity as ends in themselves. This decision is made solely for the sake of the employees. Employee’s needs were put into consideration unlike the case where working hours are to be slashed. The letter would increase employee input which raises the profit margin but then it’s unethical.

Basing my decision on the common good lens. This decision sees to it that both employees of both companies are satisfied. The impact will be positive to all employees unlike the case where the vacation days are slashed for the other company. The choice where our companies vacation days was to be increased to the point where it augers well with the other company will be very uneconomical for the company which may lead to a negative impact to both the employees and management. On making this decision I ensured every rule is adhered to, Employees have legal obligations under transfer of undertaking to protect the existing contract of employees who transfer to the acquiring organization. The internal good achieved by the decision is that all employees are satisfied and happy and feel that their needs are well taken care of. This decision not only meets the standards of life but also the core virtues of integrity, honesty, courage and civility. As a company we are able to exhibit this values. Basing my decision on all the lenses it shows that it’s not only legally right but ethical

Abstract

This paper examines the value of team dynamics in a business, how to improve poor dynamics, and how to measure dynamics within a team. I will also briefly cover how a group or team is formed and the stages that every group goes through.

The value of team dynamics is critical for organizational success. Without positive team dynamics, your business can’t leverage the potential of your employees and tap into their skills and experience. So, what is team dynamics? How can you manage and improve your team’s dynamics? And what makes a good team?

What is Team Dynamics?

Team dynamics can be defined as the motivating forces that propel a team towards its goals, they are the processes and behaviors transpiring among team members. Team dynamics have a profound subtle impact and influence on both team performance and team productivity. A team with positive dynamics is easy to spot. Team members trust each other, and work towards collective decisions, while holding each other accountable for making things happen. (Eberhardt, 2016)

Tuckman’s, Theory

T In 1965, Bruce Tuckman from the Naval Medical Research Institute, at Bethesda, Maryland, developed the “Orming Model,’ Tuckman’s model suggests that there are four primary stages of group development. Tuckman found that working in a group can be broken down into five stages. These stages are forming, storming, norming, performing, and the adjourning stage. (Tuckman, 1965) Bruce Tuckman suggests that groups move through these stages in sequential order and that the length of each stage varies from group to group. Once a group or team successfully addresses the key challenges in each stage, the team is ready and can move on to the next stage.

What makes a Good Team?

Good team members display commitment to the team’s overall goals, and are willing to work hard to achieve those goals. A good team member shows good communication skills, and can share ideas with others both oral and written form. (Eberhardt)They can also work well with others and know that they will not always get their way, and are willing to accept the decisions of the group for the good of the group. A good team member is able to look at things from different perspectives and suggest new ways of doing things for the benefit of the team.

Effective teams trust one another and have open communication, and hold one another accountable. A team with good dynamics can create goals and objectives, and commit to their decisions and plans of action. They can feel comfortable enough to state when there is a problem, as well as offer a solution on how to fix the problem or improve what’s not working. (Franz, 2016)

How to improve Team Dynamics

No two teams are going to be the same. In order to improve a team’s dynamics, it’s important to first begin by identifying what the issues are that are causing the problems or lack of team performance, then formulating a strategy to improve or fix those issues. This involves an assessment or team health check. A recent study recommended to a structured, private, and confidential, assessment or interview with each team member to get their thought on the overall effectiveness of the team.

(Franz, 2016) It can also be beneficial to include people outside the team such as stakeholders, senior management, and even significant customers. Once any issues are resolved, it’s recommended to schedule regular team reviews to ensure a high performing team. (Abudi, 2016)

The most common mistake a team can make is failure to clearly identify a leader, without a clear leader decisions typically don’t get made in a timely manner if they get made at all. “Great leaders are excellent communicators, without good communication teams become disorganized, ineffective, and disinterested”. (Houston, 2016) To ensure good team dynamics it’s crucial that everyone is clear on what the team’s goal and purpose is, and that each team member in the group has clearly defined roles and responsibilities, so that work is equally distributed.

Another way that team members can improve the teams’ dynamics is by taking time to get to know their team members, the study recommends using team building exercises to help break the ice and get to know each other. These team building exercises can ease new team members into the group gently, and help establish good communication. (Abudi, 2016)

Conclusion

What is the advantage of utilizing teams in your business? Researchers have found that when a team has a positive dynamics, the members are nearly twice as creative as an average group. In a group with poor group dynamics, people’s behavior disrupts work. As a result, the group may not come to any decision, or it may make the wrong choice. With a good, working team, the biggest advantage is that it can cut down a work load significantly, and most importantly a dynamic team can build a positive work culture that is valued to each employee.

In a world where 2 out of 3 Americans hate their job, and in a workforce that is about to be dominated by an on-demand generation, the retention of great team members will be more valuable than ever. It might even be the competitive advantage that will separate the best from the rest. (Vanderbloemen, 2018)

Works Cited

1. Abudi, G. (2016, July 15). The Five Stages of Team Development. Retrieved from Abudi Consulting Group : https://www.ginaabudi.com/the-five-stages-of-team-development-part-i/
2. CEO, J. C. (2016, July 15th). Team Work and Colaboration. Retrieved April 12, 2019, from Harvard Business review: https://binged.it/2IsGIkF
3. EberHardt, R. (Writer). (n.d.). [Motion Picture]. M.O. Ware Producer. Retrieved from Retrieved from YouTube: https://www.bing.com/videos/search?q=team+dynamics&&view=detail&mid=728C77
4. Eberhardt, R. (2016, December 10). Team Dynamics. (M. O. Ware, Producer) Retrieved from YouTube: https://www.bing.com/videos/search?q=team+dynamics&&view=detail&mid=728C77BE28396BB46BD0728C77BE28396BB46BD0&rvsmid=4159D9966B448C166D6E4159D9966B448C166D6E&FORM=VDQVAP wehttps://youtu.be/Av9sFr_NsBU
5. Franz, T. M. (2016). Group Dynamics and Group Interventions. Penn State: Wiley Blackwell.
6. Guru, Q. (2016, September 29). Tuckmans Stages of team development. Retrieved from www.youtube.com: https://www.youtube.com/watch?v=uOCz1gOmg30
7. Houstan, M. (2016, april 12). what happens to a leaderless team. Retrieved 2019, from Learn Loft : http://www.learnloftblog.com>2016/04/12
8. Stages of group development. (2016). Retrieved from Mind Tools: http://www.mindtools.com
9. Tools, M. (2016). How to use the 5 stages theory of team development, your 10 minute guide to developing a productive team. Retrieved from www.mindtools.com: https://www.mindtools.com/blog/corporate/wp-content/uploads/sites/2/2014/01/Forming-Storming.pdf
10. Tuckman, B. (1965). Tuckmans Theory Developmental sequence.
11. Vanderbloemen, W. (2018, April 3). The Competitive Advantage that Will Help Your Business Win in the next 10 Years. Retrieved from Forbes Website: https://www.forbes.com/sites/williamvanderbloemen/2018/04/03/the-competitive-advantage-that-will-help-your-business-win-in-the-next-10-years/

