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Timeline

The Company
Started by licensing its search engine to
third party sites eg. Yahoo!
In Dec. 1999, they started using the Paid
Listings Model Sponsored links that
appeared either adjacent to or
interspersed with web search results for
specific keywords.
In March 2003, Google launched
Contextual Paid Listings

Corporate structure
Top Management: Sergey Brin, Larry
Page, Eric Schmidt
Went for an IPO April 2004 with a dual
class equity structure
Class B 10 votes
Class A 1 vote
(Top management would own 1/3 of shares but
control 80% of votes to allow for stability over
long time horizons.)

Corporate Values

Dont be evil.
Technology matters.
Make own rules.
Managing innovation part of culture.
Never settle for the best.

Management Policy
To hire the right people for the job
Facilitating efficient team dynamics
and communication
Encourage creativity
To make decisions based on data
Dont be evil

Brief overview of problem


Over the past few years, Google has
grown immensely and is still growing.
Product innovations has expanded its
domain beyond search into domains like:
Portals (Google vs. Yahoo, MSN)
Planned Payment Service (Google vs. EBay)
Ad Supported Software (Google vs. Microsoft)

What moves should Google make


next?

Competitor Analysis
Competitor

Competitive
Advantage

Strategic
Direction

Yahoo!

- Leading full
fledged internet
portal

-Steering searchers to
Yahoo!s own services
- Human intervening in
search results

Microsoft

- Dominant in the
PC software
industry (Windows,
Office etc.)

- Developing
software as
services (Windows
Live)

eBay

- Largest
ecommerce
facilitator
- Owns Paypal

- Acquired Skype to
leverage on VoIP for
e-transactions

Differentiation Strategy

Had a corporate structure which allowed quick decision


making & encouraged innovation unlike competitors
Higher focus on innovation , 20% policy, resulted in products
like Orkut, Google news
Offered free software to marketers so they could optimize
their investment in Google
No adoption of commercial agendas unlike competitors, focus
only on improving algorithms for better results
Focused search engines like Froogle which are for specific
products, these were free.
Faster, better search with many enhanced features like
search history , language flexibility etc.

Differentiation Strategy
Google

Microsoft

Yahoo

CTR model, assist CTC model


marketer
Lesser assistance

CTC model
Lesser assistance

Owned by
essentially 3
people

Owned by many
shareholders

Owned by many
shareholders

Higher quality
search results

Poor search
results

High quality but


not as good

Focused on
search engine
business

A portal, operating A portal, competed


system with many in many business
business lines
lines

Porters 5 force model


Entrants to paid listings business faced considerable
expenditure & need competent software developers.
Suppliers: Companies placing ads on Google, get higher
revenue splits , better results , more guidance etc.
Buyers: better, faster, higher quality & speed of results
reducing chances of users to shift search engine.
Rivals: Diversified firms, not as competent as Google in
search engines, fierce competition as low switching cost
Substitutes: other media of communication , given the
target market of e-advertisers, rapid increase in online
access & surfing time, these hardly proved to be a threat

Porters Five Forces


Model of Industry
Competition
Advertisers got higher
revenue splits , better
results , more guidance

Diversified firms, not


as competent as
Google in search
engines, fierce
competition as low
switching cost

New entrants faced


heavy investment &
technological
superiority to enter

Users got better,


faster, higher
quality & speed
of results

other media of
communication , given
the target market of eadvertisers, increase in
online access & surfing
time, these were no
threat

Resource Based Approach


Resource based model emphasizes the use of a firms unique
resources to target and apply them to new markets
Unique corporate structure
Strategic alliances e.g. partnership with AOL
Strong focus on innovation
Unique 70/20/10 corporate strategy
CTR advertisement rate model
Superior search engine & other products like Gmail
Superior software tools & services
Strong support to advertisers & personalized search to users

Second Mover Advantage


Google entered e-search market after Yahoo this helped
them improve search results using algorithms
Google developed a CTR model which was an
improvement over Overtures CTC model
Developed contextual based advertising where listings
appeared on editorial pages like blogs, news etc.
Developed many new products like Froogle, Gmail ,
personalized home page before their competitors
Developed brand ads & video ads which attracted brand
advertisers

