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1. What are the strategically relevant components of the global and US beverage industry macro-environment?

How do the economic charactheristic of the alternative beverages segment of the industry differ from that of other beverage categories? Explain.

The strategically relevant components of the global and U.S. beverage industry macro-environment: Global beverage companies such as Coca Cola and PepsiCo had relied on such beverages to sustain in volume growth in mature market where consumer were reducing their consumption of carbonated soft drinks. Coca Cola, PepsiCo and other beverages companies were intent on expanding the market for alternative beverages by introducing energy drinks, sport drinks and vitamin drinks in more and more emerging international markets. Beverage producers had made various attempts at increasing the size of the market for alternative beverages by extending existing product lines and developing altogether new products. Expanding the market for alternatives beverages and increasing sales and market share, beverage producers also were forced to content with criticism from some that energy drinks, energy shots, and relaxation drinks presented health risks for consumers and that some producers strategies promoted reckless behavior, the primary concern of most producers of energy drinks, sports drinks, and vitamin-enhanced beverages was how to best improve their competitive standing in the market place. Rapid growth in the category, coupled with premium prices and high profit margins made alternative beverages an important part of beverage companies lineup of brands.

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The economic characteristic of the alternative beverage segment in the industry is differ from that of other beverage categories. Alternative beverages competed on the basis of differentiation from traditional drinks such as carbonated soft drinks or fruit juice. The market started out with low competition, however that is rapidly changing as many new product line enter and profit margin will inevitably suffer from the price reduction. The rest of the beverage industry is faced with low profit margins because of high competition and little ability to differentiate products.

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2. What is competition like in the alternative beverage industry? Which of the five competitive force is strongest? Which is weakest? What competitive forces seem to have the greatest effect on industry attractiveness and the potential profitability of new entrants? Competition between brands mostly depended on product innovation. Also alternative beverages competed on the basis of differentiation from traditional drinks such as carbonated soft drinks or fruit juices. Alternative beverages include energy drinks, vitamin-enhanced drinks, and others. With energy drinks competition relied on the brands attempt to develop brand loyalty based on their taste, energyboosting properties of their ingredients, and image. They work on a drinks image by its brand name, packaging, clever ads, endorsement from celebrities and extreme sport athletes, and sponsorships of extreme sports events and music concerts. With vitamin-enhanced drinks they center on brand name, packaging, advertising, unique flavors, and nutritional properties. The competitive alternative beverage was the strongest competitive forces. Among the sellers of energy drinks and other alternative beverages, competition is so strong and will grow stronger each years. Competition among major brands centers primarily on brand image, an appealing taste, attractive packaging, new product research and development, sales promotions and endorsements, and gaining better access to shelf space and strengthening distribution capabilities. As for 2010, there was no evidence of strong price competition in any of the alternative beverage categories, which makes it difficult to argue that competitive rivalry is fierce or brutal. With PepsiCo and Coca Cola already having such a big market share and their products were already provided to consumers in supermarkets, supercenters, wholesale clubs, and convenience stores it was easy for them to make their alternative beverages available by delivering the product along with their soft drinks. They were able to dominate such channels since they could make the products so readily available to consumers and winning them over.
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The bargaining power and leverage of suppliers was the weakest competitive force. Many suppliers for alternative beverage ingredients and they fight with the others to sell their products. Packaging is readily available from many suppliers and is like a commodity. However, some rare ingredients providers had a moderate amount of leverage in negotiations with energy drink producers. Additionally, the producers of alternative beverages are important customers of suppliers and buy in large quantities. The customers may have some power over the companies but not a lot. At the time when these alternative beverages were produced they didnt have much competition so customers were forced to pay higher prices and did. If customers are willing to buy it at a higher price than the companies will sell it at that price. Like with Red Bull they are small cans but sell at a high price while Monster energy drink is a competitor sells their product at the same price but offer more drink in the can but consumers still choose to pay that high amount instead of switching to Monster. Companies that seem to have the greatest effect on industry attractiveness and profitability with new entrants would be companies like PepsiCo and Coca-Cola that already have such a huge following of loyal customers to their brand. If they were to introduce a new product verse a company who isnt well known, consumers are more likely to go with PepsiCo or Coca-Cola because they like their other products and are more willing to try their new product opposed to a company they arent familiar with.

