Google Online Internet
Google, Inc. is the world’s taking on-line hunt engine company founded by Larry Page and Sergey Brin while they were pupils at Stanford University and the company was foremost incorporated as a in private held company on September 7, 1998. Google’s concern is related to Internet Search, web-based emailing, on-line function, office productiveness, societal networking and picture sharing every bit good as advertisement services like Adwords and Adsence.
Founded at Menlo Park, CA on September 7, 1998 and now has caput quarters at Mountain View, CA ( “ The Rise of Google ” . USA Today ) . It is the largest American company ( by market capitalisation ) that is non portion of the Dow Jones Industrial Average ( as of October 31st, 2007 ) . Google presently has16,805 full-time employees and Eric E. Schmidt, is the current CEO/Director of the company. Google is now traded on both NASDAQ and LSE.
The first Google ‘s IPO took topographic point on August 19, 2004. 19,605,052 portions were offered at a monetary value of US $ 85 per portion. The Google is the largest trading company on NASDAQ index with a gross of US $ 16.593 billion, net income of US $ 4.203 billion, entire assets of US $ 25.335 billion and entire equity of US $ 22.689 billion ( Financial Data Quest, 2007 ) . Google is listed as top 5 companies traded on NASDAQ with entire volume as 6,557,543.
Google gets its name from the word “ Googol ” which is the mathematical term for a 1 followed by 100 nothings. Google is the most used hunt engine on the web with a 53.6 % market portion, in front of Yokel! ( 19.9 % ) and Live Search ( 12.9 % ) doing Google has a market leader.
The chief gross for Google, Inc. is the advertisement application launched by Google called Adwords, where 1000s of advertizers advertise at that place merchandises and services. Started in the twelvemonth 2000 Google Adwords is treated as flagship advertisement merchandise and chief beginning of gross. It offers Pay Per Click ( PPC ) advertisement, and site-targeted advertisement for both text and streamer ads. Google has enormous competition in the industry with Yahoo, Inc. , MSN, AOL and others. Google, Inc. is vaulted to more than 6 Billion $ gross revenues last twelvemonth ( Business Week, Estimation 2007 ) .
Google besides faced a figure of Law suits for Violation of hallmark jurisprudence and Click fraud. Google settled a chink fraud case for US $ 90 million. In April 2002 a company called Overtune Services, Inc. ( A Yahoo Company ) sued Google for patent violation for establishing Adwords. Google holding to publish 2.7 million portions of common stock to Yahoo! in exchange for a ageless licence under the patent. ( Google, Yahoo bury the legal tomahawk, Stefanie Olsen, CNET News.com, August 9, 2004 ) .
II. Firm’s Current Situation – Internal Analysis
Strengths of Google, Inc: Google is the current market leader with more than 53 % portion in the Search Engine and advertisement industry, the factors that made possible to get this place are:
Technology: Google uses high defined user terminal engineering such as unfastened beginning hunt, which enables easy and crisp hunt to clients. Google uses high velocity waiters which can undertake 1000000s of hunts a minute. The engineering used by Google is besides used by NASA and US Defense. This type of engineering aid clients to happen relevant replies for there questions online, doing Google the most sure dependable hunt engine in the universe.
On-line Ad: Google’s online advertisement is the chief strength for bring forthing gross, Adwords is a prime service offered by Google for its on-line advertizers. Through which one can market at that place merchandise or service. After the Click Fraud Law suit Google has formulated the new processs for Adwords. Advertisers chiefly attract to Google Adwords even though there are many wage per chink advertisement webs.
Employees: Google employees are extremely trained in proficient facets and on working processs. Google had more than 16000 full clip employees in more than 50 states working 24/7. The HR policies and work environment at Google is good designed for longer keeping and extremely productive from the employees. Google besides listed in Fortune 500 companies and the Best topographic point to work, with employees as strength Google is treated and trusted trade name online.
