Challanges Google May Face
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Google faces several challenges that threaten its business model. As search becomes integrated into other applications and software, Google risks losing traffic to its main search platform and the advertising revenue it generates. Competitors are also developing new ways of advertising that do not rely on traditional display ads. Maintaining its principles around privacy and censorship also presents difficulties in countries like China. While Google has diversified, it lacks a clear strategic focus, and it is unclear if its other ventures can generate sufficient revenue should it lose dominance in search and advertising.
Challanges Google May Face
- 1. Running head: MBA 6010: CHALLENGES GOOGLE MAY FACE MBA 6010: Challenges Google May Face University of Fredericton May 28, 2016 Alexis Theriault, Thao Ly, William Allen, Xun Zhao
- 2. MBA 6010: CHALLENGES GOOGLE MAY FACE 2 Contents MBA 6010: Challenges Google May Face....................................................................... 3 SWOT ............................................................................................................................. 3 The 10 Principles of Google's Corporate Philosophy..................................................... 4 1. Focus on the user and all else will follow............................................................... 4 2. It's best to do one thing really, really well. ............................................................. 5 3. Fast is better than slow............................................................................................ 5 4. Democracy on the web works................................................................................. 5 5. You don't need to be at your desk to need an answer.............................................. 5 6. You can make money without doing evil................................................................ 5 7. There's always more information out there............................................................. 6 8. The need for information crosses all borders.......................................................... 6 9. You can be serious without a suit............................................................................ 6 10. Great just isn't good enough.................................................................................. 7 Google’s challenges........................................................................................................ 7 Strategy ........................................................................................................................... 8 References......................................................................................................................... 10
- 3. MBA 6010: CHALLENGES GOOGLE MAY FACE 3 MBA 6010: Challenges Google May Face Google has definitely become a large player in the global search engine industry, which it has been able to use to produce the majority of its revenue advertising. It seems at the time Google is simply a large advertising firm, which might someday become their downfall. A search of the internet for anything negative regarding Google is very difficult, even on other search engines such as Bing. However, by analyzing what critics and stakeholders are saying, some of Google’s weak spots can be determined and any challenges identified. SWOT Looking at the SWOT below it can be seen Google has some areas they should be concerned about and should be working toward eliminating, or improve stakeholder perceptions. Strengths Weakness Opportunities Threats - Online advertising - Search engine can't search for credibility - Android OS - other search engines, Bing, Yahoo, baidu, Yandex- AdWords - Mobile search apps - Android OS - Costly R&D - Other countries; China - Google + - Innovation - Primary revenue from Ads - Legal/Privacy - Advertises changing how they advertise- Chrome - Censorship Some of the weakness’ and threats not only pose an advantage to their competitors but demonstrate some of the challenges Google may face in the coming years. With the rapidly changing search technology, for example, increased search integration into software such as Microsoft office and mobile device applications, Google is at risk of losing users and thus revenue simply due to less traffic thru their website and searches applications. With revenues from ads being Google’s primary source of income, this shift could greatly affect their financials. Couple this with the threat of how companies are starting to advertise. Advertisers know people are no longer watching ads, either skipping or switching applications while the ads are playing.
- 4. MBA 6010: CHALLENGES GOOGLE MAY FACE 4 For this reason, advertisers have been looking for innovative ways to advertise without actually placing a thirty second or longer ad video in browsers, on YouTube, or other applications. In the opportunity and threat category, there is legal/privacy and censorship, both of these areas should be a major concern, especially when it comes operating in other countries. In China, for example, the government has much control over the internet and there is a large amount of censoring of information available to citizens. In order to fully operate in China, Google would be required to breach some of the privacy of their users in order to follow China laws. If we look further into Google’s search engines, one of the items which users are starting to become disappointed with is the bias or manipulation of search results, which happens in the name of advertising. “Even Google has acknowledged that its becoming really difficult to differentiate between real good content, good content and average content as a search engine can’t check for the credibility of all the information.” (Marketing91, n.d.). For example, some of the top search results in any given search may be simply the top bidders, and may actually, be of less quality then the content people are really looking for. The 10 Principles of Google's Corporate Philosophy By analyzing Google’s philosophy, any gaps can be identified and strategic plans updated to reflect action which will need to be taken in order to comply with their own beliefs. 1. Focus on the user and all else will follow. “Google has may products which nowadays are indispensable for almost all their users” (Haldipur, 2013). It can be said Google is a “Jack of all trades”, besides the search engine and advertising have they mastered any? Have they diversified too much and are actually failing users by continuing to invest areas which users just don’t see a value in or know exist?
