Strategic Analysis of Google Inc. (A28745) - Report

This report offers a comprehensive strategic analysis of Google Inc., examining its position within the competitive landscape. The analysis employs three primary frameworks: PESTEL, SWOT, and Porter's Five Forces. The PESTEL analysis assesses the external macro-environmental factors, including...Read More

Running head: ORGANIZATION STRATEGIC ANALYSIS A28745 1
Organizations Strategic Analysis
Name
Institution

ORGANIZATION STRATEGIC ANALYSIS A28745 2
Table of Contents
Executive Summary.....................................................................................................................................3
Introduction.................................................................................................................................................3
Discussion, Analysis, and Findings.............................................................................................................4
PESTEL Analysis....................................................................................................................................4
SWOT Analysis.......................................................................................................................................8
PORTERS FIVE FORCES MODEL.....................................................................................................10
Recommendations.....................................................................................................................................13
Conclusion.................................................................................................................................................14
References.................................................................................................................................................15

ORGANIZATION STRATEGIC ANALYSIS A28745 3
Executive Summary
Google's strategic direction seeks to serve as a reaction to various external forces in the
company's environment. This report is based on the strategic analysis of Google Inc. and is
divided into SWOT analysis, PESTEL analysis, and Porters 5 forces analysis. PESTEL analysis
is a type of evaluation by companies to establish their current market conditions and then used
for strategic planning and management. Google PESTEL analysis provides an understanding of
the essential external factors in the organization's macro-environment. The SWOT analysis of
Google outlines its internal capabilities and external factors that affect how its capabilities are
utilized. The Porter's Five Forces analysis model helps in evaluating Google's strategic direction.
This helps in the identification of the characteristics of the external factors helping it address
these factors hence continued success (StudyMode 2009).
Introduction
The Google Inc. was incorporated in Delaware and is one of the biggest internet search engine
technology was found by Larry Page and Sergey Brin in 1996. The corporation has continued to
grow to become one of the best-admired company in the world just like its name which is a
mathematical terminology meaning one followed by one hundred zeros. After it had been
founded, the founder's objectives were to establish a company whose service would be to
organize global information by giving the consumers universal accessibility and utility.
Presently, the corporation is providing just more than the search engine technology it was meant
to be by providing other services such advertisements (Lee et al 2012). Google's strategy
involves growing to be the leading internet search engine, and it improves the odds to get to
markets outside the United States such the emerging markets in China. Its strategy entails
acquiring other companies such as Motorola Mobility Center and Keyhole to help in
diversification of its products and services. The adopted business model by Google Inc. has

ORGANIZATION STRATEGIC ANALYSIS A28745 4
continued to help the company realize unmatched growth and profitability in comparison to the
competitors. The paper will look at the Google's strategic analysis. It will also discuss the
company's strategic analysis and also including SWOT, PESTEL, and Porters 5 forces with the
aim of pointing out its main success factors.
Discussion, Analysis, and Findings
PESTEL Analysis
Google's PESTEL analysis provides an understanding of the most important external factors in
the microenvironment of the company. These external factors pose an opportunities and threats
and therefore the application of this model provides the company with information on
opportunities and threats. This information is essential in the design of the company's strategy to
maintain its position as the leading most valuable company and be in a position to address threats
in its macro-environment. Proper application of this model can enhance the company's
performance. There is danger whereby the company's competition can use the opportunities to
prosper, so the company needs to take action to gain competitive advantage. This model analysis
also provides the investors with information on the value of the company and its position in the
remote business environment. About PESTEL model analysis, the company needs to invest its
efforts on the economic and technological external factors (Lee et al 2012).
Political Factors
The external political factors affecting Google entails the government activities, and PESTEL
analysis model helps in analyzing the effects of these activities on the business. The below
political activities are essential in Google's macro-environment:
 Stable political state in the key markets helps identify more opportunities.

ORGANIZATION STRATEGIC ANALYSIS A28745 5
 Globalization as an opportunity
 State-sponsored online companies are a threat.
These political factors in the company's external environment provide new opportunities. For
example, globalization improves the company's demand especially on demand for online
advertising. The stability of the political climates reduces risks which translate to growth and
expansion. Despite these opportunities, state-sponsored online companies have been proving
problematic. For instance, many large online firms in China are controlled by the government
(Yuksel 2012).
Economic Factors
PESTEL analysis model explains that the economic dynamism can change the available business
opportunities. According to this model, the following are the most crucial economic external
factors affecting Google.
 Stability of the economic state of the significant markets introduces opportunities for the
company.
 The fast developing nations bring new opportunities for the company.
The above economic external factors help Google discover more opportunities for growth.
Google can invest in new markets presented by the rapid growth in developing nations and the
stability of the economic climate of the major markets. This will help in company growth and
expansion.

