Google is a technology company and is known as Alphabet at a corporate level. The multinational firm majors in the provision of internet-related services such as advertisements, search engines, software, and cloud computing. The corporation has grown to the top of the technology industry. Indeed, its strategic planning has made it possible to keep revenue growth in the last decade. Both at the business and corporate level, Google runs well-defined strategies which help it to stay productive. At a corporate level, Google aims at strengthening brand loyalty while increasing innovation through transformational change. At the business level, the firm aims at creating and making its products the best in the market through differentiation and diversification. Thus, Google at both corporate and business level strategies positively impact the company’s financial status.
Corporate Level Strategies
Google as a large company cannot focus on a single strategy hence its strategies are diverse just as what it does. However, the main aim of the business is to provide distinct products which keep earning the firm more revenue. At a corporate level, plans are laid out to keep innovation and growth accelerating (Pineda). Indeed, the corporate level strategies focus on growing the company to be the most outstanding in the industry. These strategies ensure that Google stays at the top of the technology industry especially for the advertisement and search engine products and services. The idea of being more innovative as a whole firm ensures that Google keeps developing new products thus entering new markets. The following are major strategies at the corporate level in Google Company.
Intensive Growth Strategy
The primary strategy for Google is to grow the company and make it more profitable. In the technology industry, Google faces stiff competition which drives it to make more differentiated innovations to defeat the competitors. Through differentiation, Google keeps its competitors at bay through uniqueness. The intensity of growth in the company focuses on different levels of strategies as shown below.
The primary method through which Google grows is using market penetration. In the United States, Google already owns a technological market but not the same in other countries. Therefore, the company has to work towards acquiring new customers from such countries. While at it, Google faces competition from other search engine websites and advertising companies. Thus, for continued growth, Google strives to have a bigger market share at a global level. The firm also using differentiation of products strategy ensures its level of competition is high hence discouraging many companies from entering varied markets.
Another intensive growth plan for Google is product development which occurs through innovation. Google develops new products every day intending to increase revenue. Google is a product company and focuses on providing products that meet customers’ needs now and then. The innovation encourages employees to be more inventive and creative thus bringing new ideas. It is through product development that revenue-boosting service like online advertising was introduced.
Online advertisement is currently the most revenue-earning product for Google. In 2020, Google made approximately 181.69 billion of which 146.9 billion was from advertising revenue (Statista). This is a clear indication that the product innovation strategy is bearing fruits for the company. Indeed, the company’s revenue increase by over 20 billion from 2019 where the total revenue was 160.74 billion.
Google also uses market development as another way to achieve intensive growth. The company aims at attracting customers in the new market through offering new uses of already existing products. For example, cloud computing is already an existing product but when introduced to new application programs, it gets new uses (Statista). This method of market development makes the firm stay competitive in the technology industry. Through market development, Google also reaches more customers from different countries hence increasing revenues.
Business Level Strategies
Google earns extra revenue by venturing into new businesses in new industries. It does so by focusing on trending operations around the internet and coming up with an existing gap which it provides services to bridge. In 2006, Google acquired YouTube and it established video hosting services through which users get paid (Abdelsalam and Haitham 3). Alongside video hosting, the ads are running in the videos which increase the company revenues. Through video hosting services, Google makes at least 15 billion every year (Abdelsalam and Haitham 2). This is revenue that never existed without acquiring a new business. Diversification allows Google to increase revenue through venturing into new markets and selling new products or already existing products.
Google may offer similar products to those of its competitors but through differentiating their mode of service delivery, they become outstanding. For example, Google offers the most effective search engine which beats other websites with search engines. In search engine and other revenues, Google recorded 104 billion in 2020 thus making up to 71% of the total company revenues and 57% of the corporation (Statista). Google has made the search engine fast and reliable especially by providing most solutions to questions. Advertising with Google is also easy compared to operating with other websites like Facebook and Twitter. Thus, by making it easy to advertise, the company attracts many customers to pay for ads hence increasing total revenues.
Google has employed industry interdependence as a strategy to earn more revenues. Through vertical integration or alignment, Google connects different industries to successfully benefit the company (Pineda). The company has promoted the importance of digital communication, the internet, and other technologies to diverse business organizations. For example, Google integrated media and publishing industries by offering them the AdSense program. The program remains the best in online advertising due to the expansive list of advertisers thus drawing possibilities of earning higher revenues for Google.
The presence of the AdSense program has joined the publishing and media industries as they both use it to advertise. The integration of industries is then a positively impacting strategy to the overall Google revenue. Google android is another product that has brought together different industries in the use of the product.
Traffic Acquisition Cost Strategy
Google has benefited from traffic acquisition costs in the past and is expected to earn in the future. Traffic acquisition costs are expenses paid to companies and individuals by Google for directing traffic to its website. Google as a website receives visits like any other website. Increased traffic means that Google earns more revenue and in turn pays for acquisition costs. Reducing the traffic acquisition cost helps the company benefits from the traffic and remains with huge profits. In 2017, Google spent $21 billion which was paid off by 22% of the total revenues (Abdelsalam and Haitham 3). The firm is expected to reduce traffic acquisition costs hence enjoy more profits.
Cost Leadership Strategy
Google uses a cost leadership strategy as a competitive advantage. The company offers products and services a low prices yet of high quality. Google faces competition from other companies but the provision of high-quality products makes it outstanding (Thompson). The firm increases market share by penetrating more markets at market prices. However, Google faces competition in online advertising especially by Facebook since it offers very low prices. This however does not total advertising revenues for Google. The ongoing health pandemic has however affected the level of advertising thus reducing ad revenues. More reduced revenues are expected as the pandemic continues to affect both online and offline businesses.
Google through corporate and business level strategies makes a positive impact on its total revenues. In the past decade, the company’s revenue keeps increasing due to continued growth. The intensive growth as driven by corporate strategies keeps the company competitive and growing. Product differentiation also keeps Google at the top of the technological industry.
Other business-level strategies are also important in building the business from the ground level. The corporate structure of Google acts as the major support for business growth. Market penetration as the primary strategy helps the firm to reach more customers. Online advertising is the best product so far earning Google the highest level of revenue. Although it has been affected by the ongoing health crisis, advertising remains the core product for Alphabet. Indeed, more revenue is expected at the end of this business year and particularly from online advertisement.
Abdelsalam, Ahmed, and Haitham Nobanee. “Financial Statement Analysis of Google.” SSRN Electronic Journal, (2020). pp. 1-6. Web.
Pineda, Emmanuel M. “The Business Strategy of Google“. Profolus, 2021. Web.
Statista. “Google: Annual Revenue“. 2021. Web.
Thompson, Andrew. “Google’s Generic Strategy (Porter’s) & Intensive Growth Strategies“. Panmore Institute, 2019. Web.