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3. How is the market for energy drinks, sports drinks and vitamin-enhanced beverages changing? What are the underlying drivers of change and how might those forces individually or collectively make the industry more or less attractive? The market for energy drinks, sport drinks and vitamin-enhanced beverages kept on changing over time. It changed through differentiation from other brands to get brand image and also to meet every demand. As spoken in the USA, these energy drinks help a very great growth industry. Because of the significance of brand recognition, the sellers kept on building the product and how it to be most familiar. Drivers of change Product innovation is one of the market drivers of change. This feature is said to be the most important features of competitive alternatives in the beverage industry. Alternative beverages compete on differentiation of traditional beverages such as carbonated soft drinks and fruit juices. So for energy drinks, they often change taste, energy and materials as well as improve their images. It is also through innovative marketing and efficient distribution system that kept changing industry by constantly changed packaging, attractive advertisements to attract customers, the support of celebrities and athletes also sponsorships. Alternative beverages sellers also need to have efficient distribution systems to be successful in the industry. These forces only made the industry attractive because it can attract first time buyers through product and marketing innovation and offer responsive customer service to large customers which may then lead to an increase in market demand, market competition more intense and lead to higher industry profitability. The global beverages industry was projected to grow The high growth of purchasing power in developing countries Increase in demand in developing countries Widening Market to include adult parents and office workers New entrants are stifling profits Changes in the industrys long-term growth rate: Product and marketing innovation can make the industry more attractive by differentiation the product In order to maintain
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premium pricing industry has had to continually innovate the product New Entrants into the market are also driving product and marketing innovation in order to compete Product and Marketing Innovation Globalization was projected to increase through 2014 Analysts believed that Europe, Australia, South America, and the Middle East were attractive markets of energy shots. Poor economic conditions in US because there is a global economic crisis that makes the consumer becomes more price sensitive Increasing Globalization The content of energy shots and energy drinks was not regulated by the U.S FDA The high caffeine consumption was heart arrhythmia and insomnia. Monster Energy placed warning on its labels The concern of the relaxation drink within the alternative beverage the consumption of relaxation.

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4. How is the market for energy drinks, sports drinks and vitamin-enhanced beverages changing? What are the underlying drivers of change and how might those forces individually or collectively make the industry more or less attractive? First key factors are the benefit of the beverages product itself. According to the case study,the competition in energy drinks,sport drinks and vitamin-enhanced are really tight. Customer attend to choose these drinks because all of these beverages are good for health. With these competitions,coca-cola and PepsiCo,the most high rated seller in carbonated drinks were force to expand the market for alternatives beverages by introducing energy drinks,sport drinks and vitamins drinks in more emerging markets. Second factor is the premium-priced introduced by the company. It is psychologically that consumer will choose the price that affordable for them. It is hard for an entity to survive in the market if the prices are high. Even though it is made with high quality ingredient,most of the customer will only pick with the affordable prices. It is true that company like GNC Live Well supply the most high quality energy drinks but still their customers are much lower compared to affordable energy drink companies. Third factor,availbality of the product. For example,GNC Live Wells store are not entirely available at all places. This store are only located at the population 5000>. It does not located in rural areas but only in the cities. Whereas,coca-cola,pepsi and etc are available even in the country side. Thus,it is convenience to the customers to obtain all energy drink products.

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5. What recommendation would you

make

to Coca-Cola

to

improve its

competitiveness in the global alternative beverage industry? To PepsiCo? To Red Bull GmbH Coca-cola had been known as the giant in baverage carbonated drinks. The strength of their brand also aided the company to distribute new product to the market. Despite all successfulness,coca-cola company had been threatened by other giants like PepsiCo & RedBull. I recommend that coca-cola design a new product,whether from the casing of their drinks or their flavours. Appearance and a new flavours will attrach children,teenagers and adult to choose their product. My second recommendation is that coca-cola company done any corporate social responsibilities (CSR). Contribution to the public will help to attract consumers mind and heart closer their relationship to the company. Most important thing is,image of the company will be build. Even though it is may costly to undergoes CSR but in my opinion,it is good for lon term effect,especially for the image of the company. Coca-cola company are popular with their carbonated drinks, which is not suitable for a different level of ages. In my opinion, coca-cola company should design a product that have healthy benefit to these targets consumers. For example,we take a look at redbull. Its popular with their high energy content for teenagers and athlete to undergoes their daily activities. Compare to carbonated drinks that only inflict the various delicious flavours. It is not impossible to create something that contribute two benefits in one drinks.