ORGANIZATION STRATEGIC ANALYSIS A28745 6
Social/ Socio-cultural Factors
These factors determine how the consumers perceive the Google products. The analysis by
PESTEL model explains that such factors pose both threats and opportunities. Below are the
major social/socio-cultural external factors:
 The increasing diversification of users helps the company discover new opportunities.
 The improving use of social media presents threats to the company.
The increased use of the social media poses a threat to Google due to the exposure of companies
such as Facebook who are providing similar online advertising services. When the users are
diversified, it presents new opportunities as the company innovates to be able to meet individual
preferences.
Technological Factors
Due to the technological nature of the Company, technological external factors have a significant
effect on the firm. PESTEL model analysis details the changes in technology as potential threats
or opportunities to Google (Lee et al 2012). Below are the external technological factors:
 The improving accessibility of internet in developing nations presents new opportunities.
 There is growth in usage of mobile devices globally which is an opportunity.
Google expects more growth leading to revenue after investing in the growing markets in the
developing countries due to more advertising. The increasing mobile trends pose new
opportunities since the company can develop new online products.

ORGANIZATION STRATEGIC ANALYSIS A28745 7
Ecological/ Environmental Factors
Despite the fact that Google gains most of its revenue from online market, external ecological
factors still affect its operations. The strategic state of the company is affected by the external
ecological factors are described the PESTEL analysis model. The following are the factors that
impact the macro-environment of Google with respect t external ecological environment (Yuksel
2012).
 The increasing focus on environmental care poses new opportunities.
 The increasing interest in the development of sustainable business has uncovered new
opportunities for the company to utilize.
Google need to address the external ecological factors with the idea of improving its
environmental impact. It is essential since customers are becoming aware of the environment and
positively view companies with a good environmental contribution (StudyMode 2009).
Legal Factors
It is mandatory for every company to operate within pre-determined legal limits. Using PESTEL
analysis model, legal limits influences the does and don't of a company. Below are the legal
external factors.
 Regulations in the external environment as it influence online privacy.
 Regulations which help protect rights on intellectual property.

ORGANIZATION STRATEGIC ANALYSIS A28745 8
Google has an opportunity to enhance its privacy measure to protect its consumers by exploiting
opportunities presented by the legal external factors. It is also essential to develop new ways
which will prevent and discourage the violation of intellectual property rights.
Limitation of PESTEL Model Analysis
There are various limitations such as external factors are dynamic over time and require constant
monitoring. The external factors are derived from the assumption and remote conditions. These
are barriers to the transparency of PESTEL Model.
SWOT Analysis
It shows the internal capabilities and the external factors affecting the proper functioning of these
capabilities. The firm is one of the most valuable businesses as it leading provider of online
advertising services. Despite the continued success the company needs to exploit its
opportunities while addressing threats. The SWOT analysis proves that Google should continue
to eliminate its threats while using its strengths and taking care of its weaknesses (Awais &
Samin 2012).
Google's Strengths
These are internal strategic factors influences the company performance. The strengths direct
influence the company's success and they must be sufficient to substantiate growth. They
include:
 The strong image of the brand
 Diversified nature of its business operations
 The size of the organization

ORGANIZATION STRATEGIC ANALYSIS A28745 9
 Proprietary products which are patented
The strength outlined shows that there is growth in Google and there have been improvements
over time. This can be proved by the diversification of its products. The company can fight off
competition due to its brand image strength, patents and its size.
Google's weaknesses (Internal Strategic Factors)
Weaknesses of any business are a challenge to business operations preventing growth. Below are
the Google's weaknesses:
 Its dependence on the internet
 Its physical appearance is small
Google relies on its internet presence for expansion. For example, it had to wait for its coverage
to be in developing nations so as to expand its operations such as advertising. The company has
minimal physical appearance hence it faces problems competing with companies such as Apple
with bigger physical appearance (Awais & Samin 2012).
Google's Opportunities (External Strategic Factors)

ORGANIZATION STRATEGIC ANALYSIS A28745
10
These are mainly presented by technological changes and are the best opportunity for the growth
of the business. The Google's opportunities include:
 Expand its mobile users market
 Expansion of its fiber sector
 Gain markets from electronic consumers
One way of increasing coverage on the increasing mobile usage, the company can develop
products which are mobile friendly and also increase its Fiber use to improve revenues. It can
also increase its markets by investing in consumer electronics such as Google's Nexus devices.
Threats to business (external strategic factors)
Threats reduce the performance of the business consequently preventing business growth.
Threats to Google include stiff competition and imitation of some of its products. The company
is in serious competition with companies such as Apple and Yahoo.
Limitations of SWOT Analysis model
This model can mislead an organization by making it view circumstances to be simple hence
overlooking them. The way it categorizes the strengths, weaknesses, opportunities and threats are
subjective to the uncertainties in the market. This model explains the essence of the four aspects
of the model but does not provide identification means.
PORTERS FIVE FORCES MODEL
The model shows the interaction of the company to the five forces and the strategic choices in
response to these factors.
Competition

