1. Perform a SWOT for Google.Strengths: Strong brand name and image; strong financial position; wide range of products and services (diversification); patented proprietary services and products; ownership of the world’s most popular search engine (Google processes approximately 70% of the world’s search queries); revenues from advertising-related services; company is associated with innovation.
Weaknesses: Excessive reliance on revenues from advertising-related services (Bhanver, 2016); declining value of Google ads; high turnover rate among top executives; minimal physical presence.
Opportunities: Growing mobile market and Internet penetration; consumer electronics; services and products meant to pull corporate clients away from top competitors like Microsoft and Apple; Google Play Music; smart home solutions; driverless cars; Internet of Things; Google Fiber.
Threats: Increasingly intense competition from top tech companies; growing popularity of Amazon equals less search queries on Google; imitation of key products and services.
2. Apply a PESTEL for Google. What does Google need to consider?
Political factors: Globalization; censorship imposed by hostile governments; negative publicity due to Google’s tax avoidance schemes; state-sponsored tech companies.
Economic factors: currency exchange rate fluctuations; financial crises; rapid growth of emerging markets; growing demand for online advertising services.
Social factors: growing use of social media websites; increasingly diverse users; people’s growing reliance on the Internet to perform a wide range of activities; growing numbers of online shoppers and Google’s inability to target them – unlike Amazon.
Technological factors: Rise of shopping search engines; increasingly sophisticated social media solutions; increasingly sophisticated instant messaging services; rise of app development tools that allow anyone to come up with alternatives to Google’s apps; shopping apps.
Environmental factors: Consumers’ growing interest in environmentally-friendly products and services; global spread of environmentalism; sustainability.
Legal factors: online privacy laws and regulations; intellectual property rights; lawsuits due to copyright infringement; Google’s attempts to enter the insurance sector would probably threaten existing market players who would use any legal means to keep the US tech company out.
3. Compare and contrast Google’s smartphone/tablet strategy with that of Apple’s.
On The one hand, Google’s smartphone and tablet strategy revolves around an entirely open platform that makes it possible for experts to contribute to its growth and improvement. Also, Google does not manufacture any hardware itself as it prefers leaving that to the experts. On the other hand, Apple has developed its own patented operating system to which only its own experts can contribute, and manufactures hardware as well.
4. What type of diversification is behind Google’s corporate strategy?
Android, Google Plus, driverless cars, Google search, advertising, AdWords, AdSense, YouTube, Chrome, Google Fiber and Wireless, data center infrastructure and IoT solutions: these are only some of the projects and fields in which Google has been involved so far. The company’s strategy is to evolve in many different directions and innovate as many sectors as possible. Besides investing heavily in research and development activities, Google has been using acquisitions and mergers as tools to achieve its corporate goals.
5. What are the revenue sources for Google, Microsoft, and Apple and how does that affect their competition?
As of 2015, over 70% of Google’s revenues derived from advertising through Google websites, whereas over 20% came from advertising through its social networking sites, whereas Motorola mobility only accounts for8% of its profits. As for Apple, 55% of the company’s revenues come from iPhone sales, followed by iPad sales, Macintosh sales, iTunes and various services, accessories and iPod sales. Microsoft’s main revenue sources are commercial licensing (nearly 50%), followed by consumer licensing (23%), consumer hardware, other commercial services and other consumer services. Since Apple does not compete on price, neither Google nor Microsoft are affected by it. On the other hand, Google’s willingness to distribute software for free represents a major threat to Microsoft, whose profitability depends on software licensing (Reed, 2014).
- Bhanver, J.S. (2016). Pichai: The Future of Google. Gurgaon, India: Hachette UK.
- Reed, B. (2014). Three charts explain everything you need to know about Apple, Google and Microsoft. Retrieved from http://bgr.com/2014/02/06/apple-google-microsoft-revenue-sources/