Running head: ANALYSIS

External and Internal Environmental Analysis Jagpreet Kaur STR/581 April 11, 2011 Prof Mohammad Kazmi

ANALYSIS External and Internal Environmental Analysis There are many external factors that can influence Google to make the choices it does in order to take a direction and action which later on affects its internal structure. These external environment factors which are interrelated are: remote, industry, and operating environment. In the competitive environment, these interrelated factors outline the root of the opportunities and

threats that Google faces. In order to pursue market opportunities, Google must also be aware of its internal resources, capabilities, and skills. An approach frequently used by managers is the SWOT analysis. SWOT stands for internal Strength and Weakness of a company and the environmental Opportunities and Threat a company faces. This approach helps managers to consider Googles internal capabilities and use the result to improve its strategic options. Internal Environment Google has many advantages in comparison to its competitors in meeting the needs of its customers. There are many aspects of Google that adds value to its products and services and builds its internal strength. Google has y y y y Strong brand name and is trustworthy. It is dependable, reliable, and fast. Innovative search technology. Due to its simplicity, it gives comprehensive result and provides relevant websites promptly. y Google provides an interface to many languages and allows its users in different countries to be able to comfortably search the internet. y Its AdSense program directs visitors to advertisers website which increases their sale.

ANALYSIS y When users search for a keyword, Google uses Sponsored Link tag to separate

advertisements with actual results. Moreover, it also positions the sponsored links in order to keep most applicable sponsored links on the top. y Google has tabs on its homepage for users to be able to navigate easily. This allows Google to not be a portal and allows the website to be kept simple. y Google promptly routes the user to the webpage and does not hang around for advertisement revenue. y It is innovative regarding solutions to wireless hand-held devices such as it applications, personalized toolbars, and indexes. y Google has a management team that represents some of the most experienced technology professionals in the industry. (Google, 2011) Googles weaknesses are: y y y y Finding new key employees and infrastructure. Dependence of advertising since that is its main source of revenue. Lack of experience. Yahoo! and MSN have features like sticky which attracts users and Google does not have one. y Google has dead-ends. Its users find the citation but are not able to access the full text. y y There is no expert search. Googles focus is the Anglo-Saxon English language.

ANALYSIS External Environment The external environment involves three factors: industry, operating, and remote environment. Industry environment is the general conditions for competition that influence all businesses that provide similar products and services (Pearce and Robinson, 2011, p.91). Since Yahoo and Microsoft provide similar products and services, they are competitive threat for Google and an industry concern. Along with Yahoo and Microsoft, a new anonymous

international competitor is also an industry concern. Also, the agreements with advertisers could potentially turn out to be competitive as well. In addition, the operating environment, also known as the competitive or task environment, comprises factors in the competitive situation that affect a firms success in acquiring needed resources or in profitably marketing its goods and services (Pearce and Robinson, 2011, p. 103). The operating environment factors are: competitive position, customer profiles, suppliers, creditors and the labor market. Googles operating issues are the base of advertisement, the blueprint of the advertisements, lessening of advertisement budgets of customers, lack of experience, and less affected on 50 to 60 year-old baby boomers in comparison to other companies that depend on this demographic group. Moreover, the remote environment comprises of: economic, social, political, technological, and ecological factors. Economically, even in a period of recession Google is in a good position. Googles focus on highly targeted, measurable advertising makes it more recession-proof than many other businesses in tech (Morrow, 2009). Socially, Google makes the internet navigable for many people and as internet use increases among all age groups and across all cultures, we will become increasingly more dependent on internet search (Morrow, 2009). Politically, Google has faced pressure from the government regarding copyright and privacy issues. Google is aware of the fact that technology is constantly improving therefore it

ANALYSIS has taken precise actions to make sure it is up to date. Google uses commodity computer parts (cheap components) that are attached to the computer with Velcro which allows for quick upgrading. (Morrow, 2009) New laws and regulations, increasing intellectual property claims, and access to more information are some of the remote concerns for Google. In the competitive environment, these interrelated factors outline the root of the opportunities and threats that Google faces. Googles opportunities are: y y y y y To expand its services to the unmapped countries. New advertisement format and tracking mechanisms. Size of current customer base and market share. Leverage advertising agreements. With the demand for online books (eBooks) growing, Google can alter the way users are able to access books. Googles threats are: y Google is partially depended upon some portals like AOL. Google can drop substantial share of its revenue if those contracts gets terminated. y Not having any entry barrier for a long time in this business, many competitors

can catch up Googles market and surface in coming years with the same services and better interface. y Competition from Microsoft and Yahoo. They can have greater resources, bundled services, and the ability to attract and retain users through portals. y y y Increasing intellectual property claims and resources needed for legal claims. Increasing competition can reduce operating margins. Shrinking advertising budgets by companies.

ANALYSIS y y y New domestic and international laws and regulations. Google is known for its simplicity and it may lose it if it becomes a portal.

Google might start losing its brand name if it decides to merge with some already established mass-market portal. Conclusion

An advantage for Google would be to merge with mass-market portal since this will aid in securing its users and marketers though it is not recommended for due to the disadvantage of harming its independent growth. With this being said, Google has great technology and a management team that represents some of the most experienced technology professionals in the industry and they use this to their advantage in providing users with feasibility in search option. In conclusion, Google should focus on continuously updating the technology and services and should meet their users expectancy in order to provide the best and simplistic search engine product to the market.

ANALYSIS Reference Google. (2011). Management team. Retrieved from http://www.google.com/intl/en/corporate/execs.html Marrow, B. (2008). External Analysis of Google Inc..Retrieved from http://www.benmorrow.info/research/external-analysis-of-google-inc/ No author. (2008). Google Inc.: SWOT analysis. Retrieved from http://www.soopertutorials.com/business/strategic-management/1369-google-swotanalysis.html Pearce, J. A., II, Robinson, R. B. (2011).Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin.