Q1
·
The
ability to offer superior services to its customers in relative to offerings
from competitors. Google search engine page ranking was just an example of this
superior offering.
·
The
ability to get the needed financing for most of its innovative activities. This
was exemplified in the 2004 IPO where the company was able to raise $1.67
billion in exchange for a 7% stake to the public. Prior to this, Google had
successfully benefited from two rounds of venture capital financing.
·
The
company has also had a flexible mission statement. This has seen it increase
user experience in its core business of search thereby generating more value.
Flexibility in the mission statement also allowed Google to venture into other
business areas.
·
Making
good strategic decisions like the acquisition of Android. This was to enable
the growth of its advertising market into the mobile sector.
·
Ability
to protect its market turf. For instance, the introduction of chrome browser
was meant to allow the continuity of targeted advertising that would have been
heavily limited by the introduction of Microsoft explorer version 8.
Q2
In terms of customer base, Google was able to attract many customers
from the simplicity of its service offerings such as the superior page ranking.
The initial growth was also characterized by the introduction of new service
offerings such as the paid listings service. Even more important for the
achievement of initial growth was the availability of venture capitalists ready
to fund Google. The company managed two rounds of that.
Q3
Critical issues facing the company include concern by various regulators
that the company practices may be breaching the privacy of its customers.Practices
like the linking of Google’s tracking data to identifiable individuals has been
a particular concern of the U.S Federal Trade Commission. The EU has also been apprehensive that Google
could be breaching the former’s data protection guidelines. Besides privacy
concerns, government in the U.S and Europe are also concerned about Google’s
practices as they relate to patent infringements and competition laws. Another
important challenge to Google is its ability to remain competitive in the wake
of continuing growth.
Q4
Google can still survive despite the critical challenges facing it at
the moment. One reason for this sense of optimism is the innovative culture
that has been a key identity of the company since its founding.
Application of the analytical tools
Resource Based View (RBV)
Google was able to acquire a competitive advantage the moment it came up
with a superior page ranking system. The RBV as an analytical tool attempts to
explain the internal resources that enable a company to have a sustained
competitive advantage (SCA). Thus, it is not enough that Google had a
competitive advantage at the time of founding. Rather, it must be able to
sustain that advantage. The achievement of that state requires that Google must
acquire and control resources that are valuable, rare, inimitable and non
substitutable. There is no doubt that the internal resources at Google are
valuable. Those resources include
talented technologists who are hired in a very selective process to end with
the best that can ever be found in the market. Those resources are also rare in
the sense that not all engineers are innovative. This aspect is also amplified
by the fact that Google can use the protection of intellectual property
law-especially patents- to make some of its technologies unavailable to
competitors. This is in fact happening as Google has managed to acquire a
considerable number of patents.
Value Chain
Google operates in a highly competitive industry and the ability to earn
profits by any industry player depends on how well a firm is able to tilt the
value chain in its favor. Google has been trying to do this either by dominating
the value chain in some areas or leveling the playing field in others so that
it can be in a better position to compete with the other players. The
dominating strategy is visible in Google’s dominance of the web search element
of the value chain. Its efforts to continually monetize this dominance are
illustrative of a market player manipulating the value chain to its advantage. In
contrast, its involvement with the advancement of open standards for mobile
devices was a strategy to level the playing field that was still dominated by
other players. Open standards would allow Google to grow its advertising
market.
Porter Five Forces (External)
Of the five forces, the threat of entry is very minimal. For one, a new
entrant to the industry would have to possess absolute cost advantage to
compete with players like Google. Customers for many of the services offered by
Google have a very bargaining power for various reasons such as low switching
costs. For instant, switching from Google search to another search engine would
not be a costly affair for a customer. Besides the bargaining power of
suppliers, all the remaining threats are strong.
SWOT (Internal)
Google’s search engine is one of its strengths owing to its superior
page ranking. In addition, the flexibility in interpreting the mission
statement is also an important strength given that some of its competitors have
rigid mission statements. Having Android with has been adopted by many handset
manufacturers is also strength. The only weakness relates to the problem of
managing new business areas where Google is expanding into.
Cash Flow
Google
recorded the highest revenue in 2011 of $ 37,905,000,000 and the lowest in 2004
at 3,189,000,000.
Motorola Acquisition
The many advantages from this acquisition include an increased
bargaining power arising from the rich portfolio of patents that came with that
acquisition. In addition, Google is also able to integrate the development of
both software and hardware in the Smartphone market. The acquisition is also an
important way for Google to build its presence in the mobile internet market.
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