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Strategic Position Of The Google Corporation Commerce Essay

This single instance survey analyzes the strategic place of the Google corporation in its market and references some of the competitory forces as described by Michael Porter ( 1980 ) . The analyses will besides include some of the maxims from Sun Tzu and the art of concern by Mark McNeilly ( 1996 ) . Bernard Girard ‘s book on The Google Way ( 2009 ) was used chiefly for this instance survey. Investor relation web sites along with cyberspace articles supplemented the reappraisal of Google and to show fiscal Numberss for market comparing.

Google is arguably one of the most advanced and interesting companies today in their industry. Their beginning can be seen as the authoritative Silicon Valley company formation. Two friends from Stanford University, Larry Page and Sergey Brin, had a vision to do an impact on the information engineering industry. To be more specific their mission was “ to form the universe ‘s information and do it universally accessible and utile ”[ 1 ]( Girard, 2009 ) . But Google is anything but the typical company in mention to their schemes for traveling public and how the organisation operates.

The mid to late 1990s the calculating engineering universe was rushing towards promotions and the laminitiss of Google took advantage of this. Prior to this day of the month, computing machine engineering was more expensive for less in relation to storage, constituents, processing, and public presentation. Computers and the cyberspace were still limited to a narrow group of people which included universities, authorities and research workers, along with merely a little population fortunate adequate to afford this engineering. The mid 1990s experienced more rapid promotion in information engineering including the World Wide Web, faster processors, upgraded memory, accelerated artworks cards, more storage, and user friendly runing systems ( Windows ) . That affect made personal calculating a family name.

A big factor in this was monetary value per engineering. As Bernard Girard ( 2009 ) points out, Asia was emerging as engineering makers at the same clip promotions in computing machine constituents were maturating, giving lower monetary values for calculating engineering. The phenomenon allowed the Google laminitiss to capitalise on the market conditions which were favourable to them as it applied to constructing the calculating power they needed to carry through what they set out to accomplish. Not merely were they going the “ new entrant ”[ 2 ]into the information engineering industry, but the competitory force rule that Michael Porter ( 1980 ) describes that gave Google favour in the market from their start was “ the bargaining power of providers ”[ 3 ]( Porter, 1980 ) .

To make their monolithic database and sophisticated algorithms based on unreal intelligence ( AI ) , they would necessitate gifted programming people every bit good as the highest technological computing machine constituents which there were plentifulness of, restricting the bargaining power of the providers. There was besides no deficit of venture capitalists at that clip willing to put in the following Silicon Valley get down up. Harmonizing to in a 2007 survey of the top one 100 venture capital houses in the United States, found that about half of them were located in California ( Girard, 2009 ) . This made it easier for Google to obtain the capital necessary for their thoughts from the fiscal position.

Public Offer

When it came clip to open Google up to Wall Street in 2004, laminitiss Larry Page and Sergey Brin along with new their new spouse Eric Schmidt made a tactical move to better their company ‘s place[ 4 ]at its initial public offering ( IPO ) . Analyzing the methods of an IPO, they decided to utilize the OpenIPO in stead of the standard public offering. As Girard ( 2009 ) explains, the OpenIPO resembles the Dutch auction where the marketer sets a command monetary value and the figure of portions, and allows the investors to offer what they think is the just monetary value. In the terminal, all winning commands will pay the exact same monetary value regardless if some of the commands were higher, which is in contrast of the typical Wall Street IPO which allows investing bankers to pull strings the system in their favour. The OpenIPO scheme gave Google the credibleness, assurance, and favourable public sentiment from the start.

Market and Financial Position

Google was non formed yet when the World Wide Web took off in the mid 1990s. The internet hunt market was shared by Magellan, InfoSeek, AltaVista, Yahoo, Inktomi and Northern Light ( “ Web Search Engine, ” n.d. ) . Although Google formed in 1998, its hunt engine ( and chief constituent ) started to derive market portion in the twelvemonth 2000[ 5 ]through its alone engineering and basic place page design. In 2002 Google was in front of both Yahoo and MSN by a half of a per centum to a per centum in the market ( 29.2 % 6 ) . By May 2003, Google had 55 per centum ( 55.2 %[ 6 ]) of the planetary hunt engine market portion with Yahoo at a distance 2nd ( 21.7 % 6 ) . As recent as March 2011, Google ‘s claim on the hunt engine market is about two-thirds even though Microsoft has been deriving as of recently largely due to its Bing hunt engine and Yahoo which is included in the Microsoft statistics from their partnering ( Parr, 2011 ) .

Google ‘s fiscal place is really strong. In footings of gross, the company grew from 86 million in 2001 to over 29 billion dollars reported ( unaudited ) in 2010[ 7 ]( “ Google investor dealingss, ” n.d. ) . Google has managed to increase their grosss every twelvemonth within that clip and the bulk of that comes through advertisement. For illustration in 2010, 28 of the 29 billion dollars were logged in under entire advertisement revenues7.

