GOOGLE

CHAPTER III: PESTEL ANALYSIS

POLITICAL
Globalization
Google defended itself against allegations of trying to promote American
culture at the cost of other cultures by stating much of the books that are being
digitized have been written by foreign authors in their native tongues. They have
also stated that they are very involved with the institutions that are providing the
material, and are very open to making arrangements with institutions abroad to
provide the most accurate and robust information available. Google is now available
in over a 100 languages and have opened regional offices worldwide. It is this sort
of forward thinking that has allowed Google to stay on top of their sector of industry.
Effect on the barrier/determinants
Effect on the force of competition
Conclusion

Globalization increases the demand for

online advertising.
Increase in Competitive Rivalry
Opportunity to the Industry

State-sponsored online companies

Google has run into different issues as it eyes the largest market in the world,
China. The Chinese government monitors very strictly the content it citizens can
view, thus limiting the information available. This inherently goes against the
ideology that Google was built on. However Google executives feel it would be more
damaging to leave China and its users with no information than stay in China with
restricted information.
Effect on the barrier/determinants

Effect on the force of competition

Conclusion

State-sponsored online companies pose

a threat against Google, as in the case of
the Chinese governments control of
large firms in China.
Increase in Bargaining Power of Buyers
Threat to the Industry

ECONOMIC
Economic stability of most major markets
As a result of the provinces economic performance in the 2014/2015 fiscal
year, the Economic Stability Dividend for 2016 has been realized, and eligible
contracted staff will see a 0.45% wage increase. Depending on the agreement with
government, contracted staff may be eligible for other negotiated wage increases
that begin during the 2016/2017 fiscal year.

Effect on the barrier/determinants

Effect on the force of competition
Conclusion

The company can use these for global

expansion.
Increase in Competitive Rivalry
Opportunity to the Industry

Rapid growth of developing countries

Cities function as small open economies and create urban systems, which
impact economic growth and development. But cities in developing and developed
countries exhibit a number of key differences that might prevent cities in developing
countries from exploiting their full potential. First, the labor markets in cities in
developing countries involve a large informal sector alongside the formal sector.
Effect on the barrier/determinants

Effect on the force of competition

Conclusion

This factor enables Google to create new

momentum that the company can
exploit.
Decrease of Bargaining Power of Buyers
Opportunity to the Industry

SOCIO-CULTURAL
Increasing use of social media
The simple act of having a social profile doesnt do a thing to help rankings.
Anyone can create a profile on a social network, any time. Facebook says anywhere
between 5.5 and 11.2% of their monthly active users are fake/duplicate accounts,
and considering that represents 67.65 million and 137.76 million fake/duplicate
accounts, its easy to see why social presence doesnt equate to increased
ranking.
These spam accounts offer no real value to consumers, and thats what the search
engines look for. Activity and sharing on social channels leads to increased visibility
and links, and links lead to higher rankings.
Effect on the barrier/determinants

Effect on the force of competition

Conclusion
Rising diversity of users

The rise of social media usage is a threat

to Google because it strengthens
companies like Facebook, which also
offers online advertising services.
Increase in Threat of Substitutes
Threat to the Industry

Google is available virtually everywhere with a very diverse product line and
user base. The following demographic descriptions are derived: More popular with
users under 34. 55% of users are male. Research suggests that the majority of
Google users are of an upper-middle class income structure. Users are generally of a
higher education and technologically adept. Given lifestyle research, one can
assume that a significant number of users are married and have/will have small
families. Most Google users are business minded professionals.
Effect on the barrier/determinants

Effect on the force of competition

Conclusion

The increasing diversity of users is an

opportunity for Google to improve its
services to match individual preferences.
Decrease on Bargaining Power of Buyers
Opportunity to the Industry

