Google competitive situation
Before Google Inc. gained the market power, Yahoo has dominated the internet marketing, email, and online advertisement. Later, Google Inc. developed a superior operating platform that won the rivalry between it and the incumbent market shareholder, Yahoo. Even though Google market share grew past 90%, by 2009, in most countries in the U.K., the firm knew that competition was not far. To counter such a competitive advantage, it rival Microsoft Inc. opted to acquire Yahoo, but its $44.6billion was unsuccessful (Edelman & Eiesmenn, 2014). The antitrust war blocked Microsoft’s move, but it was in favor of Google. Microsoft’s strategy of rebranding MSN to Bing was aimed at countering Google’s competitive power on internet search engines, but it was not enough to influence Google’s competitive nature. Yahoo’s move to upgrade its search engine did not convince advertisers because its infrastructure was not good enough.
Apple and Google’s launch of smartphones initiated a tug of wars between even though both firms fought Microsoft that was a common enemy. As Apple and Google expanded their operations, in 2009, Eric Schmidt resigned as a top management official at Google because he had sat on many Apple board meeting. It is from there that Google vowed not to employ Apple employees. To counter this strategy, Apple’s release of iOS 6 prompted the firm to remove Google Maps from all their devises and replace them with Apple Maps. The war against Google’s did not end on firm rivalry, but on regulator’s moves to reduce her increasing competitive advantage. The assistant attorney of antitrust in the department of justice noted that Google was increasing internet monopoly and gaining market power in such a way that it now controls online advertisements. According to her, the commercial way of controlling more than 80% of internet advertisements was not fair to consumers and rival firms (Edelman & Eiesmenn, 2014). On the other hand, The U.S. Federal Trade Commission kept investigating on Google’s strong market share, but the institution did not come up with any legal background to file a competition case against the firm.
Critical strategic issues at stake
Before his resignation in 2009, Google’s Schmidt had an idea that the firm had to “organize the entire world’s information” and in this case, the firm has two critical options (Edelman & Eiesmenn, 2014). In the firm place, the firm was to use her competitive advantage and improve the quality of service it offers to consumers and other business partners. Categorically, the firm had to develop superior search solutions and price them through her various advertisement platforms, which will help in improving her performance.
The firm had another option of diversifying her operations to sustain her competitive advantage compared to rival firms. Google could emulate Yahoo’s strategy of combining or categorizing its content into themes as well as expand the internet financial platform, Checkouts to increase the number of transactions. As that is not enough, the firm could develop substitute products to compete Microsoft Windows and Microsoft office so that the latter does not dominate on PCs. Like eBay, Google, could invest in the construction of a warehouse that could store supplier’s goods and initiate plans to deliver them to clients on the same day using drones. Apart from that, the firm could diversify her operations and enable it to develop self-driving cars or Google glass to expand her revenue base.
It is important to note that, some of the components of the two options are inconsistent with Google’s mission; “to organize the entire world’s information” for instance, the move to develop self-driving cars and Google glass is not related to organization of information. Apart from that, Google’s move to build a warehouse that stores supplier’s goods and then deliver them to clients the same day, is not in any way the organization of information. It should be noted that the two options require an enormous financial undertaking, which is not only risky but also time consuming. It requires an overhaul review of its organization structure and change in the normal production process. The firm is uncertain whether either of the two projects would succeed. However, it is evident that any attempt to venture into one would increase the firm’s revenue.
Addressing the issue
Google’s move to diversify its product and service lines is a good idea, but the firm has to evaluate the outcome of consumer thoughts and perhaps preference regarding the new products. The firm is considered one of the best in technology utilization; it should stop infringing on the intellectual property rights of rival firms to avoid litigation cases that would ruin its brand name. Any of the options is best for Google to venture, but there is the need for the firm to conduct extensive marketing research to enable it acquires information that would give a hint or guidelines as to what is the best product or service needed in the market full of dynamism. Furthermore, the firm should improve the atmosphere of social networking especially on her newly launched Google+ to counter the competitive impact of Facebook, which is purported to be launching a search engine on its social networks. There is the need for the firm to differentiate its products relative to that of its rivals like the way Apple and Microsoft did, to avoid any potential rival from copying its style of operation, production, and service delivery (Blatstein, 2012). In any way Google will seek to address the critical issue it should ensure it is in line with its mission, appeals the consumers and of high technological value, which will increase the product life cycle.
