BUSINESS GAMES 2018

ALPHABET Eyes New

Frontiers

Team Members-
Vishal Sharma
Venkoban Sreedher
Abhinav Tripathi
Ashish Pathak
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 Background
• 1997– Search Engine Back Rub
• 1998- Larry Page and Sergey Brin incorporated Google
• 2000- Google becomes largest search engine
• 2004- Google went public (IPO – Class A,B shares)
• 2005 - Acquired Android (Becomes most popular mobile OS in 2015)
• 2006 – Acquired You tube (Revenue in 2016 becomes several times purchase price)
• 2007 – Acquired Double click (Online ad company)
• 2011 – Annual campaign to off-load redundant/ projects
• 2013 – Acquired Boston Dynamics (Put up for sale in 2016)
• 2014 – Class C share introduced (CAGR of 33% over 10 years)
• 2014 – Acquired NEST (NEST acquired Revolv and Dropcam in same year)
• 2015 – Re-structuring into holding company (Alphabet created) – separation of Core and non-
Core activities
• 2015 – Highest % (31%) of institutional investor than any other stock
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 Why Re-structuring
• Revenue from Ad services - 95% in 2012 which came down to 90% in 2015
• Acquisition in Non-Ad businesses
• Governance issues within Google framework (Google –X)
• Long term value creation
• Financial Discipline
• Segment Reporting to improve investor communication
• Accelerant for entrepreneurship in other Bets

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SWOT Analysis
Strength Opportunity
• Innovative work culture • Acquisitions
• Market leader in search engine • Related Diversification
• Ambitious R&D • Moonshots
• Brand Recognition
• Brand Equity
• Huge Cash Reserves
• Diverse portfolio
• Exceptional HR practices
Threat
Weakness
• Competitors
• Reducing Ad revenue
• Fast Changing technology
• Governance

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Case Concern
• Has re-structuring worked the way it intended?
• Extent of autonomy to other Bets?
• Would the ambitious growth plans be met?

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VRIO Analysis
Competency Value Rareness Imitability Organisation

Work Culture Yes Yes No Yes

Popularity and Yes Yes No Yes

consumer loyalty
Organisation structure Yes Yes Yes No

Innovation and Yes Yes No Yes

Technical capability

Huge cash reserves Yes Yes Yes No

Related business Yes No Yes No

diversifications

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Grey Areas
• Re-structuring without definite control/monitoring mechanism
• Creeping bureaucracy due to increased size
• Mismatch between leadership style of Google and Other Bets (eg. NEST, Verily)
• Related businesses under different Bets (Eg. Robotics under Boston Dynamics and Replicant)
• Cash reserves not being put to productive use

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Recommendations
 Strengthen the structure with control/monitoring mechanism with full autonomy to subsidiaries
 Establish Clear lines of communication

Greiner’s Model of Organizational Stages of Development

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Recommendations
• Review 70:20:10 system periodically
• Distribute resources b/w subsidiaries based on long term objective
• Integrate businesses/units having same objective
• Acquire businesses relating to both Ad and Non-Ad revenue
• Re-align/re-structure businesses under the Alphabet umbrella in wake of size/complexity or
specialisation
• Increase Moonshot projects

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THANK
YOU 10 10