Google’s predicament

Google Inc

Google Inc has been around since 1998, and it is now the biggest and the successful cost companies in the world. Today, there is an estimated 300 million people using the Google search engine daily to launch over two billion queries, which makes it the most used search engine. Google started posting its revenue earnings since 2004. At the end of 2004, the company made $1.032 billion. According to the financial reports published on 31st December 2014, Google had cash equivalent of $18.10 billion (D’Onfro, 2015). The total current assets of the Google were $80.69billion and the total assets of $131.1 billion.

Some of the companies that Google compete with include the media company AOL, Microsoft, Yahoo, Apple Inc, Baidu Inc, Akamai Technologies, Facebook, and Blucora Inc. In the total advertising revenue segment, Google tends to compete with AOL and Yahoo and also the employment website operator the Monster Worldwide, eBay, and Expedia.

According to the D’Onfro (2015), Google has acquired over 170 companies.  In 2014, Google acquired Skybox Imaging that enables Google to obtain accurate and up-to-date imagery for the Google Maps. Also, Google acquired Dropcam in 2014 so as to help Nest Labs increase their home automation products line-up.  In 2013, Google acquired Waze, which is a GPS-based navigation app. The app allows users to engage frequently through updating its roads. Google acquired Motorola in 2011 and its motivation for acquiring the company was its patents (D’Onfro, 2015).

Google is striving not just to build technology for the certain segment, but to be a technology company that has an equalizing force as an enabler for everyone across the world. According to the new CEO, Sundar Pichai, he wants Google to see, push, and also invest more in ensuring computing is more accessible and also connectivity is possible. When Google is considering making an acquisition, it has to determine if the technology improves people’s lives, can scale, used daily, and if it’s a fair game.

Recommendation

An acquisition for Google is Netflix. Netflix has an impressive market capitalization of $42 billion, and it is a big player in the subscription-based video streaming industry (Travlos, 2010). Netflix provides quality and exclusive services to clients, and it also runs on most of the modern devices. Thus, the decision to acquire Netflix will mean that; Google will achieve new horizon for Google in CATV system industry that currently dominated by Amazon (Symington, 2015). Google should not afford to let Amazon dominate in the streaming marketplace. Thus, it will provide Google with a competitive advantage to compete with Amazon in the sector.

Netflix has over 50 billion subscribers, available on most modern devices, and also produces quality exclusive content. With the current market cap of the company, it is not any company that can afford to make an offer that is worth accepting for the current Netflix shareholders. Google is a $420 billion industry juggernaut and has a 91% share of the global internet search market that makes it an appropriate company to buy Netflix v. Google has the financial resources needed to acquire Netflix.  Google has been making enormous acquisitions in the past years including Motorola, YouTube, and DoubleClick. The acquisition of Netflix will be one of the biggest acquisitions by Google since it acquired Motorola in 2011 for approximately $12.5 billion (Efrati, 2011). Thus, Netflix will add to the piece of valuable real estate to Google portfolio and also fit with its strategy.

Currently, the shares of Netflix are up over 80% in 2015 which makes the movies streaming business a good idea for Google to enter. Netflix provides streaming and also rental offerings of one, two, or three DVDs per month (Young, 2011). As streaming is growing, there are more Netflix subscribers turning to the lower-price point that include the unlimited streaming. The financial and the trend metrics for the company are moving towards the right direction. Netflix is a good app, and because it attracts a large number of viewers, most companies are not considering acquiring Netflix. 

If Google decides to acquire Netflix, it will hive Google an additional competitive edge. The purchase of the company will also help to stabilize Netflix that operated on pretty thin margins at the moment as it continues an aggressive growth path (Symington, 2015). The acquisition by Google will provide Netflix a greater and rich stability as it is expanding. When Google acquires Netflix, it will mean that the acquisition is in line with the company’s focus on improving the way people connect with information. The acquisition will provide the company with an opportunity of delivering more diverse online content to the world.

Google normally enjoy a proven success and market dominance in the online advertising. With the video and graphical advertising success through the YouTube platform and many other sites, Google established a significant competitive advantage in display marketing. Thus, if it acquires Netflix, Google will leverage its ad expertise to pair advertising with the video search requires and the video genres. Thus, the acquisition of Netflix will mean that Google will improve its growth model for winning loyalty across all facets of internet experiences which mean more time spent on Google services, more time exposed to ads and increase in brand loyalty.

Another factor of great importance and relevance in recommending Netflix to Google is because the two organizations have similar cultures. According to Peteraf et al. (2011), organizations that have similar cultures are more likely to be a part of the successful merger.  Both Google and Netflix have the ability to succeed internationally and also their position as industry disruptors. The acquisition of Netflix will increase Goggle’s revenue streams. With the acquisition, Google will be able to pursue a strategic opportunity for the growing demand for online video (Trefis, 2012). Experts claim that the demand for online video and streaming will explode shortly; thus, Google is bound to benefit from this growth regarding an increase in its revenue.

Google has an outstanding reach across the globe; thus, when it acquires Netflix, it will open new markets for Netflix in other countries as over fifty percent of some of its current subscribers are just from the US.

Conclusion

In the fight for customer loyalty in the ecosystem of desktops, television, tablets, laptops, and phones, Netflix tends to be an attractive target for Google to acquire. According to Google’s strategy, Netflix will fit well in the company’s strategy. With the cash equivalent of $42 billion, Google can open its doors and decide to invest in any strategic and quality initiative of interest. One of the areas that Google should consider investing at the moment is Netflix.

Reference

D’Onfro, J (2015). Google’s ten biggest acquisitions. 

Efrati, A. (2011). Google Notches One Billion Unique Visitors Per Month. The Wall Street Journal. 

Gamble, J., Strickland, A., Peteraf, M (2011). Crafting & Executing Strategy McGraw-Hill Education

Symington, S (2015). 3 Companies That Could Acquire Netflix.

Travlos, D (2010). Google is buying Netflix just makes sense. Forbes. 

Trefis. (2012). Netflix's New Year Rally Gains Momentum. The Street. 

Young, D. (2011). The Cost of Google's "Strategy of Everything" Search Engine Watch. 

Sherry Roberts is the author of this paper. A senior editor at MeldaResearch.Com in cheap term papers if you need a similar paper you can place your order from top research paper writing companies.