Introduction

Businesses are facing challenges to conform to professional rules including professional conduct, accountability, fairness, and professional integrity. Through observation, it has been reported that companies conforming to rightful ethical practicing are decreasing significantly. Companies are nowadays bypassing transparency and accountability and start focusing on maximizing the shareholders’ return by trying to optimize profits at whatever cost attached to the company’s daily operations,( McDonald, G.et al, 2010 In the identification and evaluation of ethical dilemma practices in the corporate world, Google Inc. is chosen for ethical dilemma case study.

Google Inc. overview

Google Inc. was founded by Sergey Brin and Larry Page, in the year 1998. Google Inc. on its prospects is a subsidiary of Alphabet Company. The internet-related commercialization services derived from Google Inc. comprise of online advertising technologies, software, cloud computing, and hardware. It has operated under the principle of providing access to the world’s information effectively, (McPherson, S.S., 2010).

Ethical dilemma

Google Inc. faces an ethical dilemma to balance corporate compliance with the national laws of different countries, company principles, and global ethical standards. Google Inc.’s principle is to offer everyone from all walks of life free access to all information in the world without harming people. Back in 2010, China requested Google authority to allow censor information on Chinese citizens who are searching for particular information which is subjective to restricting China citizen’s right to access all information in the world,( Natale, S.M. and Doran, C., 2012). According to consequentialism ideology, the Google Inc. act was aiming to benefit its businesses by denying Chinese people all information and therefore the act is morally bad and therefore unethical because does not cause or bring happiness to many.

Google Inc. during this period was enjoying a large market share in China and therefore the company had to put the matter into consideration based on whether to comply with Chinese authorities for some information restrictions to Chinese people or cease conducting business in China. Google Inc. management to remain in business decided to design a Chinese language web framework that could allow information censor and that contradict this company policy. This is an unethical act because Google is focusing on growth and profit maximization. Accepting such a need would comprise its policy, to lose credibility and efficiency because the network would be required to slow down to censor some information from Chinese people searching and as a result expose Google to competitors who promote efficiency and access to all information in the world,( Mingers, J. and Walsham, G., 2010). Based on the deontological point of view Chinese government was morally right because required Google Inc. to censor some information from Chinese people searching on the Google search engine to protect its public from being exposed to crime, immoral behaviors, or political incitement.

Google Inc. furthermore allows organizations to track people’s information, and location without their consent is unethical though not illegal. Google Inc. signs contracts with users to protect individual information but allowing companies and other government authorities to access personal information is a one-way Google company is deceiving its users that contract its principle do no evil. As a result, users lose trust in Google services, and loyalty and sing out to Google services which results in Google income continuing to lose to competitors like Bingdong.com in the name of searching for the attainment of competitive advantages in the internet-providing industry.

Stakeholders impacted by the ethical issue.

Restraining to comply with Chinese authorities on information censor to China individuals, Google shareholder’s profit declined largely. Google through store records helps to improve corporate efficiency in which cookies are deleted and leave those photos online which are violating people’s privacy as other online users use those photos hence Google faces many charges,( Klassen, K.J. and Laplante, S.K., 2012). Also, Google in the year 2011 was under IRS audit due to federal income taxes avoidance through shifting profit into its offshore subsidiaries which are denying the United States government revenue collection as a result of lack of accounting transparency and integrity.

The ethical decision was undertaken by Google Inc.

When Good refused to comply with information censor from Chinese government directives and moved its operations to Thailand the shareholders lost Chinese customers but guided its principles and policies to protect its reputation from worsening across the globe and competitors taking that as an advantage to outsell its Google services. Google’s refusal to avail its data to the United States authority on individuals faces lawsuits which are attached extra costs. Compliance with IRS financial reporting standards overburdens by compiling Google to hire extra internal financial reporting control structures to ensure international ethical standards have been adherence to, (Tan, J. and Tan, A.E., 2012).

Conclusion

This discussion can conclude that many corporates across the globe are facing challenges to conform to ethical practices and at the same time optimize profit maximization. Shareholders want their managers to focus on activities that attract profits regardless of the method applied to arrive at making desirable financial performance hence considering ethical practices as an outdated issue in modern business operations.

In contrast to the above discussion, unethical practices seem to benefit a business for a short period but in the long run the business losses to competitors or companies that are put into consideration ethical practices in their business activities. For example, in businesses practicing ethical activities such as being mindful of employees’ welfare, employees are motivated to work and hence maintain high individual productivity. Society tends to become loyal to an enterprise practicing ethical practices hence revenue increase and as a result, achieve business sustainability.

The very first IKEA was built in southern Sweden in a locality called Älmhult. IKEA all started with one young boy named Ingvar Kamprad, who figured out how to buy and sell items to make a profit at the age of five. IKEA is spelled in all capital letters because the first two letters are initials and the second two is a place. I.K stands for “Ingvar Kamprad”. The second two letters is the name of the farm and village that he grew up in. “Elmtaryd” was the name of the farm and “Agunnaryd” was the name of the village. At the age of 17 Ingvar’s father had rewarded him with money for being a good student, Ingvar decided to use it to open his own business. Ingvar opened the first IKEA 1943, but the business did not yet sell furniture out of store just yet. For the first five years the business was running, it was a mostly mail-order sales business. Between 1947 and 1955 Ingvar was selling furniture that was being made by local manufacturers. Manufacturers became unhappy about the low prices that their furniture was being sold at, so they began to boycott. Therefore, Ingvar decided to start making his own designs in his house. Then, the light bulb went off. He started to sell his goods in flat pack. “Thus the basic IKEA concept – simple, affordable flat-pack furniture, designed, distributed and sold in-house – was complete.” (“Founder of IKEA, Ingvar Kamprad – The Real Story.”)

