Katherine Carter Strategies and Policies Case Study 8 Internet Search and the Growth of Google In 1997 the domain name google. com was registered by two Stanford students name Sergey Bring and Larry Page. In 1998, it became a privately owned, incorporated company known as Google Inc. Within 6 years of its inception, Google acquired 75% of US web search market. Even the word “google”, became a verb in our society as one would say, “let’s google him! ”. Google revolutionized the internet search industry by charging its advertisers differently that ever done before.
First, they auctioned off certain “key words” and when such key words were typed in a query, web users were directed to those advertisers web page. In addition, advertisers were charged on a “per click” based upon how many users actually clicked on their page. By 2010, 70% of all internet advertising was being spent at Google. That same year, Google had $29. 8 Billion in revenues with $8. 5 billion in net profit. Google’s mission is to organize the world’s information and make it universally accessible and useful.
The Google we know organizes the world’s internet information and makes it accessible to us via its search engines using algorithms and state of the art technology. Even though Google currently at the top of their field currently, they still have competitors. Their business model must be changed continually to stay abreast of new ideas, new technology, and new competitors. Strengths Most efficient search engine on internet Brand equity – most recognized brand name Needs very little end user marketing Very strong R and D skills
Provides an interface to approximately 88 languages State of art technology Not biased towards advertisers Ability to manage strategic change Executive Management Large cash flow Default search engine for many Innovative culture Comprehensive product mix Weaknesses Business model is complex Eccentric practices confuse/anger investors Poor product marketing Inappropriate organization Growth without direction Cumbersome hiring practices Opportunities Increase demand for information International market Computer literacy on the rise Expands profits with diversification
Exploits new market segments Applies R and D skills in new areas Enters into new related businesses Applies brand name capital in new areas Seeks fast market growth Threats Legal challenges Multi industry competition Specialized search engines Click fraud Advertising space becoming more competitive RECOMENDATIONS Internet advertising is expected to continue to grow with search based advertising to account for 41. 2% of all U. S. Online advertising. Google will need to maintain its market dominance in order to stay on top of this game.
As evidenced by Microsoft, who spent and lost billions attempting to build a search engine to complete with Google, it is most likely that competition will ultimately come from cooperation amoungs competitors. Recently, Microsoft and Yahoo have teamed up. Facebook also presents a threat to Google as it currently has in excess of 750 million users. Microsoft has invested over $210 million in Facebook. In order to continue to dominate, Google must continue to increase its offering of services such as e-mail (g-mail), a calendar, and photo sharing.
This will lead to further loyalty with users. They must also continue to search for new areas of income thus diversifying. As example of this is “google apps” and the word processing program “Writely”, both developed to compete with Microsoft. Another example is the Google’s operating system for smart phones known as Android. Android let the market with a 31. 5% share of all smart phones sold in 2011. Analysts contend that Google’s new product offerings have a mixed success record. Google must refine their R and D to pick more winners to be developed and offered to end users.
This mixed review of new products no doubt stems from the current corporate structure. It is reported that there is no current efficient allocation of corporate personnel resources and massive duplication amongst those resources. This and other employment strategies must be addressed. Google must also search for future partners to team with to further broaden income and user loyalty. An example of a partnership is the one between Google and U Tube. Should Google not find and further these potential partnerships, it competitors surely will.