International Strategic Management

This report explores the strategic management at Google, focusing on its business and innovation strategy. It analyzes the business model, macro and micro environment, and competitive success factors. The report aims to understand the factors that have contributed to Google's success in the industry.

International Strategic
Management
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Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
Analysis of business model and business strategy......................................................................3
Analysis of Macro environment .................................................................................................6
Analysis of micro- environment and competitive success factor................................................6
Analysis of innovation strategy...................................................................................................8
Appraisal of organisation's strategic situation...........................................................................10
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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Introduction
Businesses operate in a dynamic environment and changes in the components of the
environment presents both opportunities and threats for the organisations operating in it. Those
organisations which are able to develop innovative offerings to exploit those opportunities and
dodge those threats are able to attain success and lead itself on the path of sustainable growth and
development. Technology is one such aspect that has presented both opportunities and threats for
the organisations. Digitalisation has presented itself both as an industry in itself as well as the
aspect that can help companies transform their fate by developing innovation in their strategies
(Ansoff and et.al , 2018). This report is aimed at assessing strategic management at Google to
assess organisation's business and innovation strategy with a view to explore those factors that
has helped it reach the pinnacle in its industry. Google LLC or Google, as it is popularly referred
to as, is an American multinational company that specialises in technology and offers internet
related services and products like search engine, cloud computing, online advertising and others.
It was founded in 1998 and has its head quarters at California, US. In 2015, company
reorganised its multiple offerings into a conglomerate and named it Alphabet Inc. Google is now
a subsidiary of Alphabet and deals in internet related services of the group. This report takes
inspirations from various case studies that have been based on the Google to develop an
understanding of the aspects that has held the helm of company's operational and strategic
control in the field on internet search services. This report explores business model and strategy
for innovation of the company to take a look and appraise the strategic situation of the
organisation. Further, factors presented in macro and micro environment of the company that
catalyses and acts as its competitive success factor have been explored to draw conclusions
regarding the innovation strategy of the company.
Main Body
Analysis of business model and business strategy
Business model refers to that core strategy adopted and followed by company which, it
believes will lead it to the sustainable path of success, growth and development (Ritter and Lettl,
2018). It is designed around the pricing and costs of the business products and services and
includes anticipation of the future to determine movement of sales, target market and other
factors that drives its operations. There are mainly four types of traditional business models –
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Business to consumer (B2C), Business to Business (B2B), Consumer to Business (C2B) and
Consumer to Consumer (C2C) but with the advent of digital technology, new models has been
coming up like Direct to Consumer (D2C), Drop-shipping, subscription services, etc. and some
companies are like Google, which have been developing their own business model (Srnicek,
2017).
Google is a digital company and offers internet related services. For example, it acts as a
facilitator and facilitates information exchange between information provider and person seeking
information. In return, it makes money through advertisements which forms major part of its
revenue. There are various models that can be used to assess business models of company.
Below mentioned is Business model canvas of Google:
Business model canvas - Google
Key partners Key business partners for the Google includes hardware
manufacturers, electronics manufacturers and other distribution
partners. Also, it has acquired or been in a strategic partnership with
companies like Applied Semantics, DoubleClick, Waze, etc.
In addition, other key stakeholders for the company include its
umbrella company – Alphabet Inc., shareholders, employees,
content creators, internet users, developers community, etc.
Key activities Key activities for the company include data indexation, search
optimisation, cloud computing, online advertising, algorithms,
software development, IT infrastructure, operations and projects,
digital innovations, research and development, etc. (Anwar, 2018).
Key resources Primary resources of Google are the distinguished services that it
offers like its page rank algorithm, its innovation business model
and company culture, its intellectual patents, its talented staff and
content developers. Additionally, it has huge financial resource that
supports its infrastructure, platforms and ecosystem to make use of
the another key resource that it possesses i.e. big data.
Value propositions Google has a simplified business structure and targets diversified
products and services to make life simpler and easier i.e. like free
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email service, instant messaging and video chat service, language
translation service, navigation and mapping service, etc.