Ingvar had created a revolution. Customers love the company; easy to assemble, modern design, with low prices you cannot find anywhere else. Along with how it is also makes for an entertaining day. Walking through an IKEA, is a lot to take in, containing all the furniture being sold at display, a restaurant and a childrens play area. Factories also love the idea of Ingvar having these very large orders. Since the orders are so large, this made lower purchasing prices. This allowed the low prices that the items were being sold at. Ingvar has always had a goal in mind for IKEA. It is “…to secure longevity and independence for his business and concept. Ingvar wants to create a system and structure that will always be able to act in the best interests of the business and the many people.” (“Milestones in Our History.”) Ingvar wanted to expand and go international, although he is worried for the security and the main concept of his brand to be tampered with. In 1980, Ingvar decided to franchise his business and keep separate roles in independent business groups. From this, Inter IKEA Systems B.V is established in the Netherlands. IKEA continued to grow and today has over three-hundred stores in forty countries.

IKEA tries as best as any other company would to be ethical and socially responsible with their decisions. IKEA works to be environmentally friendly. A spokeswoman from Inter IKEA came out and said; “sixty percent of IKEA’s range is based on renewable materials, while nearly ten percent contain recycled materials.” (Desk) IKEA is also extremely committed to helping with issues that affect children. IKEA works with UNICEF (The United Nations Children’s Fund) a lot, and has given over one hundred and eighty million dollars in cash and donations. IKEA and UNICEF’s partnership had also blossomed another program called “€1 is a fortune!”. Over the span of five years the program has brought fourteen million dollars in to support education programs for children in need around the world. IKEA also works to support gender equality within the company and makes sure their employees have a voice. Women take up fifty-four percent of all IKEA employees. Even forty-eight percent of IKEA managers are women. In 2015, IKEA created a new minimum wage structure. The amount of money you made as an employee depends on the need of the employee.

Ingvar built a business from the ground up. He figured most of it out at age five, buying a lot of matches in and selling them cheap to make a profit. That is still how he runs his business today. Ingvar stayed humble throughout his whole life. With a net worth of fifty-eight point seven billion, making him the eighth richest man in the world, he still drove a 1970’s Volvo until the day he died in 2018. His whole life was about making other people’s lives easier and more affordable. Donating as much as he could to UNICEF to help children, and trying hard to make his company more sustainable, Ingvar cared about more than the money he was making off of the amazing company he built.

Works Cited

1. “Business.un.org.” United Nations, United Nations, business.un.org/en/documents/8372.
2. “Founder of IKEA, Ingvar Kamprad – The Real Story.” Sweden.se, 29 Jan. 2018, sweden.se/business/ingvar-kamprad-founder-of-ikea/.
3. “Milestones in Our History.” Milestones in Our History – Inter IKEA Group, inter.ikea.com/en/about-us/milestones/.
4. Retail, GlobalData. “IKEA Eco-Friendly Furniture: Young Price-Conscious Shopper Appeal.” Verdict Retail, 3 Apr. 2019, www.retail-insight-network.com/comment/ikea-eco-friendly-furniture/.

Introduction

Google, its products, and its expanding services have become household names; as the second most valuable firm in the world valued at approximately $528 billion (Cusumano, 2017, p. 22) it is no surprise that they monopolize the majority of Internet general services. However, as the market becomes increasingly crowded with companies threatening Google’s technological domination, the key challenges and threats to Google’s sustainable competitive advantage must be examined and counteracted. In this position paper, Google’s performance will be examined using the VRIO framework to justify what keeps it competitive while highlighting the risks and challenges to its industry lead. From the analysis, a proposed strategy will then outline the recommendation of Google to invest primarily in AI development in order to leapfrog in the areas of technology and encourage an inseparability between Google and its users.

Google’s attributes and advantages

Since its conception, Google has valued simplicity, usefulness, and consistency in its services and products (Choi, Kim & Yoon, 2014, p. 707). A way of viewing Google’s attributes and functions is through the VRIO framework, where its success is through fulfilling the criteria for a competitive sustainable advantage. The VRIO framework is a four-component tool to highlight the resources and capabilities that a company possesses and must protect to give a long-term competitive advantage (Clearpoint strategy), comprising of value, rarity, imitability, and organization. Failure to meet a criterion will challenge Google’s superiority in the technology market, and Google must frequently revisit the framework to ensure that its strengths are not diminished by the emergence of competitors’ products and services.

Google’s strengths and opportunities will first be examined to understand where its consequential challenges lie. Primarily, Google owns a major share of the advertisement market, with their network reaching 90% of internet users with advertisements consequently placed on each page (Rothaermel, 2017, p. 7). Advertisements are Google’s main source of revenue, and thus the maximum distribution of Google products and Google Network members’ sites onto other platforms such as Apple devices are integral to reaping the greatest revenue through both cost-per-click and cost-per-impression avenues (Rothaermel, 2017, p. 7). The sheer coverage that Google has online is instrumental in maintaining its inimitability, and Google constantly upgrades its network infrastructure to continue to deliver the fastest services. Newer competitors simply cannot compete with the physical and virtual size of Google’s processing capabilities, and the rarity of Google’s subsea cable projects to increase computing technologies advances will promote their position as leaders in technology (CB Insights, 2019).

