Analyzing Google Inc.’s Elements of Business Strategy

Donald Hambrick and James Fredrickson’s article, “Are you sure you have a strategy?” presents five products that make up a strategy. The two argue that strategy in business is often wrongfully used as a catchall term by management and executives without clarification on how to accomplish it. Generally, the statements and announcements by most companies referring to strategy constitute more of strategic threads, reflecting the common use of the catchall phrase to fragment strategy. Resultantly, launching new initiatives periodically with the strategy phrase linked to them leads to a collection of strategies, undermining the business’s credibility. According to Fredrick and Hambrick any business with a strategy necessarily has to break it down into parts. They present five elements that constitute the strategy parts including, arenas, vehicles, differentiators, staging and economic logic. The following reading analyzes Google’s business and management strategy with regard to the five elements. It shows the tech giant’s strategic framework In-line with meeting the strategic elements.

The first strategic element arenas specifies the kind of business as well as the location and target market for the business. When defining arenas, it is fundamental to be specific regarding the product segments, market categories, demographics, key technologies and the stages for value addition. Businesses operating a wide range of products, market categories as well as the geographic cover, their strategies necessitate specifying the classes of and criteria for choosing arenas (Fredrickson, 2005). While selecting arenas, strategists ought to point out the areas where the business will be active as well as the emphasis placed on each. They need to separate primary market segments from the secondary categories.

In our case, Google Inc. has several applications and products, but all are running on the internet, making everyone on the globe their target audience. One of its key products is its search engine which has a simple interface and is free to use, attracting anyone with a search query. Looking closely at Google’s customer profile highlights various unique aspects of their geographic dimension. One is that they are a highly diverse audience seen as Google applications are highly complex tools. Also, over half of the search engine’s results are delivered in regions beyond the United States, and the company delivers the results in over 70 different languages.

The other strategic element vehicles entails the means by which a business will reach its target presence for the unique product categories, demographics, value addition levels as well as market segments. It shows the drivers a business implements and relies on to accomplish its decisions on its specified arenas. Fredrick and Hambrick (2005) assert, “failure to explicitly consider and articulate the intended expansion vehicles can result in the hoped-for entry’s being seriously delayed, unnecessarily costly, or totally stalled.” The means that arenas are joined are essential, making selecting vehicles a fundamental element and not just an ordinary implementation statement. Majority of Google Inc. products were services offered by other companies which Google acquired. The company largely uses acquisitions as a suitable vehicle to reach its target arena. The Usenet distributed system is Google’s initial acquisition from the company Dejavue back in 2001, which was changed to Google Groups. Other notable acquisitions by Google include the video-sharing website YouTube in 2006 and the company’s largest-ever acquisition, Motorola Mobility for a value surpassing $12 billion in 2011 (CB Information Services, Inc, 2019). It is through these acquisitions that Google Inc. is able to establish a strong presence across its arenas.

Another business strategy element is differentiators which highlights the techniques a company implements to boost its competitive edge. Differentiators specify how a business will win customers different from other companies in the same field. They necessitate management and executives to decide up-front the tools to be collected, enhanced and applied to surpass competitors in the struggle for profits and revenues. One of Google Inc.’s core differentiator is its cloud platform which is unique to other cloud providers in several ways. The platform consists of big data technology innovations including Mapreduce, BigQuery and Google Data Studio, which provide users with powerful data insights as well as appealing visual analytics (Jackson, 2019). In addition, the company’s cloud big data analytics solutions run without servers, eliminating the complexity of developing and managing a data analytics system. Resultantly it allows users to focus more time on insights.

Staging is the other element encompassing the strategic business parts. It refers to the decisions made in sequencing and speeding key moves to accelerate the chances of succeeding. Generally, strategies do not require initiatives to be equal and balanced on all fronts every time. Rather, strategists prioritize various initiatives first, and others follow subsequently (Fredrickson, 2005). Decisions surrounding staging are determined by several factors, including resources. In the case of Google Inc., completing its acquisitions, as mentioned earlier, shows the company’s staging strategic element. Google’s wide range of business tools and applications was realized by multiple acquisitions over the years, with its first (Usenet) in 2001 and its most recent (Pointy) on January 14 2020. Interestingly, the majority of the initial acquisitions completed by the company are buyouts of local companies in the USA, where Google is founded and headquartered, and foreign takeovers follow after. Staging these acquisitions from local to global companies also enhances Google Inc.’s global advertising and marketing staging strategies and setting milestones.

Economic logic is the final element forming a successful business strategy. It clarifies the idea of revenue generation by companies. Majority of well-performing strategies are made of a primary economic logic serving as the focal point for revenue generation. Operating a business that merely targets to only gather revenues that surpass its expenditure is unsatisfactory to both competitors and customers, and in most cases, they will not allow that to happen.  Google Inc.’s fulcrum for profit-making is advertising. A huge amount of the company’s revenue that accumulates to billions annually comes from AdWords and search advertising. Most of the company’s web properties are integrated with AdWords advertisements which recommend different websites when users log into and search on Google platforms (Rosenberg, 2018). Advertisers pay the company with regard to each click on their advertisements by users. Therefore, advertisers are forced to outbid one another for Google to prioritize their advertisements.

In summary, the five strategic elements need to be specified for strategists to acquire a better position in designing other supporting activities. These elements are the main nodes for developing a thorough activity system. Google Inc.’s activities reflect a feasible manner of achieving the five elements of a successful business strategy.

 

 

References

CB Information Services, Inc. (2019, November 01). Infographic: Google’s Biggest Acquisitions. Retrieved from CB insights: https://www.cbinsights.com/research/google-biggest-acquisitions-infographic/

Fredrickson, D. H. (2005). Are you sure you have a strategy? Academy of Management Executive, 51-62.

Jackson, B. (2019, December 10). Top 7 Advantages of Choosing Google Cloud Hosting. Retrieved from Kinsta: https://kinsta.com/blog/google-cloud-hosting/

Rosenberg, E. (2018, December 05). How Google Makes Money (GOOG). Retrieved from Investopedia: https://www.investopedia.com/articles/investing/020515/business-google.asp