"Alphabet - Who and what drives the strategy?"

Please find out attached files.

Word Counts: 1500

Deadline: Saturday Night

Summary:

In the textbook "Exploring Strategy Text and Cases", you are required to read carefully and thoroughly the case at the end of chapter 13 titled "Alphabet - Who and what drives the strategy?" (Written by Phil Johnson and Patrick Regnér) in order to provide answers to the below two questions:

1.   How and why can you explain today that Google decided to change from previous operations to current structure? 

2.   To what extent should Google think to face growing competition in the future?

Textbook (available at ADSM library): 

Johnson G., Whittington R., Scholes K., Angwin D. & Regnér P. (2017). Exploring Strategy: text and cases. Eleventh Edition. Pearson.

Course learning outcomes:

CLO 2: Appraise the diverse approaches and contextual factors that may influence the strategic management and organizational transformation process/outcomes.

CLO 5: Synthesize and comment critically on the strategic position of the organization.

Hints:

1.   As discussed during lectures, use the seven/eight steps to solve a case study as a guide when writing your answer.

2.   Use theories, models, frameworks, tools that you need to extract from academic journals available on ProQuest and other external reliable sources to construct your argumentation.

3.   The referencing style is APA style.

Deliverable:

A word document of five pages with 1.5 line spacing without counting front page, references list, tables, and appendices. 

 Solution

Alphabet Case Study

1.    Diverse approaches & their influence on Strategic Management:

Business is all about achievement, and companies are striving every day to make sure they stay on top. It is a well-known fact that any company at the top, no matter what margins they have with their competition, is replaceable. Nokia, in the recent past, is the biggest example of why a company needs to remain with a competitive advantage. Case with Google is no different, and there are a lot of forums where the company is actually behind their competitors. There is no denial of the fact that whenever it comes to advertisements and people searching phrases on the internet or tons of other features, there is no one to beat Google. However, the case was the same for Yahoo Inc. a few years back (Hill & Jones, Strategic Management: An Integrated Approach , 2016).

There is an interesting similarity between the Yahoo’s downfall and Google’s decision to change the structure, Yahoo’s financial crunch include several bad decisions they took to acquire new internet business to be rewarded for an early attempt. However, their decisions turned out pretty bad and eventually led to the fall of the company. Google was facing the same pressure, and the businesses not doing well has an adverse effect in terms of strategy on Google’s basic operations (Sitti, 2016).

Google+ is an example of that failed venture with a poor effect on Google’s outlook. Failed businesses, when attached to Google’s operations, conveys a message to the shareholders that any more bad decision will affect the overall productivity of the company, no matter how strong is their core business. Making them a part of the Alphabet shows that any bad decision in terms of other companies will not affect the long term goals of Google Inc. It further shows that no financial effect should be expected on Google Inc. in case the parent company attempts to make risky decisions (G, Whittington, Scholes, Angwin, & Regner, 2017).

The third most important reason for which the company changed its current structure is strategic goals over the next four/five years. Consider a scenario in which Google Inc. is attempting to buy out more internet business with the potential to be huge or trying to create a company that works in different industry than information technology, and the goals are likely to collide as the strategic competitive advantage of information technology may not be a core factor in success of a company working in health care industry.

According to C. K. Prahalad, who introduced the concept of competitive advantage in strategic management, the companies are better-off with harmonized resources, focused goals, and competitive skills as compared to multiple goals, different skills on deck, and various resources. It is important for a company to dedicate its resources towards a common goal and for that reason, Alphabet is a better answer to Google’s Inc. problems (Hill & Jones, Strategic Management: An Integerated Approach , 2016).  

2.    Contextual factors & their influence on Organizational Transformation process/outcome:

Contextual factors are important to see the decision of the company in detail as well as to evaluate how right their senior management in thinking is? A quick look at Figure-1 of the case study reflects that the company is working from the health care industry to smart appliances at home and from angel investing to stocks investments. Google Inc. is a different company and has businesses worth more than the combined financial strength of other countries (Agutter, 2014).

However, no denial of the combined effects of bad decisions in these companies can hurt the core operations of the company. The investor interested in Google’s main business may not want to be part of Calico, a company fighting age-related diseases. It would be hard to get a noticeable investment from him since the investor is not in agreement with the overall operations of the company.

Another contextual factor to consider is the way the companies should be managed at the operational level. As mentioned in the case study, the company is enjoying a Laissez-Fair leadership theory in which small teams are working independently to fulfill the overall goal of the company. How about Google Capital working with the same theory? The financial industry requires more control than information technology, so a company working in Informational Technology needs a different leadership set as compared to a financial one.

