Google's Competitive Advantage: Strategies And Challenges

Founding and Development

Question:

Demonstrate your understanding of the challenges that managers face learn about and identity the skills and abilities required for managing perform in-depth research on matters relating to contemporary management develop your critical thinking skills so you can present a balanced view of management theory and organisational practice critically reflect on your own philosophy, goals and skills about managing develop and practice your formal written communication skillsdevelop your APA citation and referencing skills.Identify and critically examine the four most important elements from the global general and/or task environments that Google should focus on to sustain its competitive advantage.

The company Google was founded by two people Larry Page and Sergey Bin in the year 1988. The company was formally incorporated when the Google’s Web Crawler indexed around 60million URL’s through a project ‘Back Rub’ which used algorithms to follow the links and connections (Viney, 2007).

Gradually with the years, the company became a gateway and traffic director for the internet (Helft, 2007). It introduced famous features like Google docs, Google Earth and Gmail with which the company gain its popularity and gained a competitive advantage from its competitors like Yahoo, Alta vista, etc. Google unlike its competitors never focuses on placing motion ads on the homepages or taking out productivity from their employees till the last hour, rather it creates an enjoyable experience for all parties like users, investors and staff too as cited by Rimm-Kaufman, 2007. Google always focuses on keeping its people happy.

Google is enjoying the top position in search engine worldwide. In order to maintain its competitive advantage Google is focusing on developing robust infrastructure which promises fast, reliable and efficient search engine and it also focuses on branching the efforts in other directions which are beyond the search. The search time on Google search engine is just 0.06 to 0.12 seconds. The reason mentioned by Kopytoff, 2005 why Google is enjoying its competitive advantage is having its own infrastructure with own servers, storage systems and bandwidth which supports the company the fastest search on the web. The company is also spending thousands of dollars on maintaining its infrastructure and providing highest speed in search in comparison to Bing (which was MSN earlier) and Yahoo.

The others reasons mentioned by Guynn, 2008 for company gaining its competitive advantage are the services like Google toolbar, Google News, Google Maps etc. It is also integrating its services with mobile applications such as android operating systems so that it can reach out to maximum number of consumers.

In order to sustain the competitive advantage, a firm should try to focus on identifying different product strategies, reshaping their core competencies, adopting new technologies and accumulating the intellectual properties so that the company can earn success in the highly competitive market. With the growth and advancements in technology, globalization and growth of internet Google is facing the problem of maintain its core competencies (Morrison, 2008).

The various strategies that Google can use to sustain its competitive advantage are:

Robust Infrastructure and Services

Cost Leadership Strategy: By providing services or products at low cost Google can achieve its competitive advantage. With lower cost of production, the operating cost will be lowered which will help the company in achieving its strategy. Lower production cost does not mean that company’s pricing strategies are cheaper because the promotional costs are very high. The pricing of its products and services has to done in accordance with the competitors so that Google can achieve higher margin rate.

Differentiation Strategy: By adopting differentiation strategy company can gain competitive advantage by satisfying its customer needs. With this strategy the firm can do competitive pricing for its differentiated products and services and thus helps organization in gaining higher margins. It is true that any firm who is adapting this strategy will incur more cost and this cost can be compensated by increased sale of its product or services.

Focus Differentiation Strategy: With this strategy a firm can focus its cost leadership strategy on a particular product or service. The product or the service from which Google is gaining competitive advantage is its database infrastructure, the relevance and reliability of its search results, the speed of its search and various products it is offering like android based applications etc (Joaquin, 2007).

Creating Competency: Google can gain distinctive competency by differentiating its products and services from its competitors like Yahoo, Bing etc. It can also create competency by market segmentation and pricing strategies of its products and service offerings

Internet Usage has spread globally to all cultures, religions and thus freeing Google from geographical dependence. Google is having 20 offices in United States and other International countries who are particularly working on various functions like research and methodology, sales and marketing. Google is offering a service of personalized search engines to different countries in their mother languages through which the company is gaining huge market share.