Secondly, Google’s substantial investment in research and development (R&D) opportunities is an amalgamation of the value and organization attributes of the VRIO framework, where they have invested 15% of total sales into R&D to provide products that meet user needs (CB Insights, p.2). When Google reorganized into Alphabet Inc, it gave structure to the organization by separating operations into core and non-core divisions, which permitted Google to trial ‘moonshots’, that is, R&D experiments that “promise revolutionary innovations” (Cusumano, 2017, p. 24) through its Other Bets subsidiaries division. While it has experienced some criticism from stakeholders as a sizeable percentage of revenue has hence siphoned away from the core and successful Google products, Android was a moonshot back in 2005 and now “leads the industry with over 80% market share” (Cusumano, 2017, p. 22), which proves that Google’s R&D work has the potential to evolve into consistently increased revenue. Other Bets investments have the opportunity to contribute to Google’s competitive advantage if the right project is funded; however, it runs the risk that there will be no payoff, only wasted profit.

Key challenges

The greatest threat Google has to its sustainable competitive advantage is imitability; while Google has been the leader in advertising for decades, competitors such as Facebook threaten its market share. Recently, Facebook has centered its strategy around delivering the quality of ads, that is, user-focused, rather than the quantity of ads, which has subsequently improved their revenue (Rothaermel, 2017, p. 9). While Google could traditionally generate revenue through mass advertising and cost-per-impression profit, the modern user has countered advertisements with ad-blocking browser extensions, with an annual increase of 41% turning to blockers due to frustration with the volume of advertisements (Rothaermel, 2017, p. 11). As the majority of Google’s functions are directly dependent on advertising revenue, including the aforementioned Other Bets, Google cannot develop and match competitors’ technologies if they lose their advertising monopoly.

Google has also failed to counter the change in user prioritization from desktop to mobile, losing 2% market share in online advertising due to the decreasing relevance of text-based advertisements ((Rothaermel, 2017, p. 10). With over half of Google’s 100 billion monthly searches in 2015 from mobile devices, and more users choosing to search via voice-enabled capacities, the effectiveness of traditional advertisements has dwindled to the point that more competitors are capitalizing on the new dynamics of the advertising platform, such as Facebook, who has generated “75% of all revenue from its mobile ad business” (Rothaermel, 2017, p. 9). This was evidenced when Google rushed into resolving the advertising demographic gap by releasing an audio-based advertisement to target users, which was met with complaints and a swift removal (Rothaermel, 2017, p. 9). Google appears to have been complacent about its historical monopoly in the advertising field, failing to prepare for the change in the operating environment, and being blindsided when competitors delivered relevant and targeted advertising that they could not counter. Google must monitor modern users’ online preferences and behaviors to prevent disconnect and strategic disadvantage.

Future recommendation

Google can reinstate its sustainable competitive advantage if it uses its R&D facilities to be at the forefront of augmented intelligence (AI) technologies, releasing AI capabilities that enhance current existing Google products. This recommendation has the ability to counteract Google’s challenges while building on its strengths if done appropriately. Firstly, Google has already understood the importance of integrating a virtual assistant into its products and services; an increase in AI technology will improve its “foothold in the search and advertising world” (CB Insights, 2019, p.11) by introducing an unparalleled user-orientated function. While Google struggled with the increased prioritization of voice-assisted search and mobile-based functions over desktop services if they release AI technology to “build each user their own individual Google” (McCracken, 2016), that is, make Google and the user inseparable from each other in the smart home world, not only will revenue increase due to dependency on Google and its products but Google will be seen as the leader in AI technology rather than an imitator. Google already has a central focus on developing machine learning capabilities; it has acquired AI startups DeepMind, Halli Labs, and Banter and has launched two designated AI funds: Gradient Ventures and Google Assistant Investment Program (CB Insights, 2019). Google should continue to focus on deep learning and AI functions in order to bolster its eventual release of AI smart home technology with the best and the most relevant products for the everyday user.

Moreover, Google’s investment in AI will increase its ability to manage processing capabilities and information organization; by incorporating deep learning into its search and Google Assistant functions, AI will provide Google an unparalleled advantage in speed and relevance which will filter down to Internet users’ satisfaction and continued use with Google and its products. Although Google has fallen behind tech giants such as Apple and Amazon by being too late to the smartphone and smart speaker markets (McCracken, 2016), with a successful AI campaign Google does not need to match their products due to possessing a niche function that other companies fail to have the funding or research background to match, at least in the short-term. Google should not be reactive to the tech market, but shape users’ desires towards their tech capabilities so that they become the preference, forcing Apple and Amazon to change their strategies to aspire towards Google’s features.

Naturally, the rollout of AI comes with a number of risks, the primary two being releasing AI integration at the wrong time and releasing products that are irrelevant to users. Google is experienced in releasing products too late as seen by the Google Pixel smartphone, Allo messaging app, Google +, and Google Home voice assistant (Rothaermel, 2017). On the other hand, Google has released products in a market with no connected tangible user needs, such as Google Glass, where users considered Glass as a novelty rather than fulfilling a smart home requirement. Noting that Amazon, Apple, Facebook, and Microsoft are all investing in AI initiatives (McCracken, 2016), Google is currently under pressure to be the first to release a complete AI integration suite of products. While Google has invested majorly in AI research and development and can be confident that its AI technologies can surpass its competitors in terms of understanding multimedia and information through multi-billion Google searches, they must also deliver a comprehensive advertising campaign to ensure that users believe that AI will complement their lives, rather than being an expensive luxury addition.

Conclusion

All in all, Google has demonstrated a clear sustainable competitive advantage for most of the company’s life, showing that they surpass its competitors in value, rarity, inimitability, and organization. However, their key challenges have been evident in recent years, where competitors and users have become smarter and desire better user experiences than mass advertising campaigns and desktop-restricted functions. Google has been challenged by the change in technological environment and has reacted rather than dominated in the release of new products and advertising campaigns, to the dissatisfaction of Internet users. This position paper, therefore, recommends that Google must be the pioneer in AI technology to complement its current core products, particularly Google Search and Google Assistant, in order to promote the inseparability of the Internet user with Google and its products while differentiating Google functions from that of its competitors. As CEO Sundar Pichai has emphasized, Google should not consider how to compete with tech giants themselves, but how to be better for the smart product user (McCracken, 2016). AI, if released at the right time and in the right way, has great potential to permanently change the smart home market, boosting revenue and conquering the modern tech environment.