Many points com ( .com ) companies did non last in the market and faded after the early 2000s, and if they did, struggled thenceforth. Google nevertheless has proven to be a profitable company. In 2001 their net income was merely under seven million dollars while gaining four cents per portion outstanding[ 8 ]( “ Google investor dealingss, ” n.d. ) . They have since grown to a net income of eight and a half billion dollars and impressive net incomes per portion of 26 dollars8 ( “ Google investor dealingss, ” n.d. ) . Though competition in the engineering universe is ferocious, Google ‘s fiscal figures still far outweigh its two closest rivals in the information engineering web services industry, Yahoo and China ‘s Baidu. To day of the month Google ‘s entire grosss are greater than Yahoo and Baidu by 23 and 28 billion dollars severally[ 9 ].

Research and Development

A big factor in the success of Google comes from its committedness to research and development. Google spent over three billion dollars ( $ 3.7 bil ) towards research and development8 ( “ Google investor dealingss, ” n.d. ) . Compare that to Yahoo, harmonizing to their investor dealingss site, who describe merely over a billion dollars in 2010 for merchandise development ( up from merely two hundred million in 2009 ) , and Baidu who merely allocated merely over seven hundred million towards research and development9.

One of Google ‘s policies in human resource direction is non merely to get who they think is of great advanced endowment, but to let them some infinite to be originative. This is what is known as the 20 per centum regulation ( Girard, 2009 ) . Google is so committed to research that they allow their people to hold twenty per centum of their clip to work on research and non be devoted full clip on specific undertakings. This is non a typical policy in most organisations. The Sun Tzu and the art of concern maxim that applies to Google ‘s theory towards invention is “ Deception and Foreknowledge, Maximizing the Power of Market Information. ”[ 10 ]( McNeilly, 1996 ) . The rule refers to remaining connected to what your competition is involved in to be able to break respond to what your market is ordering at the clip.

“ If ignorant of the conditions of mountains, woods, unsafe gorges, swamps and fens he can non carry on the March of an ground forces. ”[ 11 ]( McNeilly, 1996 )

This is particularly of import in information engineering because it is more dynamic than most other industries. As Bernard Girard ( 2009 ) points out what sets Google apart from the typical company when it comes to the attitude towards development, is that it stays connected to the universe around them for thoughts that can be placed into gesture. One of the policies refering to this is the edifice of webs in their Silicon Valley country to listen to what other companies are making and what may be the following start up new entrant on the skyline ( Girard, 2009 ) . They besides encourage their employees to remain connected to their alma maters and other university pupils to remain in touch on new thoughts in the market.

Strengths and Failings


Google is a big corporation whose strength relies on its current engineering and invention. They have dynamic leading in laminitiss Larry Page and Sergey Brin, who have the vision and the agencies to set it frontward as they have demonstrated from its origin in 1998. An obvious strength is their current fiscal place. They are in good place monetarily to put in new engineerings and combat legalities and new services. As stated in the old subdivision, most of their grosss are generated through advertisement. What set Google apart from the competition when it launched its hunt engine was the theoretical account they incorporated. It is known as the cost-per-click scheme which was a system that allowed advertizers to pay what they thought their ads were deserving which mathematically was translated in hunt rankings ( Girard, 2009 ) . Google gave advertizers a ocular manner of tracking the effectivity of their selling dollars. This was a discovery because before Google ‘s method, it was hard for companies to track their selling attempts whether it was on the web, or even in other media mercantile establishments such as print and telecasting. In an indirect manner, Google became a utility merchandise or service[ 12 ], mentioning to Porter ‘s force drive industry competition, in relation to advertisement locales besides the cyberspace. Google offered companies a more just manner to judge what they thought they should monetary value their advertizements every bit good as the ability to see their effectivity. For sellers, this information can be invaluable and a better chance than unsighted ads.

Another one of Google ‘s strength is its algorithm that runs its page superior hunt engine. It is different from the typical methods of other engines because its aim is to rank pages non merely by its word content but besides uses unreal intelligence for relevancy. Their hunt engine algorithm attack can be viewed as “ avoiding strength and attacking failing ”[ 13 ]. Alternatively of following methods and theories of the position quo web engines, they developed a alone system that has revolutionized cyberspace seeking today.


It is difficult to penetrate failing in a company of this magnitude, but no organisation is without them. The obvious is the possible loss of cardinal members which can include anyone from the executive direction squad to its package applied scientists. The information engineering market is really competitory because it relies to a great extent on scientific and mathematical endowment that is non easy to come by if you measure it against all subjects overall. Identify production employees may choose to go forth to other organisations for better offers or get down up their ain engineering company. Google ‘s tremendous growing could perchance be a failing. With that in head other companies that are viing to recover a portion of that big portion that Google presently owns. An illustration is Microsoft ‘s Bing Maps characteristic birdseye position which is direct competition with Google Earth for use as it refers to the menace of new merchandises and services from rivals.

They will besides hold to battle new companies that will come in the information engineering sphere looking to capitalise on the wagess Google has discovered. One such company that has developed a new computational cognition hunt based on natural linguistic communication and new algorithms is Wolfram|Alpha, the really company that produced the package Mathematica ( “ About Wolfram|Alpha, ” 2011 ) . Such a company could turn out to be the direct competition for Google ‘s hunt engine market because of its ability to fit the edification of the algorithms that drive both organisations search engines.

