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Introduction
Google Incorporation is one of the leading internet-related firms that operate in the global market that has been in operations since 1996. The case study reveals that this company has achieved success in the market because of its unique strategic plans it has been using in the market for the last one decade. A critical analysis of the firm reveals that it is using a number of grand strategies to achieve competitive edge over its market rivals.
Product development is one of the grand strategies that this firm has been using over the past few years. Google Inc has highly diversified its products in the market as a way of expanding its sources of revenue. Market development is another grand strategy that has given this firm a competitive edge over its market rivals. After achieving success in North American and European markets, this firm made a successful entry into the Chinese and African markets.
According to Peteraf and Thompson (2015), innovation is another very important grand strategy that firms are now using to gain competitive edge over their market rivals. This company has achieved success because of its team of highly talented and innovative employees. The firm has come up with new and highly innovative products in the computer software market that has posed serious threat even to the established players in this industry such as Microsoft.
The management has always been encouraging innovation among its employees through its reward system. This firm has also used generic strategies to achieve success in this competitive market. The firm has been using differentiation as a way of making its products unique from that of its market rivals. In this paper, the researcher will critically analyze the strategies used by Google Inc in the market based on the case study provided.
Strategic Issue
The case study identifies a number of strategic issues that Google Inc is facing in the market as it struggles to gain competitive edge over its market rivals. It is clear that this firm has been using acquisition as one of its main strategies of expansion. However, not all its acquisitions have been a success. The acquisition of YouTube in 2006 was expected to bring instant success in terms of revenues generated from advertisements.
However, the case reveals that it took longer than expected to start generating desired revenues from this newly acquired product. According to Peteraf and Thompson (2015), the acquisition of Motorola Mobility in 2012 was also seen as a strategic move by this firm that would enable it to enter the computer and Smartphone hardware market. However, this actually put it in direct market rivalry with one of the most successful firms in this industry, Apple Inc.
It meant that Google had to find a way of convincing its clients that its products offered superior value compared to that of Apple Inc, a brand that has a huge base of loyal customers who believe in its high quality products. The decision to expand its line of products in the software industry also put it in direct competition with Microsoft which is currently the market leader in this industry. Its attempt to enter the social media market through Orkut social network and Google+ also did not succeed as per the firm’s expectation.
The management of Google expected instant success in China as it targeted its 300 million internet users. However, it came to realize that the market was dominated by Baidu which had a loyal customer base that was not willing to switch to a new search engine. The close control of this industry by the Chinese government has also been an issue for this firm. This has slowed its ability to expand rapidly in this attractive market.
External Environment
When developing marketing strategies to enable it achieve success in the numerous markets that it has entered, Google Incorporation will need to understand the external environmental forces that may affect its operations in the market.
According to Gamble, Peteraf and Thompson (2015), understanding the external environment makes it easy for a firm to identify the forces that may bring opportunities and forces that may bring threats in the market, and how to deal with them in an effective manner. When analyzing the external environment, it will be necessary to start by looking at the industry life cycle.
Figure 1: Industry Life Cycle
The internet industry is still growing, but it is now approaching the maturity stage. Over the past two decades, this industry has experienced phenomenon growth. However, this is now slowing down, a sign that it is approaching maturity. The case reveals that firms in this industry have been keen to expand their operations globally as a way of expanding their market share because of the maturity of their home markets.
Google Inc was forced to expand to China because its market share was not significantly growing in the American and European markets. It saw new opportunities in China and neighboring countries. On the other hand, Baidu also noticed that its Chinese market would not offer it significant growth in market share, especially after the entry of Google into the local Chinese market.
It acted very quickly to expand its operations to American and European markets. Google Inc is also approaching the maturity stage in this life cycle given that it is the industry leader in the global market.
Key success factors
The case study clearly reveals that Google Inc is entering a highly competitive business market. Some of its new rivals in the market are firms that have registered success for so many decades with brands that are very popular. Apple Incorporation and Microsoft Corporations are firms that have been very successful in their respective industries.
However, this does not mean that Google Incorporation has no chance of beating these firms in their respective industries because it has been just as successful as these two firms. The marketing team will have to work as a unit in taking advantage of the key success factors that can enable this firm gain competitive edge over its competitors.
One such competitive factor is its team of skilled and dedicated employees. This company is known to be very keen in attracting and retaining its highly talented employees. This talent within its workforce will enable it come up with unique products that can outsmart those offered by the market rivals.
