Individual Case Analysis
It is vital for an organization to have a strategy to maintain its existence and to develop into the future. The generic competitive strategy is a methodology that aims at providing companies with strategic plans that would help them compete and gain traction in their respective marketplaces. It is one of the primary techniques of business planning for organizations across all industries. A company that has a well laid out generic competitive strategy can make good use of its strengths to ensure that it is well positioned within the competition (Liu, Au, & Choi 332). This paper analyzes Google’s strategic decisions in an attempt to demonstrate what competitive strategy they are using. The paper also discusses how Google gained its market share growing from a small search engine company to one of the largest businesses in the world.
Based on Porter’s model, Google’s generic strategy is differentiation (Liu et al. 337). This strategy is achieved by engaging in a broad market scope. Google offers many products and services that are unique. These products and services are also provided to practically everyone, meaning many different kinds of people around the world. The generic strategy of differentiation, however, also entails coming up with certain unique capabilities to make the company competitive. Google has managed to differentiate itself from rival companies due to the uniqueness of its services and products. The fact that Google is an innovative company allows it to build and develop this unique nature. A manifestation of Google’s innovation under this generic strategy of differentiation is the increasing variety of products that the company has and is still developing, including Google Search, Google Glass, and Google Fiber.
The Google search engine is the most popular service that Google offers due to its ability to provide users with an optimized and reliable way to search the internet. This service is known to have been the primary driver of Googles growth. Google uses a search algorithm that evolves with time to ensure that the company maintains a competitive advantage over rival search engines such as Yahoo! and Bing. The algorithm ensures that users find the most optimized information based on their search. Furthermore, Google has adopted a patented system known as PageRank, which further differentiates its search engine from its rivals. PageRank works by calculating a recursive score of websites based on the total weighted number of the web pages that link to them (Liu et al. 338). This system of PageRank is unique as it makes it possible for related web pages to be accessed based on the user’s search interest. Other search engines, however, find web pages depending on the number of times a search item is on a web page. Moreover, Google workers keep the major functionalities of the algorithm a secret. As a result, Google has managed to maintain a competitive advantage over other search engines since imitating intangible products is highly difficult. The several features of PageRank make it the main benefit that the Google search engine has over its competition.
The Google product that lends great support to its differentiation strategy is its internet search-driven advertising. This internet search-driven advertising is popularly known as Google AdWords is better suited for advertisers who seek to reach a specific audience as swift and efficient as possible. Moreover, the ease of use and operation of Google AdWords differentiates this Google product from both competition and the ads in Google’s increasing roster of partners (Liu et al. 347). It is easy to create ad text as well as manage the online advertising accounts without making any expensive upfront payments. Additionally, advertisers utilizing Google’s advertising services can target audiences in different and specific geographical locations. This simplicity and reliability facilitate an increase in Google’s customer loyalty which is a significant advantage of its differentiation strategy. As a result, Google enjoys over 66 percent of web searches.
In 2010, Google developed a more refined web indexing system under the title “Caffeine”. The indexing system provides about 50 percent fresher search results as compared to the previous index. This development not only increased Google search engine’s popularity but also made it more competitive. Moreover, Google aimed at reducing the time it takes to produce search results, and it developed a technology under the name Google Instant, which achieved more than just reducing the time required to provide the user with search results. Google Instant also provides predictions during searches and returns more dynamic results. Although Bing had previously adopted this technology, Google Instant outdid Bing by averaging a less search time. Furthermore, the charges for sponsored search campaigns and AdWords were previously higher than competitors. However, the current pricing for Google search engine is considered to be moderate compared to the competition. This pricing provides Google with more competitive advantage.
The present market in which Google operates is continually changing in trends as a result of the increasing number of internet users and their respective different needs. For this reason, the strategic direction of Google Search Engine would fall under product development, market development, market penetration and diversification. According to Liu et al., Google began with a market development strategy by introducing the Google search engine to the United States market (351). The company then made use of the penetration strategy to capture the American market. Google has progressively been using this strategy of market development and penetration to open offices in different regions and countries. As a result, the company has made Google search available to users in more than 149 countries.