Further, it keeps on researching and innovating its products and
services with the use of advance technologies to facilitate its
customers like its marketplace (Google Play), hosted web-based
apps, content platforms (like photos, music and video organising,
editing and sharing), cloud computing services, virtual reality,
artificial intelligence (Google Assistant), Internet carrier (Google
Fibre)m etc. (Bouncken and Fredrich, 2016)
Cost Structure Primary compositions of its cost structure includes general
operational costs like administrative cost, taxes, etc. and product
and services cost like cost of software development, maintaining
data centres, etc. Further, it incurs huge amount of money every
year in research and development of new technologies and their
application in various parts of the world. To implement those
technologies, it has to further incur legal and lobbying cost.
Revenue Streams Google offers both free and paid products and services to its
customers. Its revenue stream comprises from users like premium
services – advanced email, App Store payments, etc., from
companies – ad revenue, segmentation, licensing, subscription, etc.,
from developers – on enlisting at Play Store, from e-commerce –
Google Shopping, etc. (Keiningham and et.al , 2020)
Customer relationships Google has a strong and committed relationship with its customers.
It has become synonymous for searching something over the
internet. It is fast, flexible, has adopted problem solving approach
and has been trying to place itself as a one stop solution for
everything. It has a smooth revenue generation model while
offering both free and paid services to the customers. It allows to
develop, co-create, and manage accounts to help develop society
along with its business. This strategy placing of the company has
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helped it earn loyalty from its users.
Customer segments Its customer segment is as wide as the its offering portfolio. They
range from general users to ad agencies, web publishers, content
developers and producers, etc. Further, other enterprises, OEMs and
other members of Google Network also form part of its customer
segment.
Channels Google has multiple channels to offer to its customers like
Google.com, Gmail, Google Docs, Google News, YouTube,
Google Apps, Google Play, Google AdSense, Google Maps,
Google Books and others. It also offers products like Chrome Web
Browser, Chrome OS, Android devices and other array of service
channels like Google Analytics, Google APIs, Google Open Source
Projects, etc. (Shakeel, J. and et. al., 2020)
From above, it can be seen that Google has a superior infrastructure and extensive
portfolio of products and services to aid its business model and provides a competitive advantage
for the company. It has adopted strategies to heavily indulge in improving its technology and
innovating its processes to provide superior services to the consumers. This has helped company
be leader in its industry.
Analysis of Macro environment
Macro environment is basically condition that exits in the economic system which
includes inflation rate, employment, monetary policy, spending etc. macro environment analysis
is very important in strategic management various business also conduct pestle analysis to
identify the macro environmental factors that can affect the growth of the business. Macro
environment can also affect the performance of the business either in negative way or positive
ways.
Impact of macro environment on the strategies of google:
 There are various political factors that can affect the business strategies of google to
maintain the international relations wider free trade agreement has been launched which
the organisation in the export of goods and services political stability plays in important
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role in the growth of the economy. For the company like google political stability helps in
innovating their strategies of the business so that best services can be provided to the
customer. If the google is not analysis the macro environment properly then it can affect
the performance of the business (Chaouk and Moxon, 2020).
 For the growth of the business economic stability is also plays an important role because
economic is the one who acquires the services of the business if the inflation rate in the
economy will be high then it will affect the demand of the business in the market For
example if the cost of renewable energy will increase in the market then it will also affect
the google energy supply in the market. The various advertising companies are expanding
its renewable energy so that their operational stability can be enhanced in the market.
Economic factors helps google in achieving their objective by developing the right
strategies ( Orduna-Malea, 2018).
 Social factors of macro environment affects the growth of the business because in today's
world people wants the new variety of products and services in the market if the business
will follow its old strategies it can affect the profit of the business fulfilling the needs and
requirement of the society is very important for the organisation to increase its market
share due to the presence of social media firms like Facebook can affect the demand of
the organisation in the market because of the increasing demand of social media
operation google can face loss in its productivity in the future so to maintain its demand
in the market google has to invent new features in business which can attract the attention
of the customer can helps the organisation to increase its demand in the market. If
organisation will not provide the new and innovative services to the customer then
company will loose the interest of the customer from the business which will also
decrease the profit of the organisation (Yun and Liu, 2019).
 In today's world technology is very important for the business to achieve its desired goals
in the short period of time. In the economy people are using mobile phones a lot which
helps google in increasing their market share in the economy because with the help of
mobile phones google can promotes its various services like google play stores, google
photos etc. which will helps in increasing the profit of the organisation. Google has
93.6% web searches market share due to which google is one of the most successful
organisation in the world it helps in storing the data of user through the cloud computing
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servers which protect the data of the user and helps them to retrieve it at the time of
requirement. With the helps of cloud computing technologies google can increase its
revenue in the market and its growth opportunities. It is one of the most important factor
of macro economy which helps the organization in achieving more profit in the market
without technology organisation cannot achieve its target effectively. It also helps in
reducing the work load of the employees which helps them to increase their efficiency in
business and perform effectively.
