I. Environment Scan: Strengths, Weaknesses, Opportunities & Threats
Currently, Google is an Internet company which has gone well beyond search business (Edelman & Eisenmann, 2011). Against a stated philosophy of "It is best to do one thing really, really well," Google has diversified core business, i.e. search and paid listings, into a broad range of product and service offerings cutting across numerous industries and business activities. Notably, Google has diversified from search business into communication applications, productivity applications and computing operating systems (Edelman & Eisenmann). This expansion mandates an environment scan of Google's to be not only limited to search business but should, in fact, include, for example, mobility, devices and hardware, browsers, operating systems. Thus, in order to better perform an environment scan of Google's operating environment, scan should cover areas of search and paid listings; mobility, devices and hardware; hosting; communication applications; productivity applications; and browsers and computing operating systems.
In search and paid listings area, Google dominates U.S. and international markets at 67.7% and at 90% shares in major European countries (including, for example, Netherlands, Germany, France, Spain, Switzerland and United Kingdom), respectively (Edelman & Eisenmann). Major search engine and paid listing companies, primarily Yahoo! And Microsoft's Bing, show steady decline to market share compared to Google over 2004 – 2009. Google's market dominance is reflected in company's balance sheets over 1999 – 2007. Notably, Google's major business driver, i.e. search and paid listings, listed under "Ad Revenue," show a substantial growth from $0.2 million in 1999 to $21,795.6 million in 2008 (Edelman & Eisenmann).
In mobility area, Google has shown remarkable diversification into mobile phone and application market. From a search and paid listing only company, Google has entered into mobility market by offering a Google Phone, Pixel, a strategic move which expands company's business from search indexing and licensing business into direct Business-To-Customer (B2C) relationship ("Pixel Phone," n.d.). This pits Google against established mobile players including, most notably, Samsung, Apple, Huawei and HTC. Thus, as opposed to Google's initial strategic focus on search and paid listings, expanding into mobility market subjects Google to immediate competition against established and emerging mobile makers and, as such, would have to play by business and market rules, at least until Pixel Phone proves to be a value differentiated product offering, compared to current offerings from competitors. This is not to mention, of course, Google's Android OS and Andriod phones ("Andriod," n.d.), both discussed in further detail under "Strategic Recommendations for Sustainable Competitive Advantage".
In hosting area, Google, as shown in current case, competes against conventional publishers but is at a better competitive edge, compared to search and paid listing competitors, given Google's substantial search indices which offer publishers and writers unprecedented exposure to limitless potential customers. In balance, Google Books and YouTube, Google's flagship hosting services, have experienced different success in hosting and, more importantly, content market. If anything, Google Books, competing against established publishers and writers and running against cultural habits, particularly in Europe (France, more particularly), have encountered a series of intellectual property lawsuits based on unpaid royalty to publishers and writers. In contrast, Google's decision to delay paid listings on YouTube has been a sound one. If anything, YouTube has not only proven to be a major revenue source for YouTube, once paid listings were introduced into world's premiere video content platform, but has also expanded Google's business into content market and hence creating a new competition hotspot against music video and editorial content companies and publishers (Knopper, 2014).
In communication applications area, Google's introduction of Gmail has managed to capture a sizeable market share from competing services by Microsoft (Hotmail) and Yahoo! Mail. In addition to Gmail's unmatched capacity, 2G, Gmail offers collaboration, voice and communication services which continue to capture an increasing size of market share, particularly in word processing, spreadsheet and presentation applications as well as chat and voice functionalities as shown in more detail shortly.
In productivity applications, Google's Gmail, in addition to a broad range of cloud-based applications, continue to show strong market performance against established competitors. Notably, in lieu of conventional, app- and/or hardware-based infrastructure required for collaboration – including, as noted above, office collaboration applications such Microsoft Office suite – Google's cloud-based applications and platforms are increasingly adopted not only for individual users but for corporate ones as well, a market indication of Google's successful expansion into cloud-based services. As noted in further detail under "Strategic Recommendations for Sustainable Competitive Advantage," Google is best recommended to increase investment in cloud-based applications, services and platforms not only for cloud computing great promise in a broad range of industries but also for concept's growing adoption by users as opposed to conventional, app- / hardware-based product offerings which are, historically, expensive upon launch and, over time, becomes more obsolete and hence creates new needs and burdens budgets for individual and corporate users, let alone procurement, installation and maintenance challenges and costs.
