Google Brand Strategy Essay

This paper will give you an inside look as to how Google Inc. has evolved into a multi-billion dollar empire since it was first developed in 1996 by two Stanford University graduates working out of a garage. The paper will also compare Google to its strongest competitors in the search engine, web advertising and mobile phone industries. The paper will also reveal what the key elements to success are in those industries. The paper will also detail the resources and key competencies that Google has to make them the leading internet search engine with over 60 percent of market shares. The paper will also discuss the business model and strategies used by Google to help them become one of the fastest growing companies in history. The paper will also touch briefly on some of the threats and weaknesses they face in the marketplace. The paper will also include a recommendation to Google’s top management to help them sustain its competitive edge and financial success in the industry. Background History and Company Growth In 1996, Stanford students Larry Page and Sergey Brin teamed up to develop a new search engine they named BackRub. They chose this name because of the engines ability to rate websites in relevancy based on metatags and keywords. Backrub was quickly gaining popularity and in 1998 Yahoo’s cofounder, David Filo talked Brin and Page into leaving school to put their focus making Backrub a major part of Yahoo. Backrub was later named Google, which was taken from the word googol. Googol is mathematical term for a number represented by the numeral 1 followed by 100 zeros. The founder of Sun Microsystems was the first person to invest in Google with $100,000 in August of 1998 which raised $1 million by the end of September. Google was named â€Å"Top 100 Web Sites and Search Engines for 1998† by PC Magazine and was recorded successes at record pace. Google saw potential for profits in other segments of the market and made innovative ideas to gain market share. In 2000, their innovations included wireless search technologies, search capabilities in ten languages, and Google Toolbar browser. Google expanded its product line again in 2004 with the launch of Google News, Google Product search, Google Scholar and Google Local. Google’s index of web pages also grew to more than 8 billion and increased its country domain to more than 15. Google then entered the mobile phone market in 2004 when they created a feature allowing users to text a search request and Google would provide results to the search. Google Earth was created in 2005, which was later enhanced in 2010 when it included an Earth View mode allowing users to view 3D images of various locations at ground level. Between 2005 and 2010, Google also added Book Search, Music Search and Video Search. Google created features for its website to include Gmail software, web-based calendar, web-based documents, spreadsheet applications and language translations to accommodate 51 languages. Discuss competition in the search industry. Which of the five competitive forces seems strongest? Weakest? What is your assessment of overall industry attractiveness? Google has been able to sustain its competitive advantage because of the strong relationships they have built with Internet users, advertisers and websites. In 2010, Google was the most visited website with more than 147 million internet users visiting their site on a monthly basis to search for information. Google’s management believes its strongest rivals are Microsoft and Yahoo, although market share rankings from June 2006, June 2009 and May 2010 showed Google has more than twice their competitors combined. Yahoo was first founded in 1994 and in 2010 held the top third position for most visited search engine site. Almost any information available on the web can be viewed through Yahoo’s portal. Yahoo has many of the same features as Google such as, personal calendar, email, news, weather, television listing and online photo albums. Yahoo has also partnered with mobile phones allows users to search from their mobile devices just as Google has done and the searches performed through Yahoo accounted for 35 percent of the market in 2010. Yahoo’s many features and services have generated revenues from many sources. Yahoo’s relationship with Google goes back to 2000 and has at times been cooperative and other times adversarial. In fact, Yahoo was one of Google’s first customers, but in 2002 they parted ways when Yahoo purchased other companies to develop search engines and since then they have been considered rival companies. Another of Google’s top competitors is Microsoft whose revenues in 2009 were approximately $58.4 billion, with $14.6 billion net income. They were able to make these impressive profits through sales of computer software, consulting services, video games hardware and online services. Microsoft’s computer software Windows 7 and Microsoft office raked in half the company’s revenues in 2009 and most of its operating profits. Their online sales of $3.1 billion showed a loss of $2.3 billion during 2009. The online services generated income came from banner ads on the company’s MSN web site and other affiliated sites, as well as search-based ads displayed with Bing results. Microsoft entered the search engine industry during 2004 in an effort to compete with Google. This happened because Microsoft noticed job postings for Google were nearly identical to Microsoft specifications. Microsoft believed Google was attempting to design software applications that compared to Microsoft office such as Word, Excel and PowerPoint. Google is well aware of the competitive pressures created