Tools of analysis to evaluate the issue
The most effective tool of analysis to evaluate the issue is conducting an extensive marketing research. Google should conduct a research to learn and understand her rivals such as Yahoo, Microsoft, Facebook, and Apple’s way of productions, designing, and market (Chaston, 2012). For instance, before embarking to an initiative to develop superior search engine solutions to win Yahoo’s competition, Google should study Yahoo search engine’s technological background, understand the extent to which it influences consumers. From there, Google will have a hint, which will help it make informed decisions on ways of gaining competitive advantage relative to its rivals. In using marketing research to evaluate the critical issues, the firm will be able to reduce the financial risk thereby increase its expectations of expanded revenue base. For instance, a cost-benefit analysis can be conducted on the two options, from them the firm can establish the option with the lowest cost, and the highest benefits thereby venture into it.
Possible solutions to the issues facing Google
The major problem experienced by Google Inc. is based on other firms’ move to develop and improve their search engine potential. To exonerate itself from search engine related competition and problems, Google should adhere to antitrust laws and regulations governing its operations to avoid litigations filed against it regularly. Litigations such as the one filed by the Attorney, department of Justice, Federal Trade Commission, and European Union over antitrust charges seeks to taint Google’s name and even expose her to financial liabilities, which not only increase the cost of operation, but also reduce consumer’s confidence over its products and services.
Google’s algorithm, search engine technology is unique and it has been behind the improvement of the firm’s competitive advantage. To avoid any potential emulation or competition of the technological method, Google has to improve it even further by bettering the crawling, ranking, and indexing methodologies that form the operationalization of Google’s search engine (Kolakowski, 2012). In so doing, Yahoo’s Bing and Microsoft’s MSN will not be able to offer potential competition that would threaten Google’s move to increase its market share.
In the future, Google should build its own servers, expand its storage capacity, and connect other servers across the globe using cloud computing that operate on fiber optic technology to enhance speed and efficiency to continue gaining competitive advantage on the war over search engines from rival firms. This would mean that Google would expand its access to information and use the same information to better the results offered on its search engine using crawling, indexing, and ranking techniques (Kolakowski, 2012).
It is strongly advised that Google move to build her own servers, expand its storage capacity and connecting other servers across the world to her own will be a vital step towards improving her competitive advantage over her rivals. This strategy is in line with Google’s mission, “organizing information across the world” and that it seeks to improve its search engine capabilities. In so doing, the firm would stay away from frequent litigation charges filed against it regularly. Apart from that, the firm will increase its customer base that use its search engine because rational consumers will always prefer products and services that give them the best value. Based on this, Google business partners will increase the number of adverts on some of the Google results and for that reason, the firm will increase its revenue margins and be ahead of competition.
Plan to implement the solution
In the first place, Google should conduct research to establish the viability and feasibility of the project. From the results, the firm should conduct an analysis and establish some of the available servers that might be incorporated in its own. After that, the firm should seek to have a memorandum of understanding with owners, regulators, or developers of the said servers and then establish the amount of space it will need to incorporate all the servers after signing the agreements. This will be followed by developing plans and designing some of the technological expertise and methodologies that would be needed to implement the program. Improving cloud-computing capabilities by increasing the speed of internet will be another step Google has to undertake. This will be followed by improving other infrastructure that might support the program. After that, Google can go ahead and implement the program. Program implementation will be followed by monitoring and evaluating the program with aims of adjusting to ensure compliance.
Limitation of the proposal
Google need an enormous capital base to acquire some of the firms that take part in cloud computing, server management, and technological expertise to roll down its plan effectively. Apart from that, it may take time to negotiate and establish memorandum of understanding with some of the firms affected during the implementation of Google’s program because some firms may demand high stakes. The regulator may impose laws that might hinder some of the program implementation processes as a way of ensuring that the firm adheres to antitrust laws. There are many risks associated with this program especially if rival firms play the game theory to counter Google’s moves.
Blatstein, I. (2012). Strategic Planning: Predicting or Shaping the Future? Organization Development Journal, 30(1), 30-32.
Chaston, I. (2012). Strategy for sustainable competitive advantage: Surviving declining demand and China's global development. New York: Routledge.
Edelman, B. & Eiesmenn, T. (2014). Google Inc. in 2014. Phoenix: Harvard Business School.
Kolakowski, N. (2012). Google Search Is Undergoing Major Revamp. EWeek, 1(1), 1-3.