Google is the worlds number one web-based search engine. The company, Google Inc. had a humble beginning. It was actually started as a graduate school project by Sergery Brin and Larry Page, two Ph.D students at Stanford. They developed a search engine which could analyze the back links pointing to a certain website and called it BackRub (Scott 2008, p43). They developed an algorithm called PageRank which ranked the back links according to the degree of relevance. A search engine based on PageRank algorithm proved to be more reliable and faster than the algorithms being used by other search engines (e.g. Yahoo used Inktomi, an algorithm based on parallel-processing networks at that time).
At first, Sergey and Larry were not interested in starting up a new company and simply wanted to market this technology to other companies. They approached David Filo, the founder of Yahoo, who encouraged them to start their own business. Soon, they demonstrated their search engine to Andy Bechtolsheim, an angel investor, who instantly put money on their business. Google was incorporated on 7th September 1997 and the domain name google.com was registered on 15th September 1997 (Scott 2008, p.7). Today, Google has become a household name.
In 1999, 25 million worth of capital was injected in the company by two venture capitalist companies Sequoia and Kleiner Perkins (Eisenmann Herman 2006, p. 2). In 2008, Google became the most popular website in the U.S., leaving behind Yahoo - its major competitor. It gained such unparalleled popularity and recognition without any form of advertising. Word of mouth played a major role as satisfied users bolstered Googles reputation and appreciated its efficient services. Google offered some of its services free of cost and this helped gain a large following and users across the globe.
In 2000, Google launched its billion-page index and became the largest search engine with 18 million user requests per day. Google replaced Yahoos Inktomi as its search engine technology. During 2000, it provided services to other companies and focused on providing additional services to its users. It included wireless search and Google Toolbar. In 2001, Google acquired the archives to deja.com which were the building blocks of Google Groups. In the same year, Eric Schmidt was appointed as the CEO of the company (Scott 2008, p. 9). In 2002, Google introduced a beta version of Google News. The company acquired Pyra Labs and launched AdSense in 2003. Around this time, Yahoo was fiercely competing with Google and in response to this the company started Gmail. In 2004, Google went for an Initial Public offering to raise 2.7 billion through equity.
Googles Capital Structure Governance
Googles capital structure was composed of two classes of shares Class A shares had one vote per share while ownership of Class B shares granted the holders a right to have ten votes per share (Mills 2006). This gave Brin, Page and Schmidt control over 80 of shareholder votes (Eisenmann Herman 2006, p. 5).
Many shareholders and potential investors were skeptical of Googles dual-class equity structure and the disproportionate voting power that lay in the hands of the top executives. Over the years, Google has come under criticism for its governance structure.
In 2006, a pension fund holder of Googles shares criticized the companys dual-class equity structure, stating that this form of governance grants a high level of control to the management. The three top executives of the company owned (86,753,907 shares) 31.3 of the total shares outstanding but actually controlled 66.2 of the total voting power of all the shares (Mills 2006). According to the union official, John McIntyre, this leads to undue conservatism among managers. Usually the investment and financing decisions of the management is not in the interests of the companys minority shareholders. Also, shareholders became more wary of this governance structure due to the frauds and instances of mismanagement that have been brought to light recently.
Brin and Page have defended it by pointing out that this structure allows them to focus on achieving longer-term goals instead of just generating short-term profits. This way Googles management had the freedom to make strategic decisions that enabled it to attain long-term growth and success. The company did not have to focus on quarterly or annual results and this is a better management approach. Also, it reduces the chances of hostile takeovers and the uninvited control of outside parties. The management argued that although this kind of governance structure is uncommon in web-based technology companies, it is widely implemented in the media-related companies such as The New York Times, The Washington Post etc. to name a few. They stated that the dual class structure has enabled them to be innovative and keep their core values intact. Googles adoption of dual-class share structure shows the co-founders and the CEOs intent of keeping control in their hands. These shares are generally not traded and thus ensure that the company maintains a set number of loyal investors during difficult times.
Googles distinctive governance structure is justified because the company started as an entrepreneurial venture and thus it is not completely wrong for the co-founders and the CEO to have greater control over the company. Also, the top management of Google has high stake in the company and own considerable shareholding which directs financial economic risks at them too. They also aim to maximize the shareholders value because they are to benefit from it too. However, they maintain longer-term growth strategy that ensures sustainability and more stable growth for the company.
