Google Inc. (Google), founded in 1981 by Larry Page and Sergey Brin, two Stanford students, has shortly turned into a global technology leader, overruling its global competitors in providing search engines: Yahoo, Baidu and Microsoft (Business Insights, p. 32, 2010). Above, Google has scarcely been rated as most valuable brand worldwide (Berger, 2010). Financial data are fairytale-like: from $ 85 (IPO, 2004), share price rose by 800 percent up to $ 642; margins of 36,8 percent, annual revenues of $ 29,32 bn and an EBIT of $ 10,8 bn strengthen the picture of high profitability and economic well-being (Google Inc., p. 27, 2010; Osiris, 2011). Delivering online advertising which is significantly adjusted to the customer primarily generates revenue for Google: together with licenses for its search engine technology, GoogleAdWords, an auction-based advertising program, and GoogleAdSense, distributing ads in the Google Network, are main sources of income (Stross, 2008). Today, Google holds market share in global search advertising of 74,3 percent (Business Insights, p. 12, 2010); longing for even more awareness, content such as YouTube, GoogleEarth, GoogleEnterprise or GoogleMaps is only a precise of what Google additionally offers – all services being positioned online (Google Inc., p. 4f., 2009). Downside of the global success story is that Google keeps walking on the edge of ethics and legality, as detractors arraign (Hintermeier, 2011). Further, the company is already under the weather of internal alterations and legal denunciations (Fleischmann, 2011). Though analysts foresee further growth in 2011/2012 (Moran, p. 20, 2011), increasing rivalry as well as internal and societal debates might harm the company in the author’s opinion.
Along with an external and internal review focusing on the online advertising market, benchmarking two main competitors will provide a detailed view upon Google in order to identify threats and benefits particularized. The aim of this paper will be to analyze and evaluate Google’s strategy in terms of quantitative and qualitative data, providing an elaborated basis for recommendations on how to defend market leadership, observe strategic goals, and cope with obstacles. Relevant recommendations will be modeled in a spreadsheet to prove financial outcomes.
Table of Contents
1. Objectives to Introduce
2. Auditing the Online Advertising Market
3. Analysis of Google’s strategic issues
4. Benchmarking: Yahoo and Microsoft on fast lane?
5. Limitations and Critique
6. Conclusion
7. Recommendations
Project Objectives and Key Topics
The primary objective of this project is to analyze and evaluate Google's strategic position through a combination of quantitative and qualitative data. By auditing the online advertising market and benchmarking Google against its main competitors, the paper aims to develop a solid foundation for recommendations to defend market leadership, achieve strategic goals, and address potential business obstacles.
- Analysis of the external market environment and the business cycle's impact on online advertising.
- Application of the "Porter’s Five Forces" framework to assess competitive threats and profitability.
- Strategic evaluation using Kaplan and Norton’s "Strategy Map" and "Balanced Scorecard" frameworks.
- Financial performance modeling and comparison of key metrics like ARPU, ad revenues, and market share.
- Strategic recommendations for diversification, infrastructure investment, and reputation management.
Excerpt from the Book
1. Objectives to Introduce
Imagine that: it is raining and Google reminds you to pick up an umbrella. You are bored and Google suggests you what to explore. Your girlfriend is angry and again, it’s Google telling you what she desires most (Maatz, 2010). Scary? Imposing? Opinions differ when it comes to Google and its vision for the future.
Google Inc. (Google), founded in 1981 by Larry Page and Sergey Brin, two Stanford students, has shortly turned into a global technology leader, overruling its global competitors in providing search engines: Yahoo, Baidu and Microsoft (Business Insights, p. 32, 2010). Above, Google has scarcely been rated as most valuable brand worldwide (Berger, 2010). Financial data are fairytale-like: from $ 85 (IPO, 2004), share price rose by 800 percent up to $ 642; margins of 36,8 percent, annual revenues of $ 29,32 bn and an EBIT of $ 10,8 bn strengthen the picture of high profitability and economic well-being (Google Inc., p. 27, 2010; Osiris, 2011).
