Google’s Internal and External Environment of Strategy

Introduction

            Google stands as one of the world’s renowned company that has pioneered the search engine revolution through the provision of a way to internet users to search and get information with a click of a mouse. Additionally, the company is also distinctive for its great strategies to organize information in a precise and concise way. This has made it a game changer regarding internet economy and by extension, the world economy from the fact that individuals, corporations, as well as consumers, can search and get information any aspect from anywhere at any time. Additionally, Google on a strategic motto of “Do not be Evil” meaning that its practices are knit on enhancing information through the actualization of best practices that can help many people to search and get information. In its business practices where it has been accused of complacency with authoritarian governments in censoring information were questionable, on balance; Google has remained safe than harmful regarding information organization.

Google’s PESTEL Analysis

            This analysis tool shows that Google needs to focus on economic as well as external technological factors in macro-environments. The analysis model’s other external factors (political, socio-cultural, ecological and legal) seem less significant to cause an impact on Google (Tadros, 2010).

            Google’s PESTEL analysis gives insights on important external factors in the company’s macro environment (Vise, & Malseed, 2008). The external factors serve as opportunities and threats. Thus, this analysis yields information about the possibilities as well as risks that are critical in strategy formulation.  To keep its position as world’s most valuable company; Google has addressed the biggest threat in its macro-environment (Hamen, 2011). Doing so can enhance its performance for competitive advantage.

Political factors

            The political factors influencing Google are governmental activities. This involves effects of governments on business. Several factors affect Google’s macro-environments. This includes globalization (opportunity), stable political environments of major markets (opportunity) and state-sponsored online companies (threat) (Hamen, 2011).

Economic factors

            Google is subjected to economic dynamics.  In pastel analysis, economic factors can alter market opportunities (Gilbert, 2013). Google is faced with some these factors which include financial stability in the primary markets, rapid growth of developing markets.

Socio-cultural factors

            Socio-cultural factors are external issues that affect how users respond to Google and its products.  Pastel analysis shows that their factors threatens and hinders business. The external socio-cultural factors that influence Google include increased use of social media and increasing diversity among users (Hamen, 2011).

Technological factors

            On Google, technological factors are external factors with major impacts on its operations.  Through pastel analysis, technological shifts can promote or destroy a business. The Google’s technical factors that affect its macro environment include increased access to the internet in developing nations, and increased mobile devices adoption in global markets(Gilbert, 2013).

Ecological or environmental factors

            Despite the fact that Google makes its income through an online platform, it is affected by environmental factors. The environmental externalities that face Google included world spread of environmentalism and increased the growth of sustainable business. This is to say that Google can get good customer responses through the positive perception of its ecological environment (Hamen, 2011).

Legal factors

            Google need to operate within the limits of the law. Through pastel analysis, legal requirements are critical to any company operations. Some of the external legal factors that affect Google’s macro environments include more regulations on online security and privacy and high demands on intellectual property rights rules.

SWOT Analysis

            In analyzing Google’s internal as well as external environment strategy, SWOT analysis stands as the other best tool.  This focus on strengths, weaknesses, opportunities as well as threats to understand the strategic environment of Google.

Internal strategic factors

Strengths

            When it comes to strengths, Google stands as one of the market leaders regarding search engines.  Its greatest strength is the fact that this company is the standing leader in search engines, meaning that it dominates the lion’s share of global internet searches. Currently, it has over 65% of the market share regarding internet searches with its competitors not coming any closer to anywhere Google is(Gilbert, 2013).

            The other strength of Google is that it has a great ability to generate user traffic. This situation bases on the fact that it is the global household brand with the capacity to drive internet user traffic in a traditional way. This has made it come up with great global brands. Currently, it averages over 1.2 Billion hits in a month for new searches that users carry out on the site. This has given Google an unrivaled as well as a unique edge over the market competition.

            Google has also been a leader in revenue generation from advertising as well as display.  The model of income where it garners humungous profits from partnerships with third party entities has made it secure in its ability to mop up resources as well as increase its top-line and bottom line. This stands as a major Google’s strength that has enhanced its greater heights scaling.

            The other strategic environment of Google regarding strength is its introduction of Android as well as Mobile Technologies. This company has adopted Android as well as Mobile technologies making it become a direct competitor of major companies like Apple regarding these devices and operating systems.

Weaknesses

            In the analysis of its strategic environments, Google like any other company has its shortcomings.  First, it has over-reliance on secrecy. Google have the tendency of not revealing show its search algorithm and its basic formula.  This has always led to many experts to direct slum at it for being non-transparent and hiding behind secrecy veneer. However, recently, this company has tried to redress this through the provision of a bare bones version of the different algorithm for its search engine.

