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The Alphabet case study refers to the restructuring of the global giant in technological field, Google Inc. as it sets up a separate holding company structure for its non-core investments apart from the hugely successful and profitable search as well as advertising business. This holding company structure was being named as the Alphabet Inc. (Alphabet). The non-core businesses that this company will include are self-driving cars, high-speed interest access, investment divisions, and life science researches (IBS Centre for Management Research 2023). Thus, it spun-off distinct entities such as Android, YouTube and the Google search engine. Thus, the businesses were recognized as two separate entities “Google” and “Other Bets”. In the new setup, Google operated as a subsidiary of Alphabet along with its other investment companies, each of which is managed by a CEO independently. The rationale for this reform is that it will make investment and spending on research more transparent and will thereby allow more accountability and cleaner operations; keeping the investors happy.
The Vision statement of Alphabet is “to provide access to the world’s information in one click”, which is a direct manifestation of the nature of business (Tanha 2023). This can be realized by the fact that Google’s most popular investment is its search engine service. The mission statement of this organization is “to organize the world’s information and make it universally accessible and useful” (Tanha 2023). Thus, both its vision and mission is to provide the world with the most relevant information about various topics to all people across the world.
Created on 2nd October, 2015 is a multinational conglomerate. It has multiple strengths in the technology field in which it operates. Google has a large online search base with almost no competition in this field. As per Statista reports for December 2022, 84.08% of market share in desktop searches all over the world belonged to Google (Bianchi 2023). Moreover, other brands of Alphabet also have great influence, the Android runs more than two-third of the world’s smartphones. Google has also been one of the fastest growing companies that grew almost 400 folds since its inception.
Even with also its strengths, it does have some weaknesses. The privacy policies of the company have often been slammed by experts. It has often been fined in various countries because of breach of privacy. The most obvious strength of the company has been its Android OS provision that is able to compete directly with the Apple iOS. It also is expanding its business in multiple directions that can help the company long term. Thus, the company needs to work on its weaknesses and threats along with expanding on its strengths and opportunities. From the situational analysis it is evident that Alphabet is able to identify its opportunities and aims to capitalize on them. If Alphabet can properly address and overcome its weaknesses and threats, no company can outperform it.
Alphabet has a team-based or cross functional industrial structure. This structure is often referred to as the matrix structure having some degree of flatness (Cuofano, 2023). As the company grew into a tech giant with the passing years, its structure gradually is morphing as a centralized organization. The matrix structure of the organization borrows elements from product based structures as well as functional structures. It also incorporates some aspects from flat structure but the prevalence of the middle management is deceased. Google has functional structure in terms that it has particular functional groups such as marketing, sales, legal and products along with others all of which have a separate executive responsible for managing the decision-making of that department in the entire organization. The product-based groups such as cloud operations and artificial intelligence among others are responsible for innovative product designing to achieve competitive advantage. Flatness is observed in the way Alphabet maintain a team-based approach to management where every employee plays a role in decision-making. This makes every member feel valued as their input is considered for the company’s success. Alphabet focuses more on intelligence and less on seniority and thus, encourages direct communication with senior management.
The economic feature of Alphabet refers to the products and services it provides to generate revenue for the business. Alphabet offers a variety of platforms and products that includes maps, search, calendar, ads, Gmail, Android, Google cloud, Google Play, Chrome, and YouTube. There are also a variety of hardware products that are offered by the organization such as Pixel phones, Google Nest home products, smart watches as well as other such products.
Alphabet has a very generic business level strategy in general for differentiation. In this strategy the company includes providing various services and products for customers in various ways that are different from the ways of its competitors. Google search engine is the most popular service of the company and has dominated the world of internet searches for a really long time (Mishra and Mishra 2022). It has several features that make it fast and reliable in comparison to the other search engines that are available. It has a unique feature called the PageRank system helps to find result based on the user’s interest instead of the repetition of the search phrases.
The company has seriously taken Albert Einstein’s statement that said ‘The best investment is investment in one’s knowledge’ because they have intensively invested on the combination of learning and technology, that is, in artificial intelligence and machine learning. As Google search has been the leading source for information searching on various devices such as phones and computers; combination of artificial intelligence and machine learning helps to target a more important role of a personal assistant in an individual’s life (Consilue, 2021).
Acquisitions have been a key proponent of Alphabet’s advantage over its competitors that helps it to gain competitive advantages. By buying various companies, Alphabet manages to acquire new skills, patents as well as technologies along with improving its services and products. This helps the company to grow faster with less effort.
Google is the main revenue generator for the company that has a clear upper hand among its competitors. Google generated US$146,924 billion in 2020 through digital advertising. The company dominates this market by various platforms that include Google Ads, Google Ad Manager, YouTube ads, Google Marketing Platform and the Android OS (Jurevicius 2022). In addition, Google is the most popular search engine and covers almost 97% of the market share in this field. Alphabet’s Android OS is also the most used mobile OS that is being used by several smartphone sellers and thus controls 71.9% of the worldwide smartphone OS market share (Jurevicius 2022). This leadership in the market helps Alphabet to have a lot of publicity and attention because of its strong brand recognition that further helps to bring new users.
