Focusing on Providing the Best User Experience

Google’s main focus is to push the limits of existing technology to provide a fast, accurate and easy-to-use service that anyone seeking information can access. Google has been focusing on providing the best user experience possible. Its key ingredients are relevance, comprehensiveness, freshness and speed providing users with best possible result. Google wants to have an improved infrastructure to make their engineers more productive. They want to expand the workforce for anticipated growth, expand further into international markets, and continue developing new products

Google wants to push their add system since they take it very seriously. In addition, support thousands of advertisers to use Google’s Ad Words program advertising. It also focuses on innovation and make sure that their tools are running everywhere. Similarly, competitor like Apple, Facebook has been attacking Google from all side so they focus on development and research to bring new products to users Google’s Financial Position As of quarter ended September 30, 2013, Google has had another strong quarter $14. 9 billion in revenue. It was increase of 12% when in comparison to the 3rd quarter of 2012.

The revenue increased from $14. 1 billion in Q2 to $14. 9 billion in Q3. The Earnings per share was $8. 71 billion in Q3 2013 when in comparison to $6. 47 billion in Q3 in 2012. The Beta ratio of Google was 0. 87 which is higher than the industry 0. 74. The price to earnings ratio of Google was 30. 54. The Sales considering a 5 year growth average was 24. 77 which is a high when in comparison to the industry. The EPS considering a 5 year growth average was 19. 55. The capital spending by Google is relatively smaller as compared to the industry. The quick ratio is 4. 74 which is good. It shows how liquid the firm is.

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The current ratio is 4. 76. The long term debt to euity ratio is 2. 7. It is due to the acquisitions made by Google. The total debt to equity ratio 2. 7 which is good. The profitability ratios, gross margin 5 year average is 62. 19% which is good. The earnings before interest, tax and dividends for a 5 year average are 36. 84%. The Net profit margin for 5 year average is 24. 43%. The return on Assets (5 year average) is 15. 17. The return on equity (5 year average) is 18. 43. These are lower than the industry averages. The return on the assets and equity of Google are low. It has to be improved in order to maintain the profitability.

The profits when in consideration alone are high, but when in comparison to the investments and the equity, it is low. The overall profitability of Google is high, this is due to the high advertising revenues and also due to the various acquisitions. Google’s External Opportunities and Threats Google doesn’t have a geographic dependence because Internet search is applicable globally to all race and cultures. Google has its offices globally in many countries. Google offers a personalized search engine for the various countries and as the language support improves the company is looking at an increasing market share.

With the widespread availability of computers, tablets, IPads etc over the world, the use of internet is on an ever increasing rise. Google looks to making the experience of the web better and more personalized. They look into helping the customer access what exactly he/ she wants. They also are very interested in helping the developers to contribute to the online system more easily. In this paper we have used the Porter’s 5 force model to analyse the external environment and also to understand the industry. 1. Potential new entrants It is low for Google. Potential new entrants have to take into consideration the resources available.

Firstly they require a huge capital to build a sophisticated and complete network , both in terms of infrastructure as well as contacts. Furthermore Google is a established company, with a strong brand name. Also, the intense competition in both the online advertising industry and the search engine industry reflects that the market is relatively saturated. Despite the low switching costs, it is very unlikely for a potential new entrant. 2. Bargaining Power of customers It is strong. Buyer power is strong both in the internet and computer software industries. There are many competitors that host alternatives to Google’s offerings.

Majority of Google’s revenue is generated from advertising. If people reduce the use of Google’s services then the profitability of Google will be affected. As the switching cost is low, Google comes up with variety of products to meet the needs and expectations and wants of the people. Also to attract the customers, it is constantly coming up with various techniques and products. Most of the Google products require the creation of accounts, which enable Google to track the interests and purchasing behaviour of the buyers and also helps them to be in track by coming up with various products.

