Strategic Profile and Case Analysis Purpose
The event under focus is the restructuring of the world’s most renowned web search company Google into a subsidiary of Alphabet. The decision to change the structure was made in 2015 when Google founders and key people Larry Page and Sergey Brin faced substantial criticism concerning their increasing diversification of risky investments unrelated to the company’s mission statement. The result was the appearance of a parent company Alphabet and a clearer distinction between the Internet services and other corporate projects.
Google has amassed a considerable amount of criticism. Countries, companies, and consumers blame Google for violation of privacy, search bias, and a domineering market position. The restructuring has contributed to the improvement of Google’s image. Nevertheless, there is a high level of uncertainty as to how this company can continue its activities and return its positive reputation. The purpose of this case study is to analyze Google from different perspectives and to ascertain the most viable strategy that would give the company a competitive advantage and clear its corporate name.
Situation Analysis – External
Technologically, Google’s opportunities lie in further automation and higher interconnectedness of homes, people, and possessions. Such technologies as the Internet of Things and driverless cars represent a trend in the shift to automatically controlled vehicles and objects connected by the Internet.
The demographics of China constitute a substantial threat to Google. The company’s initiative to expand its presence to China was a notorious fiasco, which resulted in Google’s retreat from the country. Considering the growing population of China and its overall anti-Western focus, Google will likely face customer stubborn resilience and loyalty to Chinese alternatives.
Economically, Google generates millions of dollars by maintaining YouTube, Google Play, Google advertising, and other Internet-based services. At the same time, the company is known for its investment into high-risk venture capital. Such initiatives demand large financial input without the guarantee of the return of investment. Ultimately customer behavior will dictate the success of Google’s developments.
Politically, Google faces much controversy due to its expansion, violation of users’ privacy, and collection of personal data. Multiple governments have pursued the advancement of antitrust laws in response to Google’s domineering position, which drives competition, including the domestic Internet services providers, out of the market. Meanwhile, governments, fear digital spying and may seek venues to curb Google’s activities.
Google has the capacity to create a global culture, which transcends national boundaries. Combined with other multinational giants present worldwide, it may already be a developing reality. However, there is also a risk of a paranoia culture rising in response to Google’s expansion.
On a global scale, Google can benefit from the pandemic and the overall shift towards distance learning, business, and the reduction of real-life interactions. As people are pressured into staying home and avoiding mass gatherings, they will find solace in using the Internet and Google services in particular.
As the company has the entire surface of the planet on its radars, it can analyze the Earth’s physical environment. Specifically, it can classify territories based on their level of environmental pollution and living conditions.
Applying Porter’s Five Forces model to Google can highlight important the company’s superior competitive advantages. First, Google mainly produces software, which presupposes a large variety of suppliers, thus decreasing their overall bargaining power. The bargaining power of customers is average due to the substantial supply of alternatives. However, as many apps rely on Google services, many customers are forced to use them, which decreases their bargaining power. There is a high threat from substitute products as Google competes with Microsoft in search, Uber in self-driving cars, Facebook in advertising, and Apple in digital electronics. These companies constitute a strong level of competitive rivalry in the industries. On the other hand, such fierce competition makes the chances of new market entries very low.
Situation Analysis – Internal
Google’s services and products are numerous, meaning the abundance of value chains is essential for their provision. Most of the economic activity is generated by Google’s inbound logistics, which is the Internet search. All content is created by users, and Google bears no costs for them (Dubovskiy, 2017). As Google is a subsidiary of Alphabet, its operations are divided into the actual Google, which is related to search, advertising, and sales, and Other Bets, which encompasses investments nor related to search. Outbound logistics do not constitute a major operation for Google, as there are few physical stores, and most of the sales are made online. Google owns one of the most popular marketing platforms, which provides the basis for its own sales (Dubovskiy, 2017). Service is done via Google forums and apps, which provide customer feedback. Altogether, the most value is created by inbound logistics and online tools, while outbound logistics are the least effective.