- 5. MBA 6010: CHALLENGES GOOGLE MAY FACE 5 2. It's best to do one thing really, really well. That one thing is search. Google has revolutionized the way people search, however, has Google just become an advertising firm, with the majority of their revenue coming from ads. Once the newer methods of search are developed, for example, Microsoft is working on incorporating search directly into their office programs, people will no longer be required to open browsers to search, this will also remove the advertising which many users are really not interested in. 3. Fast is better than slow. How can we complain about this, “Google may be the only company in the world whose stated goal is to have users leave its website as quickly as possible” (Gamble, 2012). 4. Democracy on the web works. By utilizing “PageRank”, “Google is able to determine which sites have been “voted” the best sources of information by those most interested in the information they offer” (Gamble, 2012). Being an advertising company, this will have a large impact on ad revenue from those lesser websites. 5. You don't need to be at your desk to need an answer. This will definitely be a challenge, Google will find it difficult to have a presence on mobile devices which are not android based, especially if their competitors are working on ways to develop search technology which will no longer require Google or their technology. 6. You can make money without doing evil. Operating in China the way they want would break China Laws, user’s data would be compromised, and be subject to censorship, many people would call this evil. Users will
- 6. MBA 6010: CHALLENGES GOOGLE MAY FACE 6 eventually want to do a search either in a browser or on YouTube and not be subject to ads, How will Google respond to this? Many users are already at that point, refusing to watch ads. 7. There's always more information out there. The trouble is finding the data you’re looking for. As more and more data is added t the internet, Google will be tasked with innovating new ways in which users will be able to find relevant information. The problem will be how to give both advertiser and users what they want without compromising the search results. 8. The need for information crosses all borders. The major problem Google faces is providing information to users in other countries which are heavily censored. How will they do this? Will they choose to find ways around legislation, find ways route users outside the country (i.e. China) or simply pull out entirely from countries which they cannot provide the service they want to /need to? 9. You can be serious without a suit. This is part of the philosophy which talks to the people being the most important. We are to believe they have a great team of individuals who work well with each to create a difference. However, according to statements made by current and past google employees, “Unfortunately, in spite of the common belief, I think the average level of Google engineers is mediocre. With a lot of arrogance, too. Everybody believes he (males dominate) is better than his neighbor. So it is really hard to discuss any issue unless it is your friend you are talking to. Objective discussions are pretty rare since everybody's territorial, and not interested in opinions of other people unless those people are Important Gods." (Edwards, 2013).