by its rival and they fully understand what it takes to hold the competitive edge. They created a strategy that would allow themselves to hold their own against its rivals. In their mind, if the competition could do it, so could they. Competition stems from all sorts of directions for Google. They must compete against their rivals like Yahoo and Microsoft in the search engine industry, new entrants to this industry, the product innovations of their rivals, as well as the bargaining powers their rivals may have that they do not. One of the biggest forces of competition is website traffic. If Google can get more internet users to visit their site over MSN or Yahoo, they will have more bargaining power with advertising sales. Google must also obtain qualified employees with the capabilities to compete with the new and innovative products that Microsoft continues to create. Because the search engine sites are so alike, this causes the rivalry between competitors to increase because the products are less differentiated. What are the key factors that define success in the industry? What are the key competencies, and resources of successful search engine companies? Success in the search industry can be defined by looking at several different factors. One of the most obvious signs of success is revenue growth. Google’s revenues from its websites have grown from $792,063 in 2003 to $15,722,486 in 2009 as stated on its 10-k reports. Revenues from licensing have grown from $45,271 in 2003 to $761,759 in 2009. However the value of their stock reached the high point in 2008 at just over $700 per share and has dropped to below $300 in 2008, gained a little in 2009 and dropped again in 2010 to around $450. Some analysts believe Google’s recent decline in revenue and earnings stemmed from their decisions to increase stock prices in order to achieve revenue and growth earnings that pushed the boundaries of their corporate philosophy of making money without doing evil. In order to be successful, Google must continue to develop innovative products at features to better meet the needs of its customers. They need to offer these products at lower prices than their competitors as well. Have Google’s business model and strategy proven to be successful? Should investors be impressed with the company’s financial performance? How does the company’s financial performance compare to that of Microsoft and Yahoo? Google’s innovative products and business acquisitions have all played a part into their strategy directed at increasing the company’s market share in internet advertising. The addition of these products has increased traffic to Google’s website, and therefore, has given them more opportunities to advertise to Internet users. The strategy to dominate the internet advertising market was designed to be worldwide. China was a market that they were particularly interested in taking over since they have more than 300 million users. Unfortunately for Google, China was not as interested in this and they were faced with challenges from their local search provider, Baidu and the Chinese government. As of 2009, only 31 percent of China’s internet users searched using Google and 64 percent used Baidu. Google’s business strategy included creating new products and features for the mobile phone industry. In 2010, 234 million people owned mobile phones, with 30 percent having internet access from their devices. Google first introduced its Android operating system in 2008 free of charge to any phone manufacturer marketing mobile phones with internet capability. The applications included the operating system had Wi-Fi capability, email, web-based calendar, Google Earth maps, and GPS. T-Mobile was the first to use Google’s Android operating system with the launch of G1 in September 2008. The G1 had many of the same features as Apple’s iPhone, but much less expensive. The Android operating system was extremely successful with its market share, increasing from zero in 2008 to 13 percent in May of 2010. Another area of Google’s business strategy focused on computer software programs used by businesses. Senior management believed the programs would move from local hard drives to the Internet. These is referred to as cloud computing. The market was believed to grow to as much as $95 million by 2013. The move would offer many benefits to corporate users such as lower software acquisition costs, lower computer support costs, and easier collaboration amongst employees in different locations. Google first launched its beta version of free word processing and spreadsheet in 2006 and later relaunched in 2008 to compete with Microsoft’s Office products. In 2008, Google launched its Chrome Browser and Chrome operating system, specifically to accommodate cloud commuting applications. The Chrome browser was created with a multiprocessor design that allowed users to operate spreadsheets, word processing, video editing and other applications simultaneously. Each tab opened a new window so if one crashed the other applications running would not be affected. Also in 2009, Google made agreements with Acer, Hewlett-Packard and Lenovo to start production of netbooks that used Chrome OS and Chrome browser to access cloud-based Google apps software. Google’s business strategy also included expanding into the television market. In 2010, Google teamed up with Intel, Sony, Logitech, Best Buy, DISH Network, and Adobe to develop Google TV. Google TV was built on the Android platform, running the Chrome browser to search live networks and cable programming that streamed videos from providers such as Netflix, Amazon on demand videos, and YouTube. Google TV users would be