PLANNING UNIT—STRATEGIC PLANNING



STRATEGIC PLANNING

Google

Have you ever searched the Internet for games, research for your report, information on the newest technological advances? Chances are you “googled” the information.

Google is the world’s largest search engine. It allows users to search over eight billion websites in more than 35 languages with an audience base of more than 380 million people. Google generates revenue from advertisers who pay a fee for placing their ads on the website. The ads are targeted by keywords. Revenues have skyrocketed over the years. In 2005, the company had revenues of over $6.1 billion and net income of almost $1.5 billion. That’s one year sales growth of 93% and income growth of 267%. By 2006, revenues had increased to over $10 billion.1

Background

Google was founded by two PhD students, Larry Page and Sergey Brin, in a Stanford University dorm room. According to Google’s official website, the two did not get along, spending most of their time arguing. However, they quickly found something worth arguing about—how to retrieve pertinent information from an enormous set of data. The partners developed an innovative search engine called “Backrub” for its ability to analyze the back links to a website. Larry’s dorm room was set up as a computer hub, while Sergey established the business office. After maxing out their credit cards on a terabyte of memory, they needed more funding. Eventually, the pair raised almost one million dollars from friends, family, and acquaintances, and a $100 000 investment from Sun Microsystems founder, Andy Bechtolsheim. In September 1998, Google Inc. opened its door—a garage door. The first office was established in the garage of a friend.2

So where does the name come from? A googlol is the mathematical expression for one followed by 100 zeros. Google adapted the name because it feels it reflects the company’s vision of organizing an immeasurable quantity of information on the web. Google’s mission statement is “to organize the world’s information and make it universally accessible and useful.” 3

Current Operations

In 2007, Google was voted as the best company to work for by Fortune Magazine.4 So what makes this company so great? Life at Google is patterned after a university campus. Employees are crammed into small cubicles to give the feeling of a dorm. The cubicles are furnished with couches and your dog is welcome. New recruits often put on the “Google 15” in their first few months because free food is readily available. This is analogous to the “freshman 10” in university that states first year students tend to gain 10 pounds. In addition, the corporate head office of Google is in Mountain View, California and is referred to as a campus or the “Googleplex”. Just like university, there are cliques—the nerdy engineers, the fashion-conscious online advertising salesforce, the math geeks and the MBAs.

The Googleplex is full of office perks. Employees can dine at one of the 11 free gourmet cafes. Employees can play ping-pong, foosball, pinball, video games or billiards. There are five onsite physicians, $30 massages, media centres, a climbing wall, lap pool, snack stations, and laundry facilities. Other benefits include a $500 voucher for take-out food after the birth of a child, a $5000 subsidy for buying a hybrid car, free car washes and onsite oil changes.

Teamwork is essential particularly on the big jobs. For example, Gmail was developed by a dedicated team. The teams have meeting rooms where they create. Meetings are informal and often take place between five and seven o’clock at night.

Not everything at Google is perfect, however. It is having difficulty retaining staff. One reason that the employees aren’t staying is because they are now millionaires. Some of these extremely wealthy employees still work at Google—they are called “economic volunteers”. However, many have retired to follow other dreams or start their own companies. Currently, its attrition rate is 5%. Coupled with enormous growth (Google now employs over 10 000 people), the human resource department is extremely busy.5 One other problem in hiring is the change in Google’s image. It is no longer the small start-up business.

Google is going head-to-head with Microsoft. It is developing premium web-based software aimed at businesses. The bundle includes office productivity software such as word processing, spreadsheets, and calendars. It also provides the communication applications of instant messaging, and VOIP. This product will be sold to businesses, a change from Google’s usually free services.

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Endnotes

1 Information from corporate website

2 Ibid

3 Ibid

4 Lashinsky, Adam, “Search and Enjoy,” Fortune (January 22, 2007), pp.70-82.

5 Ibid

Review Questions

1. What is Google’s current strategy?

2. State Google’s mission statement. In your opinion, is this a good mission statement?

3. Describe Google’s corporate culture. What are the advantages and the disadvantages of this culture?

4. Prepare a SWOT analysis of Google.

5. What are Google’s core competencies?

6. Prepare a Porter’s Model of Five Strategic Forces Affecting an Industry

7. State where each of the following products would be found on the BCG Matrix:

a) search engine

b) Gmail

c) new business software

8. Which Adaptive Strategy is Google pursuing? Explain.

You Do the Research

1. Using the Internet, research Google’s current strategy.

2. Go to Google’s website, research Google’s philosophy and its 10 Things Google has found to be true.

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