Googles Corporate Values
Google has a set of distinctive corporate values such as dont be evil, technology matters and, we make our own rules (Eisenmann Herman 2006, p. 5). The companys co-founders intended to change the lives of people around the world through their services and this is depicted by their mission statement Googles mission is to organize the worlds information and make it universally accessible and useful. The company has realized the extent and amount of knowledge that is available and continuously being produced and they aim to index more and more of it so that their users have access to it all. Google Images, Google Scholar and
Google Books are a result of this integration of new databases and archives into search.
Their corporate value, dont be evil aligns with their mission statement and depicts their focus on maintaining the trust and reliability of search results. They do not manipulate the rankings of web pages and it is their algorithm, PageRank that ranks pages in the order of relevance to the search strings entered by users. Their ethical values are also reflected in the advertisements they put up. This is also one of their guiding principles that states democracy works best on the web.
Google generates earnings by offering search technology to other companies. It earns major portion of its revenue from the sale of advertising. Adwords is used by millions of advertisers to market their products and services while Adsense displays ads based on their relevance and connection with the websites content.
With regard to their advertising practices, they have a set of principles for the advertisements they place on their own website and other pages on the internet. Relevance is an important criterion as they display ads on result pages only if they have a connection or link to them. They do not include pop-up advertising because it is distracting for users.
The company has laid great emphasis on technology and continuously tried to enhance it. They made efforts to improve their search algorithms and the software for advertisers. They are constantly upgrading their technology to provide accurate, faster and user friendly services to their customers.
Googles management follows a free-style and has its own way of working. Google is a customer-oriented company. Their focus on customers actually leads them to enhance their services and develop new tools and applications depending on the changing needs and preferences of their users.
One of their most importance principles is that they believe in specializing in one area (doing one thing, really well). Their domain is search and so they focus all their energy in providing better search solutions and they can be in the form of Gmail and Google maps. The have worked towards the convenience and satisfaction of their customers. According to Google Corporate Information Philosophy, they call themselves the only people in the world to have a goal to have people leave their homepage as quickly as possible.
For further user convenience, Google has kept in mind the growing need for mobility. Users are constantly on the go and they demand information where they go at all times. They developed Android an open source mobile platform, free for the users, offering search solutions on mobile phones.
Google has kept in mind the diversity of its users and offers search interface in 110 languages. This is why Google has managed to become a household name across the world. Even in China, which was dominated by the local search engine called Baidu, Google managed to garner a respectable market share.
The corporate values incorporated by Google explain the success of the company in such a limited time. It is indeed their customer focus, out of the box thinking and innovation driven practices that have made Google the worlds best search engine and web-based service provider. However, there are some practices of Google that are often criticized by stakeholders. Shareholders complain that there is lack of transparency in the way Google manages its affairs and business. Google has also been criticized for censorship of its search results. Google was also involved in a controversy over its censorship and privacy policy in China. Google launched Google.cn in early 2006 where certain search results were censored. This action of Google went completely against, Googles value dont be evil. Google was opposed and in the eyes of many users its lost its credibility as a fair and just company. Google signed the Global Network Initiative agreement with Microsoft and Yahoo, promising to provide greater privacy for all and freedom of speech (Hogg 2010). However, many rejected the companys core values as simply hoax and viewed the company as financially driven rather than ethically. In January 2010, however, Google decided to stop censoring Google.cn. This was done after Chinese cyber attacks on Google and other U.S companies. According to Google, the attacks were an attempt to get access to Gmail accounts of Chinese human rights activists working against the Chinese government.
Googles Organizational Structure
Google is built on an informal organization structure. Its co-founders created the organization around the idea that work should be challenging, and the challenge should be fun. Teamwork is encouraged while diversity and creativity are highly valued in the company. This is why the company maintains a bank of highly qualified and capable employees who have ideas that are instantly put to test and action. The work environment at Googleplex is infused with energy and vigor. There are no strict formal lines of communication and bureaucracy to inhibit new ideas and innovative thinking in the organization. Employees are free to express themselves and have a say in the important decisions as 360-degree discussions are held. This way they feel empowered, appreciated and motivated and such a workforce is the most profitable asset for any company. It has also enabled the company to excel in the break-neck competition prevailing in the web-based search engine industry. Googles work environment is flexible and fun. Employees are allowed to bring their pets to work and basically work is made enjoyable for employees (Scott 2008, p. 8). Such an environment is crucial in keeping the flow of creative thinking and innovative ideas in the organization.