Delivering online advertising which is significantly adjusted to the customer primarily generates revenue for Google: together with licenses for its search engine technology, GoogleAdWords, an auction-based advertising program, and GoogleAdSense, distributing ads in the Google Network, are main sources of income (Stross, 2008). Today, Google holds market share in global search advertising of 74,3 percent (Business Insights, p. 12, 2010); longing for even more awareness, content such as YouTube, GoogleEarth, GoogleEnterprise or GoogleMaps is only a precise of what Google additionally offers – all services being positioned online (Google Inc., p. 4f., 2009).
Downside of the global success story is that Google keeps walking on the edge of ethics and legality, as detractors arraign (Hintermeier, 2011). Further, the company is already under the weather of internal alterations and legal denunciations (Fleischmann, 2011). Though analysts foresee further growth in 2011/2012 (Moran, p. 20, 2011), increasing rivalry as well as internal and societal debates might harm the company in the author’s opinion.
Summary of Chapters
1. Objectives to Introduce: This chapter provides an introduction to Google's historical growth, its core revenue drivers, and the ethical/legal challenges the company faces as a global market leader.
2. Auditing the Online Advertising Market: This section analyzes the external market environment, emphasizing the influence of the business cycle, increasing internet penetration, and e-commerce growth on the online advertising sector.
3. Analysis of Google’s strategic issues: This chapter examines Google's core competencies and strategic alignment, using the Strategy Map framework to explain how the company aims to maintain its market leadership.
4. Benchmarking: Yahoo and Microsoft on fast lane?: This chapter applies the Balanced Scorecard to benchmark Google against its primary competitors, Yahoo and Microsoft, highlighting their respective financial and non-financial strategies.
5. Limitations and Critique: This chapter critically reflects on the limitations of the data sources and the analytical frameworks used, noting the challenges of comparing companies with different fiscal reporting standards.
6. Conclusion: This chapter summarizes the market outlook and reaffirms Google's dominant position, while acknowledging the potential risks posed by emerging duopolies and regulatory hurdles.
7. Recommendations: This final chapter provides actionable strategic advice, including infrastructure investment, geographical expansion, and corporate reputation management to ensure long-term sustainability.
Keywords
Google, Online Advertising, Market Leadership, Search Engine, Business Analysis, Porter’s Five Forces, Strategy Map, Balanced Scorecard, E-commerce, Financial Metrics, ARPU, Competitor Benchmarking, Corporate Strategy, Digital Innovation, Market Share
Frequently Asked Questions
What is the core focus of this business project?
The project provides a comprehensive business analysis of Google Inc., focusing on its strategy, market position, and financial performance in the context of the global online advertising industry.
Which key industry sectors are analyzed?
The study primarily explores the online search advertising market, while also touching upon related sectors such as mobile technology, cloud computing, and the broader e-commerce landscape.
What is the primary objective of the research?
The goal is to evaluate Google’s current strategy using specific management frameworks to identify how the company can defend its market leadership against rivals like Yahoo and Microsoft while overcoming legal and societal obstacles.
What scientific methods are utilized in this analysis?
The author uses Porter’s Five Forces framework for market context, and the Strategy Map/Balanced Scorecard frameworks by Kaplan and Norton for internal strategic evaluation and performance benchmarking.
What topics are covered in the main section of the paper?
The main section covers market auditing, strategic issue analysis, competitor benchmarking, limitations of public data, conclusions on market growth, and specific recommendations for future investment.
Which keywords best characterize this work?
Key terms include Google, online advertising, market leadership, strategic benchmarking, and financial performance modeling.
How does the author assess the threat from new competitors?
The author concludes that the threat from new entrants is currently low due to high capital requirements, though Google must remain cautious regarding trust issues and data safety to prevent rivals from gaining traction.
What is the specific recommendation regarding Google’s financial strategy?
The author recommends that Google leverage its strong solvency to invest in social media and display advertising, while also diversifying into offline markets to counter the influence of media agencies.
What role do societal trends play in Google's outlook?
Societal trends, particularly concerns regarding data collection and privacy tracked by the Federal Trade Commission, are identified as significant risks that could negatively impact the foundational algorithms of Google's advertising model.
- Quote paper
- Elisabeth Felice Nehls (Author), 2011, A business analysis project on Google Inc., Munich, GRIN Verlag, https://www.hausarbeiten.de/document/175231