The talent will also be very important when it comes to developing promotional strategies. In the current competitive market, successful firms are those that have mastered the art of marketing. Firms that know how to pass a promotional message to the target audience without making them feel irritated are the only ones that can be successful in the market. This company has the right team to achieve this objective.
The leadership of this firm is also a key success factor. The management of this firm has remained highly flexible when it comes to implementing new trends that emerge in the market. Most of the new lines of products offered by this firm were creations of a section of the employees of this firm.
The management has been keen to identify and develop creative ideas among its workforce. It has provided the right environment for the employees to be creative in what they are doing. The expanding middle class in the global market, especially in China and India, is worth noting as a factor that may bring success to this firm if effective marketing strategies are developed to reach out to them.
Strategic group map
Strategic group map analysis may further help in defining the position of this firm in the market. Based on the case study, Google Inc has majorly focused on two areas which are product diversity, geographic coverage. Over the years, this firm has expanded its product offerings beyond the search engine.
It now offers a wide variety of computer software and hardware products. It has also expanded its geographic coverage beyond the United States. The firm realized that this is the best way through which it could expand its market share. Its products are now available in the global market. Google search engine is currently the most frequently used engines in the world, having made a successful entry into the African market despite the problems it faced in the Chinese market. The map is given in appendix 5.
Industry Analysis
When developing a strategic plan it is always important to critically analyze the industry’s attractiveness to determine the ways in which its opportunities can be tapped. After understanding the general external market, this section now narrows down to the specific industries that Google Incorporation is operating in to determine its forces that may affect the firm’s competitiveness. Porters’ Five Forces is very useful at this stage.
Five forces analysis
The first factor that the marketing manager must focus on when analyzing this industry is the competitive rivalry within it. As Gamble, Peteraf and Thompson (2015) note, the level of competitive rivalry will always determine the right strategies that a firm can take in order to remain successful. In the search engine market, Google Incorporation has already eliminated major threats, especially after a successful entry into the Chinese market.
However, the entry of this company into the computer software and hardware promises to be the greatest challenge that this firm will have to deal with, especially in the local market in the United States. In the hardware market, Apple Incorporation is currently the market leader.
This firm has been known for its high quality products. The brand is known to offer the best in this industry in terms of quality. Many firms such as Samsung have tried to compete against it, but what they have succeeded in doing is to produce large quantity products that target the lower market segments that are always keen on purchasing low-priced products.
In the software industry, Apple Incorporation and Microsoft Corporations have been the giants that have dominated the market for the last four decades. Google Inc will be a junior player in these two industries. As such, it should be keen to avoid price-wars in these new markets because the industry leaders have a better opportunity of wining such wars.
Threat of substitute products, according to Gamble, Peteraf and Thompson (2015), is always another issue that a firm has to put into consideration when developing the marketing strategies to boost its competitiveness. An industry that offers numerous substitute products is as dangerous as an industry that has numerous players.
In the search engine market, this threat is relatively low. However, the software market has a number of substitute products that one can use. Google can manage this threat by ensuring that its products are always of higher quality than what the substitutes offer.
Threat of new entrants is real in all the industries where this firm operates. Technology is transforming the world and it is also creating innovators and inventors across the world. The emerging technology makes the market highly unpredictable, and this means that this company must always be ready to deal with threats of new entrants in the market. The firm will have to remain very innovative and flexible in all that it does in the market.
Bargaining power of buyers in the market may sometimes be considered a challenge, especially if clients have the power to dictate the prices of the products in the market. It is a fact that the market where this firm operates is highly competitive. However, the bargaining power of the clients has remained low, especially in the computer software and hardware markets. This is an important factor that should inform the marketing strategies that Google Incorporation will use.
For instance, the bargaining power of the buyers is always eliminated when they are offered a product that exceeds their expectations. When customers realize that products they are buying have features that are incomparable to what others offer in the market, they always tend to be willing to pay more for the products. It means that this company will find a way of delivering unique value to all the products it has in the market.
Finally, it will be important to look at the bargaining power of the suppliers. According to Gamble, Peteraf and Thompson (2015), when suppliers have a greater power to dictate terms of trade, then this may affect the profitability of a firm because the suppliers would always want terms of trade that is highly beneficial to them.
In the computer hardware market, this problem is real given that some of the components used in developing these hardware have to be imported from other parts of the world. This firm will need to form a strategic alliance with all its suppliers in order to reduce or even eliminate this threat in the market.