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1. Discuss competition in the search industry. Which of the five competitive forces seem strongest? Weakest? What is your assessment of overall industry attractiveness? Search industry built on search engine and advertisements. It seems like there are only five main competitors in this industry compete with Google. Among the companies are Yahoo!, MSN, Baidu, Ask and AOL. Competition between Google and other companies are tight because most of them have the same target market and carry on a similar business and technology. STRONGEST Bargaining power of buyers In year 2007 and 2008, 97% of Google's revenue comes from advertising business. The remaining 3% comes from income already made by other businesses. The advertising customers have the power to bargain for Google depends on advertising sales too much. In addition, since the industry is relatively new, there are still many opportunities for further growth of Google's current or potential competitors that cause the bargaining power of buyers is very high. Rivalry The main competition is the Yahoo! and Microsoft. However, all competitors have similar products and services. The competition based on the performance of each company that can attract customers rather than on price. Such as an example of the results that will be generated for each search engine when consumers are searching for information about something, there is the latest news in each search engine, the speed of the search engines and many more.

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WEAKEST Bargaining power of suppliers Talented people were required by Google. They are known as a supplier to Google. Without them, Google is not able to continue the success of its own. Because they are too hard to get talented people in various fields such as technology, art, animation and many more, Google has provided many benefits and flexible work schedules to attract and retain them in the company. For example, they are given the facilities and equipment as well as a lucrative salary appropriate to their work. Therefore, the supplier has bargaining power is high. Potential entries Internet search engine industry has low barriers to prohibit new participation has the potential to enter. There are several companies that exhibit high technology and workers that are more knowledge than any other company. This causes low barriers for each new rival. Although the barriers are low, a new entry must provide better and faster results to compete with other competitors. They have to win others with better service and fast, and difficult to duplicate by other competitors. Substitute As search engines or as an advertiser, there are some powerful or suitable substitute can replace Google. Such an example successors are as Yahoo!, MSN, Bing and others. Not only Google but they also has a way of alternate and distinctive style to attract customers to choose their search engine. The successor will also continue to change and evolve to become established in order to compete with Google.

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Since Google and the rest of the search engines are already established and technologically advanced, new entrants will have a hard time competing with the search engine giants. For new entrants to succeed, they must be able to top the service of Google and the other search engines. Google and the other existing search engines already have the search history of old users, putting them at an advantage over potentially new entrants. The industry is very attractive due to it being a relatively new industry. Technological advances can push the industry to greater heights.

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2. How is the search industry changing? What forces seem most likely to bring about major change to the industry within the next three to five years?

Computing technologies are one of the trends which will have also a big impact on software market. Google is a big player in this field. Microsoft has identity this as a big threat to their business. This field is still going under great improvement. Second trend in industry is rising a competition in mobile search or advertising and importance of social networks is still in growth. In the search engine market, the following trends were find: Internationalization of the search market China as a new prospective market and fight between Google and Baidu for market share in china High possibility of further mergers in the search market It can be expected that some of the search engines will be specialized for customer-based needs.

