Google Value Creation Case Study

Google was founded by Stanford students Larry Page and Sergey Brin who named the search engine they built “Google,” which is a variation on the word “googol,” the mathematical term for a 1 followed by 100 zeros1. The name reflects the immense volume of information that exists, and the scope of Google’s mission: to organize the world’s information and make it universally accessible and useful. Google is a very familiar name to everyone nowadays.

Most of us must have experienced its powerful search engine in today’s Internet world. But how much do we know about Google? Google’s mission is “to organize the world’s information and make it universally accessible and useful”2. The philosophy of “putting the needs of the users first” enables Google to offer a high-quality experience which leads to increased traffic and word-of-mouth promotion. Revenue in which 97% is made up of Advertising Revenue has increased from US $21.

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8 billion to US$23. 7 billion from 2008 to 20092.In this paper and the accompanying presentation, we will analyse Google’s current situation and how the dynamics of internet and presence of new enterants in the internet ecosystem are providing challenges to Google in terms of changing nature of business environment and mantaining the bigger share of market and also how google is navigating these new challenges.

As we will cover in detail in the proceeding sections,Google is swamped in the various operational and ethical dilemmas. Would Google be able to overcome these challenges and continue to be a ubiquitous leader in the pack? Google Value SystemGoogle’s value system is very different from that of the manufacturing industry. Google’s core business is to provide internet search engine service to web users and advertising services to advertisers. The higher the number of web users Google has, the higher the revenue it can generate, since 97%2 of revenues in 2008 and 2009 were made up of advertising revenue. As a result, the content providers act as the key supplier to provide sufficient number of websites in response to user’s search request. Without the content providers, the search results would be limited and the users would turn to other competitors such as Yahoo!Inc. and Microsoft Corporation’s Bing. The channel through which Google delivers its service is largely non-money related.

Google uses “the quality of our own products and services as our most effective marketing tool and word-of-mouth momentum continues to drive consumer awareness and user loyalty worldwide”2. Secondary channels are engagement in targeted marketing efforts, sponsorship of industry conferences and promotion of the distribution of Google products. As Google heavily relies on advertising revenue, advertisers are the key buyers. Google does not compete on price.Instead, Google “competes to attract and retain users of its search and communication products and services” “on the basis of the relevance and usefulness of its search results and the features, availability, and ease of use of its products and services2”. Issues Over the last few years , as the internet technologies became mature and as our dependence on the internet has become more obvious, for the Companies playing in this domain, the landscape has become overly competetive, especially with the advent of start up companies which are no longer restricted to the real estate of Silicon Valley in United States.As it is evident the Intenet Behemoth Google is also facing an increasing chunk of that comepetetion. Facebook became a formidable threat to Google domination of internet with over a billion plus user network accessing the Facebook and spending hours socializing on the Facebook platform.

Facebook ecosyetm, Advertising which is Google’s only known source of revenue, seems to be headed into facebook dominition. Facebook also has made it no secret that they will run a rival to youtube and provide a better emailing system for users to communicate in their vast network.Also, It is worth mentionoing that Google has been plagued by host of privacy issues, ranging from automated scanning of user’s Gmail inboxes to deliver specifc advertizements, to Google map camera buses scanning wi-fi airwaves in the streets of North America inadverdently capturing users passwords and internet browsing habits. These privacy issues have constantly kept Google’s legal department on toes with a lot of explaning to do to the privacy watchdogs around the world.Googles philosophy of a completelty transparent and uncensored internet did not find a soothing ear to the Chinese government which caused Google to loose its footing in the fastest growing internet community in the world, China. Chinese government policy of censoring access to chat rooms and preventing access to internet blogs was not liked by google and it had to vacate the chinese market. Regional comepetetors like Baidu took complete advantage of this scenario in outsetting google form this lucrative market.

Also due to its multifacted nature of business, Google faces intense competetion from not only the search engines and social networks but also personal computer manufacturers like Apple computers. Google launced the completely open OS Android and is distributing it free of charge to any manufacturer which chooses to adopt it for their handsets and tablets. Though Google themselves dont gain any monetary revenue from giving away their operating system, they are directly taregettiung the bread and butter market of other established players like RIM, Apple , Nokia and Microsoft.Conclusion: The internet ecosystem is more competetive than ever. In recently organized Web 2.

0 Summit at San Fransico,In words of Conference oraniser Tim o’Reilly ,”We’re entering a period of conflict in the Web, a period of intense competition. We’re looking at new levels of M&A. We’re looking at the decision: do you partner, or do you compete? “3References: 1. Google 2009 annual report. 2. About Google. com, http://www.

google. ca/intl/en/corporate/ 3. Competitive unease hovers over Web 2. 0 ,http://news. cnet. com/8301-13577_3-20023194-36.


Author: Kelley Hughes


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