Question 1

Unlike other search engines, Google distinguishes between useful and trivial websites. Like other search engines, it examines the words on web pages and then indexes them, but unlike them, it also looks at how and where these words were being used and at the number of other websites linked to a page. It shows a list of web pages with most useful link appearing at the top. Google search engine is simple and user-friendly as compared to other search engines. The advertisements are text-based and hence the page remains uncluttered, i.e. free from any kind of obstructions to the users, and the page loading speed remains at its maximum. Google has competitive advantage in terms of its speed of search. It takes only 0.2 seconds, which is quite low as compared to other search engines. Google also provides value for money, both to the users as well as to the advertisers. To the users, it provides the results timely so that they need not wait. It did not mix the advertisements with the search results keeping the website simple and clean for the users. Moreover, it advertises only text-based advertisements or pop-up advertisements, but not banner ads although this practice has been observed with other search engine companies.

Google's customers are advertisers ranging from a SME to large scale enterprises to the end users like the common man. The sites are ranked according to the key words and the key words have got some price tags. The advertisers put their advertisements of products and services in Google and they pay to the company when someone clicks the advertisements. Google's Ad word is the latest addition to this foray. Google also pay the other companies to display Google's advertisements. Google is continuously reinventing itself to be miles ahead of other companies. So with the addition of millions of internet users every year worldwide internet has became the latest buzzword. Whichever organization wants to be ahead of the competition they have to be present in the cyber space and who else than the search engine giant “Google” to show the way. The relevance of search results cost of executing the search and the speed of the search and continuous innovations makes Google the ultimate destination for advertisers as well as the end users. Let us take an example of Google Ad words. The benefits advertisers can get are

The customer can easily set up the Google Ad word within 30 minutes. Advertisements will be displayed at the right hand side of the website.

Customer does not need a website. They can be an affiliate marketer to promote their products.

Customer can market any type of product using Ad words. Customer can sell their own products like eBooks, music etc. Customer can test market their product before the original launch. They can specify the budget they want to spend on each day. Advertisements can be country specific, city or town specific. Customer can split test their Advertisements to see which is working and then can put their

best Advertisements.

Google cannot afford to lose the customer's attention and trust. Some years ago average search time was 3 seconds and they have bought it down to .2 seconds and now they are working towards reducing the time further. Also the relevancy of search result has to be maintained to retain the

customers if it means losing in revenue for the company. So we can have an idea about the value Google wants to create for the advertisers and the customers. These are the intangible values Google is creating towards their customers.

Question 2

According to the Google CEO they never made any strategy but what they have made is what the customer wants. In my opinion they are pursuing cost leadership strategy as well as differentiation strategy. Google has technological advantage over its competitors as they use high performance system which can take workload more than the general systems. Because of this capability they have a cost advantage over their competitors. Google scores over other competitors on the technology advancement.It scores over its competitors over relevance of search results, cost of executing the search and the speed of the search. The value it has already created in the mind of consumer if the product or service is differentiated customer will not be price sensitive.

Corporate level strategy decides which business and which market the organization should look to enter. An organization needs corporate-level strategy to a) penetrate the existing market, b) Wants to enter new market with existing product, c) develops new product for existing market, d)develops new product for the new market. The business options are wether to work in the same business or diversify, wether to cater the home or national market or to go international. Google saw China as a fast growing competitive market. They entered in to an agreement in 2006 and Google is known as google.cn. This was a market development strategy followed by Google. From the year 1999 Google has presence in China but due to censorship issues Google was losing its market to Chinese origin search engine Baidu. From the year 2002 to 2007 Baidu's market share went up from 3% to 58%.This promoted the search engine giant to enter in to an agreement with China and to operate its office from China abiding the laws of censorships. In 2006 there were over 105 millions of online users only in china and that was only 8% of the Chinese populations. So Google sensed the opportunity in that market and entered in to an agreement with them.

For any organization efficiency, quality, innovation and customer responsiveness are the four building blocks of competitive advantages for their products and services.

a) Efficiency- In order to achieve efficiency a company needs to have economics of scale, learning, experience, good marketing, Research and development, optimum use of Human resources and infrastructure.

From a mere 10000 search in a day to 75% of search made using it has came a long way. The revolution in hardware technology coupled with innovation it has considerably reduced its unit cost. Google's optimal use of Human resources can be seen as only 650 employees are there in Google

worldwide. They claim that their employees are 50 to 100 percent more productive than their competitors.

b) Quality-Quality of goods or services can differentiate one organization from the other. Maintaining quality will lower the defects and operating cost increasing the profitability of any organization. Google has maintained the relevancy of search result to retain the customers if it means losing revenue for the company.

c) Innovation-Google believes in continuously reinventing itself by innovative products. At the start Google found a way to generate revenue from the corporate by keywords bidding and advertisements. Some years ago average search time was 3 seconds and they have bought it down to .2 seconds and now they are working towards reducing the time further. So Google is continuously trying to innovate and upgrade its technology as well as strategy to be ahead of the competition.

d) Customer Responsiveness-Customer responsiveness can be defined as giving products or services to customer at their price what, when, where they want. Google has worked in the same way. It has given its advertisers and end users the ease of search, speed, reliability and deliverability at a cheaper price. As their business is customer centric they do not hesitate to test market a product or services before the actual launch and seeks feedback from the user to improve it. The R&D division of Google invites its users to their lab and includes them in the development process of the new products as well as enhancement of the existing one so by seeking their feedback.