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3. What are the keys factor that define success in the industry? What are the key competencies,capabilities & resources of successful search engine companies. Particular strategy elements Technology Google build and acquire its own technology. That means the company build its own serve from the component that directly from their trusted manufacturers Google now operates the world's largest distributed computer system.-Drummond Brand. A European study recently determined Google to be the number one most recognized worldwide brand-Drummond. As we know, Google had become a verb in order to search for informations. This also the strength of the company. Operational Approaches Acqusition . In 2004,Google has been active in acquisitions. Also in order to dominate the search engine world, Google has verify its services. For example ,they provide maps, local services, airline travel information and etc. With the decision to make an acquisition with Double Clicks, Google have the opportunities to diversify their services more than search ads. Entry market into smartphones. Google discovered that person from the age of 13 and above had owned a mobile phones. In 2008,Google has introduced the world with the Android system. With the introduction of Android, it helps to boost up the share of mobile search and delivering the internet advertisement through the phone. Google has make many approaches. In order to succeed, the company had involve in many different level of fields. For example, Googles senior management had an opinion that by the year 2013,the company will acquire to $95 million if they invested in cloud computing. In 2010,the company had the collaboration with Intel, Sony and etc. This is because Google had decided to initiate to expand search to television.
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As for Googles compentencies, capabilities and resources, there are a few element that can be discuss. Globalization. Google is available in 160 different local country domain and 117 languages. While Google is available virtually everywhere there is internet access but operated in only 20 countries. Google is still working to establish a significant business presence in places such as Middle East. As they are expanding their operations and hire their first employees in another country, that part of Google feels like a startup. They have started Google.org with the idea of eclipsing the impact of Google itself while focusing on more philanthropic causes. Though they are working on extremely tough problems in difficult locations, they have made significant pace. They have established several main focus areas, including predicting and preventing disease; improving public services by informing and empowering people according to the locations; and increasing economic growth and job creation through stimulating small and medium enterprises. Simplicity and flexibility. The company gives their best services to their customers. Flexibility here means that the company give variety of services such as maps, translator and etc. Simplicity are meant by the simplicity of their services. When a certain customer acquire their services ,its not complex or hard to understand. Google give the direct and most simplest services so that their customers doesnt have the trouble to think hard just to acquire or interpret an information.

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4. Describe Googles customer value proposition and profit formula linked to its business model. What strategies has Google relied upon to build competitive advantage in the industry? Low cost provider Google supplied their services to their customers with the lowest cost but with the most excellent services. We can see on our daily life, as an user, Google doesnt charge with hidden cost but only cost with our internet charge. Its also seems that the u sing of internet when we trying to googl the internet, it does not consume much charges into our internet limit. Differentiation on features. Why we chose Google? For most student it is because it much easier to gain any services other than searching for an information. For an example, Google become the only search engine that provide the services of translator. Reporting and Metrics. Advertisers has the ability to change their ad campaign and also,a dvitisers had the ability to change their advertisement whenever they pleased. AdWords Discounter is a feature built into AdWords that will charge you the lowest possible CPC while still maintaining your position for each keyword. So even if you set an ad group maximum CPC of US$1.00, you won't necessarily be charged this full amount for every click. Your actual CPC (the amount you actually pay per click) is often less than the maximum CPC bid you specify for your ad group or keyword. Smart Pricing is a feature that automatically reduces the price advertisers pay for clicks if our data shows that a click from a Display Network page is less likely to result in a conversion. This means that if our smart pricing system predicts a particular Display Network page is likely to have a low conversion rate, we will automatically reduce the price advertisers pay for that click.
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Googles business model are: Reliable pricing system Scalable architecture Disruptive business model Efficient ad system and relevant ads

To support further growth of Google they are relaying on this strategies: Differentation Deliver the most relevant, objective data in the shortest time Focus on user experience and anticipate user needs. Develop personalized user products and services. Innovate advertising solutions for business sector. Protect key talent by investing in culture. Explore & develop internet video/wireless frontiers. Innovate service/interfaces for wireless sector.

That is why Google need to: Invest in R&D (innovations, search for algorithms and communications) Pursue strategic alliances (integration and interoperability) Manage the Google brand (avoid marketing)

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5. Have Googles business model & strategy proven to be successful? Should investors be impressed with the company financial performance? How does the companys financial performance in that of Microsoft and Yahoo? Please conduct a financial analysis to support your position-you may wish to use the financial ratios presented in the Table 4.1 of the text as guide in doing your financial analysis of the company.

Analysis : Statement of operation


2003 Operating Profit Margin Net Profit Margin ROA ROE 0.179 0.136 0.155 0.181 0.185 0.15 0.181 0.233 0.072 2004 0.2 0.125 2005 0.32 0.239 2006 0.334 0.29 2007 0.306 0.253 2008 0.304 0.194 2009 0.351 0.276

Operating Profit Margin This ratio will show how much profit is earned on each dollar sales, before paying interest charges and income taxes. Net Profit Margin This will show after-tax profit per dollar of sales. Return on Total Asset A measure of the return on total investment in the enterprise. Interest is added to after-tax profits to form the numerator, since the total assets are financed by creditors as well as by stockholders.

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Return on Stockholders Equity This ratio will show the return stockholder are earning on their investment in the enterprise.