- 7. MBA 6010: CHALLENGES GOOGLE MAY FACE 7 How can any company claim be an effective team when employees feel this way? When it comes to managers, “mediocre thinking of middle management types who are completely focused on metrics to the exclusion of all other factors. They don't want to rock the boat…” (Edwards, 2013). This being said, their managers now become a liability who rely too much on the name “Google” and expect everything to be forever. 10. Great just isn't good enough. Google works hard at anticipating what users need/want and then works on innovating to produce those products, (Gamble, 2012). But do users need these products, just because Google says so? For example, Google Glass, the world just wasn’t ready for it. Google’s challenges Google faces many challenges implementing the strategy they would like in many cases such as Adwords. Concerning Adwords, although their strategy is sound and that it does help users that use the Google search engine help them find what they are looking for as well as their cost per click good value for their customers, in terms of revenue, Google isn’t even noted above the 5% in the ad revenue global share as Facebook controls the majority of that market share. Google is facing an uphill battle in internet advertising and although they are a behemoth for the search engine, their other internet ventures may not be as successful. Google has tried on multiple occasions to incorporate social networking one way or another by tying everything back to their Gmail accounts to keep users using their products. However, people are heavily invested in Facebook for social media, and Google still has no answer for professional networking such as LinkedIn or even Twitter in microblogging. Google faces problems implementing its mobile strategy as well. Google has the front page of the internet for most users as they’ll look on Google to find something on their laptops
- 8. MBA 6010: CHALLENGES GOOGLE MAY FACE 8 but on mobile devices, it’s a different ballgame. Smartphone users will use the app and other alternatives to Google on their phone to look up places, gifts or even distractions. The number of these apps will interfere with the google search market share over time as they are being tailored to the specific needs or devices of the users. However, Google is already trying to solve the problem by having added voice-activated search technology to find the resources online or to find the best app for the user’s needs. However, this was due to their acquisition of AdMod in 2009 (Levy, 2014). Their rivalry with Apple is huge on the device choices for their software for mobile devices and even though the number of apps for both companies is similar, Apple is still retaining their lead. Since the product launch customers that wanted a mobile phone and/or a tablet have already gotten one and have slowed the industry. Google is no longer growing as much as it used to and if that is the case, may lose its share of top talent employees to whatever the next best thing may be. Strategy Google’s strategy is based on their philosophy, besides stating their strategy involves differentiation and Blue Ocean, does it really say anything about what they have planned. It seems lately they are working on a little bit of everything and have diversified much of their R&D into small units, working independently. Google’s strategy appears to be more about being great then about how they will get there. “A company exhibits strategic intent when it relentlessly pursues an ambitious strategic objective, concentrating the full force of its resources and competitive actions on achieving that objective.” (Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J., 2016, p. 40). It’s hard to say if Google is actually achieving this, many would believe they are merely trying to anticipate what the next great thing will be and try to be
- 9. MBA 6010: CHALLENGES GOOGLE MAY FACE 9 the first to put it on the market, i.e. Google Glass, Driverless cars. If Google loses the whole search engine and advertising revenue, will these other endeavors be enough, probably not?
- 10. MBA 6010: CHALLENGES GOOGLE MAY FACE 10 References Edwards, J. (2013). Google Employees Confess The Worst Things About Working At Google. Retrieved from http://www.businessinsider.com/google-employees-confess-the-worst- things-about-working-at-google-2013-11 Gamble, J. (2012). Google's Strategy in 2012. Case 13. 168-186. Google's new AdWords policy explained. (2010). Managing Intellectual Property, 110. Haldipur, R. (2013). Google's Stakeholders. Retrieved from http://raunakhaldipur.blogspot.ca/2013/02/googles-stakeholders.html Levy, A. (2014, Aug 19). Five problems Google faces in the next 10 years. Retrieved from CNBC: http://www.cnbc.com/2014/08/17/five-problems-google-faces-in-the-next-10- years.html Marketing91. (n.d.). SWOT analysis of Google. Retrieved from Marketing91: http://www.marketing91.com/google-swot-analysis/ Micah. (2015). What Are Google’s Vulnerabilities? Retrieved from http://greatleapstudios.com/blog/search-engines/what-are-googles-vulnerabilities/ Search Optics becomes Google AdWords premier partner. (2015). Telecomworldwire. Smith, R. (2010). GOOGLE MEANS EVERY. Research Technology Management, 53(1), 67-69. Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2016). Crafting and Executing Strategy: The Quest For Competitive Advantage, concepts, and cases (20th Ed.). New York, NY10121: McGraw-Hill Education.