Google Products and Competition
Google has a wide range of products. Google search engine is the fastest, most reliable and widely used search engine. The most successful and revenue generating product of Google is Adwords. This advertising service is based on Pay per click (PPC) and bid-based model. Advertisers bid for a string of search words or key words that would generate their advertisements which are shown as sponsored links. Adword ads can be shown on google.com as well as on the web pages of its partners such as AOL search, Ask.com and Netscape. The direct competitors of Google Adwords are Yahoo Search Marketing and MSN adCentre.
Adword leads in this product category.
Adsense is another important product of Google. It provides web page owners a chance to display ads, relevant to their own web-sites content, and earn money either on per-click basis or per impression basis.
The third most popular Google product is its free e-mail service Gmail, lauched around five years ago. Users registered and made a Gmail account after receiving an invitation from another user. The most significant feature of Gmail is the mail fetcher and Google Talk is also gaining popularity. Gmail grew by 43 in 2008 and soon overtook AOL Mail. Gmail is ranked third after Yahoo Mail and Hotmail in first and second positions respectively. Despite Gmails growth in the last five years, Yahoo Mail and Hotmail still own the major share of e-mail market and Gmail has an uphill task of over taking the two e-mail giants.
Google News is the automatic news aggregator page with various headlines collected from 4,500 publications worldwide. Google acquired You Tube in 2006 for 1.65 billion.You Tube owns 45 of the share in online video market. Through this deal Google left its main competitors, Microsoft and Yahoo in a fix. This was a good strategic and competitive decision taken by Google and although it has created a strong hold on the search engine market, it was able to enter and conquer a completely new market. The Google-You Tube merger will be beneficial because as Google has data centers that will help lower You Tubes bandwidth costs. With the decision to continue with Google Video which possesses 10 of the online video search market, followed by 6 each for Yahoo Video and MSN Video.
New Initiatives by Google
Google works on the policy launch early and iterate. True to this innovation philosophy, Google undertakes some new product or service initiatives now and then. In early 2009, Google launched Picasa, a software application for editing digital photos. It provides photo library options and facial recognition and geotagging features. In 2008, Google launched the Google Chrome browser. The browser became an instant success as 30 million users use it every day. Nine months later, the company announced the launch of the Google Chrome Operating System as an extension of the Google Chrome browser. This new product offering is expected to be well-received by the users. The existing operating systems were developed during a time when internet use was not so widespread. These operating systems have become outdated and the Google Chrome OS is expected to better meet the needs of todays internet users.
In February 2010, Google announced the launch of Google Buzz, a social networking site. Google Buzz has been developed to compete with the other social networking sites such as Facebook and Twitter. Google will have a hard time overcoming the popularity that Facebook and Twitter currently enjoy. Also, Googles Orkut had become a favorite social networking site only to lose the competition and attention of the users to facebook. Google must learn from its mistakes in orkut and work on its existing strengths to compete in this market. Google is trying to integrate Google Buzz into Gmail.
In December 2009, Google revealed five new features it had developed. The first was the Near Instant Voice Translation (Kirkpatrick 2009). This new product enables users to use their voice to search information. The product also translates English to Spanish through mobile phones. The companys vice president for engineering, Vic Gundotra also elaborated on a new feature called Google Suggest. It is a mobile search feature which makes use of the users location to provide search results. Another interesting and useful feature developed by Google is the product which will inform the user about the nearest stores and the availability of the required product. Google has created a visual search feature whereby the user may take a photo and enter it for search. Google will scan and analyze the image and identify it. These exciting new products show the extent to which Google will play a role in changing the lives of its users. Google has had phenomenal growth and success and it has managed to survive in the industry that is marked with cut-throat competition. Google has become the market leader in the search engine area and is working towards developing and launching new products and entering new markets.
