GOOGLE

Strategic Analysis

The Vision
To make search engines so powerful they
would understand "everything in the world".

The Mission
To organize the world's information and make
it universally accessible and useful.

The Focus
Google continues to focus on innovation and
on the user experience.

Google Strategy
Its the same as of Honda & Sony
Both these companies have major
share in world manufacture share of
Engines and Electronic Goods
Google wants world wide webs
major share.

QUESTION?

IS GOOGLE IN THE RIGHT INDUSTRY?

Lets Analyze the Industry

The Industry Stats

Country Analysis
Country

Users (Mn) Usage Growth

(2000-2007)

US

210.00

120.80%

China

162.00

620.00%

Japan

86.30

83.30%

India

42.00

740.00%

Brazil

39.15

682.8%

World

1173.00

225.00%

QUESTION?
IS GOOGLE IN THE RIGHT BUSINESS?
Lets Look at Products and Rev Model.

Google Products (>60)

Web
Search
Maps
Ride Finder
Analytics
Directory
Google Mini
SMS
Search Mash
Advertising
AdSense
AdWords
Audio Ads
Click-to-Call
Grants
TV Ads

Standalone
Applications
AdWords Editor
Gmail Notifier
Hello Pack
Photo Screensaver
Picasa
Secure Access
GTalk
SketchUp
Desktop Extension
Blogger Web
Comments
Browser Sync
Dashboard Widgets
Send to Phone
Toolbar

Communication &
publishing
3D Warehouse
Blogger
Calendar, Docs&
Spreadsheets
Dodgeball
FeedBurner
Gmail, Orkut
YouTube
Reader
Mobile Products
Blogger Mobile
Calendar
Gmail
News
iGoogle
Reader
Maps Mobile

Core Products & Revenue Model

Core Products Search and
Adwords.

Revenue Sources Contextual Ads - Adsense.

Adwords.
Licensing Google search.

Approx 10 Billions Dollars.

Internet Advertising - 2007

Global - By E-Marketer
Number 1 Advertising Medium in terms of growth
rate.
Ad spending on the Web should net out at $21.7 billion
this year VS $20.4 billion on radio.
E-Marketer predicts that online advertising will reach
$28.2 billion next year (an increase of 30 percent)
Online advertising will account for a nearly twice as
many dollars - constituting a hefty $44 billion market

Internet Advertising Trend

and Predictions

Global - By Zenith Optimedia

Internet Advertising Trend

and Predictions
Global - By Zenith Optimedia - continued

The internet will grow six times faster than traditional

media between 2006 and 2009 and increase its share of
the ad market from 5.8% to 8.7%.
All of the fastest-growing ad markets are in the Middle East
and Central & Eastern Europe
These regions are growing at double-digit rates,
compensating for an under performing North America
World Adspend to grow 5.2% in 2007, on par with longterm trend
Olympics, elections and football to lift growth to 6.2% in
2008.

Global Market Share

in Search

Total search in year 2006 99.57 Bn

Google is doing 138.1 Mn search per day

Porters Five Forces Model for Google

Search
Supplier bargaining power :

Supplier concentration is low

Switching costs is low
Threat of forward integration is low
Importance of volume to suppliers is high

Rivalry factors:
Entry barrier:
Entry barriers due to brand
identity and scales is high

Few players of relatively smaller

size industry is growing at rapid
pace
Product differentiation is low
Switching cost is low
Exit barrier is low
Switching cost zero
Informational Complexity due to
secrecy of internal algorithms

Buyers bargaining power:

Buyer size/volume is very small

Change cost/frequency is very low.
product/service importance is high.
Ability to backward integrate is very less.
Price sensitivity is high
Product differentiation is low

Substitution threat:
Mobile search. But due to
less sophisticated
technology threat is far away
few years
Switching cost is LOW

QUESTION?

WHAT MAKES GOOGLE?

ANDAR KI BAAT

Leadership

Dr. Eric Schmidt,

Chairman of the Board and Chief Executive Officer
Larry Page, Co-Founder & President, Products
Sergey Brin, Co-Founder & President, Technology

Philosophy of Google

Focus on the user and all else will follow.

It's best to do one thing, and do it well.
Fast is better than slow.
Democracy on the web works.
You don't need to be at your desk to need an answer.
You can make money without doing evil.
There's always more information out there.
The need for information crosses all borders.
You can be serious without a suit.
Great just isn't good enough.