Advertising revenue Google is one of leading internet technologies and advertising companies in the world that specialized in internet search engine and related advertising services. The company's infrastructure includes a strong portfolio of own websites which generate advertising revenues contributing to a significant portion of its total revenues. Table below indicate the advertising revenue as percentage in the full year from 2003-2008. 2003 Google Websites Google Network Websites Licensing revenue and other 54 43 3 2004 50 49 1 2005 55 44 1 2006 60 39 1 2007 64 35 1 2008 66 31 3

Exhibit 6 : Googles Revenue by Source, 2003-2009 (c-147) Google website: Advertising revenues from Google websites accounted for 66% of its total revenue in 2008 compared to 64% and 60% respectively in 2007 and 2006. This represents a revenue contribution of $ 14,413,826 thousands, $10,624,705 thousands and $6,332,797 thousands. Among this three full year, 2009 was the highest level of revenue contribution for advertising. Moreover, Google website accounted for 55%, 50%, 54% of the companys advertising revenues in 2005, 2004 and 2003 respectively. Google Network Websites: The highest revenue record in Advertising revenue from Google Network Websites is in the year of 2004 which id 49% of the total advertising revenue. in the year 2003, the revenue is 43%. Then increase to 49% in 2004. In 2005, the revenue from Google Network Website start
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to declined. Revenue accounted for 44%, 39%, 35% and 31% for the full year of 2005, 2006,2007 and 2008 respectively.

Licensing and other revenue: Basically Licensing and other revenue in 2003 contribute 3% of the total revenue. In 2004 the revenue declined to 1%. In 2005, 2006, 2007 the contribution revenue from Licensing and other revenue are same as in 2004 which is 1%. Meanwhile, in 2008, the percentage of revenue rose to 3%. If we compare the revenue for year 2006 between Google,yahoo and Microsoft,it seems that Microsoft had the lead with $44,282,000,000. Microsoft had the lead from the year 2006-2009. In our opinion,according to the calculations,Googles business strategy have been proven successful and investors should be impress with the company.