            Despite its market dominance, its weaknesses present business challenges. A firm’s weaknesses can prevent its growth.  Google has a major weakness of depending on the Internet and minimal physical presence. Depending on the Internet means that the company must waits for Internet coverage to improve in developing markets before expanding most of its operations, like online advertising, in such countries. This company is also a mostly-online entity. This presents a weakness in competing with organizations with significant physical presence, such as Apple.

            At some points, Google faces falling Ad rates. This has been one of its weaknesses particularly in 2013 where it faced declining revenues from ads. This resulted in its profitability to take a hit. This can be attributed to the continuous global economic slowdown as well as the competition that snap its heels in a more strategic way. Indeed, other companies like Yahoo and Apple already took steps to garner revenues regarding the search engine in their devices making Google cognizant of the challenges ahead.

            The other weakness of Google is its overdependence on advertising. Its business model depends heavily on advertising with statistics revealing that it gets over 85% of its revenues single-handedly from ads. Strategically, any potential dip in terms of revenues can dearly cost the company dearly. This means that Google must come up with a more device and robust business model which penetrates e-commerce as well as mobile commerce together with its present business model of ad-based revenues generation (Nehls, 2011). The other weakness of this company is that its lacks Compatibility with next generation devices. Google stands as not compatible with several next generation computing platforms such as mobile as well as tablet computers. This stands as a concern area for Google.

External Strategic Factors

Opportunities

            Opportunities always present options to exploit and make the company better. Like any other company, Google has some opportunities. For Google, the company can tap more mobile users, Expand its Google Fiber and Penetrate new markets with consumer electronics. Google has the chance to exploit the current trend of increased mobile device usage through the provision of mobile-friendly products. Fiber coverage is an opportunity that can help to make more revenues (Nehls, 2011). The offering of consumer electronics like Google’s Nexus devices is also an opportunity that can contribute to increasing its profitability and competitiveness. The first one is Android Operating System. Google’s pioneering effort to provide Android OS stands as the biggest opportunity that has made it become a direct competitor to Apple as well as Samsung.

            The other opportunities for Google are the diversification to more non-Ad Business options. Google need to diversify its business into non-ad dimensions to remain profitable. Luckily, there are current indications that the company is adapting to this through pushing towards commercial transactions through its many sites such as Google Maps and Google Books. Google Glasses, as well as Google Play introduction, presents other opportunities for Google as a company. Their introduction indicates opportunities of a game changer, and this stands as a significant opportunity to exploit. In particular, this very aspect can make Google take the next evolutionary leap and emerge as a global leader in noncompeting. The other opportunity for Google is Cloud Computing. Cloud Computing stands as the major opportunity for Google through the provision of storage as well as cloud alternatives (Nehls, 2011). Indeed, Google can move into enterprise market environment through the use of cloud-computing paradigm.

Threats

            Despite its success, Google has its threats that when not dealt with, they can lead to a drop regarding revenue generation and quality service.  The first threat of Google is a completion. Currently, Facebook has become a primary challenge of Google. The introduction of Social Media has significantly threatened Google’s global internet dominance.  This means that Google has to pull an ace to handle increasing features that are provided by current competitors like Facebook (Nehls, 2011). The other main competitors of Google are Yahoo, Microsoft, eBay, Huffington post, Amazon, Hulu among others. The second threat faced by Google is mobile computing. Mobile computing threatens to pass Google because newer companies are seizing the opportunity to ramp up their mobile I terms of computing presence.

The Current Strategy Diamond of Google

            According to the strategic diamond model Google Inc operates in an arena in which it competes. Its product mix includes search engine as well as services such as Gmail, Google Maps, Google Dox, Google Earth as well as Google Chrome. Its services are on computers, smartphones, and tablets (Steiber, 2014). Google has large audience targets that do not discriminate on any aspect of demographic. It operates offices in many major cities globally. Its core technologies encompass Page Rank algorithm of click-through-rate computation as well as Google Analytics that has unmatched success in revenue generation from advertising through search engines (Lopez-Tarruella Martizez, 2012). Google’s value creation is found in its mission statement of organizing the world’s information to universalize its accessibility and usefulness. Google creates value through this

            Its powerful vehicle is internal development. Google has remained successful mainly through their discoveries.  These includes Page Rank algorithm, Android system, Google Earth, among others (Lopez-Tarruella Martizez, 2012). Google also has also other vehicles, for instance, the YouTube acquisition which made it enter content hosting markets. It is also engaging in joint ventures with other companies like Twitter as well as Daimler to tap into other markets.  Google offers licensing programs through Android system to encourage app developers to engage it.