 To achieve the success every business in the market have to face the environmental
changes like geographical location, change in climate etc. strengthening the environment
will help the organisation to increase its demand in the market with the help of renewable
energy environmental stability will not get affected and will also increase the demand of
the business in the market. Google also corporate the social responsibility strategies
which helps them to maintain the environmental stability of the macro environment
(Moriuchi, 2019).
 In order to sustain in the market for a long period of time rules and regulation should be
followed properly. So that performance of the organisation cannot get affected there are
various privacy policies which are imposed by the government which google has to
follow in order to continue its functioning without the interference of the government.
Online privacy policy helps google in improving their technologies in the market which
will helps them to provides best services to the customer.
Analysis of micro- environment and competitive success factor
Micro-environment consists of those factors which are present within and around
business and impacts it directly like its employees, suppliers, customers, competitors,
shareholders, etc. (Zanconato, Cordenonsi and Piccolo, 2019) Google as a company was started
in an asset-light model and was aimed to develop as digital platform that offers one-stop solution
for the every issue that one can face in the daily life. It is a digital business and operates in
technology industry. Micro-environmental factors of the company impacts its size of operations,
human resource, financial resources and whole set of business strategies. Management of Google
understands the importance of managing the internal stakeholders as well as external
stakeholders that directly influences its operational direction and scale. There have been various
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models that help in assessing micro-environmental factors and their impact over developing
competitive success factor. One such model is Porter's Five Force model which was developed
by Michael Porter to help understand a company' s strategic direction and the impact of the
micro-environmental factors over it. Below mentioned is the Porter's five forces analysis for
Google:
Summary of Porter's five forces analysis on Google
Force of competition Strong
Bargaining power of buyers Weak
Bargaining power of suppliers Weak
Threat of substitutes Moderate
Threat of new entrants Moderate
 Forces of competitive rivalry – Google is one of the largest digital company but in
today's era where most of the businesses are transforming themselves to digital space
faces strong competition from firms which are equally diverse and strong on resources
like Yahoo, Bing and Apple. Therefore, it is very important for company to keep on
developing new products and services which is able to maintain its competitive advantage
(Li and Xie, 2017).
 Bargaining power of buyers - Users of Google are so large in number as well as of
diverse nature that, it is not possible for a small group of customers to influence company
at a large extent. Therefore, it can be touted that bargaining power of buyers is weak in
driving the demand for the company or influencing their operational processes.
 Bargaining power of suppliers – Google is a digital company and does not have any
such supplier that is irreplaceable. Further, it partners with local countries in which it
operates to mitigate the cultural risks. These suppliers are so large in number that a single
supplier or group of suppliers won't be able to make much of a difference to the
company.
 Threat of Substitutes – Offerings of the company, its pricing and the quality are the
factors that act as competitive advantage for the company. However, they are not
something that do not have substitutes or cannot be imitated. If company falters in its
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performance, users will likely to shift to its substitutes. But, looking at the level of
operations of the company and the loyalty of its users, threat of these substitutes can only
be considered as moderate (Cai and Li, 2018).
 Threat of new entrants – Google offers digital products and operates in industry where
entry and exit are not so difficult. Therefore, any newcomer can try to enter the market
and threaten the position of the company. Company is primitive in its industry and has
earned its way till here. It is is so large in operations and scale that it would get difficult
for any newcomer to reach to the level of company in near future making the threat only
moderate in nature (Anastasiadis and et. al., 2017).
Above mentioned model helps in analysing external forces present in the micro-
environment of the company and to further analyse the factors that impacts business strategy and
success of the company, value capture model should be utilised. One factor is value creation and
another is value capture. Creating value has been priority for all businesses but Google is one of
the few companies that have been able to capture value as well. Google almost monopolises
search engine across the globe and like monopoly firms is able to set its own prices and take
decision regarding its profit margin and therefore, is able to capture value effectively. Further, it
maintains hefty market capitalisation and price-earnings ratio that help in capturing financial
value. Company aces in innovation and offers both free and paid services. These free services are
like revenue leaks or opportunity cost for the company. It monopolises search market and earns
from ads heavily but its other offerings like Gmail and Google Maps are not that big revenue
drivers. However, it can use these products to earn revenue further like monetizing Google Maps
by introduction of cab services connected to Maps or earning through promoting locational
advertisement, etc. Google is a market leader and it needs to keep performing sustainably to
maintain sustainability in its position as market leader, keeping in mind that future is for digital
businesses (Schito and Semenza, 2016).