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6. What are the companys key resources and competitive capabilities? What competitive liabilities and resources weakness does it have? What opportunities exist? What threats to its continued success are present? Strength Google is one of the premier internet brands in the world. The company is ranked among the top brands worldwide. Over the past 4 years since 2010, Google was ranked number one worldwide in Brand Value. Google brand is valued at $43,557 million according to 2010 estimates, which is an increase of 36% compared to 2009. Also, according to industry sources, the company is the second most valuable brand in the world. Google search engine was designed to help people retrieve information from either a computer network within an organisation or the World Wide Web, Google's search engine differs from prior engines in that it sorts information by a ranking of relevance. This relevance is determined by the number of times other web pages refer users to a particular webpage to find their requested information. An uncluttered and clear user interface simplifies the search function. Users are able to get fast and more relevant results to their search queries. Lets first examine the speed of an average Google search. Any random search takes between 0.06 to 0.12 seconds (Gigaom). Googles competitive edge is traced to the fact that theyve built their own infrastructure of servers, storage systems, bandwidth and hardware that supports the fastest search on the web. This initially helped to form the competitive advantage which Google once held over its rival search engines, since imitated by Microsoft with its MSN Search. The relative ease of the search interface for internet search users has helped to place Google firmly in the position as the current US market leader In addition, the company holds strong market position. According to industry sources, Google Sites lead the US explicit core search market, followed by Yahoo and Microsoft. The company also owns 90% of search market in Latin America. Google is also hugely dominant in Western Europe with more than 90% market share of the
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search sector. In Asia Pacific, Google owned 51% of the search market in 2010, followed by Baidu (23%) and Yahoo (18%). Further, the company's YouTube online video services is a leading online media platform. YouTube serves over two billion videos per day from a selection of over 500 million. The company also has robust market share in social networking segment with Orkut, and webmail through Gmail. In addition, Android, the companys own mobile operating system for smart phones, is the most used in the world with over 500,000 devices activated daily, and has about 34% of smart phone operating system market share at the end of 2010. Significant brand image coupled with strong market position provides a competitive advantage to the company over its peers. Robust financial performance strengthens investors' confidence and provides capital for future growth avenues. Google has a wide portfolio of offerings. The company's integrated offerings include search, operating systems and platforms, and enterprise products. It maintains a vast index of websites and other online content, and makes it available through Google.com, the companys search engine, to anyone with an internet connection. The company also offers Google Instant, which starts searching with every keystroke, thereby saving users time on every search. As per the company, Google Instant has saved its users over 100 billion keystrokes. The company's application tools allow users to create, share and communicate user generated information. Some of Google's applications products include Google Docs, Google Calendar, Gmail, Google Groups, Google Reader, Orkut, Blogger, Google Sites and YouTube. The company serves users in nearly every country and 146 languages. Google Translate works in about 58 languages and offers translations between 3,306 language pairs. For geographic information, Google covers the globe with imagery from satellites, airplanes, and cars, and the company made street maps available of nearly 100 countries. YouTube, an online community that lets users upload, share, watch, rate, and comment on videos, from user generated to niche professional to premium videos, serves over two billion videos per day from a selection of over 500
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million. More than 150 million people use Google Maps every month on their mobile phones, and nearly 10 million use Google Latitude to connect with their friends and families on maps. In addition Gmail, the companys most-used communications app, the companys broader suite of apps is used by over three million businesses and 10 million students. In addition, in June 2011, the company also launched Google+ in an attempt to capture the growing social networking market. Googles operating systems and platforms include Android, Google Chrome OS and Google Chrome, Google TV, and Google Books. The companys enterprise products provide its technology for business settings. Some of its enterprise offerings include Google Apps, Google Search Appliance, Google Site Search, Google Checkout, Google Maps Application Programming Interface (API), and Google Earth Enterprise. Googles advantage over competitors is its rapid speed that keeps users coming back. The results of the search may vary, but because of the incredible speed, a user can search another key phrase with minimal sacrifice and therefore be less inclined to switch to a competitor.google need very little end user marketing as the name itself is getting word by mouth publicity. It has a simple interface and it give comprehensive result without confusing its users. Google also weights the votes and ranks web pages with its PageRank technology to give it user access to the most important pages first. Google also not biased towards advertisers. It clearly separates relevant advertisement and actual results bt giving Sponsored Links tag to sponsored results when user searches to get information with some keyword. Moreover its also ranks sponsored links to keep more relevant sponsored links on the top. Google offer localized search called search by location where users can get results showing vendors, products and service earby their areas. Google also have range innovation additional sevices like Images, Groups, Directory and News. Google didnt complicate its website by making itself a portal rather it kept tabs for these

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service on ots homepage so users can easily navigate and that also keeps the website as simple as it was earlier. Google has also come up with solutions for wireless handheld devices, personalized toolbars, catalogues which are added essence strengths. Other than that google also quickly routes the user to the webpage and doesnt linger for ad revenue. Weakness Legal proceedings. Claims of patent infringement could adversely impact Googles financial condition. While these claims have not been fully adjudicated there could be large financial loss if the decisions are not favorable to Google. According to News week the U.S. Federal Trade Commission is expanding its antitrust probe of Google Inc to include scrutiny of its new Google+ social networking service. The FTC is looking into whether Google is giving preference to its own services in search results and whether that practice violates antitrust laws. Google is also facing various legal complaints from various nations for inadvertently collecting personal data from unprotected wireless networks via its Street View cars. This breach of privacy has brought up regulatory sanctions against the company from various countries including the U.S., Canada, and the European Union. Although these cases have not been adjudicated there is a real chance Goggle could face government sanctions in some of the countries. Any unfavorable verdict in any of these cases could affect the companys financial condition and operating results. Google's greatest strength and biggest revenue driver to the tune of 99 percent is its advertising scheme. But Google's contextual ads are also the company's biggest weakness. Spammers and made-for-AdSense site creators are constantly gaming Google's system through the practice known as click fraud. And some AdSense publishers note that Google's black box algorithms ensure that the company can bilk advertisers for millions. While Google says it has click fraud under control, it's made some concessions. And if AdSense publishers continue to grouse, expect more equivocating and changes from Google.