Recommendations for Google
One recommendation for Google is to consider e-commerce as a new market to be explored. As internet usage is increasing around the world and the users demands for faster and easier electronic transactions are increasing, this area could prove to be a lucrative market that Google can possibly exploit. Another recommendation for Google is to increase transparency in its management and business decisions. Google management must increase the scope of Public Relations and become more open about their strategic decisions. They must give out the right amount of information to external stakeholders like shareholders, investors and users to earn their trust and appreciation, without losing their confidential information to competitors.
At first, Sergey and Larry were not interested in starting up a new company and simply wanted to market this technology to other companies. They approached David Filo, the founder of Yahoo, who encouraged them to start their own business. Soon, they demonstrated their search engine to Andy Bechtolsheim, an angel investor, who instantly put money on their business. Google was incorporated on 7th September 1997 and the domain name google.com was registered on 15th September 1997 (Scott 2008, p.7). Today, Google has become a household name.
In 1999, 25 million worth of capital was injected in the company by two venture capitalist companies Sequoia and Kleiner Perkins (Eisenmann Herman 2006, p. 2). In 2008, Google became the most popular website in the U.S., leaving behind Yahoo - its major competitor. It gained such unparalleled popularity and recognition without any form of advertising. Word of mouth played a major role as satisfied users bolstered Googles reputation and appreciated its efficient services. Google offered some of its services free of cost and this helped gain a large following and users across the globe.
In 2000, Google launched its billion-page index and became the largest search engine with 18 million user requests per day. Google replaced Yahoos Inktomi as its search engine technology. During 2000, it provided services to other companies and focused on providing additional services to its users. It included wireless search and Google Toolbar. In 2001, Google acquired the archives to deja.com which were the building blocks of Google Groups. In the same year, Eric Schmidt was appointed as the CEO of the company (Scott 2008, p. 9). In 2002, Google introduced a beta version of Google News. The company acquired Pyra Labs and launched AdSense in 2003. Around this time, Yahoo was fiercely competing with Google and in response to this the company started Gmail. In 2004, Google went for an Initial Public offering to raise 2.7 billion through equity.
Googles Capital Structure Governance
Googles capital structure was composed of two classes of shares Class A shares had one vote per share while ownership of Class B shares granted the holders a right to have ten votes per share (Mills 2006). This gave Brin, Page and Schmidt control over 80 of shareholder votes (Eisenmann Herman 2006, p. 5).
Many shareholders and potential investors were skeptical of Googles dual-class equity structure and the disproportionate voting power that lay in the hands of the top executives. Over the years, Google has come under criticism for its governance structure.
In 2006, a pension fund holder of Googles shares criticized the companys dual-class equity structure, stating that this form of governance grants a high level of control to the management. The three top executives of the company owned (86,753,907 shares) 31.3 of the total shares outstanding but actually controlled 66.2 of the total voting power of all the shares (Mills 2006). According to the union official, John McIntyre, this leads to undue conservatism among managers. Usually the investment and financing decisions of the management is not in the interests of the companys minority shareholders. Also, shareholders became more wary of this governance structure due to the frauds and instances of mismanagement that have been brought to light recently.
Brin and Page have defended it by pointing out that this structure allows them to focus on achieving longer-term goals instead of just generating short-term profits. This way Googles management had the freedom to make strategic decisions that enabled it to attain long-term growth and success. The company did not have to focus on quarterly or annual results and this is a better management approach. Also, it reduces the chances of hostile takeovers and the uninvited control of outside parties. The management argued that although this kind of governance structure is uncommon in web-based technology companies, it is widely implemented in the media-related companies such as The New York Times, The Washington Post etc. to name a few. They stated that the dual class structure has enabled them to be innovative and keep their core values intact. Googles adoption of dual-class share structure shows the co-founders and the CEOs intent of keeping control in their hands. These shares are generally not traded and thus ensure that the company maintains a set number of loyal investors during difficult times.
Googles distinctive governance structure is justified because the company started as an entrepreneurial venture and thus it is not completely wrong for the co-founders and the CEO to have greater control over the company. Also, the top management of Google has high stake in the company and own considerable shareholding which directs financial economic risks at them too. They also aim to maximize the shareholders value because they are to benefit from it too. However, they maintain longer-term growth strategy that ensures sustainability and more stable growth for the company.