Bibliography

1. CB Insights. (2019). Google Strategy Teardown. CB Insights. Retrieved from https://www.cbinsights.com/research/report/google-strategy-teardown/#ai
2. Choi, J., Kim, B., & Yoon, S. (2014). UX and Strategic Management: A Case Study of Smartphone (Apple vs. Samsung) and Search Engine (Google vs. Naver) Industry. Lecture Notes In Computer Science, 703-710. doi: 10.1007/978-3-319-07293-7_68
3. Cusumano, M. (2017). Is Google’s alphabet a good bet? Communications Of The ACM, 60(1), 22-25. doi: 10.1145/3018990
4. McCracken, H. (2016). At Sundar Pichai’s Google, AI Is Everything—And Everywhere. Retrieved 21 September 2019, from https://www.fastcompany.com/3065420/at-sundar-pichais-google-ai-is-everything-and-everywhe
5. Rothaermel, F.R. (2017). Alphabet’s Google. NYC, United States: McGraw Hill Education.

Introduction and company background

This report will highlight the strategic plan on how Google can achieve a trillion-dollar mark like its competitors Apple and Amazon. Google was founded in 1998 by Larry Page and Serge Brin in California, USA. Since then, the company evolved exponentially and became a tech giant in the mainstream media.

Google’s mission is to organize the world’s information and make it universally accessible and useful. Ever since its beginnings, the company has focused on developing algorithms to maximize effectiveness in organizing online information, with the vision of providing access to the world’s information in one click. According to a 2019 economist cover ‘data is the most valuable resource a company can have’. Their values including Work with great people; technology innovation, being actively involved; you are Google, and sustainable long-term growth and profitability.

SWOT analysis for Google.

Strengths: King of the Online Search with a vast Market share, no competitor has come close to challenging its position let alone reaching its market shares in search engines.

Weaknesses: Privacy policies: Google has been slammed by many experts for its excessive reliance on privacy, especially when it comes to hiding information about algorithms. The company has since taken steps to address the allegations. Excessive Advertisement: Google’s overdependence on advertising has increased.

Opportunities: Wearable Market: In Nov 2019, Google acquired Fitbit for $ 2.1 Billion to compete with Apple and Samsung in the lucrative and growing wearable (smartwatch and fitness band) market. Non-Ad Business Model: Google needs to undertake a diversification process and aim to build a non- Ad Business Model accordingly. It needs to pursue adaptability by committing itself to more commercial transactions. It will ensure sustainable revenue.

Threats: Alteration of Information: Google has received considerable criticism over its alleged collaboration with China over a censored search engine project (Dragonfly). Censorship Policy: Google has not managed to protect itself from backlash over its censorship policy. Many whistle blowers have begun leaking formation over its political, ideological leanings. Competitors: The primary threat that Google faces is from its competitors Facebook and Amazon. The two competitors are slowly catching up with Google. Their new features and increasing popularity can take the spotlight away from Google.

PESTLE Analysis of Google

PESTLE conditions could make Google very vulnerable to changes in political, economic, social, legal, technological, and environmental, conditions. Therefore, it is a good time to see how PESTLE could affect this tech giant.

Political Factors: The criticism that Google has too much control over the flow of information, Which is why they have not been able to enter some potentially lucrative markets, such as China, because of political reasons. This could limit the company’s future growth.

Economic Factors: the company has accumulated a huge amount of cash, which makes it very vulnerable to inflation. A sudden drop in the value of a currency could reduce the company’s value drastically.

Social Factors: A decline in the use of traditional laptop and desktop computers, which historically have been the most popular means of accessing Google. Tech Crunch reported that more searches were done from mobile devices than computers for the first time during the summer of 2015.

Technological Factors: Growing use of mobile devices to access the Internet. Amazon has been able to dominate shopping research with its solution. Many companies are now designing proprietary apps to allow customers to bypass search engines. Examples of this include shopping apps.

Legal Factors: Google is increasingly entering heavily regulated fields such as finance, insurance, telecommunications, and automobiles. This could place severe restrictions on its operations. Liabilities and legal costs could increase as Google enters fields like insurance and experiments with delivery services. Successful antitrust action in Europe could give rise to similar efforts elsewhere, particularly in the United States. This could lead to expensive litigation and efforts to change Google’s business model.

Environmental Factors: Google’s business model is heavily dependent on data centers and other Internet infrastructure that use large amounts of electricity. Efforts to control global warming by encouraging the use of costlier green energy sources to produce electricity could raise Alphabet’s operating costs. At some point, Google might not be able to offer free services as it has in the past.

It remains to be seen whether Alphabet’s new business model will insulate it from these factors. If it can successfully protect the company, Google could be more profitable than ever.

The VRIO Analysis of Google

This section will look at each of its internal resources one by one to assess whether these provide a sustained competitive advantage. The Google VRIO Analysis also mentions at each stage whether these resources could be improved to provide a greater competitive advantage. Lastly, the resources analyzed are summarised as to whether they offer a sustained competitive advantage, have an unused competitive advantage, temporary competitive advantage, competitive parity, or competitive disadvantage.

Valuable: The Google VRIO Analysis shows that the financial resources of Google are highly valuable as these help in investing in external opportunities that arise. These also help Google in combating external threats. According to the VRIO Analysis of Google, its local food products are a valuable resource as these are highly differentiated. This makes the perceived value for these by customers high. These are also valued more than the competition by customers due to the differentiation in these products. Also, the Google VRIO Analysis shows that Google’s employees are a valuable resource to the firm. A significant portion of the workforce is highly trained, and this leads to more productive output for the organization. The employees are also loyal, and retention levels for the organization are high. All of this translates into greater value for the end consumers of Google’s products.

Rare: The financial resources of Google are found to be rare according to the VRIO Analysis of Google. Strong financial resources are only possessed by a few companies in the industry. The employees of Google are a rare resource as identified by the VRIO Analysis of Google. These employees are highly trained and skilled, which is not the case with employees in other firms. The better compensation and work environment ensure that these employees do not leave for other firms.

Imitable: The distribution network of Google is also very costly to imitate by competition as identified by the Google VRIO Analysis. This has been developed over the years gradually by Google. Competitors would have to invest a significant amount if they are to imitate a similar distribution system. The patents of Google are very difficult to imitate as identified by the VRIO Analysis of Google. This is because it is not legally allowed to imitate a patented product. Similar resources to be developed and getting a patent for them is also a costly process.