Google's competitive advantage

Competitive advantage can be achieved either through lower costs strategy or differentiation strategy targeting a particular segment of the market.

a) Cost Leadership Strategy-Any organization achieves competitive advantages by able to produce goods or services at a low cost. It lowers the operating costs in order to achieve this strategy. A Cost advantage is the main objective of this strategy. Costs are tried to be marginalised in every step of the production of goods or services. But low cost of production of goods or services does not mean that pricing would be low as there can be a high promotional cost for the goods or services. Products can be priced competitively so as to achieve bigger margin than the competitors.

b) Differentiation Strategy-Organization adopting this strategy attains competitive advantage through satisfying customer needs. This results in competitive pricing of the differentiated product or services and higher margins for the organization

The organization adapting to the differentiated strategy will incur more cost  than before for creating the competitive advantage of the product or service. This cost can be compensated by increase in sales of that particular product or services.

c) Focus Differentiation/ Cost Leadership Strategy- Focus strategy is focusing differential or cost leadership strategy on a particular segment of the market.

The source of Google's competitive advantage comes from the infrastructure of database Google has created over the years, relevance of search results, cost of executing the search speed of the search, product offering from AD words to social networking site to mobile application platform. Distinctive competency of an organization can be defined as how the company differentiate its product and services from the competitors, how to segment the market, price their products and what is the range of the products available with the company. Google scores over its competitors over relevance of search results, cost of executing the search and the speed of the search. This is the differentiation advantage Google is having over their competitors. Google's competitive advantage comes from the infrastructure they have built over the years. Continuous innovations, ease of use, relevancy in results are some Google's distinctive competencies. Google's ability to connect with the internet users, advertisers, website owners differentiates it from the competitors. Google has technological advantage over its competitors as they use high performance system which can take workload more than the general systems. Because of this capability they have a cost advantage over their competitors.

Google's ability to sustain its strong position among Internet search companies was a function of its ability maintains strong relationships with Internet users, advertisers, and Web sites. Google has a distinctive technology advantage over Microsoft, eBay, Amazon, Yahoo. Google utilizes custom high-performance systems which are cost efficient because they can scale to extreme workloads. This hardware allows for a huge cost advantage over its competitors.

In 2005, Internet users searching for information went to Google more often than to any other site with search capabilities. There was nothing that would prevent Internet users from abandoning Google to use a better search technology. However, the development of a better search engine by a rival could lead to rapid erosion of advertising revenues for Google. Google management believed its primary competitors were Yahoo! and Microsoft.

In August 2004 Google went public, raising over $1.5 billion. With no debt and flush with cash, the company looked set to build on its lead in the search engine business. However, competitors were not sitting on the sidelines. In 2003 Yahoo! purchased a rival search engine company. Overture Services and replaced Google as the search engine on its site with a proprietary search engoine based on Overture's technology. Microsoft too seems to have its sights set on Google. Microsoft is reportedly working on its own search engine technology, which it plans to integrate with its software.

Corporate strategy

Google's business model is mainly based on advertising. Any market that attracts advertising is a target for google. Google is in a situation in which it can resist the economic crisis and find new revenue sources, both advertising and non advertising. Google's ability is to attract users in the sole basis of its services quality and without turning to advertising. That's why google largely buys traffic from different providers. Google has financial power to buy traffic from partners so that they can access massive audiences. Google has alliances with firefox (browser), Dell (computers), Apple (IPhone), Sun (java packages), AOL to have the Google search engine appear by default. So by doing alliances with different organizations, Google expands its advertising network reach.

Apart from increasing market share of current performance advertising, Google is looking advertising opportunities in Internet mobile. At present time, mobile advertising market is growing very fast. So Google's current strategy is to capture mobile advertising market. But current mobile industry is not suited for the google's development model which is based on openness, interoperability and network effects. If we consider current mobile world, maximum cell phones manufacturers are using symbian or windows operating system and terminals assigned to a unique operator. All operators provide different services through there own portals and these portals and services favored over other portals. Because of closed operating systems, Access restricted to services/ contents and to their improvements.

As part of their strategy to go in mobile internet advertising, Google is trying to change the mobile world according to their business model and it is using following vehicles to implement its strategy.

1- Open Source Operating System: Android

Google has developed ‘Android' Open source operating system for mobile device. It is a free, mobile software platform. It allows developers to create new mobile device applications and manufacturers to install it in their handsets. Android is being developed with the Open Handset Alliance, a group of more than 45 technology and mobile companies, with the goal of providing consumers a less expensive, richer and more powerful mobile experience. As per Google corporate report, T-Mobilehas already announcedtheG1, the first phone built on the Android operating system.

2- Partnerships with different telecom companies

Google is trying to do partnerships with telecom companies' to offer its applications as default options. Advertising revenue will be share between Google and operators. Google had already entered in telecom domain. It announced a partnership with China Mobile, the world's largest mobile telecommunications carrier to provide mobile and Internet search services in China. These deals are continuation of deal making among network operators, internet providers and makers of telecom equipments around the world. They have introduced AdSense for Mobile; giving sites optimized for mobile browsers the ability to host the same ads as standard websites. New beta version ofAdsence allows developers to display text and image ads in iPhone and Android applications. Google's interface for iPhone gives users the option for Search, Gmail, Calendar, Docs, Reader, Web, Notebook and News. This interface is available in 16 languages. In this, Google shows search suggestions, auto-complete for Gmail contacts, slideshows in Picasa Web and includes a presentation viewer in Google Docs.

Google strategy is to change the mobile industry to create an environment that will be fit according to the distribution of its products and monetization model. Google's strong brand and image as a technological leader are its key differentiators for this strategy, because it gives a great confidence to their investors and customer, who give their advertisements on Google's websites.