In browsers and computing operating systems area, Google has shown strong market performance by offering Google Chrome and Google Chrome OS, respectively. In contrast to current browser offerings (e.g. Microsoft's Internet Explorer, Mozilla's Firefox and Apple's Oprah), Google Chrome has proven usability benefits including, most notably, convenience in entering web addresses (Edelman & Eisenmann), a broad range of add-ons which enable users to enhance browsing experience and convenient swapping and duplication of opened tabs. Inspired by cloud-based applications, Linux OS and using Google Chrome browser, Google Chrome OS is an open source OS ("Chromium OS," n.d.) which, still a project in progress, offers new potentials unavailable in current OS offerings such as Microsoft's Widows and Apple's Macintosh. As shown under "Strategic Recommendations for Sustainable Competitive Advantage," Google is recommended to roll out Google Chrome OS, particularly since Google's OS is well aligned to general usability patterns favoring open source and more interactive OSs compared to standard ones offered by Microsoft and Apple.
In addition to above external market conditions analysis, Google has notable organizational features which distance world's leading search company from competitors not only in search business but also in numerous industries as discussed above.
Given current situation, Google has strong organizational assets (Strengths) and soft spots (Weaknesses) in current organizational makeup. Notably, Google has a corporate culture which promotes innovation, collaboration and inter-group communication. These features or values have, indeed, helped Google achieve a rapid growth in recent years. However, Google will sooner or later mature, as stated by Goggle's CEO Eric Schmidt (Edelman & Eisenmann). The maturity of Google would, if anything, further expose company's soft spots. Specifically, Google's rapid expansion at current pace cannot be sustained forever not only because of an established fact of corporate maturity (i.e. business lifecycle) but also because Google's current force is not likely to stay as young or innovative in medium range for, at least, experience maturity reasons. Marissa Mayer is one very clear example (Carlson, 2012).
The above environment scan analysis can be summed up in a SWOT format as follows:
→ Strengths
Supportive corporate culture promoting collaboration, innovation and communication across business functions and roles
Substantial cash assets which enable Google to invest in R&D, expansions and partnerships
Flat organizational structure, if any, which enables staff to exercise more independence in decision-making processes
→ Weaknesses
Diluted organizational hierarchy which makes management process a particularly uncontrollable process, particularly in regions outside U.S.
Inevitable maturity of Google's workforce
Loss of strategic direction as company expands on products and/or services and markets
→ Opportunities
Growing mobility market, particularly in mobile operating systems
Increasing adopting of cloud-based applications, platforms and services
Favorable usability conditions for open source applications, platforms and OSs and hence a great promise for Google Chrome OS
→ Threats
Growing competition in mobility and OS markets
Rapidly changing consumer preferences
Legal liability posed by music video and editorial content companies
II. Current Strategy Diamond
At a strategic level, companies are required to better identify major strategic directions in each main business area. Similarly, Google has major strategic directions which fall into five major components, according to a Strategy Diamond Model (SDM). Conceptually, an SDM is made up of: (1) Arenas, (2) Vehicles, (3) Differentiation, (4) Staging, and (5) Economic Value. The "Arenas" component refers to areas a company should focus much on. The "Vehicles" component refers to means by which a company achieves strategic objectives. The "Differentiation" component refers to value added features a company has in order to differentiate offered products and/or services from competitors. The "Staging" component refers to a pace a company adopts to achieve set strategic objectives. The "Economic Value" component refers to underlying rationale for a given pricing strategy for product and/service offerings.