Organization: The financial resources of Google are organized to capture value as identified by the VRIO Analysis of Google. These resources are used strategically to invest in the right places; making use of opportunities and combatting threats. Therefore, these resources prove to be a source of sustained competitive advantage for Google.

From the VRIO Analysis of Google, it was identified that the financial resources and distribution network provide a sustained competitive advantage. The patents are a source of unused competitive advantage. There exists a temporary competitive advantage for employees. There exists a competitive parity for local food products. Lastly, the cost structure of Google is a competitive disadvantage. Research and Development is also a competitive disadvantage.

Recommendation

As for recommendations, in order to get Google to the $1 trillion mark they will first have to be more transparent this means that they will have to be open about how the company operates. Being transparent is one of the four core values which really help Google to gain customer confidence when they’re using its services. They will also have to come up with a new product or even a new business module that does not depend On advertisement, this can include programs using the YouTube platform which can be similar to Netflix where customers can pay for a monthly subscription and have access to the original program. Also, they can come up with products such as Google Library where people can have access to any books that they want for a small fee. To reach the trillion dollar mark Google will have to also do more research on current trend on what customer wants, including learning customer behaviour And growth continuous. To achieve this Google will first have to analyze the market using their new and existing customers locally and globally. The customer of Google and the content creators are the people that put the information into Google, businesses are the companies that use Google to advertise their businesses But also use the site to do research, and the industry which uses information from Google on a daily basis. Google will also have to consider all the market options the process for this will be to diversify and come up with the subscription program as mentioned above. This can be achieved by partner with other companies such as Netflix as we mentioned above they can come up with the original program and people can be paid for subscription to Netflix partnership will be one of the strategic moves that Google can make. Also, they can look into marge with other companies and accusations which they have already started to do. In November 2019 Google bought smartwatch company Fitbit for 2.1 billion this is because of the increase in demand for wearable products and the great success of Apple watches. Because of this strategic move, google should be able to increase in revenue in a near future.

Google, a corporate titan that has existed for approximately 20 years ago, possesses a massive power that sways large parts of the United States economy and society, ranging from political issues to personal shopping habits, from the stock market to the manufacturing of small businesses. With Google’s enormous size and dominance over the users’ database and economies of scale, some governments have raised their concerns and are gearing up for an antitrust investigation of the company.

Body:

1. Why google is a natural monopoly?

The chairman and CEO of Berkshire Hathaway, Warren Buffett, claimed in an interview that Google’s search ad business acts like a natural monopoly that can fend off any potential competitors. This proclamation can be primarily attributed to the company’s significant amount of market share, economies of scale, and network effects.

The diagram below shows a common phenomenon in natural monopoly industries, increasing returns to scale, in which as output increases, the average total cost falls. The source of this occurrence is the huge initial fixed costs, which gives a large independent firm an advantage of lower average total cost over two or smaller firms. Illustrated in the below graph, the natural monopolist’s ATC curve gradually declines along the product quantity axis at which price is greater than or equal to the average total cost. In other words, the phenomenon takes place at least until the firm would break even in the long run.

Within media companies, network effects play a vital role that controlling the number of users a business can approach. The more users approach Google, the more data it collects, which allows the company to innovate its algorithm to attract more customers and more application developers will gravitate to them. The platform cuts both ways, which constrains smaller firms from expanding due to their limited user data.

Google has become so widespread that nowadays, it is regularly utilized as a verb. The platform’s practical applications and prevalence have attracted a vast number of users and concurrently, deterred them from seeking alternatives. Furthermore, Google is automatically embedded in a myriad of devices, from mobile phones to website browsers, which consequently enhances peoples’ inclination to the page. For instance, Google’s Android software presents in three out of every four smartphones in the world, according to analysts’ estimations. In order to achieve such scale, the company has required manufacturers to place its search engine on their devices and preinstall a series of Google apps in exchange for free utilization of the software.

2. How does Google use its monopoly power?

Google owns approximately 90% of the market share of internet searches, a substantial

proportion compared to the modest 2% of its closest search competitor, Bings. This predominance allows the company to exert tremendous influence over peoples’ consumption of the Internet as well as the production of other businesses.

In a published article in 2015, Robert Epstein, a senior research psychologist at the American Institute for Behavioral Research and Technology, stated that Google can control “a wide variety of opinions and beliefs … [more] than any company in history has ever had. Google’s search algorithm can easily shift the voting preferences of undecided voters by 20 percent or more – up to 80 percent in some demographic groups – with virtually no one knowing they are being manipulated….” With the immense power Google currently possesses, it is capable of shaping the perspectives of citizens not only in America but all over the world. Moreover, ever since 2011, Google’s advances in its algorithms, ranging from Panda to Fred, have driven a number of corporations out of business.

In addition, Google, Amazon, Facebook, Apple, and Microsoft have together purchased over 500 companies in the past decade. Most of the emerging tech startups did not have the chance to compete and expand because as soon as they enter Big Tech’s “kill zone”, they are acquired. Meanwhile, a growing amount of evidence indicates that the concentration on these merger activities leads to lower productivity, lower income, and destroyed economic dynamism.

3. Should Google be regulated?

The power and control of Google over the market have turned into a controversial issue

and raised a question of whether the US government should break up the company in the way that it once broke up the railroad, oil, and steel monopolies. “Today’s big tech companies have too much power – too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation”, the Democratic senator and presidential hopeful Elizabeth Warren argued. In fact, some restrictions have already taken place in Europe, as Google confronted a $5 billion fine for alleged anti-competitive Android bundling and a separate $4 billion under GDPR case. Examining the devastating effects of Google’s jurisdiction on society, governments acceded that an action has to be established. However, the optimal approach is unclear since US foreign policy can impact society on a global scale and can be influenced by political factors.

Ending:

Google is considered a natural monopoly generally because its products and services are superior to those of its competitors in the industry. The company obtains a regular and solid customers owing to its strong brand popularity and is able to extract enormous amounts of data to generate larger amounts of revenue. Therefore, governments’ intervention in Google’s monopolistic power and its control of users’ data would extend the market’s efficiency, increase competition, and allow customers to acquire a variety of options.