Googles Corporate Values
Google has a set of distinctive corporate values such as dont be evil, technology matters and, we make our own rules (Eisenmann Herman 2006, p. 5). The companys co-founders intended to change the lives of people around the world through their services and this is depicted by their mission statement Googles mission is to organize the worlds information and make it universally accessible and useful. The company has realized the extent and amount of knowledge that is available and continuously being produced and they aim to index more and more of it so that their users have access to it all. Google Images, Google Scholar and
Google Books are a result of this integration of new databases and archives into search.
Their corporate value, dont be evil aligns with their mission statement and depicts their focus on maintaining the trust and reliability of search results. They do not manipulate the rankings of web pages and it is their algorithm, PageRank that ranks pages in the order of relevance to the search strings entered by users. Their ethical values are also reflected in the advertisements they put up. This is also one of their guiding principles that states democracy works best on the web.
Google generates earnings by offering search technology to other companies. It earns major portion of its revenue from the sale of advertising. Adwords is used by millions of advertisers to market their products and services while Adsense displays ads based on their relevance and connection with the websites content.
With regard to their advertising practices, they have a set of principles for the advertisements they place on their own website and other pages on the internet. Relevance is an important criterion as they display ads on result pages only if they have a connection or link to them. They do not include pop-up advertising because it is distracting for users.
The company has laid great emphasis on technology and continuously tried to enhance it. They made efforts to improve their search algorithms and the software for advertisers. They are constantly upgrading their technology to provide accurate, faster and user friendly services to their customers.
Googles management follows a free-style and has its own way of working. Google is a customer-oriented company. Their focus on customers actually leads them to enhance their services and develop new tools and applications depending on the changing needs and preferences of their users.
One of their most importance principles is that they believe in specializing in one area (doing one thing, really well). Their domain is search and so they focus all their energy in providing better search solutions and they can be in the form of Gmail and Google maps. The have worked towards the convenience and satisfaction of their customers. According to Google Corporate Information Philosophy, they call themselves the only people in the world to have a goal to have people leave their homepage as quickly as possible.
For further user convenience, Google has kept in mind the growing need for mobility. Users are constantly on the go and they demand information where they go at all times. They developed Android an open source mobile platform, free for the users, offering search solutions on mobile phones.
Google has kept in mind the diversity of its users and offers search interface in 110 languages. This is why Google has managed to become a household name across the world. Even in China, which was dominated by the local search engine called Baidu, Google managed to garner a respectable market share.
The corporate values incorporated by Google explain the success of the company in such a limited time. It is indeed their customer focus, out of the box thinking and innovation driven practices that have made Google the worlds best search engine and web-based service provider. However, there are some practices of Google that are often criticized by stakeholders. Shareholders complain that there is lack of transparency in the way Google manages its affairs and business. Google has also been criticized for censorship of its search results. Google was also involved in a controversy over its censorship and privacy policy in China. Google launched Google.cn in early 2006 where certain search results were censored. This action of Google went completely against, Googles value dont be evil. Google was opposed and in the eyes of many users its lost its credibility as a fair and just company. Google signed the Global Network Initiative agreement with Microsoft and Yahoo, promising to provide greater privacy for all and freedom of speech (Hogg 2010). However, many rejected the companys core values as simply hoax and viewed the company as financially driven rather than ethically. In January 2010, however, Google decided to stop censoring Google.cn. This was done after Chinese cyber attacks on Google and other U.S companies. According to Google, the attacks were an attempt to get access to Gmail accounts of Chinese human rights activists working against the Chinese government.
Googles Organizational Structure
Google is built on an informal organization structure. Its co-founders created the organization around the idea that work should be challenging, and the challenge should be fun. Teamwork is encouraged while diversity and creativity are highly valued in the company. This is why the company maintains a bank of highly qualified and capable employees who have ideas that are instantly put to test and action. The work environment at Googleplex is infused with energy and vigor. There are no strict formal lines of communication and bureaucracy to inhibit new ideas and innovative thinking in the organization. Employees are free to express themselves and have a say in the important decisions as 360-degree discussions are held. This way they feel empowered, appreciated and motivated and such a workforce is the most profitable asset for any company. It has also enabled the company to excel in the break-neck competition prevailing in the web-based search engine industry. Googles work environment is flexible and fun. Employees are allowed to bring their pets to work and basically work is made enjoyable for employees (Scott 2008, p. 8). Such an environment is crucial in keeping the flow of creative thinking and innovative ideas in the organization.