Research and Development: Google with high user terminal engineering which requires uninterrupted Research and Development. Google has separate R & A ; D division which involves execution of new invention of different concern theoretical accounts. R & A ; D of Google is doing Google to remain in front of its rivals. ( R & A ; D power of Google, Google Guide, 2006 )
Acquisitions: Google has acquired several little start-up companies frequently dwelling of advanced squads and merchandises. Google acquired companies like Upstartle, Pyra Labs and Youtube which made Google to establish more innvovative merchandises to the market. Acquisitions of Google are treated as of import strength of Google.
Weakness of Google, Inc: Turning concern and strengths of Google besides resulted in failing for the house, even though Google is regarded as World’s top Search Engine.
Investors: Google Investors are non happy with the public presentation of portions in the company, says the research of The Economist in 2007 its found that Google Investors are non happy with the Google jurisprudence suits with the instances of trade grade and chink fraud which turned Google to pay more than 160 million $ as a mulct. Investors are besides concerned about the low pricing of the stock from last 2 months.
Copyright: Google ‘s concern relies on working content the company does n’t have. To technophiles and those who understand the flow of attending and Web traffic, Google is nil but a extremely effectual usher to the natural states of Internet content says “Mark Cuban and Howard Stern, 2007” Google admitted its exposure late in a recent SEC filing in France tribunal. Adverse consequences in these cases may ensue in, or even oblige, a alteration in Google patterns which could ensue in a loss of gross or even which could harm concern.
Low Wage Disputes: Recently Low pay differences are originating among the employees of Google, Inc. It is said that a system decision maker get 35,000 $ as annually salary in Google, when compared to its rival Yahoo pays around 50,000 $ as annually wage for the same place. These issues may go forth Google with low productiveness and low keeping periods of the employees. ( Google Wage Survey and Disputes, 2006 )
B. Evaluation of Strategic Position
1. Key Success Factors: Drummond pointed the Key Success Factors ( KSF ) . David Drummond, Google ‘s General Counsel, in his presentation at Stanford Law School explained the cardinal factors for success of Google, Inc.
Technology: Along with its advanced attack to page ranking, Google is a purpose-made hardware company, constructing all its ain waiters from constituents it buys straight for their makers. Harmonizing to Drummond, Google now operates the universe ‘s largest distributed computing machine system.
Business Model Invention: By honing the nature of targeted ads, Google non merely has created a extremely effectual gross generator, it has produced what it hopes to be a better experience for its users. It is Google ‘s end to do their targeted ads at least as relevant and utile to users as the hunt consequences themselves.
Trade name: Harmonizing to Drummond, a European survey late determined Google to be the figure one most recognized worldwide trade name. Indeed, Google has become a verb ( I ca n’t wait to acquire place and Google him ) which poses existent challenges to a company seeking to protect the strength of its grade.
Focus on The User Experience: Merchandise determinations at Google are driven by optimising for the user experience foremost and for gross second. The folks at Google steadfastly believe that the better the user experience, the more easy money will follow. ( David Drummond, Google ‘s General Counsel, address at Stanford Law School, 2007 )
2. Distinctive Competencies of Google, Inc:
Marketing Manner: Google adopts a alone selling manner which leads chances into possible clients ; this originative activity is developed by a squad of experts at Google, Inc. driving 1000000s of gross revenues in Adwords. Its trade name image and public presentation in on-line advertizement made Google as leader in the market. Google keeps on altering its selling scheme harmonizing to economic and political fluctuations in the market.
High Website Indexing: Google has the largest web site indexing into its hunt engine, doing it the most popular and frequent user hunt engine in the universe. Google performs exact hunt harmonizing to the page rank. High Website Indexing is a cardinal competence that made Google the market leader.
New Business Development: Google is now researching different other concern like nomadic engineering and other online concern, CNET intelligence late announced that Google is already started proving a action performed advertisement system, for which advertizers will do a haste. ( CNET, Google New Entry, March 2007 )
Google is turning at an dismaying rate. Google ‘s initial public offering took topographic point on August 19, 2004 with a sum of 19,605,052 portions were offered at a monetary value of $ 85 per portion. The sale raised US $ 1.67 billion and gave Google a market capitalisation of more than $ 23 billion.