The problem is what Google was facing at multiple fronts, and it was evident that there is no other way to ensure a smooth run for the company than to cut it off with the rest of its operations and be placed in front of the people as the competitive edge business unit of a bigger corporate umbrella that is attempting to achieve more in different industries.

Last but not the least contextual factor to make the company decide for its new structure is the difference in competition. Google has 80% of the traffic when it comes to internet search, but what about video surfing? Is YouTube the only medium or the priority whenever it comes to video surfing?

The answer is no, and that requires special attention in terms of how advertisers will be attracted to YouTube. Not only is that, what about the new talent and people who love to work for any of the business units at Google? Defining a clear boundary between the companies will help them to focus on their problems in terms of competition and would enable them to make their own goal rather than twist their goal to fuel the overall goal of Google Inc. YouTube can decide its own managerial and corporate structure with a self-defined hierarchy (Hill, Schilling, & Jones, Strategic Management: Theory & Cases: An Integrated Approach, 2016).    

3.    Synthesize and comment critically on the strategic position of the organization:

Google, as a corporate organization, is destined to think of the competition in the market. Porter’s five forces competition model is a great theory to evaluate the possible extent to which Google should think of its competition. Revenue streams are important for any company to strive, and as mentioned in the case study, the advertisers still tend to prefer electronic media over social and internet mediums. Though Google has a great deal of negotiation power when it comes to its buyers, i.e., ad-word advertisers or suppliers, i.e., AdSense’s content creator. However, forums like Instagram, Quora, Tumbler and Facebook are likely to disrupt the revenue side of the Google as people more often than not attempts to search to reach a specific website from where they can get the information (Hill & Jones, 2016).

 However, the Facebook instant article provides an opportunity to land on the same website without going through the Google search, and it might not create a big difference, but how about an ad-word website showing on the top of the page when someone tries to match the phrase against the Google database? These are some of the few areas where Google’s main business can get a hit let alone the other sub-units of Google Inc. that are already struggling to maintain their positions against the competition (G, Whittington, Scholes, Angwin, & Regner, 2017).

Google’s future is bright, and there is a lot required to put the company out of business. The immediate competition has not shown anything to consider a windstorm coming in towards Google. However, the information technology sector is all about the unseen, and the industry’s shift can alone have the power to disrupt the whole company, i.e., Nokia. Google needs to see how YouTube can serve its purpose of video stream search engine. It needs to come up with more ideas like YouTube Music, i.e., a separate platform that attempts to create a separate stream of quality music and make sure it attracts some upside of iTunes.

Similarly, the company needs to boost the revenues of its Maps application. The current stream includes IOS and Android phone manufacturers that buy Google Maps to put into their by default applications. Other possible buyers include the corporate services that need maps as a core part of their operations (Sitti, 2016).

Google has to fight its competition at various levels, and one of the most critical competition is changing industrial trends. The company has placed the right controls to keep up its pace with the upcoming trends. 20% of the time for engineers to work on their project is a great initiative and might help the company to ride the upcoming waves in the industry (G, Whittington, Scholes, Angwin, & Regner, 2017). Different streams of competition are likely to make the company busy with the struggle. The innovation might take the burden off and help the company to achieve its strategic targets quickly, the barrier to entry is too low, and information technology is still a hotshot that makes the company prone to fight the unseen competition.

Summing up all, the case represented the need for the change of the structure in the company. The attempt to address the current challenges to ensure greater efficiency needs an out of the box solutions. Google’s decision includes several contextual and diverse factors to address.  Being the core business of Alphabet will keep the interest of the potential investors as well as will prove Google with the right amount of independence to create strategic goals specific to its own needs. Additional companies and working in other sectors will create no additional burden for Google on the Managerial Level.

References

Agutter, A. R. (2014). Getting Inside Google's Head Book: The 13 Key Elements to Successful Web Site Optimization. Amazon.

G, J., Whittington, R., Scholes, K., Angwin, D., & Regner, P. (2017). Exploring Strategy; text and management and cases. Eleventh Edition. Pearson.

Hill, C. W., & Jones, G. R. (2016). Strategic Management: An Integerated Approach . Cengage Brain .

Hill, C. W., Schilling, M. A., & Jones, G. R. (2016). Strategic Management: Theory & Cases: An Integrated Approach. Cengage Brain.

Sitti, R. (2016). The Ins and Outs of Google Inc.; A Strategic Analysis. Research Gate.