Analysis of innovation strategy
Innovating its products and processes help a company develop and maintain competitive
advantages. Google has placed innovation at the heart of its strategy and has developed its work
culture accordingly. It inspires its employees and developers to think big and futuristic.
Engineers at Google are advised to think ten times about developing something new rather than
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aiming for 10% improvement in present offerings. This has helped company develop so many
innovative products using virtual reality and artificial intelligence like these mentioned below:
 Google Glass – It is a wearable computing device which acts as an extension to android
smartphones and tablets. It can be used to capture photos and videos, make text messages
and phone calls and also offer other facilities like checking out map, read emails and
perform voice based commands. It is a like a product which has taken actual form from a
science fiction and has not only been able to impress tech community but also fashion
industry.
 Internet balloon – Google is a digital company and requires the facility of internet to
perform its products and services. Therefore, it has low penetration in those markets
where internet connectivity is not found. Rather than, taking it as a challenge, Google
took it as opportunity and developed a portable product that is able to provide internet to
these remote areas (Varadarajan, 2018). It launched Project Loon, under which it
launches balloons that fly high to stratosphere at a height of about 20km and relay the
internet to the houses using a special antenna that captures the signal sent by the device.
It is not only innovative but an eco-friendly manner to solve the problem of poor
connectivity in remote areas and is therefore, a matter of interest for many developing
countries now.
Company does not shy away from experimenting and it believes in launching prototypes
of the new experiments to assess its viability and know whether it works or not, whether it is
being loved by customers or need improvement. It believes in taking small steps like first
developing the product then launching it at a limited scale and making further modification in the
product as per the feedback received from the consumers. Real-world user feedback helps it
understand what market wants and this gives an added advantage to the company that not only it
understands the necessary modifications in the current product but also, gets ideas for the future
products. This helps company turning its threats into opportunities as well like in the case of
Internet balloon.
One more thing that company has adopted as its strategy is to maintain transparency.
Therefore, it indulges in open communication with its employees and associates as it believes
that when your team knows you completely, it is able to develop more innovative things (Gao,
Hsu and Li, 2018). With this approach, it has developed innovations in its processes like TGIF
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meeting. It is an hour-long meet with senior management of the company and more likely
founders of the company and Googlers from all over the globe, in which management informs
the employees about news about company, changes in the industry, upcoming projects, etc.
Other departments also provide insight about their areas of operations like human resource,
marketing, finance, legal, etc.
Company has been known as market leader in innovation and to maintain that, it focuses
deeply on its hiring function. It strives to hire such people who are not only intellectually
talented but are good at innovating the process, love the challenges and welcome change. It
assesses candidates in four different areas – role related knowledge, leadership, general cognitive
ability and personality as it aims to hire for capability and learning ability before they hire for
expertise (Song and Yu, 2018). It has developed a culture under which resources are allocated to
keep a bigger picture of future in mind. It inspires to keep on focus on core needs and on the
same time, encourages to stretch one's personality and behaviour into new and unrelated areas, to
develop an out-of-the-box thinking. This has helped company develop a culture of innovation
without distorting its core business activities.
Company has a large amount of data and relies on it to understand consumer behaviour
trends which not only impact consumer decision making but also help it steer setting the trends
in the industry. It invites ideas to innovate and asks its staff to always look out for ideas
everywhere. It also takes help of its users to improve its products and this is further innovation
which helps company improve its processes without incurring high expenditures. For example, to
improve the services of Google Maps, rather than increasing its own team of cartographers, it
encouraged local users to be citizen cartographers and help company improve the maps. It
resulted into one more innovative product for the company by the name of Google Map Maker.
Appraisal of organisation's strategic situation
Google is a digital company which has placed innovation as part of its working culture.
As observed earlier, company has been evolving its strategies according to the market and the
forces it has been subjected to deal with in the market to maintain its competitive advantage.
