Aug 13, 2019 in Case Studies

Overview of the Company

Google is the most famous search engine in the world formerly known as Backrub, founded in 1998 by Larry Page and Sergey Brin, who met at Stanford University in 1995 (Google, 2015a). It is best known as search engine (web search) Google, where people can get all information they want with a click of a button. In addition, the company offers products like Google Chrome, which is a browser known for its agility run on Android, a mobile operating system that is compatible with Google Play, a platform where people can download a wide range of applications. All these products and actions are aimed at making the company follow its primary purpose of making information accessible to users all over the word. Google organizes its operations to ensure it meets demands of the major broad business market and the web market (Google, 2015c). The major undertaking of Google entails advertisements, where it provides a platform where companies and business personalities can attract customers from all over the world. On the other hand, on the web front, Google is in the forefront coming up with products that are aimed at ensuring the web becomes better and more accessible with time.

External Environment

The external environment of a company is a combination of factors and changes outside the company at hand. They include political factors, economy dynamics, market competition and government regulations to name but a few. In the case of Google, the external environment is even more unpredictable and uncontrollable. It is because it operates in a great geographical area, being subjected to different cultures and governance. However, Google has not experienced major hardships while operating on this huge market. In terms of government policies and regulations, the company faced few limitations in 2006 imposed by the Chinese government on the search engine, where the government requested Google to censor some of its content in respect to the country’s free speech restrictions (Liedtke, 2006). However, the company and the Chinese government managed to iron out the issue, and the former made great strides in the market.

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Another aspect of Google’s external environment is market competition. From this perspective, competition can be from new entrants and other existing competitors. In the first case, the Internet search industry has a very high barrier to entry because the existing players in this field, Google, Microsoft and Yahoo to name but a few, have accumulated large databases over the years. It means that to pose a threat in this industry, a new player will have to come up with a better database and a faster search engine. The probability of this happening is minimal, making the threat on the part of a new entrant to the industry unlikely. On the other hand, Google has outgrown its main rivals Yahoo and Microsoft. Moreover, in terms of economy dynamics, Google operates in different countries, the economies of which sometimes face recessions (Google, 2015a). However, due to the company’s extensive marketing undertakings, Google can shed off the effects with ease.

Current Strategies and Objectives

Objectives

The core objective of Google is to organize the entire world’s present and future information in a manner that can be easily understandable and accessible. This aspect is evident considering one of the company’s objectives to have complete scans of all existing collections of 129 million books by 2020 (Google, 2015a). Another Google’s objective is the continuation of the provision of the best user experience. Company’s innovations and undertakings are always in line with this aspect. A continuous improvement in its search web engine is also an important issue for the company. The company believes that there is the need to do what one does well (Google, 2015d). Being a dominant search engine, its continuous upgrade and updates is an important task for the company.

Strategies

The main strategy utilized by Google is introducing innovations, whereby ensuring the relevance of its content is paramount. This strategy is achieved by Google hiring smart and self-driven people who make up a team known as Googlers. The company is also keen on being inclusive, employing people from different cultures and languages. It is further supported by the company’s well-intentioned action of having seventy offices in over forty countries around the world (Google, 2015b). On top of this, the company utilizes the expansionary strategy, which has enabled Google to have offices around the world for the purpose of transforming the Google search engine into different locally acceptable search forms. As a result, it can be accessed in different languages around the world. It is the main reason for Google being the biggest search engine in the industry.

Financial Analysis

Table 1. Liquidity Ratio (NASDAQ, 2015)

Period ending

12/31/2014

12/31/2013

12/31/2012

12/31/2011

Current ratio

480%

458%

422%

592%

Quick ratio

480%

458%

418%

592%

Cash ratio

383%

368%

335%

501%

Trend

The current ratio trend shows that Google has been in a position to pay its liabilities throughout 2011-2014 fiscal years. In addition, its quick ratio adds to the fact that the company has been improving its ability to pay its short-term debts. Its cash ratio decreased from 2011 to 2012, but since that time, it has been on the rise (NASDAQ, 2015). It is a good indication that Google has continued expanding its cash base or equivalent that can meet its liabilities.

