Read Case 1-2 “Google” and then answer the following questions. How does Google’
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Question
Read Case 1-2 “Google” and then answer the following questions. How does Google’s information systems strategy support its business strategy? How does Google’s organizational strategy support its business strategy? Which of Porter’s three generic strategies does Google appear to be using based on this case? Provide a rational for your response.
CASE STUDY1-2 Google Started in the late 1990s, Google grew rapidly to become one of the leading companies in the world. Its mission is "o E organize the world's information and make it universally accessible and useful." It is operating on a simple but innovative business model of attracting Internet users to its free search services and earning revenue from E winner-takes-all business of Internet search. Google has captured considerably more market share than its next highest rival E Yahoo. This has turned Google's Web pages into the Web's most valuable real (virtual) estate. Through its two flagship pro- grams, AdWords and AdSense, Google has capitalized on this leadership position in searching to capture the lion's share in advertisement spending. AdWords enables businesses to place ads on Google and its network of publishing partners using E an auction-engine algorithm to decide which ad will appear on a given page. On the other hand, Google uses AdSense to ? push advertisements on publishing partners' Web sites targeting a specific audience and share ad revenue with the publishing partner. This creates a win-win situation for both advertisers and publishers; Google makes more than 90% of its revenue E from ads. Even as a large company, Google continues to take nsks and expand into new markets. Innovation is at the core of their enterprise. Sergey Brin and Larry Page, the founders declared in Google's IPO prospectus. We would fund projects that have a 10% chance of earning a billion dollars over the long term. . . We place smaller bets in areas that seem very specula- tive or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas." They = = E add that they are especially likely to fund new types of projects when the initial investment is small. Google promotes a culture of creativity and innovation in a number of ways. It encourages innovation in all employees by allowing them to spend 20% of their time on a project of their own choosing. In addition, the company offers benefits such as free meals, on-site gym, on-site dentist, and even washingachines at the company for busy employees. Despite an open and free work culture, a rigid and procedure-filled structire is imposed for making timely decisions and Eexecuting plans. For example, when designing new features, the team and senior managers meet in a large conference room. They use the right side of the conference room walls to digitally project new features and the left side to project any tran- scribed critique with a timer clock giving everyone 10 minutes to lay out ideas and finalize features. Thus, Google utilizes rigorous, data-driven procedures for evaluating new ideas in the midst of a chaotic innovation Nine notions of innovations are embedded in the organizational culture, processes, and structure of Google I. "Innovation Comes from Anywhere": All Google employees can innovate 2. "Focus on the User": When focus is on the user, the money and all else will follow (accessed September 11, 2015). Kathy Chin Long. "Google Reveals its Nine Principles of Innovations.Fast Company,hitp:/lwww.fastcompany.com/3021956/how-to-be-a-success-Explanation / Answer
Ans 1.
The Business strategy of Google is to organize the world’s information and make it universally acceptable and usable. Their business model focuses on encouraging users to their free search engines. They earn revenue for target advertisement in the search engines. There two advertising platforms are AD sense and AD words which generate 90% of their revenue.
The focus is on creating a search engine which has an answer to all its users, it drives users to use their services free of cost by providing all information by just keying in a few words. The revenue is automatically generated as they get a large part of organizations advertising budgets to spend on advertising on Google.
They keep focus on their core activity .i.e. organizing information and making it accessible to the users. They believe in the philosophy “ Focus on the user, the money and all else will follow.”
Q2. How does Google’s organizational strategy support its business strategy?
The organizational strategy is to focus on the following:
It supports their business strategy by driving the organizations to advertise with them by making them the world’s number one search engine. Further, they are continuously adding new information keeping the users fascinated and engaged with Google. The use of search engine drives almost processes 3.5 million searches everyday i.e.40,000 queries every second. This pushes the organizations to spend a maximum of their budgets on the two advertising platforms of Google AD sense and Ad Word. This also completes their strategy to focus on the user and the revenue will come in automatically. There 90% revenue is generated from advertising.
Q 3. Which of Porter’s three generic strategies does Google appear to be using based on this case? Provide a rationale for your response.
The three generic strategies of Porter are Cost leadership, differentiation and focus.
They are using the Differentiation strategy, which is defined as “Creating a product or service which is unique in the business or industry”. They are unique by offering the following:
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