Google Inc. External and Internal Environments

Google Inc. External and Internal Environment
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Google Inc. External and Internal Environment
Introduction
Google Inc is an American multinational technology corporation that was founded by Larry Page and Sergey Brin in 1998. Larry and Sergey named the search engine they developed “Google” which sounded like “Googol,” the mathematical term for a 1 followed by 100 zeros. The company specializes in internet products such as online advertising, cloud computing, softwares and search services. Google Inc. is a publicly traded corporation, which had an IPO in August 2008. In 2015, Larry and Sergey again co-founded Alphabet Inc., which is a collection of companies. Alphabet is a parent company to all companies previously owned by or attached to Google. Google Inc. is its largest subsidiary. Since Alphabet was founded, Google's stock shares were converted into Alphabet’s stock under which it now trades publicly (Google, 2016). Google Inc. is the biggest internet search engine and a pioneer in its segment, which struck my interest. Since its inception, the company has experienced various opportunities as well as challenges such as increased competition, posing major threats to its incredible operations. For the understanding of Google’s market position, it is necessary to analyze the company’s internal and external environment, highlighting the various forces of competition, opportunities, and threats that impact on the firms operations and level of competitiveness in the market.
Segments of the General Environment
Besanko et al., (2009) lists six segments of the general environment; demographic, socio-cultural, political/legal, technological, economic and global. Technology is one the highest-ranking influence on Google Inc. due to its dynamic nature. Google products and services are predominantly based on the internet, which is accessible to many people. The invention and affordability of internet enable mobile phones is expected to increase Google’s revenue from online advertisements. The economic down turn is also pushing more businesses to online advertising. However, Google may not be reaping all the benefits because as businesses are embracing social-media based marketing as opposed to the traditional search-based marketing. As a result, many businesses are opting to advertise on Facebook. Even if the demand is increasing due to technology, the same technology is threatening Google’s dominance with the invention of other search engines and the likes of Facebook.
Being a multinational corporation, Google products are enjoyed across the globe. Therefore, socio-cultural factors also have a great influence on the company’s short term and long-term demand projections. According to BBC (2007), Africa has a population of 1 billion and it has a relatively small numbers of internet users. Only 10.9% of this population uses the internet. This trend can also be observed in Asia, which has a population of 3.8 billion and only 21.5% of the population uses the internet. As more people in these regions begin to use the internet, the demand for Google product is likely to increase. However, the gap between those who can use the internet and those who cannot may continue widening because of different economic classes of the population. Some people may not have the ability to afford a computer or pay for internet use. Many young people in the developed economies spend more time online, and this internet culture is positively impacting on Google. With time, demand for Google’s services in the developed economies will reach saturation levels, and a rapid increase in demand will be experienced in Africa and Asia regions as technology becomes more affordable and internet accessibility increases.
Forces of Competition
David (2007) notes that the Porter’s five forces of competition play a very important role for businesses to develop the right strategy to enable its survival and become more competitive. Customers and competitors are most the most significant forces that Google Inc. experiences. The customers using the search engine are becoming more refined and demanding, which increases their bargaining power. Google customers are already aware of substitutes that are easily available at a lower cost or even free. For example, Facebook provides online photo storage for free while Google charges $5 for 20GB photo storage per year (Google, 2016). Trying to balance different customer demands has also proven to be complicated. Some customers may prefer their advertisement on the webpage being broadcasted in big banners while others may be offended with the advert popping every now and then, as they would and instead they would prefer to find it in the search results. Most of the Google’s profits come from advertisements. To cushion itself from the effects of high customer bargaining power, it strategizes on obtaining new and more advertisements to maximize the profit even from small advertisements. In addition, Google must always put their customers first and think about what benefits the users who come to the site.
Google aims to beat its competitors and become the dominant company in the sector of search engines. Its main competitors Microsoft and Yahoo which have significantly lower profit compared to enviable profits it generates which puts Google at the same level with yet another competitor Apple Inc. Alphabet’s advertising business has outpaced its competitors, and expanded is market share. Google has taken the high rivalry as a way of helping it improve on quality and made the searching easier (David, 2007). However, efforts to beat rivals will be futile over time, as competitors will eventually become equally skilled and innovative. Therefore, the only way out of this without counting many loses is to join forces with competitors and increase its resources and capabilities. With the strategic coalition, a mutual formal relationship with two or more organizations achieves collaborative valuable strategic outcomes. It also allows for risks and control to be shared with greater benefits than those of individual efforts. Global market accessibility will also improve, and it will be easier to penetrated markets such as China.
Google Inc. SWOT Analysis
The world around us is constantly changing, and the changes are affecting individuals as well as multinational corporations. Since change is inevitable, companies need to accept the changes and make adjustments to their business models for them to remain profitable in the dynamic global arena. The environment in which an organization operates holds different factors that can affect it positively or negatively. These factors are known as environmental factors, which are categorized into two: external and internal factors. External environmental factors take place outside of the organization, and are hard to predict and control. Accordingly, external environmental factors are considered more dangerous to the success of an organization. They include; political, economic, social and technological factors. Internal environmental factors occur within an organization and are easier to predict and ...