As the computers are becoming affordable so the people from economically backward countries are able to afford a computer and internet connection. Google can take advantage of this by routing these countries through its search engine and offering products like mail, G-Talk, Google Earth and Google plus. For cost saving, Google can bundle its web applications with the Linux based operating system which are cheaper (Blankenhorn, 2008)

Google should position well itself in demographics section as it is targeting young generation. The company while doing market segmentation should focus more on young user base as it will less affected by the baby boomers segment in comparison to companies who are targeting 50 above demographic group. Today’s young generation is more techno savvy and is curios to get their answers own by searching online. Also distances barriers are finishing by using video call facilities provided by Google through G-talk feature. The internet usage is not dependent on gender ratio because the both male and female young generations are very active in using Internet facility. Also Google can gain more benefits by targeting some paternalistic societies who are traditional in approach, to use internet facility at regular intervals.

Sustaining the Competitive Advantage

From the global environment perspective the factors which Google should focus to sustain its competitive advantage are the External factors which include Technology, Economic, Political-Legal and Socio cultural factors.

Technological Factors: Each and every day technology is upgrading and Google should ensure that it take specific measures in adopting latest technologies and making its products and services in sync with the latest technologies. For Eg when Nokia Lumia launched its first mobile phone Lumia 710 it did not supported G-talk feature. Although the phone is based on Windows but Google failed in providing the application of G-talk on Lumia Phones. Then gradually the company came up with applications for G-talk for new series of Lumia phone.

Google can its competitive advantage by using cheap components that are some computer parts. The components will fail so company can ensure that each component is replaced by its duplicate. According to May, 20007 these cheaper components can be attached by Velcro rather than by screws which saves time and money for quick swapping and upgrading.

Economical Factors: As mentioned earlier that major of the Google offices are present in United States. Recently US has undergone the period of recession because of which the various companies stocks were traded at lower costs. However Google being a technology company could protect its stocks and shares by posting internet based advertisements which will save the company’s overall promotional cost. The company can save itself from the impacts of recession as the online search and online advertisements are worldwide adopted by the societies and economies.   Schiffman, 2008 in his article says that Google can well position itself to protect itself from the impact of recession by focusing on highly targeting and measurable advertising strategies which will make the company much safer and protected from recession in comparison to other technological companies. Thus the company should stay informed, connected and well updated which will keep the services and products of Google vibrant irrespective of the arid surroundings (Schiffman, 2008).

Political and Legal Factors: The various formal institutions have not affected the Google’s operations, but Google has been facing pressure from various institutions like Justice Department to abandon the archived search terms (Buncombe, 2006). Google has also faced allegations and pressure from Chinese government as cited by Liedtke, 2005 to censor the search results.

Google has been affected by political and legal factors of different countries: for e.g. Google was charged for privacy issues. In the year 2008 there was a Google matra, “Don’t be evil” which was the hottest topic in news to discuss as online users where questioning whether the cooperation of Google with Government will challenge their freedom and privacy. Thus, in respond Google satisfied its users by adding a privacy link to its home page. The link provided by Google helped the users to read the privacy policies of Google with respect to the political and social issues. Thus in future Google can gain its sustainable advantage by solving the privacy concerns of its users and defining the Company’s privacy policies and making it available to everyone.

Demographic Target and Segmentation

As mentioned by Baker, 2006 Google has also faced the litigations of copy right issues as the company stores the copies of web pages and images of third party on its servers. The company could have responded to such criticisms by releasing an information page for the copyrights. This page will provide all the relevant information required for digital information and will also provide links for notifying the Google and US copyright office about the infringement happening (Google, 2008).

Socio-Cultural Factors: With Globalization and increasing use of internet the world is becoming connected and breaking the barriers of boundaries by means of easy communications. Google with its giant search engine can make the internet facility navigable in almost all countries and religions. Google should not restrict itself to a particular demographic group, rather it should target to all demographic segments: age group, gender, culture etc. as they all are gradually becoming dependent to Internet search.

Google can also target new segment of market i.e. mobile phones as almost all phones are internet based. These days people are using their phones not just for calling purpose but also for getting directions by using navigation application, downloading music, checking mail box, watching videos etc. Thus, Google can benefit by such user activities on search engine and can increase its revenue by number of queries made by the users. To make more revenues company can introduce android based operating systems on mobile phones to encourage people to access more and more Google services from their mobile phones. Google can also adopt a product strategy by introducing Google based mobile phones where all the application move the customers to Google search engine.