TECHNOLOGICAL
Growing Internet access in developing countries
The idea that access to information and communication are key rights to
enable economic growth and to support human development and the empowerment
of marginalised and impoverished people is not a recent one. From the World
Summit on the Information Society (WSIS, 2003-2005), and the subsequent
discussions in the Internet Governance Forum (IGF), to the May 2011 report by the
United Nations Special Rapporteur on the promotion and protection of the right to
freedom of opinion and expression, Frank La Rue, consensus has been built around
the idea that access to the internet is an important means to advance human rights.
However, there are several obstacles limiting the equal right to access
around the globe. Rural and geographically isolated areas and large parts of
developing countries still lack the telecommunications infrastructure on which the
internet is made available. Furthermore, there are economic barriers in developing
countries tied to the scarcity of infrastructure and bandwidth, making access to the
internet not affordable to many impoverished and marginalised people. This is
compounded by the lack of public access infrastructure.
Effect on the barrier/determinants

Effect on the force of competition

Conclusion

The company can expect higher

advertising revenues as developing
markets become more connected online.
Decrease in Bargaining Power of Buyers
Opportunity to the Industry

Rapid adoption of mobile devices in the global market

The latest data shows that we are now well past the tipping point mentioned at the
top of this post. Mobile digital media time in the US is now significantly higher at
51% compared to desktop (42%).

Effect on the barrier/determinants

Effect on the force of competition

Conclusion

Google can improve the mobilefriendliness of its online products to

exploit the mobile trend.
Decrease Threat of Substitution
Opportunity to the Industry

ENVIRONMENTAL
Global spread of environmentalism
In recent years, Google has made its environmentally-conscious initiatives
well-known throughout the gadget universe. Whether it is simply cutting down on
the emissions of data farms or having goats roam Googles campus to eliminate the
need for fertilizer and lawn mowers, the company has always strived to cut down on
greenhouse gases. In a way akin to IBM, Google is contributing to the future green
advancements of the world by implementing them today.
Effect on the barrier/determinants

Google can expect improved customer

responses based on positive perceptions
of the firms environmental
contributions.

Effect on the force of competition

Conclusion

Decrease in Bargaining Power of Buyers

Opportunity to the Industry

Growing interest in sustainable business

Widely recognized as a business innovator, Google is also leading the way to
a greener future with its environmental sustainability and green supply chain
management practices. The company has demonstrated a commitment to existing
in concert with the environment rather than at odds with it. Through initiatives such
as powering its facilities with renewable energy sources, bringing in goats to trim
the grass, and hosting farmers markets and sustainable-cooking seminars, Google
has established an environmentally aware corporate culture and solidified its
reputation as one of the worlds most forward-thinking companies.
Effect on the barrier/determinants

Effect on the force of competition

Conclusion

With its sustainability, Google can attract

more consumers and compete with other
companies not just in service but in
reputation.
Increase in Competitive Rivalry
Opportunity to the Industry

LEGAL
More regulations on online privacy
Fearing people would lose faith in the Internet, Google asked the U.N. to address the
world's online privacy rights back in 2007. The company's privacy chief Peter
Fleischer told The Guardian this lack of confidence could hamper the Internet's
development. Six years later, the lack of worldwide privacy rules still remains a real
problem, and the main culprit is the U.S. Now, cracks are beginning to appear in the
global network. Meanwhile, Google's own position on online privacy has become
complicated as the company has faced criticism for sharing some information with
the NSA, as well as scanning user data to target ads and for taking pictures of
people for Google Maps.
Effect on the barrier/determinants
Effect on the force of competition
Conclusion

The company can improve its privacy

measures to protect individual users.
Increase of Threat of New Entrant
Opportunity to the Industry

More regulations on intellectual property rights

In comparison to popular search engines like Yahoo and Bing, Google hosts
more than 66% of all online searches. Both Yahoo and Bing have efficient methods

of dealing with copyright infringement through their legal pages to disable or

terminate accounts at their discretion, which may repeatedly infringe the copyrights
of other's intellectual property. In addition, Yahoo is known for being quick in dealing
with copyright infringements and open to listening to customers' complaints of
potential erroneous copyright infringement reports. However, it appears that only
Google will automatically lower search results for any sites that have a high number
of removal notices.
Effect on the barrier/determinants

Effect on the force of competition

Conclusion

Google can develop innovative measures

to discourage people from violating
intellectual property rights.
Increase of Threat of New Entrant
Opportunity to the Industry

CHAPTER IV: INTERNAL ANALYSIS

I.

