MGT703: Strategic Analysis of Google's Business Environment

This report provides a strategic analysis of Google, examining its external and internal environments. It begins with an overview of Google's history, location, and various businesses, justifying the selection of Google for analysis based on its global impact and market dominance. The external analysis employs Porter's Five Forces to assess competitive rivalry, bargaining power of suppliers and buyers, threat of substitution, and threat of new entrants. The internal analysis utilizes a SWOT framework to evaluate Google's strengths, weaknesses, opportunities, and threats, offering recommendations for leveraging strengths, addressing weaknesses, capitalizing on opportunities, and mitigating threats. The report concludes with a list of references to support the analysis and findings.

Running head: STRATEGIC MANAGEMENT 1
External and Internal Analysis of Google

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Google
Location of the Organization
The corporate headquarter of Google is Googleplex which is located at 1600
Amphitheatre Parkway in Mountain View, California, United States, near San Jose (Google,
2019).
History of Google
Google’s history began in the year 1995 when Larry Page met Sergey Brin. Both of them
were students at Stanford University, California. By the year 1996, both of them started their
initial work on a search engine called BackRub which was successfully managed by the duo. As
the search engine worked on the Stanford servers for more than a year, which gave rise to
Google.com. The Google.com was registered on September 15th, 1997. The company finally
settled at Mountain View in 2003 from where they started making rapid growth to become of the
world’s largest media company. After its initial public offer in 2004, the company successfully
launched Google News, Gmail, Google Maps, Google Chrome and Google+ by the year 2011
(McFadden, 2018).
Different Businesses of Google
Google has remained profitable and competitive by the virtue of its 4 most important
businesses. They are:
 Google Maps - This application allows to look up to any location of the world. Apart
from providing an aerial overview of the locations, Google Maps also provide accurate
street-level views of many cities.
 Google AdSense- AdSense provides an opportunity for advertising online on its partner
sites.
 YouTube- It is one of the most popular video platform on the internet which generates
revenue for Google from sponsored content and video advertising.
 DoubleClick- It is an advertising service that allows website owners to place ads on their
websites.
Rationale to select

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The rationale for selecting Google is that it organizes the information from all over the
world and makes it universally accessible and useful to masses. The company has been a
dominant player in the market from a very long time but the company has also been humble
about it stating the fact that there are many players in the market and consumers could relatively
switch to any new enhanced search engine.
External Analysis of Google
For analyzing the external environment of Google, Porter’s Five Forces Model will be
used which can be summarized as followed:
Competitive Rivalry
Google experiences strong competitive rivalry from its competitors such as Apple,
Comcast, and Bing. Due to availability of diverse set of competitors, Google has been
experiencing a strong force on his business. Google has developed its offerings such as Google
Glass, and Chromecast (Heizman, 2019). Along with that, switching costs of customers is very
low as they can switch to any other company. Therefore it is a strong force exerted on the
Google.
Bargaining power of Suppliers
Since there are many suppliers to choose from, there is a weaker power of suppliers in
case of Google. In addition to that, a combination of both availability of suppliers and their larger
population has reduced the effect of bargaining power of suppliers on Google. This means that
Google will face no difficulty in switching their suppliers due to diversity in its products such as
Google search and Google glass.
Bargaining power of buyers
The bargaining power of buyers is relatively weak in case of Google. This means that
Google considers bargaining power of buyers as a minimal strategic decision. Since the
contribution to Google's revenue of each buyer is comparatively low, therefore it is weaker force
for the company. The rising demand for Google products also exerts a weaker force on Google
(Porter, 2019). The availability of moderate quality of information exerts a moderate force on the
company.

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Threat of Substitution
There is a moderate threat of substitution for Google. The substitute for Google includes
radio, television and print media and other advertising channels. Customers have an option to
move from Google's services to other substitute which means that will be low switching costs
exerting a moderate force on the company. The availability of high substitutes may lead to a
moderate threat of substitution against the products offered by Google.
Threat of New Entrants
Google may face a moderate force on it due to threat of new entrants in the market. These
new entrants can be technological companies offering homogeneous products. Due to
technological advancements, there are many startup companies entering into the market to
compete directly against Google, may have an impact on its operations. But on the contrary, cost
of brand development is high for new entrants making it a weaker force for Google. But due to
easily fulfill regulated requirements, Google may face a competition from these startups.
Internal Analysis of Google
Google’s SWOT Analysis recommends that the company has adequate strengths to
overcome its weaknesses. This also specifies the opportunities Google and have and perform
better by mitigating the risks.
Strengths
Google is undisputed leader in search engines holding more than 65% of the market share
for internet searches (Sterling, 2015). Google generates more than 1.2 billion user traffic
searches on its website which gives it a competitive advantage over its competitors. The adoption
of mobile technologies by Google has resulted in directly competing with Apple as far as
operating systems and performance is concerned. Google generate heavy revenue from its
advertising efforts.
Weaknesses
Google is very secretive about its algorithm for searches which has been disapproved by
experts making the company look opaque in terms of its operations. Google's business model
heavily relies on its advertising efforts which requires the company to build a robust business

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model. Google provides minimal physical appearance to its products, main face difficulty against
companies like Apple. The area of concern also lies in its compatibility with many computing
platforms.
Opportunities
The enhancement of Google's Android operating system has an opportunity to provide
direct competition to Samsung and Apple. Google also has an opportunity to diversify its
business into non-Ad Business models. Google has also an opportunity to generate maximum
revenues from Google Glasses and Google Play, but the company needs to exploit these (Forbes,
2014). Google can also expand its Google Fiber coverage and cloud computing enterprise
market.
Threats
The advent of social media platforms like Facebook has threatened Google's hold over
the internet market which requires the company to build robust changes in its offerings. Google
is operating in highly competitive market with competitors like Apple along with startups
offering similar products like Google. The emerging area of mobile computing can also be a
threat to Google.

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References
Forbes. (2014). Is Google Glass The Next Big Money Maker? Retrieved from
https://www.forbes.com/sites/greatspeculations/2014/06/18/is-google-glass-the-next-big-
money-maker/#1aec03dd6d67
Google. (2019). Contact us. Retrieved from https://www.google.com/contact/
Heizman. A. (2019). Google Glass Isn’t Dead; It’s the Future of Industry. Retrieved from
https://www.howtogeek.com/400963/google-glass-isnt-dead-and-its-the-future-of-
industry/
McFadden. C. (2018). Almost Everything You Need to Know About Google's History. Retrieved
from https://interestingengineering.com/almost-everything-you-need-to-know-about-
googles-history
Porter. M. E. (2019). How Competitive Forces Shape Strategy. Retrieved from
https://hbr.org/1979/03/how-competitive-forces-shape-strategy
Sterling. G. (2015). Google Controls 65 Percent Of Search, Bing 33 Percent [comScore].
Retrieved from https://searchengineland.com/google-controls-65-percent-of-search-bing-
33-percent-comscore-228765