There are also many companies that create mobile phone operating systems , making it possible for customers to buy other products that are not Google based. This creates a situation which enables buyers to control the pricing. 3. Bargaining power of Suppliers This is low. Google’s ad system is a reliable source of Income because both the ad-making partner and ad-receiving individual are both Google’s clients. In 2011, Google earned revenue of USD 37. 9 billion, which its 96% came from online advertising. The finance and insurance industry was the largest portion of advertisers, spending over USD 4 billion.

The Ad Word bidding system eliminates rare negotiations between advertisers and Google salesperson as well as concerns about price increases, and it makes billing simple and more transparent. Advertisers have no bargaining power as Google controls most of the internet search ads. The Android phone system has been selling with great success for all mobile phone companies, so suppliers of these items want to maintain a good relationship with Google as well, putting them in a somewhat powerless position

4. Competitive Rivalry It is moderate. Google does have its competitors, the two strong ones being Yahoo and Microsoft’s Bing, it still commands a large majority of the internet services. Google’s search engine is the most used year after year, with innovations like Google doodle, Google earth, Google+, etc. , leaves the competitors to try really hard to catch up. Google has been successful in staying ahead when in comparison to yahoo and Microsoft. When introducing the Android operating system, Google put themselves in competition with Apple’s iPhone.

While it may be true that Android phones make up a larger share of the market than iOS phones, Apple only has a few versions of a phone that uses their OS. Many different companies have released Android power phones, making the market much more saturated. However, there is no one Android phone that would come close to the market share of the iPhone on its own. 5. Potential Substitutes This is very low. The internet has become the primary source for information gathering and queries, and the backbone of this is built off search engines and other services that return the results needed.

With such a commanding presence, Google has itself positioned for long term success in the market. As of now there is no foreseeable substitution for Google Inc. Google Internal Strength and Weaknesses S. W. O. T analysis is the analytical analysis for this paper to discuss the internal strength and weaknesses of Google. Google provides soft-wares such as Google chrome, Google toolbar and, Gmail. They started as a search engine but it has continually improved to enhance its many operations and also generate revenue through advertisement that is cost effective and highly relevant.

They have an opportunity to grow by analyzing its current status which involves doing an analysis of S. W. OT (Strength, Weaknesses, Opportunity and, Threats), through improving strength, reducing its weaknesses, taking advantage of the opportunities and being aware of the threats (Barosso,2003). According to Barosso (2003), it is important to distinguish between strength and weaknesses because they affect the company’s internal environment. Google has gained upsurge popularity because of its technological advancement. This technological advancement provides users with better experience.

Many companies have failed to revolutionize web searching; therefore, Google can maintain its brand equity through strong marketing, good business leadership, and effective financial management. Google Inc. remained the most profitable even when there was global recession In 2008 and it earned a total of five billion dollar revenue through advertising which was a seven percent increase from a year ago (Barosso, 2003). This was attributed to the rising spending on its website and Google Adwords, which is an advertisement program, allow businesses to display their products and services.

Businesses pay if their link, which appears in the search results, is clicked on. Google has much strength, but it is coupled with some setback. The two primary weaknesses that have been exposed to weaken Google are issues of technology and filtering of information. Page ranking in Google has been manipulated due to political reasons. Google watch has criticized these ranking techniques on Google page, as they discriminate new websites. As a result, Google has been facing many lawsuits. In 2006, kinderstart. com sued Google because their page ranking was set to zero.

Different people have voiced this like MyTrigger. com and a transport tycoon Sir Brian Souter. Another issue that contest Google’s reputation is the filtering of material supplied. Filtering image and text has been inadequate to Google. Filtering contents is necessary to protect children from explicit online contents. Competitors such as AOL, Yahoo and, Microsoft have been researching on how to filter website URL contents. The United States justice department encouraged a study inviting all search engines to research on how to filter contents in order to protect on children from explicit online contents.

Google withdrew from this afraid they would give of their trading secrets and privacy. This was not a good move because it portrayed poor choice from the manager considering their content was not up to standard according to the United States government. Google is capable of monopolizing if it changes its current position. Business Strategies Google mostly depends on one source of income, which is Google advertising and having a strong financial base is a long-term strategy for Google. In order for Google to have a fast income growth, Google should diversify its earnings and risks.