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Google scored a home run with text-based advertising, but its subsequent efforts at monetizing content have fallen short. Google's project to sell ads in magazines floundered, but the company has recently redoubled its efforts and is selling ad space in newspapers. Google has been ramping up its audio sales force, and the scuttlebutt is that the company will soon sell advertisements in podcasts. Google's success in these offline efforts will depend on its ability to sell to scale, whether in one medium or across media. But the technology is unproven, and there's no guarantee Google will be able to target ads to consumers as effectively in offline environments. In the interim, the company may be vulnerable to established players or companies that specialize in a single market and/or medium. Google cost Per Click advertising charging and ranking policy is confusing and makes it difficult for marketers to predict where their ads would be positioned and how much they would cost. In the eyes of some media companies, Google's business relies on exploiting content the company doesn't own. To technophiles and those who understand the flow of attention and Web traffic, Google is nothing but a highly effective guide to the wilds of Internet content. But the media companies that are accustomed to being at the top of the attention food are expressing their frustration.Google admitted its vulnerability recently in a recent SEC filing: "Courts in France have held us liable for allowing advertisers to select certain trademarked terms as keywords. We are appealing those decisions. We were also subject to two lawsuits in Germany on similar matters where the courts held that we are not liable for the actions of our advertisers prior to notification of trademark rights. We are litigating or recently have litigated similar issues in other cases in the U.S., France, Germany, Italy, Israel and Austria. Adverse results in these lawsuits may result in, or even compel, a change in this practice which could result in a loss of revenue for us, which could harm our business." Retention of Key Personnel. Googles performance largely depends on the talent and efforts of a skillful workforce. Google is in a very competitive industry where competition for skilled employees is intense. Though they have a great compensation program (such as their equity award programs) that may not be enough to motivate, attract and retain the worlds
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most skilled people. Perhaps the least of Google's worries, but a worry nonetheless, is how to make applications that lay users understand and actually use. Some of Google's products, like News, Maps and Gmail, are very successful. Others, such as Google Video, Google Reader and Google Talk have faced adoption challenges. Part of the problem is Google's tendency to solve engineering problems instead of user problems. A good example is Google Video's link within a video feature. The feature is great if you know about it and want to physically change a URL. But otherwise, it's an accessibility nightmare. Another problem is Google's tendency to come out strong with a beta release, but neglect to follow up with a release candidate. In addition, Google has relatively low patent technology compared to its competitors. For example, as per the industry sources, the company was granted 282 US patents in 2010, compared to Microsofts 3,094 new patents and Apples 563 patents. Also, in July 2011, Apple, Microsoft, RIM, and the other consortium partners won Nortels bidding and gained access to over 6,000 mobile patents. Although, in the same month, Google purchased 1,030 patents from IBM to protect its Android platform from litigation, it may not completely protect the company from patent wars, especially from the combined efforts of Apple and Microsoft to target Googles Android platform. Furthermore, the legal uncertainty around the open source operating system may make new customers wary about licensing the Google mobile platform and also can cost current Android customers millions of dollars. In addition to fighting lawsuits against itself, Google also has to concentrate on helping out its carriers who are facing patent infringement problems due to the adoption of Andrioid OS. Unfavorable verdict in any of the matters related to patent infringement or other intellectual property rights may affect the company's financial condition and operating results. Google do not have latest driver news like yahoo. Google only focus strictly on the web portal like search only. Their diversification is limited. It means that google doesnt have highly personalized search by which it could charge users by switching cost if they decide to

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leave googles service. Google also doesnt have sticky like Yahoo and Msn have which can attract users. Many spammer manipulate google ranking technology by creating dummy sites with thousands of links to pages that they wanted Google to ranks highly. Google link based ranking did not employ actual traffic analysis. Google contextual advertising was perceived by marketers to be less effective in generating sales because visitors to web pages showing editorial content were less likely than searchers to be ready to buy. Contextual search algorithms are not 100% perfect and many times make mistakes. Google also cannot compete serach engine in China. Many locals here in China prefer Baidu for Chinese searches and Google for searches in foreign languages. Baidu is still ranked as the most popular search engine without any doubt for now.In my opinion, Google is the only real threat to Baidus dominance. As long as politics interfere with Googles availability in China, Baidu will stayon top as king of the Chinese search engines.

