External environment analysis

The company has a robust market position in the various markets it serves. It is the leading search engine in the world. Google's YouTube online video service is a leading online media platform. It also has robust market share in social networking segment with Orkut, and webmail through Gmail. Robust market share provides a base for company's revenue growth.

Information industry is a new form of market segment and Google is in the middle of this. Goggle has already transformed the pattern to do business in information industry. At present businesses require optimized and easily access information flow. This requires different method and channels which also affect the future business practices in information industry.

In this industry, google's buyers are all that companies who place their advertisements on Google's network. If we will see bargaining power of buyers is moderate here, because they are already bidding by using AdWords.

Google uses tier1 internet access (transit-free network) from several providers which provides a backup for uninterrupted service. Same is for computer hardware suppliers like HP, IBM and Dell. Google build there own servers which is less expensive and available for multiple sources. So for Google bargaining power of suppliers is also moderate. But after entering in mobile world, google suppliers are all telecom and cell manufacturer companies and they have strong supplier power. That is the reason Google is seeking long term alliances with these all.

If we think about some new substitute for Google, Yahoo and MSN search, it is too difficult to imitate. Because it is a quite specific industry people uses internet to browse information. Search engine return result according to user query. All these search engines are using extremely sophisticated algorithms. So it is nearly impossible to provide substitute for these search engines.

In Information/Internet search industry entry is not much difficult for new entrants but whoever tries to enter should have good capital fund because they have to compete with business giants like Google, Microsoft and Yahoo.

Google faces competition from companies that seek to connect people with information on the web and provide them with relevant advertising. It competes with internet advertising companies, particularly in the areas of pay-for-performance and keyword-targeted internet advertising. Google also competes with companies that sell products and services online. It also faces competition from companies offering traditional media advertising.

Microsoft and Yahoo are its key competitors. Microsoft has developed features that make web search a more integrated part of its Windows operating system and other desktop software products. Recent data from Nielson Mega View Company shows that Google's share of the total search market decreased from 66.1% to 64.8%. Total US searches increased 5% from June 2009 to July 2009. Yahoo Search grew 11% and increased from a 16.2% share of market to 17.1% share of market. Microsoft's search sites, including MSN, Windows Live and Bing - which nabbed 8.8% of the market in June - increased to a 9% share in July. (Nielson Mega View, july-2009)

There is a lack of product integration in different Google's product. Google has launched many products in recent time. They have many new innovative products but these products have very little in common with each other. The benefit of product integration is to get users easily from one service to another and company can retain users for longer time. In comparison to Google, yahoo has much better integration in its various products. Users can choose from available products on Yahoo homepage. (Datamonitor: Google Inc, b, June 2009)

Another threat for google is foreign exchange risk as it derives a major portion of its revenues from international operations. Its international revenues accounted for 51% of the total revenues in 2008. The proportion of revenues derived from international markets increases the company's exposure to fluctuations in foreign currency to US dollar exchange rates. Additionally, the company's average cost-per-click paid by advertisers decreased in the first quarter of FY2009 primarily due to the strengthening of the US dollar relative to foreign currencies. Google is already using hedging to reduce effect of fluctuations in foreign currencies, but it not much effective for their business model. (Datamonitor: Google Inc, b, June 2009). But as Google is doing alliances with different telecom customer as part of its internet mobile strategy, It will help Google to do internal hedging, like they partnership with China Mobile, they can pay them in Chinese currency only without doing any conversion.

Strategic Leadership

Eric Schmidt, CEO of Google, played a great role in Google's growth. He joined Google as chairman and chief executive officer in 2001.With founders Sergey Brin and Larry Page, he has helped the company to grow from a startup to a global enterprise and market leader. Under his leadership, Google has dramatically expanded from an Internet search engine to a legendary business leader in internet technologies. He is also a great planner, a practitioner of "thinking outside the box". With founders Sergey Brin and Larry Page, and the rest of the executive team, Eric's Leadership is also a biggest competitive advantage for Google.

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