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Key Challenge
Google is a large corporation that net worth is $367.6 Billion (Forbes, 2015). The company evolved quite fast since its formation in the 1996 by introducing the most popular online research engine. However, after intensified technological advancement and emergence of new innovations, it became more difficult for Google to maintain stable growth and constant evolvement. The key challenge faced by the company is decreasing of its net growth. According to the last estimations, the percentage of Google’s net growth decreased from 19.1% to 7.7% in 2016 and estimated 7% in 2017 (E-marketer, 2016). This problem may create obstacles for the company’s further development. One of the main issues here is the rapid changes in the IT market that is prone to severe competition, high fluidity, and unstable conditions. It is especially difficult to remain competitive in this sector, so as to preserve stable and rapid growth. While Google managed to expand through the acquisitions, its growth with the help of innovation and original products may be hindered due to the various reasons that stem from the internal and external environment.
External Environment
In this case, the external environment can be analyzed with the help of PESTLE analysis that evaluates the political, economic, social, technological, legislative, and environmental factors affecting the business in the external environment (Miler, Vandome, and BcBrewster, 2011). In the case of Google, it is essential to evaluate multiple components existing in the external environment that affect the company’s business and further growth. Political factors that influence the company represent constant criticism and antitrust issues to Google due to its status as a monopoly and its ability to control the information. It was noticed earlier that the company is the most popular search engine for the users. The company controls a wide variety of the information making it responsible for users’ decisions. The politics criticize Google for its constant desire to decrease the costs through the acquisitions of the foreign company. Due to the political pressure, the company cannot enter the lucrative foreign markets, like China, and, thus, cannot expand further.
Despite the fact that Google is a large multinational and has high rate of net worth, it is dependent on the market fluctuations and unstable international economy. It was noted earlier that the company tends to acquire the companies overseas to avoid the high taxes and expand. However, as the firm managed to accumulate large amount of cash and it tends to hold the companies overseas, any changes in currency and exchange rate will limit the ability of Google for its market capitalization. Also, the U.S. government could pressure the venture to return its assets, which will lead to higher taxation. In this case, its slow growth and financial problems will hinder the ability of the company to remain successful in the market.
Social factors may affect the company’s ability to grow strongly. First of all, one of the major problems facing by Google is its weak presence in the market of mobile search engines and social networks. It was reported that Google is not popular among the mobile users. In the case when laptops and PCs are replaced with the mobile devices, the company will not be able maintain a strong presence in the market. Social media is particularly popular among people, while Google Plus is the least favorite way for the users to connect with their friends and family (Denning, 2015). In addition, people do not trust Google with their information due to the image of the company and its ability to hold and control enormous amount of public and private data. In this case, the company will not be able to grow if it does not revisit its social network potential and its ability to create more effective research engine for mobile phones.
Technological factors affect Google the most, as it is the leading company in the IT sector. There are multiple competitors in this business. As the company entered the mobile market, it has to consider the strengths of such competitors as Apple and Samsung, and popularity of such platforms like IOS and Android. Also, the technologies tend to change quite rapidly requiring the companies to produce innovations as frequently as possible. Google’s slow growth and unpopularity among the consumers may create a barrier for its ability to present new solutions in the market. Growing sophistication of the applications creates an easier way for the competitors to create alternatives to Google’s products.
Legal and environmental factors affect Google’s growth and its ability to expand relate to the specificity of IT market and company’s acquisitions abroad. Legal factors affecting the company’s business roots in the necessity to take into account both international and local legislation when acquiring the companies abroad. Google owns a large portion of patents that raise disputes about the ownership rights, which lead to legal suits and loss of finances. A lot of Google’s products require a lot of electricity that makes the company dependent on this resource. Pressure to use environmentally friendly resources of energy can increase the operational costs for the company.
Internal Environment
The company has a lot of potential and opportunities due to its strong internal environment. Google is ranked second in the list of the best employers and is known for its excellent treatment of its workers (Forbes, 2015). The company maintains a productive internal environment that fosters innovations and change. It enables Google to produce innovations and updates of its products easier. The company attracts key talent in the industry creating comfortable and benefiting opportunities for the employees. Also, the company controls a large portion of the information and maintains a strong presence in the IT business. Google owns a lot of companies abroad that create a lot of opportunities for the firm to enter new markets and expand. At the same time, the company showed its stagnation in growing and inability to expand, which points to the internal and external problems in the company.
Alternatives and Justification
It was identified that the core obstacle is the image of Google among the public and politicians. The company is not popular due to its monopolistic intentions and the ability to control a large portion of information. In this case, the first alternative for the company’s resolution of the current issues will be to improve its solutions to transparency of its actions in terms of the operations with the information. The company has to stop its politics of favoritism of the data that benefits the company or its acquired businesses. Google has to develop a solution for its engine that would work with the information evenly and produce the results on the basis of the users’ interests rather the company’s interests.
Another alternative has to concern Google’s development in the segment of social networking in order to improve its competition in this segment and outrun such competitor as Facebook. Specifically, the company has to elaborate user-friendly and customized experience in the social networks for providing an exclusive experience for the users. It will help the company to improve its image and to attract more consumers, including the mobile sector as well. By creating more options for the users, Google may compete with Facebook.
Overall, the first solution tends to be the most effective, as it provides the opportunity for the company to resolve the problems on several levels, including political and social areas. By maintaining the politics of transparence and responsible treatment of the personal information, by for example decreasing the amount of targeted ads, the company can attract more customers and improve its image in the face of local and international governments.
References
Denning, S. (2015). Five Reasons Why Google+ Died. Forbes. Retrieved from: http://www.forbes.com/sites/stevedenning/2015/04/17/five-reasons-why-google-died/#7b4ad94033c0
E-marketer. (2016). Google's Gains Slow, but Big Mobile Growth Continue. Retrieved from: http://www.emarketer.com/Article/Googles-Gains-Slow-Big-Mobile-Growth-Continues/1013531#sthash.iCgBxHjy.dpuf
Forbes. (2015). America's Best Employers: Google. Retrieved from: http://www.forbes.com/companies/google/
Miller, F. P., Vandome, A. F. & McBrewster, J. (2011). Pest Analysis. Saarbrücken, GE: VDM Publishing.