For Google, SDM can be as follows:
III. Strategic Recommendations for Sustainable Competitive Advantage
Given above analysis, Google has decided internal assets as well as substantial external market opportunities. These favorable conditions are shaped not only by Google's capacity for innovation and agility but also by favorable user preferences for Google's open source, cloud-based offerings, in particular. True, Google has started off and continues to be a search and paid listing company. However, Google's expansion into numerous markets and product / service offerings has driven growth in recent years, albeit differentially across different product offerings and user customer segments.
As indicated under "Environment Scan: Strengths, Weaknesses, Opportunities & Threats," specially in SWOT analysis section, Google's Strengths, Weaknesses, Opportunities and Threats highlight company's present and future strategic directions (summed up under "Current Strategy Diamond") across different product / service portfolio offerings and customer segments. Throughout, Google's performance has shown fluctuations as well steady rise. Given current situation, Google appears to be at crossroads. More specifically, Google's current rapid growth pace, as shown in company's Strategy Diamond, cannot be sustained for reasons discussed above. Just as Google has maintained an upward growth over recent years against a steady decline of major competitors, particularly Yahoo! and Microsoft, Google is more likely to experience a similar corporate fate unless specific areas are addressed in company's strategy. Specifically, Google should better focus on product / service offerings which are closely match company's corporate culture and stated "Statement of Philosophy". As noted above, Google has substantial market opportunities in mobility, productivity applications and open source operating systems areas. These can be summed up as follows:
Mobility. Google has made bold, strategic steps in recent years including expanding into mobility market. This expansion has not been, however, all in Google's favor and is not likely to pick up pace, at least in near future. Notably, Google has rolled out new mobile phones, i.e. Pixel and Andriod, into an already saturated market, at least in developed markets. Moreover, Google has introduced Andriod OS, a system which has become increasingly adopted across different platforms. Given current market performance and based on above analysis, Google is recommended to focus more on Andriod OS and gradually phase out from Andriod Phone. If anything, Andriod OS best matches Google's history as a platform company as well as company's workforce which is primarily made of software engineers, not hardware product development experts / specialists. Needless to say, Google's Andriod Phone, compared to Apple's iPhone series and Samsung's Galaxy series, remains a poor performer and, given current price offerings, is not likely to be a big business driver.
Productivity Applications. The future is for cloud-based applications, platforms and services. The successful adoption of Gmail as well as a broad range of cloud-based service offerings by Google in recent years only underscores how virtuality will come to replace hardware-based infrastructure.
Open Source Operating Systems (OSOSs). True, Google is still experimenting with Google Chrome OS, under numerous projects. However, Google's decision to expand into OS market is well aligned to favorable market conditions as well as company's organizational makeup. The OS market is increasingly favorable for open source applications and platforms. The early introduction of Mozilla's Firefox is a very clear example. Moreover, Google's corporate culture as well organizational makeup promotes a culture of innovation and sharing. This is evident in numerous product and service offerings generated by company's engineers during discretion hours offered by Google. Thus, Google is recommended to invest more not only in current Chrome open source projects but also in different open source applications, platforms and services.
References
Andriod. (n.d.). Retrieved from https://www.android.com/phones/
Carlson, N. (2012, September 18). Marissa Mayer Only Gave Google 30 Minutes Notice Before She Quit. Business Insider. Retrieved from http://www.businessinsider.com/yahoo-ceo-marissa-mayer-google-30-minutes-notice-2012-9
Chromium OS. (n.d.). Retrieved from https://www.chromium.org/chromium-os
Edelman, B., & Eisenmann, T. (2011). Google, Inc. HBS No. 9-910-036. Boston, MA: Harvard Business School Publishing.
Knopper, S. (2014, February 5). YouTube's Billion-Dollar Payout Provides New Revenue for Musicians. RollingStone. Retrieved from http://www.rollingstone.com/music/news/youtubes-billion-dollar-payout-provide-new-revenue-for-musicians-20140205
Pixel Phone. (n.d.). Google. Retrieved from https://store.google.com/product/pixel_phone