Industry Profile Attractiveness
It is necessary to analyse the attractiveness of the industry where Google Inc operates in order to determine how it can take maximum advantage of it. In the United States and China, the population of the middle class and upper class members of the society have been on the rise in the past one decade.
The same case has been witnessed in many other countries where this firm operates. Despite this attractiveness, the management of Google Inc needs to understand the fact that this industry is very delicate. The market is very sensitive due to stiff competition. A little mistake may result into a major shift, and this may affect the sustainability of the firm.
The current industry leaders in the computer software and hardware products such as Apple Inc and Microsoft have gained market trust, and it will require effective marketing and production strategies to compete with them favourably in the global market.
Company Situation
At this stage, it is clear how the larger external environment and the specific industries where this firm operates looks like, and the steps that this firm will need to take to manage these external forces.
In this section, the focus will be narrowed down further to the specific firm to understand its situation and ability to manage the forces discussed in the section above. This section will also look at various strategies that this firm can use in the market to deal with various forces discussed in the sections above. To critically analyze the internal environment, it would be necessary to use SWOT analysis.
The strength of this firm lies majorly on its team of innovative employees. The main driving force of Google Incorporation is innovation. The firm started as a search engine company that offered its users superior value compared to what was offered by other market rivals. This catapulted it to be the leading search engine company in the world. The innovative team of employees has worked very hard to come up with an array of products that this firm can offer to the market.
That is why Google Inc is currently operating in a number of industries. The flexibility of the top leaders of this firm has worked to its advantage. The top leaders of this firm has maintained a close relationship with the employees to ensure that whenever they have a new idea, the idea is quickly developed into a new strategy or new product that can enable this firm to achieve greater success. Products such as Google TV emerged out of such creativity and close relationship between the management and employees.
The case study reveals that Google is keen on imitating some of the successful products in the market. This is a major weakness that the firm will need to fight. For instance, the firm came up with Google+ in 2010 to offer products that were very similar to what Facebook was offering. However, it never achieved any significant success despite the resources that were used in promoting it.
The product lack originality and the firm lack the vision of pushing it to become a major platform as successful as Facebook. The firm has now entered the computer hardware market that is currently dominated by industry’s giants such as Apple Inc. Only time can tell if this new product line will be successful. The firm should try to avoid this mimicking strategy and instead become creative in the market.
The market has a number of opportunities that this firm will need to take advantage of both locally and internationally. From the case study, it is clear that China has about 300 million people who are actively using the internet. This is a massive opportunity to grow, especially if it can manage to come up with products that will outsmart Baidu that is currently dominating the market.
The expanding size of the middle class in North America and the rest of the world is another major opportunity because this means that more people are economically empowered to use the products offered by the company. Most of the products offered by this firm are more appealing to people who have some level of literacy. This population is rapidly increasing in the global market, increasing the number of those who will find products of this firm relevant to them.
The local and international market has a number of factors that are a threat to the success of this firm. From the case study, the biggest threat of this firm is the level of competitive rivalry in the local market. The decision of the firm to start developing computer and Smartphone hardware makes it a direct market rival of Apple Inc, a major player in this industry.
Its successful entry into the software industry makes it a competitor of Microsoft. These two giant firms have proven that they know how to manage competition, especially the rivalry that comes from the emerging firms. These two firms are expected to offer very stiff competition to this company in the local market.
Grand strategy
The grand strategy that Google Incorporation is currently using in the market is majorly based on the premise of diversification. For the first ten years of its market entry, Google Inc was keen on developing its competitiveness in the search engine market. Most of its revenues were generated from the advertisement as it won the trust of the national and international community as the most reliable and efficient search engine.
However, this firm has changed this strategy and it is currently keen on diversifying its products. The diversification strategy has been made possible by two main approaches. The first approach is acquisitions. As this firm strives to diversify its sources of income, it has acquired a number of firms such as YouTube, Motorola-Mobility, and Double Click. Google Inc acquired these firms to enable it expand its sources of income.
The other approach that has helped in diversifying its product lines is strategic alliance. In instances where this company realizes that it cannot purchase a given company that it desires, then it is always willing to enter into strategic alliance with them. That is how it was able to come up with Google TV after forming an alliance with Sony, Intel, Adobe, Logitech, and Networks. This alliance has been beneficial in promoting the capacity of this firm to deliver better hardware in the market.