Analysis of the companys existing strategies

COMPANY PROFILE
Google company has packed a lot into a relatively young life. Since it was founded
1998, theyve grown to serve millions of people around the world. The Google
search and advertising business and several of the company's "side projects"
comprise the Alphabet holding company. Each unit has its own CEO and reports
financials. The move is aimed at increasing transparency, accountability, and focus.
The Alphabet lineup is Google, which will include search, ads, maps, apps, YouTube,
and Android; Calico, which studies longevity; Nest, which develops smart
thermostats, smoke alarms, and other smart home devices; Fiber, the high-speed
Internet infrastructure venture; Google Ventures and Google Capital, the company's
investment entities; and incubator projects, such as Google X, where the company
is developing a self-driving vehicle. Segment reporting of the units begins with Q4
2015. Alphabet Inc.
In order to enter new markets and maintain a portfolio of innovative offerings,
Google is continuing its strategy of new product development. The company

launched its Google + social networking service in 2011 to directly compete with
market leader Facebook.
They also provide a variety of services for people and businesses. And there are
glimpse on what theyre offering. They offer for businesses, they provide a variety
of tools to help businesses of all kinds succeed on and off the web. These programs
form the backbone of our own business; theyve also enabled entrepreneurs and
publishers around the world to grow theirs. And for the web they build products that
they hope will make the web better and therefore your experience on the web
better. With products like Chrome and Android, they want to make it simpler and
faster for people to do what they want to online.

Mission- is to organize the worlds information and make it universally accessible

and useful.

Vision- pushes the organization to achieve new heights, such as through rapid
innovation.

COMPANY STRATEGIES:

STRATEGY

DESCRIPTION

MAINTAIN,IMPROV
E OR ELMINATE

Develop

Google makes the majority of its money from

new

ads shown as part of search results. However

sources of

Google's search ads monetize much better than

income

the ads shown on a typical web page because

MAINTAIN

the ads users see are typically from providers

who can help them solve a problem they are
actively trying to solve at that moment.
FIGHT ANY

Until now, Google's biggest frenemies were the

ATTACK

traditional media: newspapers, magazines and

MADE BY

TV stations that create online content Google

RIVALS

searches and that buy online advertising from

Google. But google has money to buy
innovatinve start ups to itself at the cutting
edge.

IMPROVE

CONTINUE

Google has used acquisitions to expand its

ITS

workforce and launch new products since

ACQUITION

before it was a household name.

MAINTAIN

STRATEGY

II.

Value Chain analysis

Supply Chain and Inbound Logistics

Google does not reveal the details of its supply-chain management and
inbound logistics to the public. The company is reported to be attempting a digital
transformation in supply-chain via projects aimed at automated drone delivery of
products.

Google maintains a dedicated supplier site, where suppliers can submit

invoice for payment, check invoice status and deal with a range of other
administrative aspects of their cooperation with the company in a convenient
manner.
Operations
Google operates via more than 70 offices in more than 40 countries
internationally. Google offices are famous for their creative design and the presence
of distinctive features such as sharing cubes, video games, pool tables, pianos,
cafes and others. Google headquarters in Mountain View, California consists of
about 4.8 million square feet of office and building space, along with about 15 acres
of land that can be ground for more office space in the future.