Google Analytics is a free web analytics tool offered by Google to help you analyze our website traffic. It allows you to measure the results of individual campaigns in real time; compare the data to previous periods, and so much more. Even though “web analytics” sounds like a very small area of our digital presence, the implications of Google Analytics are in fact huge. It helps to understand our customers in detail such as by age or location which is very helpful to figure out who our core audiences are on the internet. This information is extremely useful and actionable which helps us to target our main consumer through digital marketing.

Google Analytics is a free tool that you can use to track data about the way visitors to your site associate with it and is much more functional and effective as compared to other paying tools. It is particularly helpful to optimize our marketplace. During a search engine optimization (SEO) campaign, we will need to use Google Analytics to track the performance of our keywords in order to have a successful campaign. We will be able to know how much traffic each of the keywords brings to our website. Google Analytics will open up a world of information we probably never knew about visitors to our site. Google Analytics allows us to set up goals to track when a user completes a certain action on our site. Regardless of how many users each channel is driving to our site, we need to know that this traffic is converting.

It also helps to discover what other keywords our visitors type in order to discover our website other than the core set of keywords that we are optimizing. During the initial optimization campaign, the number of keywords might be close to nothing but as time passes by it will begin getting more keywords being listed on natural postings due to our overall optimization effort. It also helps to identify which pages and links our visitors click the most and measure whether our optimization campaign is guiding the traffic to the right pages. It will also help us to know what number of new visitors our search engine optimization campaign brings to us.

Google Analytics also collects data traffic from MSN and Yahoo! search results other than collecting data about traffic from Google with respect to our site and uses it to strengthen our stronghold on the search platform. It also provides an analytic report which will have the capacity to fine-tune our website and do another copywriting on any page that isn’t changing over well. At last, it will bring you greater quality prospects, and in this manner increase more customers in the near future.

Google Analytics has a vast range of features that allows us to review the experience of users that are interacting with our website and content. These metrics monitor different aspects of the customer journey, showing how the customer has interacted. It provides stats against individual pages that provide us with a better idea regarding the performance of each page. Bounce rate (the percentage of visitors that navigate away from our website without interaction, after viewing only one page), Pages/Session (the average number of pages each visitor has viewed) and Average Session Duration (the average amount of time spent on the website by each visitor) are some important measures of Google Analytics.

Google Analytics allows us to monitor which devices our users are using which gives us some indication as to how well our mobile site is working in comparison to the desktop version. If we are receiving a similar amount of visitors from each platform but fewer conversions from one, there is some issue with that version of that site.

If we summarize the importance of Google Analytics, it allows you to track many important metrics, covering all aspects. We can monitor the effectiveness of our online marketing strategies, onsite content, user experience, and device functionality. All these statistics show us what is working well, and more importantly, what isn’t. Once you identify these issues that our site may have, we can create a solution. Google Analytics allows us the critical information needed to improve our website.

Introduction: Overview of why choose these companies:

Google is recognized as the world’s largest search engine company, with a large number of users around the world. It operates more than one million servers in data centers around the world, integrates global information, processes hundreds of millions of search requests every day, automatically ‘browses’ each web page, and scores them one by one. Users only need to input the search home page Keywords, Google search engine will find out the relevant pages with the highest score from the pages it visited, and display them in less than a second so that everyone can access and get the information they want.

Google has been able to grow into a company with a dominant share of the Internet search market, thanks to the effectiveness of the ranking algorithms used at the bottom of its search engine. The underlying system for search has managed to handle more than 88 billion searches per month. During this time, the main search engine has never experienced an outage, and users can expect query results in about 0.2 seconds. [googleblog.blogspot.com]

Main:

Design architecture part:

Google’s search engine is implemented in C or C++, which is efficient and can run on Solaris or Linux. In this section, we will give a high-level overview of how the whole system is designed as pictured in Fig.1.[引用]

In Google, Web crawling is done by severely distributed Crawlers. [文章] The function of the URL server is to send the list of URLs to Crawler, and then Crawler will send all the acquired web pages to the store server, and then the Repository will compress the webpages and store them in the database. When the system starts to parse web pages, because each web page has an ID number (called docID) associated with it, the parsed URL will be assigned that number. The indexer performs many functions that can read repositories, extract documents, and parse them. Every document is converted into the occurrences of a set of a word called hits. The hits are used to record words, and their position in the text, and estimate font size and capitalization. The indexer distributes these hits into a set of ‘barrels’, creating a partially sorted forward index. [文章] The indexer also has an important function, which parses all links in each web page and stores important information about these links in the anchor’s file. File information can accurately locate the location of each link and to. and the text of the link.

URL resolver reads the anchors file and converts the relative URLs to absolute URLs, then to docID. It puts the anchor text into the forward index, associated with the docID that the anchor points to. It also creates database links for each pair of docs. The links database is used to calculate the PageRanks of all documents.

The sorter takes the barrels, which are sorted by docID, and resorts them by wordID to generate the inverted index. [文章] This operation requires a little temporary space. The sorter also generates a list of words and offsets it into the reverse index. The DuffSimulink function generates a new dictionary for the searcher along with the LeX icon generated by the indexer. The searcher is run by a web server and answers queries using dictionaries built by DopCopION, inverted indexes, and PageRanks.

Scalability, availability, and security:

From the perspective of a distributed system, Google’s search engine is a fascinating case study, which can handle extremely demanding high demand, especially in scalability, reliability, availability, and security.

Scalability:

Scalability refers to the effective and efficient operation of distributed systems on different scales (from the intranet of small enterprises to the Internet). If the number of resources and users surges, the system can still maintain its effectiveness. There are three challenges to achieving scalability.

(1) Control the cost of physical resources

When the demand for resources increases, we should spend reasonable costs to expand the system to meet the requirements. For example, if a search engine server cannot handle all the access requirements, it is necessary to increase the number of servers in order to avoid performance bottlenecks.