Google always give importance to its stakeholders and manage its operations in such a manner that its stakeholders are benefitted. Google’s stakeholders comprise of company’s shareholders and also the company’s employees, customers, suppliers and trading associations. As discussed above that Google has faced the political and legal challenges, thus the company should make the decisions in accordance with the agendas, rules and regulations of Government, media, various activist institutions (Mills, 2007). Google should focus on maintaining strong relationship with its stakeholders, as the stakeholders has the power to affect the Google’s decision. To protect the company’s direction from the stakeholders decisions, Google should ensure building a strong distribution business model which will not be affected by the powers of Stakeholders. Along with Stakeholders company should keep a track on the activities and feedback of its users, mass media and various government institutions which can influence the objective of the company.

The Google’s top management should ensure the firm’s survival and providing long-term benefits to its various stakeholders. The various litigations made on the company by the institutions and users can affect the company’s both short term and long term benefits. Google Management team should be capable enough to resolve the conflicting claims like user privacy, copy right issues, user’s right to information and adhering to rules and regulations of government. The Management team should be able to priorities the seriousness of each claims and come up with a solution which will benefit the majority of its stakeholders. Thus it is very important for a company to be cautious about its external environment.

Conclusion

Google can sustain its competitive advantage by focusing on its external environment and treating positively to all its stakeholders. As the company is growing it will face the problem of retaining its fun image. The company can sustain its competitive advantage by initiating software proprietary like cloud computing, and platforms for smart phones. Also the company’s management can achieve the goal of competitive advantage by training the management to keep the company’s stakeholders happy by making continuous and frank communications with them (Fortune, 2008). The company’s employee should work hard to satisfy each stakeholders of the company and build positive image of company in their eyes.

Baker, L. (2006, September 21). Google Outsourcing Copywriting to India. Search engine Journal.

Blankenhorn, D. (2008, October 10). On the Linux laptop the bundle is all. ZDNet.

Buncombe, A. (2006, March 15). Google resists demand to hand over search records. The Independent.

Fortune. (2008, February 4). 100 Best Companies to Work For. CNN Money.

Google. (2008). Company Overview. Retrieved January 12, 2015, from Corporate Information

Guynn, J. (2008, September 16). T-Mobile to introduce phone with Google's Android software. Los Angeles Times.

Helft, M. (2007, March 10). Google, Master of Online Traffic, Helps Its Workers Beat the Rush. New York Times, p. A1.

Joaquin, J. (2007, June 11). Microsoft’s Dead Naming Strategy. D All Things Digital.

Kopytoff, V. (2005, December 18). How Google woos the best and brightest. San Fransisco Chronicle.

Monica, P. R. (2006, March 31). Google Leaders Stick with $1 Salary. CNN money. Retrieved from :

Lawson, S. (2008, November 6). Martin, Page Push White Spaces. PC World.

Levin, M. (2007, April 24). Google Value Chain. Hit Tail.

Liedtke, M. (2005, January 24). Google Agrees to Censor Results in China. Breitbart.

May, R. (2007, September 14).Velcro As a Competitive Advantage. Business Pundit.

Mills, E. (2005, October 10). Google Reveals its 300-year Plan. Retrieved from ZDnet:

Mills, E. (2007, April 20). Meet Google's Culture Czar. ZDNet Australia.

Morrison, J. E. (2008, December 4). Google Gears Down for Tougher Times. The Wall Street Journa.l

Pineda- Krch, M. (2008, August 29). Running an academic lab Google style. Mario’s Entangled Bank.

Riley, D. (2007, December 22). 2007 In Numbers. TechCrunch.

Rimm-Kaufman, A. (2007, November 1). Google Jumps, Yahoo Slumps, Microsoft Steady. The Rimm-Kaufman Group.

Salkever, A. (2004, May 3). The How and Why of Google's Auction. Business Week

Schiffman, B. (2008, January 29).  As Downturn Looms, Google Looks Recession-Proof.

Truta, F. (2008, June 19). Apple Engineers Paid Below-Market Salaries. Softpedia.

Viney, D. (2007, September 14). Search Engine History - Web Search Before Google. SEO Expert Services