Google Case Study

Executive Summary

     Google is an organization that has grown since they first begun operation in 1998, the use of a differentiation strategy.  The company established dominance by focusing on their core competencies of search relevancy and speed, advertising and operations based upon their ten principles of corporate philosophy. (1)

     The industry is defined by competitive forces with rival firms, substitute products, weaker competitive forces and new entrants.  Competition by Yahoo and Microsoft with similar products has an impact on Google and their operations, even though new entrants fail to pose an immediate threat to Google’s market dominance.

     Changes in the market which are related to the need for cloud computing and wireless access to phones and tablets to access of applications and software are shaping the actions in which Google takes to keep market leadership. With the growing consumer need in the search industry market has defined Google’s continuing innovation with Google pursuing a cloud computing for business applications and the acquisition of Motorola Mobility.

     A financial analysis of Google shows the implementation of using their advertising strategy through sponsored ads. Even though Google shows areas of success, with their advertising and search function, they also have limitations due to their lack of flexibility in cultural markets.  Their inability to adapt had kept them shut down in China, and that had impacted their sales in foreign search markets.

     The search engine market has a diverse range of competition, and immediate competitors.  Google is progressing into the Mobile search capabilities, and their biggest rival is Apple.  Since acquiring Motorola, Google launched its Android operating system in 2008, which it is now leading the smartphones with 50.9 percent of the market share.

     Google also had direct competition from Microsoft online services which utilizes semantic search technology.  The one thing that Google has done is entered an alliances with Intel, Sony, Dish Network, Logitech and other firms this allowed Google to launch Google TV.  This allows users to search network and cable programming.

     Since Google’s main strategy has been to dominate the Internet advertising and expanding worldwide.  This resulted in the targeted sponsored ads and numerous acquisitions of DoubleClick and YouTube, which allows for revenues received from banner ads.  Google is achieving dominance in Internet advertising, which accounts for about 96% of their revenues in 2011 and half of that came from the U.S.

     Google’s highest expense has come from sales and marketing, which is followed by research and development. (2)  They have had a slight increase in the profit margin between 2010 and 2011, with a decrease in net profit, which may be due to a 5% decrease in operations. (2)  Google’s net profit is higher than most of their competitors, except Microsoft with a higher margin. (3)

     One of the possible biggest threats to Google is Microsoft Bing, which could be integrated into Microsoft office suites and well as the Microsoft’s cloud that may attract loyal Office users.  With the possibility out there that wireless manufactures could eventually develop search capabilities for their own products.

     Even though Google has the competitive advantage with the search industry, they would greatly benefit by improving their search technology by developing a fast and accurate semantic search engine.