Apart from that, Alphabet has great acquisition capabilities. It has acquired over 55 companies since 2016 (Jurevicius 2022). This helps the company to acquire new skills and technologies that provides it an edge over its competitors.
The biggest weakness of this company is its policies related to privacy. This has caused the company to be penalised with fines for breaching the privacy policies of various countries. Moreover, the company is too much dependent on its advertisements. This is highly competitive heavily relies on macroeconomic conditions. Many major advertisers also boycotted the company when they came to understand that their ads were run along with extremist contents. Being the sole leader by a large margin in the search engine business, it uses this advantage unfairly and often prevents the entry of new players. There are several projects and companies under Alphabet that are not as successful as Google or Android and incur losses to the company.
The company has several opportunities. With the acquisition of Fitbit in 2019, it can effectively compete with Samsung and Apple in this growing wearable market sector. The Android OS has also been an important opportunity of the company because it is a significant and only competition presently to Apple’s iOS. The global boost of internet has also been a great opportunity for this company to increase its market because most of its products and services are targeted for that audience.
Competitors like Amazon and Facebook have rose as potent competitors of Alphabet in the recent past. Alphabet’s major revenue source is its advertisements, which have reduced as users have found options that help them to block ads from websites and videos to improve their experience.
POLITICAL FACTORS: Alphabet keeps their cash in foreign bank accounts so that they are able to avoid the corporate income taxes levies in the US. However, political conflicts in US forces companies to bring that money in the country (PESTLEanalysis, 2022). It may also cause Alphabet to make foreign acquisitions so as to avoid taxes. The issue US has with China has avoided Alphabet to enter China’s market.
ECONOMIC FACTORS: As it has such a huge amount of cash, it is vulnerable to inflation. The huge money stored overseas makes it highly vulnerable to exchange rates and market currency value.
SOCIAL FACTORS: The traditional use of laptops, computers for internet search has been changed over the time with the increased use of social media even for searches, money transfer and shopping that was done on internet (PESTLEanalysis, 2022).
TECHNOLOGICAL FACTORS: Several competitors have gained immense advantage in the market such as Amazon, Microsoft, Facebook and Apple. This creates threat for Alphabet.
LEGAL FACTORS: Liabilities and legal costs will increase for Alphabet as it increases its investments in the field of insurance and other such services.
ENVIRONMENTAL FACTORS: The high dependence on electricity for managing the data centres and internet infrastructure. The efforts to control global warming will lead to investment in costlier energy sources that will increase Alphabet’s investment.
Demographic Characteristics of Market: Alphabet targets both males and females who is older than 12 years old (Business Research Methodology, 2017).
Psychological Characteristics of the Market: The lower class, middle class, working class and upper class are also the target audience of the company.
Behaviours of the Target Market: The people consuming Alphabet’s products and services can be mainstreamer, struggling, resigned, aspiring, explorer, reformer or a successful person.
Strategies Appealing to Market: Provides various products and services to target multiple segments of customer.
Marketing Mix of Alphabet
Product Strategy: It imitates positions such as launching Chrome browser to imitate internet explorer, then leader in this sector to increase its reach.
Pricing Strategy: The most prominent pricing strategies used by Alphabet are freemium pricing, market-oriented pricing, value-based pricing and penetration pricing.
Promotional/ Advertising Plan: The Company uses its own websites, apps and platforms to promote its products and services through advertisements.
Product: The services and products offered by Alphabet maintain quality, customer demand fulfilment, warranty, margins and provide various payment methods and prices to make it accessible for all (EssayPandas, 2023).
Pricing: It uses penetrative pricing, introductory pricing as well as competitive pricing according to the demand of its products.
Place: Its products are avail on e-commerce platforms along with traditional retail stores as per the type of the service or product.
Promotion: Promotion is targeted to increase brand loyalty and sales of the company.
Strength comparison with competitors: The search engine Google has almost no competition in the market. In addition, other investments such as Android OS also have strong market hold in the operating system sector.
Weakness comparison with competitors: The Company is overly dependent on advertisement that is often risky. It also has severe privacy issues. Other competitors such as Facebook and Amazon are catching up with the company by providing similar services.
Organization’s Competitive Advantage: As Google is still a leader in the search engine sector, it learns a vast variety of details about its consumers and tailors the services and products as per the customer’s needs.
Alphabet’s key success factors are targeting search queries as per user’s preferences; user intent; click-through rate; freshness and uniqueness among others.
The three primary challenges of the company are its culture; external threats from competitors such as Facebook and Amazon; and data privacy issues.
For the third quarter of 2022, Alphabet made $69,092 million and the company’s net income was $13, 910 million (Google, 2023).
It can be concluded that Alphabet, formerly Google has been very successful over the years primarily because of its search engine, which aims to fulfil both the vision and mission of the company. Apart from that, other investments and companies such as Android OS, YouTube, are able to make effective profits and market share for the company. However, some of its projects are not that successful such as Nest, NoteBook and even Google Cloud computing are considered failures because of the losses they incur to the company. However, Alphabet has been an intelligent company and it will eventually use its profits and invest its opportunities along with working on its threats and weaknesses.
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