Product development
It is clear from the case study that Google Incorporation has decided to diversify its products. This means that it has a number of direct market rivals and this increases the competitive rivalry in the market. To manage this market rivalry, this firm will need to differentiate its products in the market by enhancing some of their features to be better than what the competitors offer. All the products of this firm should be designed to be unique in terms of delivering value. This will make them successful in the market.
Market development
The current market position of Google Incorporation requires it to develop effective strategies that would enhance its competitiveness. This can be done on the basis of the 4 Ps of marketing mix elements. The product element has been discussed in the section above. As stated above, this firm will need the products that are superior and differentiated from what others offer in the market. Having superior products will give it a competitive advantage over its market rivals.
The firm should be very cautious when pricing its products in the market. The pricing strategy should attract the target clients, but it should not provoke a possible price war in the market because this may be very disastrous. The product of this firm should be readily available in the places where clients expect them to be, especially the software and hardware products. The promotional strategy used by this firm should use both the social and mass media platforms to reach a wider segment of the market.
Conclusion and Recommendations
It is clear from the case study that Google Inc has achieved massive success over the past decade due to management strategies that not only focuses on diversification, but also delivery of high value products to clients. It was not an easy decision for this firm to challenge some of the most successful technology-based companies such as Microsoft Corporation and Apple Incorporation. The progress of this company in the software market has generally been a success.
The stiff competition from the market leaders did not deter it from making progress. However, its ability to be successful in the computer hardware market is yet to be determined. As it seeks to achieve greater success in all the industries where it operates, Google should consider taking into account the following recommendations.
Generic strategy
Porter’s Generic Strategy offers a number of options that a firm can use to achieve competitive advantage in the market. Each of these options fits into various contexts based on the position of the firm in the market and the variety of products that a firm offers.
This company now finds itself in a situation where it has to find an effective competitive strategy because its market rivals are now ready to deal with the new competitive market condition. Its diversification clearly shows that the strategy will have to put into consideration a number of factors in order to achieve the intended outcome. Under this generic strategy, there are three options available for the firm as shown below:
Cost leadership
Cost leadership strategy involves setting friendly prices on products in order to attract customers. Under this strategy, Google Inc may need to charge a below-market average price for all its major products as a way of gaining competitive edge over its market rivals. Using cost leadership is not possible for this firm, especially in the computer hardware and software market where there are established market leaders.
The market leaders have the experience and financial muscle that can easily make them win such wars if this company chooses to use the strategy. However, this strategy may work in the search engine market where it is the market leader. As a market leader, it has the power to adopt the strategy, especially when the aim is to fight off new entrants or weaker competitors.
Focus strategies
Focus strategy is always considered appropriate for small companies that are keen to avoid upsetting the market for fear of eliciting stiff competition from the market leaders. It always enables a firm to enter a given market in a quiet way and sometimes without the knowledge of the industry leaders. For Google Inc, this strategy may not be applicable because it is a large firm with clearly defined competitors. This strategy should, therefore, be avoided.
Differentiated strategy
The best strategy that this firm can use is differentiation. The stiff competition in the market requires a strategy that will enable Google Incorporation to achieve uniqueness in the market. It means that this firm will have to differentiate its products from those of the market rivals in order to make them unique. This strategy enabled it to become an industry leader in the search engine market. This strategy may enable it achieve success in the other markets despite the threat of stiff competition it faces from the industry leaders.
Objectives
The objective of these strategies is to create a competitive advantage for Google Inc that will enable it to manage the threats it is currently facing in the market. The strategies seek to find the best ways in which this firm can ensure that its products are successful in the market without jeopardizing their profitability. If implemented properly, these strategies should make the products offered by this company different from that of other market rivals in terms of value they give to the customers.
Strategic justification
Google Incorporation has taken very ambitious projects which may pose serious financial consequences if they fail to work as per the plan. The investment made in the software and hardware projects is significant, and the marketing team at Google must ensure that it is successful. That is why this strategic marketing plan is very important. It will determine the ability of this firm to continue on its successful path even after taking this risky but ambitious plan that promises a lot of prosperity.
Appendices
Appendix 1: Porter’s Five Forces
As shown in the Porter’s Five Forces figure above, Google Inc must find a way of dealing with the five strategic issues in this industry to achieve sustainable growth.
Appendix 2: SWOT Table
Appendix 3: Financials
Appendix 4: 4 Ps of Marketing
Appendix 5: Strategic Group Map
Reference
Gamble, J., Peteraf, M. & Thompson, A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage. New York: McGraw Hill.
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