Technological Position

Google puts stock in invention. As mentioned, they encourage coaction and creativeness. This is apparent from the engineering they are able to house. Harmonizing to author Bernard Girard ( 2009 ) , Google ‘s informations house, which is built on a really powerful package platform, may dwell of about four hundred and 50 1000 ( 450,000 ) personal computers. There in house intranet known as Moma, is highly powerful and Acts of the Apostless as their endeavor broad application which reveals legion statistics about their operations every bit good as an unfastened position of all of their research and development. Google ‘s technological armory is stocked good plenty to vie against rival companies.

Promotions and Emerging Markets

Some of Google ‘s promotions in the market include their web browser Chrome, which is one of the fastest, the popular Android Mobile runing system, and their Gmail service. The Gmail service has emerged as of the more popular electronic mail systems today that offer an extraordinary sum of free infinite. They accomplished this through by leveraging their cloud engineering which is besides emerging today. They besides plan to offer about all personal and workstation computer science applications through the cloud engineering which would straight vie against Microsoft. One illustration is the current research and development of the Google Chrome OS ( runing system ) which is intended to run entirely on computing machines specifically manufactured from Google ‘s spouses ( “ Google Chrome OS, ” n.d. ) .

Google has even partnered with the company GeoEye to establish a orbiter for higher quality imagination for their Google Earth service in 2008 ( “ Google. ” n.d. ) . They have besides entered the renewable-energy market with their subordinate, Google Energy, and invested in a air current undertaking in the province of North Dakota ( “ Google. ” n.d. ) . Another market that Google is experimenting with well is the broadband service. They have an understanding to put in the Google fiber ocular system which will offer broadband at extremist high velocities upward towards one hundred times faster than normal broadband harmonizing to Google. They are besides beta proving a free place radio service under the name Google TiSP.

International Policy

One of the negatives that ever need to be dealt with in mention to big corporations is its place in the international community. Antimonopoly Torahs can be used to restrict the power one company may hold. Google ‘s already has had a negative experience abroad in relation to China. Harmonizing to subscriber Steven Levy ( 2011 ) , Google had a unsmooth relationship with China due to the state ‘s censoring policies which were contrary to Google ‘s positions and manner. Google ‘s service was besides different over at that place because it had to accommodate to the possibility of turning over informations to the Chinese authorities, something they wanted to avoid. As Levy ( 2011 ) explains it got so bad that even Google ‘s policy for their employees to take 20 per centum of their clip towards independent ventures was non good received in China ‘s civilization. This is an illustration of non merely are at that place different and possible alone Torahs a corporation may hold to stay by, but besides a different life style and civilization may impede how a company may run its operations.


Answering the inquiry about how Google can better market portion is a hard one. Google is fundamentally viing against itself in its ain industry. This is why they expand in all waies to derive portion and enter other markets. Their market portion can better greatly with the success of their extremist high velocity broadband service experiment. Ultra high velocity connexion for everyone, even in outlying rural countries is the hereafter. Google has the engineering, resources and ability to present this. Another possible market Google would hold the capableness to enter is the smart contraption industry. This emerging engineering uses programmable characteristics in contraptions that would let control for family energy use. The industry is still new, but a company such as Google could do an impact because of its package programming endowment, cyberspace laterality, and its new broadband engineering.

Google ‘s direction is really progressive. Harmonizing to Girard ( 2009 ) they took autonomies to put in a collaborative environment to be able to link its employees to each other every bit good as to the outside universe ( universities, other companies ) to better react to the alterations in demand from clients and emerging engineerings. For illustration users were going more defeated with internet adventurer in the late 1990 and early 2000s. Google responded with the Chrome web browser to take market portion. When electronic mail services were inexpensive on storage, they answered with Gmail. Now the populace has been demanding more velocity for the rich applications across the cyberspace and Google is reacting with an extremist high velocity service.

A twosome of Torahs that Google needs to remain on top of are privacy Torahs and antimonopoly Torahs. One jurisprudence in peculiar, The Patriot Act, may impact Google in a negative manner because there are Torahs that all companies have to stay by, which may intend passing over of information when requested. This could hold consequence on use and market portion due to how the populace may comprehend the elephantine corporation. Antimonopoly Torahs can impact Google because of its growing and size. Google has a history of purchasing companies to get different engineerings which included KeyHole, DoubleClick, Aardvark, and YouTube to call a few ( “ Google. ” n.d. ) . Laws that prohibit monopolies may hinder Google ‘s quest to turn further in certain markets.


One would hold to inquire the inquiry, will Google be able to prolong its ain growing? Information engineering is a wide field that covers many facets of the industry. Google ‘s corporate scheme judgment by the sum of services it offers and the 1s it is seeking to breakthrough makes it an aggressive company that likes to remain on top of invention and market portion. Turning excessively fast can be an achilles heel at some point, because a company can stop up distributing itself excessively far while disregarding promotions and alterations it might necessitate for its chief services.

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