Google's Business Model and Success Factors

This solved assignment examines Google's successful business model. It analyzes how the company's flat organizational structure, streamlined project approval system, and division of functions into specialized units have contributed to its growth and dominance in the search engine and online advertising markets. The assignment also highlights Google's continuous market analysis and adaptation strategies for maintaining a competitive edge.

Group Project

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Q1 Ways in complementary forces shape company strategies..............................................1
Case 2...............................................................................................................................................2
Keys to Google competitive advantage..................................................................................2
Analysis of competitive industry............................................................................................4
Ways in which Google has strengthened its structure for gaining competitive advantage....5
CONCLUSION................................................................................................................................5
REFERNCES...................................................................................................................................6

INTRODUCTION
Google is a company that has evolved to be a business house which is part of every single
individual life. At present, it is the biggest digital company in the world which is venturing into
physical products like smartphones, smart goggles, driverless cars, etc. the organisation has
outgrown its own scope and size and today it is a leader in search, advertising, product
development and engineering (Masumoto and Inui, 2013). This report states about how various
complementary forces shapes a company like Google strategies and how they aid in making it
more strategically competent. Also, an industry analysis will be conducted for the US market
based search engine advertising. It will also be stated as how Google has solidify its competitive
advantage in the market.
TASK
Q1 Ways in complementary forces shape company strategies
There are multiple factors and forces that operate in the dynamic market. Every company
has to manage it in a way that will allow it in ensuring higher productivity and effectiveness. The
company has to manage them by analysing and evaluating them in a effective manner. As stated
by Porter, there are five forces that exist in the immediate environment of company and has an
impact on it. This tool allows managers in gaining insight regarding various factors. There are
certain ways this tool is implemented by the company (Israelachvili, 2011). The first thing which
they have to do is to gather data regarding changes in each force and after analysis they have to
analyse results as well as put them in a user friendly report. The application of porter five forces
model is stated below:
Competitive Rivalry: The company has STRONG rivals within industry. There are large
number of companies that are serving in industry pose a threat to Google. There are many firms
like Yahoo, Apple, Comcast, Bing, etc. For overcoming tough competition, it is offering tangible
and intangible goods and services into market. Also, the switching cost for consumers is low
which puts a higher pressure on company.
Threat of new entrants: The level of risk is MODERATE when it comes to the entry of
new companies. The term “new” not only represents small ventures but it also state about large
companies which makes huge investment to capture market share (Hesterly and Barney, 2010).
Though, the rules and regulations are less and its is very easy to enter into market and compete
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against giant like Google. But, the sole issue that hampers organisation is higher brand
development cost. Basically the marketing cost hinders their ability to perform.
Threat of Substitutes: The risk with this factor is MODERATE. There are many ways
Google offerings can be easily substituted by different products that is being sold into market.
The advertising services as well as open source forums can be replaced by any company in the
market (Harrison, Bosse and Phillips, 2010). But still the level of threat is at moderate level as
google has built a brand name for itself.
Bargaining power of Buyers: The consumers power to bargain is considerably WEAK.
Usually they are separated into individual groups or are in small numbers. Also the demand is
very high which reduced their bargaining power. The moderate level refers to lower knowledge
of consumers which is good for company.
Bargaining power of Suppliers: The suppliers bargain power is WEAK. There is huge
population which offers products to individuals it is very easy for organisation to move from one
supplier to another as there are numerous offerings from multiple sources. The company has a
diverse range as they have diverse range of goods such as google car, glass, phones, etc.
Case 2
Keys to Google competitive advantage
There are certain factors that allows Google in attaining a higher level of competitive
edge in the market. Any company that is operating at the level of search engine giant has to
ensure that it keeps its advantage ahead of everyone (McWilliams and Siegel, 2011). The prime
point that makes Google a major organisation in the sector is the value that it creates and serves
to customers. Also, the company is able to keep up with efficiency, quality, innovation and
consumer responsiveness. The brief description of the following is mentioned below:
Efficiency: This organisation carries a distinct approach so to maintain efficiency in its
operations. Google employs PUE performance which is one of most greener approach which
management of data centres.
Quality: Google employs tools such as iterative testing, debugging and innovation to
ensure that quality of offering matches the benchmarks.
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Innovation: This organisation is supreme when it comes to inventions. The development
of Google Lens is yet another disruptive innovation introduced by the organisation. It undertakes
visual analysis and states the thing or object which is placed in front of camera.
Customer Responsiveness: The company have always been successful in responding to
the changing demands of consumers. The rapid response by the company to changes have
assisted in catering competitive advantage.
The company is primarily focused on providing customer with products that will fulfil
their needs and desires. There are certain key factors that allows Google in gaining competitive