Googles Culture

Heart of Small Company

Hands on contribution to the Products by each employee
Flat Hierarchy
Each employee having several responsibilities in different
departments
Hiring Policy
Non Discriminatory
Preference of ability over experience
Multilingual company environment
Multidomestic culture
Recreation along with work
Common caf for all employees

Googles Global Presence

21 countries at present

Uniqueness about Google

SEARCH

Speed, Accuracy, Objectivity and Ease of

use of.
Fit between their technology and the
consumer behavior.
Page Rank technology Orkut merged
Solved the scale up problem
Positioned as Fastest Crawling
Technique
Keeps the search Up to date

Uniqueness about Google

1st to get it right advantage
Advertisers tie up as CPC
Trade off between Speed &
Compression
Best asset utilization (Efficient storage
space)
R&D expenditure = 50% Net Income(10%
of Revenue)

Continuous Innovation

Biz Model

User Info
Social Networking
Page Rank
Relative Importance
Customization
Contextual Advertising

competitive advantage comes from its core competencies in

computer hardware and software engineering

Value Chain

Dynamic View
Buying many sites,
Opening offices in many
Countries, Huge investment in
R&D, Continuous investment in
increasing Database

Resource
Endowments

Resource
Commitment

Searching for various

avenues, Continuous
innovation, Developing
people, learning new
technologies

Activities

QUESTION?

WHAT IS GOOGLE PITTED AGAINST?

THE BATTLE ZONE

Competitive Landscape
Search

Competitive Landscape
Advertising

Competitive Landscape
Video
Blogging

Competitive Landscape
Social Networking

QUESTION?

HOW WOULD GOOGLE CLASSIFY

THESE PLAYERS AND WHO ARE THE
TOP COMPETITORS?
THE BATTLE ZONE Part Deux

Direct Competitors
OR Complementors?

Internet companies,
web search providers,
Internet access providers,
Internet advertising companies

Indirect Competition
Or Complementors?
Competition from traditional media
companies.
Most large advertisers have set
advertising budgets, a very small
portion of which is allocated to
Internet advertising.

Top Competitors

Google Identifies Top 2

Primary competitors - Microsoft and Yahoo! Inc.
Both Microsoft and Yahoo have more
employees than Google. Microsoft 6 times.
Microsoft also has significantly more cash
resources.
Longer operating histories and more
established relationships with customers
and end users.
Microsoft and Yahoo also may have a greater
ability to attract and retain users - because
they operate Internet portals with a broad
range of content products and services.

Strengths Analysis

Weaknesses Analysis

Threats Analysis

Common Opportunities
BRIC Countries

Computer literacy is on the rise

Telecommuting and at-home-businesses growth
Mobile technologies offer another opportunity.
Cheaper global telecommunication costs open new markets
Google
Traditional ad domain
Office Suites

Yahoo
Other Software
Apps.

Microsoft
Pay Per Use office
Internet Ads

Competitor Analysis

Google Aim To make everything free for the Virtual User.

QUESTION?

SO WHAT IS GOOGLE DOING AND

WHAT SHOULD IT DO?
ACTION ITEMS

Inorganic Growth - List of

Google acquisitions
2004

2005

2Web Technologies
Phatbits
Urchin S/W Inc.
Dodgeball
Reqwireless
Current Comm.
Group
Android
Skia
Akwan InfoTech
AOL (5% stake)
-Internet

2006

dMarc
Broadcasting
Radio
Advertising
Measure Map
Upstartle
@Last Software
Orion
Neven Vision
JotSpot
YouTube- Video
Sharing
Endoxon

2007

Xunlei
Adscape
Video Game
advertising
Trendalyzer
Tonic Systems
Marratech
GreenBorder
Panoramio
FeedBurner
PeakStream
Zenter
Grand Central
VOIP

2008

5 year Performance

5 year Performance
R&D -> More than 10% increase Y/Y
since 2002
Continuous Innovation, creating new products.
New products every year, Need Based
Positioning, Depth rather than Breadth.
Ready to deal with dramatic change.

Cost of Revenue around 40%

increase Y/Y since 2003
Find new sources of Revenue, margins
reducing.

Recommendatio
ns

Diversify earnings not products

Country

Revenu
e%

US

61%

UK

14%

Rest Of
World

25%

The Growth Share Matrix

Recommendation
Search : Competition from both big web
companies and well-funded startups will force
Google to remain focused on continuing to
innovate in search.
Contextual Ads Continue good work
Other Ad formats - With Google clearly intent on
spreading its advertising platform to the offline
world, go for more acquisitions.
Video Continue Good work. Consolidate position.
Social Networking Acquire other players.
Office Suite Continuous R&D

Recommendation
s
Be Multi-domestic company
Find new sources of revenue.
Continuous Innovation is the key to
maintain dominance in such an
aggressive environment.
Concentrate on BRIC nations.

Recommendations
Balance Scorecard

Have we left any

QUESTIONS unanswered?

THE POWER OF GOOGLE IS

ENPOWERMENT.