The company is listed on the NASDAQ stock exchange under the heart symbol GOOG. The current market monetary value of the portion was 430 $ . Google has touched its all clip high of 730 $ in Nov-Dec 2007 and once more came down to 400 $ due to market fluctuations ( Investopedia, Google Index ) .
Form 10-K of Google, Inc. presented to public on 1stMarch, 2007 says “Google is traveling to establish some other web based applications for web advertizers, which will duplicate the income of Google” besides announced the launch of Google Checkout a new on-line payment system. The studies present income of Google, Inc. for 2004 – 20.4 billion $ , 2005 – 34.9 billion $ , 2006 – 37.8 billion $ and 2007 – 44.6 billion $ at the rate of alteration increasing twelvemonth by twelvemonth by more than 10 % . By analyzing the rate of growing of Google, Inc. is traveling to traverse its 50 billion $ grade next fiscal twelvemonth doing it as the best investing option. ( Google 10-K, Yahoo Finance )
Current Market: Google holding more than 53 % of the market portion and leader by no uncertainty holding the best current market on NASDAQ. The demand for Google portions is really high, because of the bullish market and the growing of the company. ( Parker James, Analyst Finance2007 ) .
Since the origin of portion in the market the stock public presentation is hiking, from 85 $ to 430 $ with in merely three old ages of public presentation. Stock public presentation is the chief strength of the company because it maintains good relationships with investors. Analysts say that Google is traveling to lift by 15 % annually. ( Money Control Analysis, 2007 )
Liquidity Ratio: Liquidity ratio can find the significant stableness of the company, Google short term solvency ratio ( Liquidity Ratio ) is strong and clearly indicates significant growing staying for future old ages shown in chart below.
The fiscal ratios of the company show changeless addition in the past three old ages, which is the significance of companies growing, Google uninterrupted to turn by implementing new applications and methods to its working processs.
Analysts say that these profitableness ratios are the key to success of the house. Google’s gross net income border is expected to remain at a degree of approximately 60 % over the following 20 old ages. Furthermore, the net income ratios show that in 2026, Google is expected to hold a return on assets of merely 8.6 % , and a return on equity of 9.0 % , important lessenings from current figures. ( Matt Decuir, 2008 )
Google projections are estimated as addition in gross revenues as $ 25.726 billion in 2008, and $ 39.791 billion in 2009. The portion market tendency is besides in favour of Google. The public presentation of the average monetary value in 5000 tests was $ 719.65, while the average portion monetary value was $ 476.85. In 2007, Google replaces Coca-Cola as the most competitory company, but non merely because of its trade name. Harmonizing to consumers, the Google trade name is merely one beginning of its economic and consumer advantages. ( Top 40 Most Competitive Companies in 2007 at www.wratings.com )
III. External Environment: Opportunities and Menaces
A. Strategic Group Maps: Google histories for about 50 % of the market portion of all hunts on the cyberspace ; it has a few chief rivals. Yahoo is the biggest rival by far, at around 28.5 % but Microsoft isn’t excessively far behind with 10 % , while other rivals include Ask.com and AOL, which both hold around 5 % market portion. Yahoo has already started establishing same advertisement applications that Google have and even more technologically advanced.
Yokel and MSN are decidedly a concern for Google, because of the high terminal engineering already Yahoo and MSN have already launched beta version of web applications.
B. Social Environment:
Economic: Analysts predict that with over public presentation of Google in the stock market may take to devaluation of portions and may free investor attending. With back uping economic reforms all over the universe hunt engine industry is looking for an advanced alteration.
Technological: Google uses high terminal technological web applications. Recently Google besides announced that its researching on action performed advertisement. Yahoo and MSN have already gone base on balls Google in establishing beta version of web applications. Search Engine companies are doing experiments on different advertisement systems.