Competitive Advantage
Google should offer personalized features like
personalized search, search history
Expand service range add features like desktop search ,
base , search Gmail,
Higher quality of accurate search results obtained faster
Competitive rates to advertisers & better services like
Google wallet, to increase their sales and reduce costs
Google should lock itself as dominant design preferred
by customers & firms who would incur switching costs if
they changed their search engine

Technology Paradigm Shift


A new technology getting its start away from the mainstream
of a market, and invades the main market, as its functionality
improves over time
Firm which develops a technology that changes they way an
industry functions gets majority of market share of that
industry
Google discovered 2 killer applications
Page rank algorithm to improve search results
CTR paid listings model
It leveraged on these 2 competencies to make Google a
favorite with buyers and advertisers and changed the way
online search is conducted

What we do is search. Yahoo is a


portal with a myriad of
specialized services. What
Google does is sufficiently
limited. It's not really targeted
at what Yahoo or AOL is trying to
do. Our business strategy is not
to compete, because we want
them as customers
Eric Schmidt, CEO Google

Other Future Offering


Extension of existing services in order to diversify
Close potential gaps in service provision
Further partnership with AOL (biggest service
provider in America)
Create as much awareness as possible
Brand awareness plays a major role in search
engine selection
Yahoo pays 900 million to facebook to capitalize
on the youth market, Google has orkut which can be
further developed to this purpose
Very successful with project to provide free WiFi in San
Francisco and Mountain Valley (California)
Extend such projects worldwide

To zoom in4 Alternatives to


Venture into
Focus on Comparative Advantage:
Develop superior search solutions +
monetizing through targeted advertising
Make it the trusted third part info escrow
agent for all the world business
In line with its aim of organizing all of the
worlds information
Portal Building
Consolidating content
Up to date and subjective searches
Classified by relevance

eCommerce
Build trusted networks to provide intermediary
function as an online payment inter phase (like
PayPal)
Extending to purchasing journals, copyright
articles via Google Channels
Extend Functionality
Compete head on with Microsoft as rumored
Desktop searches, office alternatives (provide
support to development of open source
initiatives like Open Office)
Provide interfaces compatible with Linux users
to extend market base

Why not build their portal?


According to Eric Schmidt, CEO of Google, Google is not
in the portal business.
Data also show that using websites as portals is the least
important factor for respondents (internet users), among
factors such as relevant results, speed of website, best
features and the way results are presented.
There are already 2 big players in the Portal business,
namely Yahoo! and MSN, due to high market commonality
and high resources similarities, Google should practice
mutual forbearance and not enter the portal business to
prevent counter attacks by Yahoo! and MSN.
Yahoo! has first mover advantage- loyal customers, who
may find it difficult to switch to another portal format.
Google may find it difficult to take the market share away
from them.

Why build their own portal?


Google has enough expertise to enter
portal business.
Portal can be use as a complement
service to their search engine.
May be a relatively easy investment.

Why not focus on ecommerce?


Already has big player Paypal
87million accounts in US

Why focus on ecommerce?


Next big thing
Have enough capabilities to create a
payment service
Because Google Wallet is coming out
Competitors are not into it yet

Why not build their own OS?


Not consistent with Googles philosophy
Its best to do one thing really, really well
Google does search best

Difficult to compete with Microsoft


Microsoft already has positive feedback loop
High installed base of users
High switching cost

Why build their own OS?


Possible in the long run
Given that Google gain the technology

Why should Google focus on Core Competency?


Shows a consistent image of the Google
Porters 5:
- Low threat of new entrants
- Rivalry: defend against competitors due to better
search functions
- Well-positioned relative to substitutes because of
brand loyalty
Market Commonality high
Resource similarity high
have mutual forbearance
should focus on their core competency to avoid from
multi-market competition

The 70,20,10 Rule


70% should be on Core business
Focus on search

20% should be on projects that extend the


core
Portal, eCommerce

10% should be on new business


OS and other radical ideas