(Liao and Tsai, 2019) Below mentioned is the VRIN analysis of the company on the basis of the
resources identified in Business model canvas:
Highlights of VRIN Analysis of Google
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Resource Valuable Rare Inimitable Non-
substitutable
Products and
services
Yes Yes No No
Business model Yes Yes Yes Yes
Company culture Yes Yes Yes Yes
Intellectual
Property Rights
Yes Yes No No
Human Resource Yes Yes No No
Financial
management
Yes Yes No No
Research and
development
Yes Yes No No
Customer Loyalty Yes Yes Yes Yes
Brand Image and
market position
Yes Yes Yes Yes
 Valuable - These are those resources which add value and also provide competitive
advantage to the organisation. Google has placed strong emphasis to create and capture
value in its resource model, business model and all the other factors associated with them
that provide a competitive advantage. It evolves to retain the value captured (Cao and
Chen, 2019).
 Rare – These are those resources which are not easily accessible to rivals and provides
essential competitive benefit to the company. Company has various key resources that is
not only valuable for it but are also rare to be possessed in the industry. Company has
been primitive in its industry and has been able to develop such working model by now
that provides it both physical and intangible resources like customer loyalty and brand
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image that are result of its superior business strategies and acts as competitive advantage
for the company (Wijethilake, Munir and Appuhami, 2018).
 Inimitable – These are those resources which are difficult to replicate by competitors.
Business model and company culture of Google is difficult to imitate and so is the
customer loyalty and brand image that it enjoys in the market due to innovative strategies
and diverse product portfolio. However, its other resources are not non-inimitable and
competitors can try copy them if they make effort like its talented human resource.
Though its difficult to provide same culture for employees to work, it is possible to train
them to work alike by the rivals.
 Non-substitutable – These are those resources which cannot found substitute in the
market. Just like inimitability, its few resources are non-substitutable but others are
possible to be substituted. However, company has been working since long and has
developed not only financial resources but also market position that others would find
really hard to substitute and moreover, with resources that company possess, it can
counter the impact others can have over it (Huang and Li, 2018).
Google has been able to maintain its position with its superior business strategies in the
industry in which it operates.
Comparative analysis
Basis of
comparison
Google's Business Strategy Industry success factors
Products and
services
Google offers diversified product and
all of its strategies are innovation
oriented. Company has always
assumed on taking leadership position.
Other companies in the market place
bet on technologies to provide
diversified products to customers and
adopt follow lead strategy.
Customer
relationship
It maintains direct relationship with its
customers through various platforms
like social media and in some cases,
involve them to be part of the company
like in the case of Google Maps
discussed (Guo, 2019).
Other companies in the digital
industry also maintain direct
relationship with customers through
various platforms and campaigns that
offer them connectivity with their
customers.
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Revenue
streams
As observed above, company has
variety of revenue streams and has
adopted the strategy of providing both
free and paid services to the
consumers. Free services act as bait to
attract them while paid services from
users, companies and developers
provide revenue to the company.
Advertisement and paid subscription
make maximum part of the revenue
for the companies. However, now-a-
days other companies have also
develop new sources to diversify
their revenue streams.
Further, it was analysed in the innovation strategy analysis for the company that it has
maintained a superior quality in its strategy which is flexibility i.e. it learns as it perform and
develops lessons from its experience to convert them into the future opportunities to be
exploited. It absolutely fits with mission, vision and value statement that company adheres to.
Google's vision is to provide access to information across world in a single click and all the
products and services that it innovates are a step ahead in that direction only (Chen, Wang, and
Wang, 2018). It has values like great is not good enough and democracy on the web works
which coincides with innovation strategy of the company which not only believes in innovating
product process but internal operational processes as well with values like transparency, freedom
and inclusion.
Conclusion
As per the report it has been analysed that google plays an important role in the
development of an economy. With the helps of google individual can resolve its queries easily
within a short time period. Google has adopted various innovation techniques so that it can
increase its demand in the market and generate the revenue of the business. As every business
google has also planned their strategies so it can increase its market share and achieve its goals.
In today's world google is one of the most successful search engine in the world which helps the
economy with proper information and data so that they can perform their task effectively. To
avoid the chances of loss in the future proper analysis of micro and macro environment has been
done which will also helps the organisation to achieve its targets.
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