In this respect, Google considers scalability in three dimensions:

1. being able to process more data (x)
2. being able to process more queries (y)
3. seeking better results (z)

From the data in the Introduction, Google’s search engine is undoubtedly very good in these aspects. However, in order to be scalable, other functions, including indexing, ranking, and searching, require highly distributed solutions. [引用书]

(2) Control the loss of performance

When the distributed system deals with a large number of users or resources, it will produce a lot of data sets. The management of these data sets has a great demand on the performance of the distributed system. In this case, the scalability of the hierarchical algorithm is obviously better than that of the linear algorithm, but the performance loss cannot be completely avoided.

Because Google’s search engine requires high interaction with users, it is necessary to achieve low latency as much as possible. Therefore, the better the performance is, the better the network search operation can be completed within 0.2S. Only in this way can Google make more profits from the sale of advertisements. The annual advertising revenue is as high as US $32 billion, which shows that Google is superior to other search engines in the performance processing of related underlying resources, including network, storage, and computing resources.

(3) Prevent the exhaustion of software resources

The search engine uses 32 bits as the network address. If there are too many Internet addresses, the Internet address will be exhausted.

For this, Google does not have a good solution at present, because if we use a 128-bit Internet address, there is no doubt that many software components need to be modified.

Availability:

The availability of distributed system mainly depends on the extent to which new resource-sharing services can be added and used by multiple clients. Because Google’s search engine needs to handle the highest requirements in the shortest time in web crawling, indexing, and sorting, availability is also a strong demand. To meet these needs, Google has developed a physical architecture (Fig.3)

The middle layer defines a general distributed system infrastructure, which not only enables the development of new applications and services to reuse the underlying system services but also provides integrity for Google’s huge code database.

Security:

There are many information resources with high value to users in distributed systems, so it is very important to protect the security of these resources. The security of information resources includes three parts: confidentiality (to prevent disclosure to unauthorized individuals), integrity (to prevent change or damage), availability (to prevent interference with the means of accessing resources)

When investigating the security of Google’s search engine, we found that Google has not been very successful in security, and even has publicly admitted to divulging user information to seek benefits, which also makes users use Google’s software, information security can not be guaranteed.

Google distributed file system

The implementation of the Google file system is to meet the rapid growth of Google’s big data processing and management needs. In addition to this demand, GFS faces the challenge of managing distribution and the risk of increased hardware failure. Ensuring the safety of data as well as being able to scale up to thousands of computers while managing multiple terabytes of data can thus be considered the key challenges faced by GFS. [引用文章2] So Google made an important decision not to use any of the existing distributed file systems. Instead, it decided to develop a new file system. The biggest difference with other file systems is that it optimizes the use of large files (i.e. Gigabyte to multi-terabyte), resulting in the majority of files being considered immutable, and can be read many times with only one write.

A GFS cluster consists of a single master and multiple chunk servers and is accessed by multiple clients. As shown in Fig. 4. (Figure summary [Vijayakumari, 2014] about GFS)

These machines are common Linux process machines that can run user-level server processes. As long as the user’s resources allow the block server and client to run on one machine at the same time. The stored files are divided into fixed-size blocks, each with a globally unique 64-bit chunk handle. [引用] Chunk servers store on local disks as Linux files， It can read and write at the same time. Chunk data is assigned by a chunk handle and data range. To improve GFS performance, every chunk needs to be replicated to at least three servers. The chunk master maintains the metadata of the whole GFS. In a certain period, the chunk master will ask every chunk server to upload the state through HeartBeat messages. Data-bearing communication, which does not need to be linked to the Linux Vnode layer, directly connects to the chunk server. Neither the client nor the chunk server caches file data. This approach without storing data not only avoids the inability to cache because the working set is too large but also makes the client and the whole system consistent. The buffer of Linux stores all the frequently accessed data in memory, so chunk servers do not need to cache file data, which greatly improves the performance and speed of GFS.

Communication protocols:

The setting and selection of communication protocols are very important for the overall design of a system. Google adopts a simple, minimal, and efficient remote call protocol. Communication of the remote call protocol requires a serialization component to transform the procedure call data. So, Google developed a protocol buffer, which is a simplified, high-performance serialization component. Google also uses a separate protocol to publish and subscribe.

Protocol buffers:

Protocol buffers focus on data description and subsequent data serialization. It wants to provide a simple, efficient, extensible way to specify and serialize data independent of language and platform. The serialized data can be stored, transferred, or in any scenario that needs to serialize the data format. There are three reasons why Google chose to use protocol buffers. As shown in Fig.5. The disadvantage of Google’s design is that it’s not as expressive as XML.

Publish-subscribe

Because protocol buffers cannot fully meet Google’s requirements for communication, the designer also uses publish-subscribe. It can ensure that distributed events can be sent to a large number of potential customers in real-time and reliably. The main reason it is used is to support Google’s advertising system. Google’s publish-subscribe uses a theme-based approach that emphasizes reliable and timely delivery. In this way, although communication can be effectively implemented, it will cause additional overhead.

Key finding:

Google search engine can achieve the fastest speed and the most efficient retrieval mode without taking up too many resources, no matter the distributed system architecture, the way of management scalability, availability, and security, or in the way of communication. I think the core technology that Google search engine can complete the whole retrieval requirements in 0.2S is Google’s unique distributed file system.

At the stage of Google’s design of the Google file system, the goal is to provide redundancy for the storage of massive data on cheap but low-reliability computers. Because the distributed file system Google wants needs to meet the application and workload of Google, the designer designed the Google File System (GFS) on the premise of high component failure rate, high throughput, and low latency. The framework and basic operation of GFS are introduced in 3.1. It can be seen that the biggest difference between GFS and other distributed file systems is the use of a single primary device. Because the traditional distributed file system will have a single point of failure and throughput bottleneck. In order to avoid these failures, GFS weakens the main device and never moves data (excluding metadata), and establishes a cache on the server. Only when the data changes, can the primary device agent replicate the data. Although the design is simple, it is good enough.

At the same time, the system has high fault tolerance. In the event of a system error or failure, the primary device and block server can be restarted in a few seconds, and there are at least three replicas for block replication. In addition, the main device is hidden.

GFS also has some problems with reducing efficiency. At present, Google has more than 450000 devices, but only 1 / 3 of them are really effective. This brings Google a lot of extra costs, extra energy, and extra space. I think that since GFS can achieve high performance at a low cost, the next problem to be solved is to reduce unnecessary costs.