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Opportunity There are many opportunities in the external environment for Google to exploit and become more versatile in the market industry they operate. The ability to grasp and implement the opportunities will place it in a very stable position far ahead of their major competitors like Yahoo; Microsoft and Amazon. Microsoft believes new Web services will work in tandem with software installed on the computer, a vision that differs from "software as a service" advocates who expect services delivered over the Web to eventually replace software that resides on local PCs. This is indeed a great opportunity for Google to expand and assert itself on the market because their new operating system to be launched in the second half of 2010 is an upgrade of the Google Chrome. If enough computer manufacturers embrace the Chrome operating system, it could weaken Microsoft while opening up new avenues for Google to persuade consumers and businesses to use its suite of online applications and other Internet services, generating more opportunities for Google to sell lucrative Internet ads. This will greatly be a great incentive for Google and a disincentive for Microsoft because their operating system tagged Windows is quite expensive due to the fact that it adds an extra cost to the purchase of a PC. If Googles operating system is successfully launched, it will be a fierce challenge to Microsoft who has enjoyed some kind of monopoly for more than two decades without any formidable challenge by any firm. Nevertheless, getting consumers and businesses to switch to computers powered by a new operating system won't be easy, as Google has learned from the introduction of Chrome. Google have been gradually trying its operating system for Smart Phones and other mobile devices. This operating system is referred to as Android and is a direct challenge to the ones by Microsoft Inc. and Apples Inc. According to the Associated Press Google says about 30 million people are using Chrome, a small fraction of the Web surfers who rely on Microsoft's market-leading Internet Explorer. If all their marketing and operation strategies fall in place, then Google will ultimately capture the market with its proposed operating system. At the moment the worlds third largest PC manufacturer, Acer Inc. have dropped
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Windows notebooks and replaced it with Android which in their opinion is cost saving and at the same time will enable the PCs to run faster. Part of the Google quest to attract users to its Gmail service, Google has introduced dozens of features, including one that, after a certain time, makes a user solve a Maths problem before sending an email, giving them time to rethink it. Google makes money anytime an e-mail user clicks an advertisement banner in their inbox; by enhancing their email service to increase their advertising market share, they hope to take away a significant chunk of the market share away from Yahoo. Google can become a mass-market portal like Yahoo and Microsoft and also can increase switching cost for its users. It also can add sticky like chat rooms and email systems to attract users and survive in tough competition. Google also can enhance personalized and localized searching and can also add localized paid listings of advertisers. Other than that Google can start new service like multimedia, product search, private database and print media. Google also can merge with an established mass-market portal to lock in large number of users and advertisers. Beside that Google can start giving full fledged service on hand held mobile devices to capture market beyond conventional internet.
Threats

Yahoo, Microsoft, and Amazon have all joined in a court suit to block the court settlement of a 2005 copyright infringement class-action suit that would give Google the right to digitize, host, and sell ads against millions of published works (Myslewski, 2009). This is just a tiny bit of the threats faced by Google against their major competitors. Other threats faced by Google are their inability to motivate their contract employees spread all over the world. In December 2008, Google could not give cash bonus to their contract staff members but gave them G1 cell phones. Other than that is their privacy concerns.

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Foreign exchange risk will give threat to Google. Other than that is disruptive innovations. The other threat is increase global competition.

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7. What recommendations would you make Googles top-management team to sustain its competitive advantage in the search industry? How should I best capitalize on its strategic initiatives in mobile phones, cloud computing, emerging markets and other ventures? Invest in R&D-Stimulate innovation. Constant search for improved algorithms and communication. Implement new innovation very quick. Try new solution with real people. Search for strategic alliances (integration and interoperability) Seek alliances with like-minded companies that promote open sources standards. Extend the reach of Googles search into wireless sector (seek alliances with wireless network provider or create a Google wireless network). Maybe seek alliances with Apple (combining iPhone, WiFi Network and Googles mobile search capability) Mobile Operating System Mobile industry is one of the important goal in Google strategy. Open platform (devices,services,network and application) are already in Google strategies. Cloud Computing Futher improvement of Googles web browsers in a way of supporting cloud computing. Attract Microsofts customer, first by Google search, well established services and thn also with cloud computing. Manage the Google brand. Keep on avoiding marketing. Anticipate, support, expand users bond with the Google brand by anticipating their needs and developing tools that meet them. Allow users to have interactive access and control over their own personal information, increasing its usefulness and building trust in Googles brand. Support public education-critical issues impacting Internet access. Net neutrality, open access and interoperability across platforms is very important. Reduced cost of personal training.

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