advantage:
Intellectual property: The company protects its products, designs, logo, etc with the aid
of intellectual property rights (The 6 Keys to Real Sustainable Competitive Advantage. 2017).
The major examples for intellectual property are as name itself 'google', inventions, product
name such as Pixel and packaging of product. This allows it in ensuring that nobody else uses
them and they stay exclusive to the organisation.
Dynamic product range: This is how Google has grown in the market. It does not rely on
a single product (advertising). It keeps on adding new innovations to its portfolio which allows it
in ensuring better productivity. This company have covered almost various segment concerning
technology such as software development, mobile handsets, applications, smart-wear and
Artificial Intelligence. The distinct product range have helped company maintain supreme
position in the market.
Efficiency: The company constantly tries to improve its process so that no new
development can hamper is ability to perform.
Employee relations: The managers are completely focused on making sure that the
working environment stays healthy. Also, the team building and working is boosted by
management.
Focused differentiation: The company aims to keep its ability to differentiate. As this
allows it in attracting consumers towards its products and services (Goldfarb and Tucker, 2011).
Basically, constant innovation and changes allows it in gaining differentiation from competitors.
The above stated factors are the key ways which allows company in gaining competitive
advantage over other firms.
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Analysis of competitive industry
The role played by the web based search engines is significant. They are being used to
procure data over the internet and now employed for the purpose of advertising. At present,
Google is leading the advertising industry in the market with more than 63% market share. The
second position is procured by Yahoo! Which stands at a minimal 10%. This data is enough to
perceive the dominance which is enjoyed by this brand. The another side to it is that there rises
chances of abuse of the favourable industry circumstances. The search based advertising are the
one which are displayed on the side of interface of users. These are paid and incurs huge revenue
for business the pricing model such as PPC is employed. The users are more attracted towards
company due to its differentiated product portfolio and more consumers focused services. The
graph below states about the structure that exist:
The company is improving speed of results as well as focusing on making them more
realistic or according to the need of user (Croft, Metzler and Strohman, 2010). Management of
company welcomes innovation and new products that would make its process more effective as
well as efficient. The market forces are dominant but still some how uses same structure or
process which are used by Google. Closest rival of company is BING but its is far behind. Also,
recently it has started to push A.I. Services on its servers which makes process much faster.
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Ways in which Google has strengthened its structure for gaining competitive advantage
The company is completely focused on gaining competitive advantage via introducing
various innovative products and services. Google prime aim is to serve consumers with a
qualitative services and ensure that their requirements are fulfilled (Langville and Meyer, 2011).
At present, there are different programmes that are in development phase and once they prove
their market viability as well as feasibility, they will be launched. The company understand that
it is very vital to keep on innovating and diversifying to stay ahead of its competitors. There are
certain key factors which allowed Google in attaining this level of market edge. The company
made few changes which are stated below:
Change in management: In 2011 Larry page became the CEO of Google and started a
changing whole managerial pyramid. He ensured that the structure would remain flat and there
are less barrier for people to reach their managers.
Project focused: He found out that the new projects were not getting permissions and
they use to stay in beta stages. He changed a lengthy system and introduced direct approval
where individual can get approval from their peers.
Bifurcation of functions: Page initiated the bifurcation process for making sure that the
vice presidents are able to focus on each units (McWilliams and Siegel, 2011). Before this there
were only two units that were operating, one was product management and second was
engineering. Now there are seven separate units, Search, Advertising, YouTube, Mobile,
Chrome, Social, Commerce.
CONCLUSION
Today, google is one of the market giant when it comes to search engine market share. It
owns more than 63% market share when it comes to online advertising. The company needs to
keep analysing market and its trends to ensure that each task is completed in a set period of time.
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REFERNCES
Books and Journals
Masumoto, J. and Inui, N., 2013. Two heads are better than one: Both complementary and
synchronous strategies facilitate joint action. Journal of neurophysiology, 109(5),
pp.1307-1314.
Israelachvili, J. N., 2011. Intermolecular and surface forces. Academic press.
Hesterly, W. and Barney, J., 2010. Strategic management and competitive advantage. Pearson,
ed., Pearson Prentice-Hall.
Harrison, J. S., Bosse, D. A. and Phillips, R. A., 2010. Managing for stakeholders, stakeholder
utility functions, and competitive advantage. Strategic Management Journal, 31(1),
pp.58-74.
McWilliams, A. and Siegel, D. S., 2011. Creating and capturing value: Strategic corporate social
responsibility, resource-based theory, and sustainable competitive advantage. Journal of
Management, 37(5), pp.1480-1495.
Goldfarb, A. and Tucker, C., 2011. Search engine advertising: Channel substitution when pricing
ads to context. Management Science, 57(3), pp.458-470.
Croft, W. B., Metzler, D. and Strohman, T., 2010. Search engines: Information retrieval in
practice (Vol. 283). Reading: Addison-Wesley.
Langville, A. N. and Meyer, C. D., 2011. Google's PageRank and beyond: The science of search
engine rankings. Princeton University Press.
Online
The 6 Keys to Real Sustainable Competitive Advantage. 2017. [Online]. Available through:
<http://www.businessinsider.com/the-6-keys-to-sustainable-competitive-advantage-
2010-6?IR=T#proven-team-with-inside-relationships-4>. [Accessed on 10th October
2017].
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