            There are two primary differentiators for Google. These are a PageRank algorithm and its strategy of advertising. The PageRank algorithm has been making Google top in search result relevance. Optimizing the secret formula ensures that its core business customers remain satisfied. The advertising strategy ensures that advertisers get satisfied and return (Lopez-Tarruella Martizez, 2012). Through its free Google Analytics software, it gives unmatched service than competitors.

            Google´s success started when it adopted a variant of Overture´s cost-per-click strategy. This enabled Google to increase its income revenue. It also launched the e-mail service Gmail. It also entered video host market through YouTube.  It also has a successful web browser Chrome that is competing with Internet Explorer as well as Mozilla Firefox.  Recently, it staged the launch of the Nexus One with voice recognition (Edelman& Eisenman, 2011). This company significantly uses economy of scope.  Through different but compatible services like Google Calendar and Gmail, it encourages users to become brand loyal from combined unique experience. Its success is mainly attributed to the PageRank algorithm. Its algorithm is different in that they take into account the number and pages a website links to.  This has made Google show relevant search results than competitors (Steiber, 2014). Google differentiates itself by avoiding high spam results characterized by other search engines. It also uses a different cost-per-click strategy than its competitors. Google uses a formula to show relevant advertisements in best positions. Google also helps advertisers to improve their paid listing campaigns through free Google Analytics software.

Strategic recommendations for Google so that it might achieve sustainable competitive advantage

            For Google to achieve competitive advantage, it must remain focused on distinctive competence.  It must come up with preferred search options and monetize using targeted adverts. This avenue will provide many opportunities for growth if the search is enhanced beyond World Wide Web to include print, mobile as well as other information sources. Google must also diversify into other areas such as having a full portal such as MSN through aggregating content in thematic channels (Hill, 2005). There is also need to innovate a challenge to Microsoft’s dominance on PC desktops through products that can compete with office and window. To enjoy a competitive advantage, Google needs to enhance its core search business. It must further their market share. Currently, its market share shows a high position.  It has 65.6% market share in the United States compared to Yahoo´s 17.5%. Despite this, there is room to improve to like, over 90% share in other countries foreign countries.  This can help it to monopolize search engine business and make it control the whole market. Since Google operates in markets with high-profile companies like Microsoft and eBay, it must face significant competition (Steiber, 2014).  Hence, it will be forced to invest to compete with big market players. Google must avoid this risky situation. Google must also encourage its employees to continue working on own projects to support its innovation and strengthens its competitiveness. From pastel analysis, Google needs to strategize working in line with political, economic, and sociocultural as well as legal demands of the different global market. It must also deal with issues of security and privacy. Doing this can make it enjoy its market competitiveness.

Conclusion

            The SWOT analysis presents Google’s internal capabilities as well as the external factors that have been critical in influencing its capabilities use. Analytically, Google has the leading position regarding online advertising. It also has one of the most valuable brands in the world. On the other hand, it must address all the threats in its business environment to continue in its success path. This can be done through the exploitation of opportunities. The Pastel and SWOT analysis shows that Google must continue to address its business threats. Upon full address to the possibilities as well as threats and using its strengths to enhance performance based on the weaknesses, Google can enjoy robust competitiveness. Its SWOT analysis also shows that it has adequate strengths that can help to overcome its shortcomings. Nevertheless, the pastel and  SWOT analysis also indicates the need to perform better to protect itself against threats like competition, imitation, and mobile computing.

References

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Hamen, S. E. (2011). Google: the company and its founders. Edina, Minn, ABDO Pub. Co.             

Hill, B. (2005). Google search & rescue for dummies. Hoboken, N.J, Wiley.

Lopez-Tarruella Martizez, A. (2012). Google and the law: empirical approaches to legal aspects    of knowledge-economy business models. The Hague, T.M.C. Asser Press.

Nehls, E. F. (2011). Business analysis project on Google Inc. [Place of publication not       identified], Grin Verlag Ohg

Steiber, A. (2014). The Google model: managing continuous innovation in a rapidly changing       world.

Tadros, M. (2010). Real world Google SketchUp 7. Berkeley, Calif, Peachpit Press.

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Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in custom nursing essay writing services services if you need a similar paper you can place your order for college essay writing services.