Table 2. Profitability Ratio (NASDAQ, 2015)

Period ending

12/31/2014

12/31/2013

12/31/2012

12/31/2011

Gross margin

61%

60%

63%

65%

Operating margin

25%

28%

30%

31%

Pre-tax margin

26%

25%

31%

33%

Profit margin

22%

23%

23%

26%

Pre-tax ROE

17%

18%

20%

21%

After-tax ROE

14%

15%

15%

17%

In terms of gross margin, Google has been enjoying good percentage revenue retention averaging 60% (NASDAQ, 2015). It means the firm is profitable as this is usually the percentage of revenue retained by a company after production cost deductions. As a result of a high gross margin, Google has also been enjoying fair operational margins. It reflects company’s efficiency in terms of its operation and pricing strategy. With 28.75% pre-tax margin, Google represents a company that has remained profitable form 2011 (NASDAQ, 2015).

Google Sticking to the Current Objectives and Strategies

If Google has been sticking to its current objectives and strategies for the next five years then continued growth and profitability will be a sustainable phenomenon. Making information understandable entails translating it into different languages, and this will make Google more appealing to a huge number of users. The result is huge earnings from associative adverts from different corners of the world. In line with this, if the company ensures user’s best experience, more users will visit the web search engine. As a result, Google will avail more potential customers to business personalities and will have a basis to post more adverts. It means increased revenue for the company and improved and sustained financial performance.

When it comes to strategies, the main one for Google is innovations. It will make Google not only relevant but also interesting. Besides, utilizing different perspectives and insights from the Googlers will mean that the final output in the market is comprehensive and inclusive. It is therefore reasonable enough to argue that the utilization of the current strategies and objectives will enable Google to become more profitable.

Strategies Recommendation

If I were a CEO, I would recommend focusing on the most viable strategies like innovation and expansionary undertakings. In any business venture, introducing an innovation is a crucial tool in ensuring that the venture’s output meets the market trends and demands. In the same line of thought, Google will have to make huge investments in the innovation docket to ensure the company keeps in touch with the dynamics of the industry. It will make the company customer-oriented and at the same time relevant and comprehensive. Implementing expansionary undertakings will ensure Google remains the dominant force in the industry. Besides, through this perspective, it will be possible to earn more from advertisement. Utilizing the two strategies will place Google on a platform where there will be continuous growth and profitability.

Competitive Strategies Used by the Company’s Main Competitors

Google’ main competitors are Yahoo and Microsoft. Yahoo has recently unveiled new technology under the BrightRoll brand. It is in the form of BrightRoll DSP and BrightRoll Exchange aimed at transforming the ways in which business people can interact with their customers (Fuloria, 2015). The technological upgrade is aimed at making Yahoo a better marketing platform. The company is also keen on partnership deals with companies that have a huge following. It is a good marketing strategy. A good example is a partnership with NFL, where Yahoo users around the world can access a game via live streaming on the Yahoo platform (Edelman, 2015).

On the other hand, Microsoft is keen on upholding and improving customer experience. To meet this, Microsoft has invested a lot in market research. It has seen the company employ around 90,000 workers across 190 countries around the world, mandated to come up with products that reflect the needs of people with a different background (Microsoft, 2015). The company has also made a deal with NFL, and it forms part of a well-calculated marketing strategy.

Google’s Most Effective Strategies and Countermeasures

Both Yahoo and Microsoft are keen on implementing new marketing strategies. Moreover, Yahoo has seconded its marketing strategies with the incorporation of new technology. With Microsoft’s heavy investment in research, the company will attain a bigger marker share with time. The incorporation of new technology, research and marketing forms effective Google’s competitors’ strategies. It is because utilizing the ones, the companies will be able to attract more customers, some of which may be from Google. In response, the latter should ensure it is more active on the marketing front. With its advantage in terms of market reach, utilizing a new marketing strategy will help the company enjoy the benefits of having loyal customers. Customer loyalty is an essential component when it comes to safeguarding business perpetuity. Market analysis can also be a helpful tool, through which it can be well-informed on the actions and inactions of its competitors. Through the analysis, it will be possible for Google to invest in a smart manner and exploit the gap left in the market. It will help caution the company about competitors’ expansionary undertakings.

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