Political-legal: Google already faced a figure of jurisprudence suits for go againsting trade grade and cyber security. Google paid 194.65 million $ boulder clay now for working legal Torahs. Click fraud has shocked the full industry doing it a legal issue. Political and Legal reforms have changed the working of hunt engines.
Socio-cultural: Since Google and other hunt engines are unfastened terminal hunt engines, they are opened for erotica and other chancing. Many societies and civilization are doing these sites unworthy. China banned Google hunt in schools and other countries. Socio-cultural factors are besides advantage for the hunt engine as they can index relevant civilization pages and acquire noticed.
Demographic: Google has low trade name value in some states where as Yahoo hunt is used chiefly. In United States Google as became a common word, doing it the largest used hunt engine in United States. Children get downing in cyberspace have a common name on there head Google.
C. Task Environment – Porter’s Five Forces:
Rivalry among viing houses: Rivalry among companies is used to hold new inventions, and alteration direction process and others. Result as medium
Menace of new entrants: New entrants have a really little market in the beginning of there origin. New entrants will go on there concern for acquiring trade name name and user entree. Market performing artists will get such companies many times. Result as low
Dickering power of purchasers: A purchaser is a possible mover of the concern, most valuable plus of the company. Buyer is one who generates gross revenues and net income for the company. Result as high Bargaining power of providers: A provider is besides regarded as the chief entity in a concern map. Suppliers are besides associated with the company for bring forthing gross revenues and gross. Result as high.
Menace of replacement merchandises or services: Utility merchandise can take out gross revenues of the merchandise. For illustration: Adwords gross revenues have decreased with the launch of Yahoo hunt selling. Google have updated the Adwords by supplying excess benefits. So utility merchandises or services are of import for driving competition among companies. Result as high.
IV. Key Issues
Bing a market leader now Google has many troubles in retaining the trade name name and value of the company
Employee satisfaction: Low rewards for Google employees may diminish the productiveness and take the company to losingss.
Click fraud: Click fraud is now an international issue that Google should hold as a cardinal issue.
New Inventions: Google should go on R & A ; D on assorted web based applications, so that Google will be a competent participant in the industry.
Customer service at glimpse is the generic scheme I recommend to Google, because in hunt engine industry and on-line advertisement the companies need repeated clients. Making the client as possible client is more of import. A perennial client provides profitable concern to the company.
Important Schemes and tactics that Google should use:
- Geting little companies in web based advertisement will be the of import scheme. This makes Google to increase its gross and market portion.
- Since 99 % of the gross of the Google is generated by Adwords, pulling clients by offering them free entree ( non recognition bound ) to the members countries would be of import tactic. This makes the client to repeatedly depend on the concern.
- Launch of advanced web applications like online accounting package and Human Resource package would be an of import option to seek a new market.
Rationale behind all determinations: Since Google is a market leader and a advanced company, it should besides seek in new markets like online package and other web applications. My sentiment is Google already had a trade name name which is popular universe broad, so come ining or making a new market is truly profitable for the company.
- Google Financial Data, 2007 – www.investopedia.com
- Top 40 Most Competitive Companies in 2007 at www.wratings.com
- Money Control Analysis, 2007 – Advanced Company Research
- Google Stock Index – www.moneycontrol.com
- Google fiscal history – Matt Decuir 2008
- Google 10-K policy 2007 Google 10-K, Yahoo Finance
- Search Engine indexing – CNET, Google New Entry, March 2007
- “The Rise of Google ” . USA Today
- Charts of Google, ADVN Financial, 2007
- About Google – www.google.com/about.html
- Google Click Fraud and Law Suits – The dark side of on-line advertisement. “Business Week”
- “ Truth in advertisement ” The Economist, November 23, 2006.
- “How Click Fraud Could Swallow the Internet. ” Wired Magazine, issue 14.01 ( January 2006 ) .