It should look for alternative ways to offer advertisements such as offline. This is a long-term strategy to close the niche for offline and online advertising. The company plans to achieve offline advertisement to become almost similar to online advertisement. Google Wallet long-term strategy will also improve on Google weaknesses such as privacy especially with increased consumer’s transactions requires more privacy. Google should turn their strategy into action based on their course of their performance. The ultimate goal is to arrange information gathered from the world and make it universally it available to users.

They should systematically unfold strategies to revive integrated action plans. Google going for everything that is connected with its core business is a great strategy. This is because Google needs new sources of revenue and have a competitive advantage over its competitors. One of Google weaknesses was patent litigations. This patent litigation is costly and time consuming. These litigations have distracted the company’s performance on innovation. Google’s competition strategy is to acquire intellectual property. Acquiring Motorola was not a strong strategy for Google because Motorola has not been performing very well.

This is evident because Google Motorola has been making many losses and an increased competition from rivals has diminished its brand strength. However, Google should take advantage of its hardware and its market share to complement its software products. The new Motorola phones should increase Google market share. Google should take advantage of the growing number of internet users and has a chance to increase revenue from the advertising service and mobile device users. The new Google fiber cable will deliver internet content a hundred faster than the current provider will.

Google investment on this infrastructure will give them a competitive against its rivals. Implementation of strategy Google should use its strong financial situation to implement its long strategy by advancing its research and development of products. Google’s revenue is fifty million dollars making it among most profitable and successful companies worldwide, which has mostly been generated from desktop users, but the number of mobile users, are increasing very fast. By taking advantage of the number of mobile users, this creates platform for its Good Adwords service which is it major source of revenue.

Additionally, launching its notebook, tablets and, smart phones into the market will strengthen its market share. This will diversify Google income and integrate its software products. Increase in Google products such as Google maps, drive, and OS will rank Google search index better. Google should also focus on hiring of additional staff and evaluating staff through SMART which increases employee productivity (Mantere 2012) or holding competitions to come up with innovative products and ideas to diversify. They should also research on ways to promote Google Wallet competitiveness as a medium for online payment.

On the marketing department, Google should make some of its products premium. Some of these products such You Tube can broadcast Movies and Music videos for customers to who intend to sell their services. Google should also re-introduce Google Affiliates and market it along with Google Adwords as an alternative. The use of Google Affiliates is important because it provides users with an alternative that charges on fixed cost and is suitable to assist businesses and customers in educating customers as well as reviewing businesses in industries such as Travel and Hotel businesses, which are sensitive.

This can advance to make Google Wallet the medium of payment and use of maps to locate the business locations. This will improve Google’s profitability. Basing on Pro-forma financial statement there will be a significant increase on the total revenue due to the number of mobile users increasing, but the overheads will increase as the budget for the research and marketing departments will increase but the effect will not be significant as it is a fixed cost. Revenue would also be increase from additional revenue from Google Wallet transactions.

Strategy Review and Evaluation Google should determine its SMART goals so that they can review its strategic process to analyze the employee motivation and productivity. An income statement for the period needs to be made for evaluation of the sales. Google should analyze if there was a positive progress and compare its income statement before these strategies were implemented. They should also evaluate its success through surveying its customers and business associates.

For the re-introduction of Google Affiliates results can be analyzed by the number of businesses signing in for this product, as well as the number of customers liking this on Google plus product. The revenue generated from the commission earned can be used to quantify the financial success. The subsequent success of this product will also will also assist in evaluation of Google Wallet product. Conclusion Google started as a search engine but has continually improved to enhance its many operation and also to generate its revenue.

Google has opportunity to grow and monopolize by analyzing its current status carefully and taking the advantage. Google will continually gain upsurge popularity because of its technological advancement. This is evident with the release of Google smart phones and tablets. Google going for everything that is connected to its core business was a great strategy. Acquiring Motorola will help Google in the long run because of its market share. In order for Google to gain a competitive advantage from its competitors, Google should stop relying on one source of revenue.

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