ORGANIZATION STRATEGIC ANALYSIS A28745
11
Porter's Five Forces Model shows that Google experiences competition and this competition
limit the growth capabilities. The following the strong external forces that Google should
consider.
 Many firms
 The large numbers of firms are diversified
 Low switching costs
Google faces competition from firms such as Yahoo, Apple, Bing and others. Due to its
diversification of its products, it has many competitors. Google has Google Glass, Google Fiber
and Chrome-cast in the market and the Google car is under development, and this exposes the
company to strong forces.
Buyers Bargaining Power
The bargaining power of buyers is weak, and according to the analysis using this model, such a
factor is considered less in the strategic decision-making process. The external factors that
contribute to the weak bargaining power include small size buyers, high and improving demand
and the moderate quality of information.

ORGANIZATION STRATEGIC ANALYSIS A28745
12
The buyers exert minimal forces since each contributes a small revenue and also due to the high
and increasing demand for products. These two lead to a minimal influence on the firm. There is
limited knowledge of customers which might not inform the advertisers on the dynamism and
complexity of the online advertising environment (Goldfarb 2014).
Suppliers Bargaining Power
There are various suppliers to choose from, and this means that Google experiences weak
supplier power. These external factors include the easy access to suppliers and a large number of
suppliers. The large number and availability of the suppliers minimize the bargaining power, and
Google can easily move from one supplier to the next.
Threats of Substitutes
There is the moderate threat due to the availability of substitutes such as other advertising
channels such as radio and print media. Google should consider the low switching costs and
moderate to the high availability of substitutes. There is a moderate force for Google due to low

ORGANIZATION STRATEGIC ANALYSIS A28745
13
switching costs and due to moderate to the high availability of substitutes. The end impact for
these factors according to Porters Five Forces model is the moderate threat of substitution
(StudyMode 2009).
Threats of New Entry
There are moderate forces due to new entrants such as new ventures or investment of large
companies. The external forces to consider include the moderate cost of doing best and high cost
of brand development. Also the ability to easily fulfill the regulatory requirements should be
considered. Many firms entering the market might find it hard to operate in long-term since
Google is already the most valuable brand.
Limitation
The model is not designed for application in small market level but the broader level of an entire
market environment. It is also inherently static and only represents the aspects of the present.
Recommendations
PESTEL Analysis
The PESTEL model analysis of Google helps in concluding that external factors to macro-
environment are opportunities for growth. It is essential for the company to focus on these
opportunities to maintain and improve its competitive advantage. For instance, the company can
apply its innovative culture to develop new capabilities such as increase the ease of use Google
products on mobile devices. The competitiveness of the company and influences would be
expected to increase if they address the identified opportunities (Goldfarb 2014).
SWOT Analysis

ORGANIZATION STRATEGIC ANALYSIS A28745
14
SWOT Analysis for Google shows that the company has enough strength and therefore should
utilize them in addressing its weaknesses. The company should improve its physical appearance
by opening new physical stores and promotions. We have seen the company opening stores the
United Kingdom but have since stopped.
Porters Five Forces Model
On Porter's Five Forces, Google competition poses the greatest force. Other forces such as
substitutes and new entrants are moderate. The bargaining power of suppliers and buyers is
insignificant to its business environment. This means that Google should invest on dealing with
the strong force of competition (Goldfarb 2014).
Conclusion
In general, Google has won many awards continued to increase its revenue, improved services,
innovated new developments and reduced most of its competition. It has also addressed its
weaknesses. It is to say that Google's business strategy has been successful despite various
difficulties. It is evident that the company has more strengths and opportunities in comparison to
its threats and weaknesses.

ORGANIZATION STRATEGIC ANALYSIS A28745
15
References
Awais, M., & Samin, T. (2012). Advanced SWOT Analysis of E-Commerce. International
Journal of Computer Science Issues(IJCSI), 9(2), 569-574.
Goldfarb, A. (2014). What is different about online advertising? Review of Industrial
Organization, 44(2), 115-129.
StudyMode (2009). Business Analysis of Google Co. Retrieved on October 8, 2016 from
http://www.studymode.com/essays/Business-Analysis-Of-Google-Co-191594.htm
Lee, H., Kim, M. S., & Park, Y. (2012). An analytic network process approach to
operationalization of five forces model. Applied Mathematical Modeling, 36(4), 1783-1795.
Yuksel, I. (2012). Developing a multi-criteria decision making model for PESTEL
analysis. International Journal of Business and Management, 7(24), 52.