Google’s strengths lie in its dominance in the global online search market. Furthermore, the necessity of Google services, such as Google Maps and Google Play Store, for multiple applications forces consumers to choose devices compatible with these services as opposed to those, which cannot access them as is the case with current generation of Huawei and Honor smartphones.
Weaknesses include strong competition in social media, which is represented by Facebook, Twitter, and other platforms, which outcompete Google Plus. Another problem is the mounting criticism of Google’s search engine, which takes blame for bias and the collection of personal data (Esteve, 2017). The negativity surrounding Google’s violation of privacy compels consumers to use other search engines with fewer controversies.
Opportunities for Google encompass the development of the Internet of Things and artificial intelligence. As the physical environment becomes more connected and regulated by AI algorithms, consumers will show more interest in further automation and online control over their possessions. As a result, investments in this sphere are likely to pay off in long term perspective.
Threats to Google stem from antitrust regulation and privacy laws. Google’s expansion is seen as an alarming factor by both competitors and countries, which leads to negative publicity and protectionist measures designed to help domestic companies compete with Google. Finally, the notoriety for privacy violations puts the company at a disadvantage when faced with services, which block Google’s ads and offer less intrusive search alternatives.
The first strategy is pushing for corporate social responsibility. Google is already a top choice among search engines. However, negative publicity forces consumers to seek alternatives. Therefore, a possible solution is to promote CSR and accentuate how Google itself excels at fulfilling its social responsivities. The disadvantage is that Google will be forced to acknowledge its intrusion upon privacy.
The second strategy is changing corporate name and image. Google management has already followed this approach by restructuring into Alphabet. Aside from being a well-known brand, Google is simultaneously an infamous one. For many people, Google is almost synonymic to spying and search bias (Esteve, 2017). Changing a name may prevent the formation of negative associations in the consumers’ minds. However, it is a high-risk venture, as there is no guarantee that a new name will remove the negativity.
The third strategy is further diversifying Google’s products and services, with a higher emphasis on the physical goods. The less information is gathered about a consumer, the less concern there will be about privacy. Selling more physical objects (for instance, driverless cars) will allow the company to draw consumer attention away from the collection of personal data, as vehicles are designed for a different purpose (Kaur & Rampersad, 2018). The disadvantage is the high risk of the investments and diversification. This is a preferred strategy because it is not as radical as changing the corporate name and possibly losing customer loyalty. Moreover, this course of action has more substance than the CSR strategy and can easily be proved with the actual sales.
Strategic Alternative Implementation
The first step is stopping the promotion of Google as a primarily search engine company. Instead, the marketing should focus on the company’s logo “Do the right thing” in relation to physical goods. The more news there will be of Google producing and selling products not related to the Internet search, the less it will be seen as a search company, similar to Apple no longer being viewed as a computer hardware manufacturer.
The second step is expanding the choice of physical goods. Currently, Google focuses on electronics and driverless cars (Kaur & Rampersad, 2018). Instead, it can opt for smart house appliances connected by the Internet, clothes, entertainment tools, such as Google Stadia, and other non-virtual goods, which actually be seen and touched. The company should redirect more of its cells into developing and manufacturing these objects.
Finally, Google should continue the restructuring. Currently, there are two subdivisions – Google and Other Bets, which presuppose search engine as the primary asset. Instead, the “Other Bets” can be expanded to include sections like IOT home appliances, Google fabrics, and other possibly engaging labels. Combined with the already existing investments into the Internet of Things and driverless cars, the diversification of Google’s goods and services has the power to revolutionize the company and remove the label of a controversial search company, which violates user privacy.
Dubovskiy, J. (2017). Google value chain analysis: Benefiting from no-cost inbound logistics. Business Research Methodology.
Esteve, A. (2017). The business of personal data: Google, Facebook, and privacy issues in the EU and the USA. International Data Privacy Law, 7(1), 36-47.
Kaur, K., & Rampersad, G. (2018). Trust in driverless cars: Investigating key factors influencing the adoption of driverless cars. Journal of Engineering and Technology Management, 48, 87-96.