Consequently, Google uses the product development strategy to increase its competitive advantage. Google’s search engine technology has been greatly improved by adding new features within a short period of just five years. This strategy has considerably helped Google to dominate not only the American market but also the world market. Also, Google has many vertical search services. Google’s diversification strategy began in October 2000 when the company launched AdWords, a new product aimed for a new market. The target market for this product was businesses that were interesting to advertise on Google search. AdWords is probably the highest income generator for Google. The generated revenue from AdWords is a large beneficial support for the company. AdWords is deemed to be a crucial component of Google search since, without it, Google would be providing its search services at no cost. Moreover, without AdWords would not be in existence were it not for Google search as there would be no initial platform for its development. As a result, AdWords is a crucial part of Google’s growth strategy.
How Google Gained Market Share
Before Google, to find results, search engines depended on databases containing textual keywords. When the user interacted with the search engine, the search item would be compared to the existing database of terms before the search result was returned. The pages with text that was most similar to what was entered were ranked higher in the result list as they were deemed to be more relevant. Unfortunately, this way of computing would rarely return logical search results. For instance, a search for “Microsoft” would return a result with retailers who sell Microsoft products being higher on the list than the official Microsoft company website. This result is because a single retailer may have many Microsoft products listed on their web page. However, in 1997, the advent of PageRank system by Larry Page and Sergey Brin of Google brought change to how web searches were being conducted (Zimmer 136). PageRank would list search results based on how algorithms that check how many web pages link to a particular webpage. As a result, Google would deliver more relevant results compared to the other search engines. This unusual yet very convenient technique resulted in a rapid increase in the number of users of Google search engine.
Focus on Search
Even though Google had an increased reach and number of users, the company refused to shift its core focus on search. Google believes that finding information is of greater importance to people than stock quotes, horoscopes, or a range other things. Based on this focus on search, Google has a simple user interface which features only a few texts and links, but one big search bar with the iconic Google logo above it. Additionally, this focus on search combined with simplicity resulted in an increase in traffic and by February 1999, the search engine was enjoying 500,000 searches per day. This exponential growth in traffic attracted investors and partners, and Google was funded to a tune of more than $25 million (Zimmer 141).
Improving with Age
In 2000, Google had become the largest search engine in the world based on the pages indexed. The company had beaten much older rivals such as HotBot and Lycos (Zimmer 147). Rather than losing focus and becoming bloated like most search engines, Google is improving with age. Its spider crawlers build the search engine’s index and recalculate the PageRank better with time. Despite Google’s results being so accurate, Yahoo! remained to be its biggest competition. Yahoo! was still the most popular search engine at the time. However, Yahoo! could not match the prowess at search that Google had. As a result, Yahoo! was losing its market share to Google.
Zimmer states that just like many other search engines that wanted to remain relevant, Yahoo! also turned to Google linking a significant traffic size to a competitor (151). This marked an important milestone for Google as it not only found a reliable source of revenue but also the company would enjoy greater traffic due to the deal’s publicity. Through this, Google gained more market share and had soon beaten even Yahoo! to become the most favored search engine in the world.
The generic strategy of differentiation implies that Google must keep up its competitive advantage taking into account uniqueness. It is of basic significance for the firm to keep innovating. A corresponding strategic target is to design and develop new products or keep enhancing its existing products. Like this, Google will have the capacity to maintain its competitive advantage in utilizing the differentiation generic strategy as a part of the substance of rivalry from other technology firms.
Liu, Charles Zhechao, Yoris A. Au, and Hoon Seok Choi. "Effects of Freemium Strategy in the Mobile App Market: An Empirical Study of Google Play." Journal of Management Information Systems 31.3 (2014): 326-354. Business Source Complete. Web. 16 Apr. 2016.
Zimmer, Daniel. "The Emancipation of Antitrust From Market-Share-Based Approaches." Antitrust Bulletin 61.1 (2016): 133-154. Business Source Complete. Web. 16 Apr. 2016.