Google: A Strategic Move

Google Inc.

A Strategic Move

History

Sergey Brin and Larry Page met in spring 1995 at a gathering in Stanford University. Between January 1996 and December 1997, they created "BackRub", the precursor of Google search engine. The objective was to better organize and huge amount of data on the Internet. Eventually the name was changed to "Google" to signify the immense amount of information that resided on the Internet. Google is transformed from the word googol, referring to 1 followed by 100 zeros.

Brin and Page incorporated Google in 1998, just nine years ago, with $1 million dollars from family and investors. The quality of Google's search technology attracted a growing amount of users. Many companies had Google as its main web search engine. It took the company till 2001 to be profitable because of its great financial performance. From there they sold 19.6 million shares from which they raised $1.7 billion dollars.

Today, Google has continued to expand from being a Web search company to offering an increasing array of services. It has now over 50% share of the total search market. In 2005 Google incorporated "Google Payment Corp." as he is working on a PayPal-like payment system. They have very recently released a Web-only video search engine that allows users to view videos without entering the host's site. It has been rumored also that Google plans to compete more directly with Microsoft in Internet browsing and operating systems.

(Source: Fred David's Strategic Management 11th ed. Page 34-35)

Summary of a Strategy

Google is a single-product-line business of search engine technology. In order to compete with other huge companies such as Microsoft and Yahoo, Google has to develop a strategy for differentiation to create a competitive advantage. Google's short-term objectives are to expand the workforce, expand to new international markets and continue the development of new products. By expanding the workforce, Google believes they can achieve its long-term objective of delivering new advertising technology. They will begin to offer new policies to promote idea generation and feedback for all its employees. This way everyone has a say in the company and encourages a better job. Google is now trying to penetrate more markets including China in which they have a large potential market but political difficulties. This company is applying a Concentric Diversification strategy or related diversification. It plans to expand its products and create new, related products to complement its previous ones.

Next, I would like to talk more in depth about each aspect of their strategic process according to Fred R. David's Strategic Management book and what Google is taking into consideration.

Develop Vision and Mission Statements

The first step of the Strategic Management Process is to define the Mission and Vision statements. Each statement answers the questions "What is our business?" and "What do we want to become?" respectively. This is a very important process to express a single, unified company purpose. According to Google's site this are their statements.

Google's Mission statement is the following:

"Google's mission is to organize the world's information and make it universally accessible and useful."

Google's Vision statement is as follows:

"'The perfect search engine,' says Google co-founder Larry Page, 'would understand exactly what you mean and give back exactly what you want.' Given the state of search technology today, that's a far-reaching vision requiring research, development and innovation to realize. Google is committed to blazing that trail. Though acknowledged as the world's leading search technology company, Google's goal is to provide a much higher level of service to all those who seek information, whether they're at a desk in Boston, driving through Bonn, or strolling in Bangkok.

To that end, Google has persistently pursued innovation and pushed the limits of existing technology to provide a fast, accurate and easy-to-use search service that can be accessed from anywhere. To fully understand Google, it's helpful to understand all the ways in which the company has helped to redefine how individuals, businesses and technologists view the Internet."

(Source: Google.com Company Information)

Internal and External Assessment

Here we will analyze the company through the SWOT process in order to understand the strategies formulated in the next step. This step is actually not in the comprehensive model of strategic management but it is something every analysis takes into consideration.

The Internal Environment

Strengths

* Strong brand name.

* Broad website appeal.

* Innovative and advanced search technology

* The advertisers as a return on investment.

Weaknesses

* Finding new key employees.

* Dependence on advertising as source of revenue.

* Google Member Network's lack of popularity.

* Weak position in China due to government filters.

* Nearly all revenue in one product line (search).

* Lack of experience.

The External Environment

Opportunities

* Unmapped countries for expanding services.

* New advertisement format and tracking mechanisms.

* Size of current customer base and market share

Threats

* Competition from Microsoft and Yahoo.

o Greater resources, bundled services, and ability to attract users through portals.

* Increasing