Google Products and Competition
Google has a wide range of products. Google search engine is the fastest, most reliable and widely used search engine. The most successful and revenue generating product of Google is Adwords. This advertising service is based on Pay per click (PPC) and bid-based model. Advertisers bid for a string of search words or key words that would generate their advertisements which are shown as sponsored links. Adword ads can be shown on google.com as well as on the web pages of its partners such as AOL search, Ask.com and Netscape. The direct competitors of Google Adwords are Yahoo Search Marketing and MSN adCentre.
Adword leads in this product category.
Adsense is another important product of Google. It provides web page owners a chance to display ads, relevant to their own web-sites content, and earn money either on per-click basis or per impression basis.
The third most popular Google product is its free e-mail service Gmail, lauched around five years ago. Users registered and made a Gmail account after receiving an invitation from another user. The most significant feature of Gmail is the mail fetcher and Google Talk is also gaining popularity. Gmail grew by 43 in 2008 and soon overtook AOL Mail. Gmail is ranked third after Yahoo Mail and Hotmail in first and second positions respectively. Despite Gmails growth in the last five years, Yahoo Mail and Hotmail still own the major share of e-mail market and Gmail has an uphill task of over taking the two e-mail giants.
Google News is the automatic news aggregator page with various headlines collected from 4,500 publications worldwide. Google acquired You Tube in 2006 for 1.65 billion.You Tube owns 45 of the share in online video market. Through this deal Google left its main competitors, Microsoft and Yahoo in a fix. This was a good strategic and competitive decision taken by Google and although it has created a strong hold on the search engine market, it was able to enter and conquer a completely new market. The Google-You Tube merger will be beneficial because as Google has data centers that will help lower You Tubes bandwidth costs. With the decision to continue with Google Video which possesses 10 of the online video search market, followed by 6 each for Yahoo Video and MSN Video.
New Initiatives by Google
Google works on the policy launch early and iterate. True to this innovation philosophy, Google undertakes some new product or service initiatives now and then. In early 2009, Google launched Picasa, a software application for editing digital photos. It provides photo library options and facial recognition and geotagging features. In 2008, Google launched the Google Chrome browser. The browser became an instant success as 30 million users use it every day. Nine months later, the company announced the launch of the Google Chrome Operating System as an extension of the Google Chrome browser. This new product offering is expected to be well-received by the users. The existing operating systems were developed during a time when internet use was not so widespread. These operating systems have become outdated and the Google Chrome OS is expected to better meet the needs of todays internet users.
In February 2010, Google announced the launch of Google Buzz, a social networking site. Google Buzz has been developed to compete with the other social networking sites such as Facebook and Twitter. Google will have a hard time overcoming the popularity that Facebook and Twitter currently enjoy. Also, Googles Orkut had become a favorite social networking site only to lose the competition and attention of the users to facebook. Google must learn from its mistakes in orkut and work on its existing strengths to compete in this market. Google is trying to integrate Google Buzz into Gmail.
In December 2009, Google revealed five new features it had developed. The first was the Near Instant Voice Translation (Kirkpatrick 2009). This new product enables users to use their voice to search information. The product also translates English to Spanish through mobile phones. The companys vice president for engineering, Vic Gundotra also elaborated on a new feature called Google Suggest. It is a mobile search feature which makes use of the users location to provide search results. Another interesting and useful feature developed by Google is the product which will inform the user about the nearest stores and the availability of the required product. Google has created a visual search feature whereby the user may take a photo and enter it for search. Google will scan and analyze the image and identify it. These exciting new products show the extent to which Google will play a role in changing the lives of its users. Google has had phenomenal growth and success and it has managed to survive in the industry that is marked with cut-throat competition. Google has become the market leader in the search engine area and is working towards developing and launching new products and entering new markets.
Recommendations for Google
One recommendation for Google is to consider e-commerce as a new market to be explored. As internet usage is increasing around the world and the users demands for faster and easier electronic transactions are increasing, this area could prove to be a lucrative market that Google can possibly exploit. Another recommendation for Google is to increase transparency in its management and business decisions. Google management must increase the scope of Public Relations and become more open about their strategic decisions. They must give out the right amount of information to external stakeholders like shareholders, investors and users to earn their trust and appreciation, without losing their confidential information to competitors.
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