able to use their televisions to browse the web and run cloud based applications. Google’s business strategy also focused on the addition of targeted advertising placed alongside search results on its website. Google Adwords increased annual revenues from $220,000 in 1999 to more than $86 million in 2001. These ads were prices using an auction system, where uses bid on keywords that described their product or service. What are the company’s key resources and competitive capabilities? What competitive liabilities and resource weaknesses does it have? What opportunities exist? What threats to its continued success are present? In order for Google to have continued success in the search engine industry, they need to have resources and capabilities to create competitive advantage over its rivals. Many of theses resources needed for success are intangibles. They included human assets and intellectual capital. This means having employees with experience, education, creativity and innovation to develop new products and features to compete with its rivals. Another important resource is their company image. Google’s 10 principles’ of Corporate philosophy includes â€Å"You can make money without doing evil†. Their image is different from many other businesses. Google believes in conducting business in unconventional ways. They believe their work should be challenging, but fun. The company puts emphasis on team achievement and individual accomplishments that contribute to the company’s overall success. They work in a place where there is great communication and camaraderie in order to have the tools necessary to produced Google users with the information they are seeking. Google also believes being great will not make them successful. They must anticipate the future needs of its user and develop innovate product and services in order to be successful in the search engine industry. Building relationships or alliances with suppliers is another key component of success. These relationships can help to reduce costs and enhance product quality and performance. A perfect example of this relationship is Google offering its Android operating free of charge to mobile phone providers or its collaboration with Sony, Logitech, Best Buy and DISH network to develop Google TV. Some of the tangible resources needed for success include financial assets, technological assets and organizational resources. Google must have cash and marketable securities in order to finance new products and investments as well as pay dividends to its stock holders. Some technological assets are its copyrights and production technology. Production technology refers to the processes used to develop new products to compete with its competitors. Organizational resources included the company’s workstations and servers used in developing these products. Some of the threats that Google faces in the industry include new entrants in the market and product innovations from its competitors. Overall, Google has done a relatively good job in competing with the development of competitors products. They created the Android operating system in order to enter the mobile phone industry and they are developing new applications for cloud commuting to compete with Microsoft office software. They need not worry too much about the entrance of new businesses as they have developed a brand and corporate image that has already earned loyalty from many consumers. What recommendations would you make to Google’s top management team to sustain its competitive advantage in the search industry? How should it best capitalize on its strategic initiatives in mobile phones, cloud computing, emerging markets, and other venues? Because Google’s rivals are competing with relatively the same products, I would suggest to Goggle’s top management to focus in conducting business in an ethical manner that conforms with the business philosophy. They have received much criticism recently because of their impressive revenues growth during the recession. They need to focus on building their brand image that consumers are appealed by. I would also suggest finding ways to offer products and services at a lower price to its consumers in order to dominate the market. With products being so comparable and easily substituted they need to compete on price. It would be in Google’s best interest to focus on the markets in the United States and Canada , rather than in China. China does not want them competing there and they are spending too much time and money trying to get in when there is plenty of opportunity here. The only thing they are gaining from this is bad publicity. It would be in the best interest of the company to put much of their focus on the thing they do best and that is the search engine. Google should stay with the industries they have performed well in, such as search engine and mobile phones. Their biggest competitor, Microsoft, is the leader in innovative products and they will most likely be more successful than Google in the cloud commuting market because businesses are familiar with their products and have already created a following where Google has not. They should focus on the areas they do well in and leave the other markets to competitors. Management needs to add features to make their current products more appealing to consumer rather than looking for new markets to enter. References Thompson, A., Peteraf, M., Gamble, J., & Strickland III, A. J. (2012). Crafting and executing strategy. (18 Edition ed.). New York: McGraw-Hill/Irwin. Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2012). Cases m for crafting and executing strategy. (19 ed., Vol. 1). The McGraw-Hill Companies, Inc.