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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 worlds 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: Googles 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 companys 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 companys 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 Googles business model.
Environmental Factors: Googles 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 Alphabets 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 Alphabets 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.
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