All spheres of Googles operations are guided by its organizational culture

based on challenging the status quo and adopting an unconventional approach in

getting things done. However, there are views that due to its rapidly increasing size,

Google has to develop more policies and procedures and become more bureaucratic
with negative implications on the level of entrepreneurial spirit in the company.
Outbound Logistics
Online

search

and integration of

advertisements into search

results

represents Googles core business and there is no outbound logistics associated

with running this business. Google also sells physical technological products such as
Smartwatches, Nexus Phones, Chromecast, Chromebooks, technological accessories
and other products via its website. In 2015 Google also opened its first fully-branded
physical store in London.

Marketing and Sales

Googles marketing strategy relies on integration of online and offline
communication channels to communicate the marketing message.

Popular components of marketing communication mix such as advertising,

events and experiences and public relations are used by Google extensively,
whereas the company uses sales promotions and direct marketing sparingly. Google
sales are predominantly conducted via online sales channel and the company
started to utilize traditional offline sales channel only recently.
Service
Google forums play an instrumental role in terms of assisting customers to
deal with a wide range of technical and other issues.

Interestingly, as of May 2015, attempts to find Googles customer services

phone numbers have proved to be unsuccessful. This must be due to cost

considerations taking into account hundreds of millions of Google customers around
the globe.

Sources:

Sources:
(2006, January, 25). Google censors itself for china . BBC.CO.UK, Retrieved 5/3/2007, from
http://news.bbc.co.uk/1/hi/technology/4645596.stm
Vise, David A. (2005, May 13). Google to focus on expanding its business overseas. Washington Post, p.
E05

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http://yourbusiness.azcentral.com/economic-factors-affecting-businesses-4557.html
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https://www.clevelandfed.org/newsroom-and-events/publications/economictrends/2015-economic-trends/et-20150720-assessing-consumer-confidence-withgoogle-search-terms.aspx
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http://research-methodology.net/google-value-chain-analysis/
https://www.searchenginejournal.com/real-reasons-social-media-affects-companysseo/129900/

CHAPTER V: OBJECTIVES AND PROPOSED STRATEGIES

Objectives:
Financial Objective To increase revenue by 10% annually.
Strategic Objective Develop and implement a promotional plan to drive
increased business.

Proposed Strategies:
Strategies:
1. A suitable recommendation for Google is to focus its efforts, especially in
product development. The company has been criticized for engaging in
seemingly disparate product development efforts in different industries and
markets. Through its intensive growth strategies and generic strategy,
Googles wide variety of products helps in building its dominance in the
global market. However, to improve its strategic alignment, Google can first
focus on ensuring the profitability of its current products before embarking on
the development of any new product.
2. To the average user, search engines feel interchangeable. Enter a query on
Google or on Bing and the results look similar. What keeps people with
Google is a perception that the engine behind its search is somehow better.
So Pichai needs to make sure Google continues to maintain the positioning of

being the most advanced search engine and deliver on that promise. So
Google should signal its commitment to serving at technologys cutting edge.
3. Defend Google and its properties against competitors that might steal
usagetime. Facebook, Spotify, Netflix, iPhone and Twitter have forced Android,
Google+, and Play into existence to defend Googles its share of internet
time.

CHAPTER VI: EXECUTION

1. Attract and retain the kind of talent that got them there since Google has lost
talent to Facebook or employees have gone to pursue their own startup.
Google needs to maintain a good working environment for its employees.
Figure out what it takes to attract and keep the hungry and talented that are
looking to change the world.
2. Google should not focus on creating a Google or Android "Music Store," but
instead an extended market place married to Android/Google search.
Whether they handle the transactions or collect fees or not (Google
Checkout), the federated cataloging of the progression from interest to intent
to action, abstracted into meta-avatars would allow them to condense the
huge number of individual users on the web into a manageable number of
marketing profiles. This same type of marketing profile that makes them so
affective at targeting ads with AdSense.
3. Google should acquire Twitter, not for its technology, but for its user base.
They should then fully decentralize it, making it the social graph that weaves
together all its properties and products.