Patrick HagmannBSAD 130Professor Fisher15 November 2013 Case Study Analysis: Google “Google‟s mission is to organize the world‟s information and make it universallyaccessible and useful.” (Harvard 1) Google sense 1999 has focused their business goal inprimarily dealing with the distribution of knowledge and information on the World Wide Web.Google headquarters, which is located in Mountain View, California, had produced grossrevenues of $6.1 billion in 2005 can run business operations of just $2.0 billion. Google usedsome business ideas like Partnerships, dual-class equity structure for stock options, and policy ofranking paid listings to financially get ahead of the corporate world . However Google cancontribute much of their success based on the post-capitalistic ideals stressed by Ducker,Gitmann, and the Harvard Case study itself. Google achieved innovation and creativity into theorganization based through the principles of “don‟t be evil; (2) technology matters; and (3) andwe make our own rules” Being specialized and putting employees first (Harvard 6). SinceGoogle has a lot of power in what is shown on the Internet, its reasonable to suspect that Googlecan tailor the search results to the company‟s needs rather than the consumer.The ethics ofprivacy makes them seem untrustworthy and that they are focused too much on revenue fromsearch engines. Another big problem of Google is that it needs to have a wide range of flexibilityof profits, otherwise the firm wont be able to adapt to this constantly changing post-capitalisticsociety. “ Since its IPO, Google had launched a flurry of products that had expanded its domainbeyond web search. These included Gmail, a free e-mail service; Google Desktop, … Google
Maps; Google Book Search; Google Talk….and Google Base, a free online database for all kindsof user-provided content, ranging from help-wanted ads toproduct reviews.”(Harvard 1) Googlealso needs be able to adapt to the constantly changing knowledge environment in order to investin the firm‟s long term needs Google‟s founders were Brin and Page. They created the company based on the notion ofthe World Wide Web. To make early profits, Google has signed Partnerships with multiplecompanies. “Partnership was important to Google, which had signed a five year deal to continueproviding web search results and search-based advertising to AOL, as it had… Google promotedTime Warner products.” Sense Google unstop that knowledge was power, they were able toforce some popular companies to use their search engine. The society‟s popularity of Google‟ssearch engine, Google.com, was evident sense it “held a commanding 68% share of all searchtraffic in Q3 2005.… Yahoo.com, its closest rival”(Harvard 2). Drucker would back Google‟ssuccess here because in a post-capitalistic society, “knowledge is power” (Drucker 13) In theearly ways of capitalism, Land, Labor, Capital, and entrepreneurship greatly increased success.However, these times are changing and as a result the four values mentioned become irrelevantto success when knowledge proves to be very useful and powerful. Google claimed to popularity because search engines lacked a strong sense ofOrganizations in search results. “Due to World Wide Web, large demand for search enginessearches increasingly returned—”spam”—that frustrated users. In 1998, Sergey Brin and LarryPage tackled this problem”(Harvard 2). Brin and Page announced their funding for Google, fromtwoelite venture capital firms: Sequoia and Kleiner Perkins. Until December 1999, Googleearned revenue strictly by licensing its search technology to Yahoo! And other third-partysites.Monetarily, Google became wealthy due to the fact that business in society was
transitioning from the physical world to the technical world. “In fact, 70% of all e-commercetransactions originated through web search and 40% of all web searches had a commercialmotivation” (Harvard 3). Again, the concept of knowledge is power strongly applies herebecause Google has a very strong influence because it can control what commercial items theirmany users see. This has made them extremely controversial and untrustworthy. Google defendstheir monopoly like control of knowledge because their company strongly values the ethicalconcept of “don‟t be evil”(Harvard 5). This coincides with Ducker‟s concept of social and ethicalresponsibility. “Social responsibility is the concern of businesses for the welfare of society as awhole. Consist of obligations of just making a profit”(Gitman 53). Google backs that they aresocially responsible by saying “We never manipulate rankings to put our [advertising or content]partners higher in our search results. No one can buy better PageRank. Our users trust Google‟sobjectivity and no short-term gain could ever justify breaching that trust…We don‟t try to putour sense of ethics into the search results, but we do when it comes to advertising (Harvard 7).”The huge ethical conflict though is the this statement highlights that Google is playing Godresponsibly when it comes to projecting what products and information are seen by society.Many believe good “doesn‟t do evil” but there‟s no way for sure if they are unethical aboutdistributing information. As a result, people are forced to speculate and doubt Google‟s values,which can hurt business in the future. Early on Google ran into trouble displaying searches due to users being lazy and pickingthe first link provided in search engine. “cost-per-click” (CPC) auctions yielded results that metusers‟ needs. Users tended to click only on the top-most paid listings, ignoring ads that appearedlower on the search results page.”
To try and make search engine ”democratic”(Harvard 20) and more fair, Google uses a paid-listings system when it comes to search engines.“PageRank evaluates all of the sites linking to aweb page and assigns them a value, based in part on the sites linking to them. By analyzing thefull structure of the web, Google is able to determine which sites have been “voted” the bestsources of information by those most interested in the information they offer” (Harvard 21).Paid-listing depends on four factors; its coverage rate, click-through rate, average cost per click,and revenue split. All this allows the users to indirectly clarify which cites are more trustworthyand useful for consumer needs.Google recognized that internal connections in management and authority needed to becontrolled by those who had the companies best interests. The Stock system of dual-class equitystructure gave a good in maintain inside authority. dual-class equity structure, giving ten votesper share to holders of Class B stock, versus one vote per Class A share(Harvard 5). Googleclarities that “to become an important and significant institution. [it] takes time, stability andindependence. We bridge the media and technology industries, both of which have experiencedconsiderable consolidation and attempted hostile takeovers… dual-class ownership has allowedthese companies to concentrate on their core, long-term interest in serious news coverage,despite fluctuations in quarterly results”(11 Harvard). In the dual-class equity, clearly Class Bshares provide more power within the company and assigning those shares to important topmanagement people and highly valued knowledge workers, the company can focus on long termgoals despite short term problems. Drucker would agree that the knowledge worker needs tohave power in the business. Before “ Corporations were now to be managed exclusively tomaximize shareholder‟s value…this alienates the very people on whose motivation anddedication the modern business depends: the knowledge workers”(Drucker 80). Drucker clarifiesthat in order to be successful in a post-capitalistic society, the idea of a dual-class equitystructure helps by “making management accountable” (Drucker 81). Google encouraged innovation and creativity by using a “bottom-up [process]from the employee ranks” (Harvard 9). Google also believes that to maximize effinciy, teams of3 to 5 generly created a good innovative work enviorment. Google also believed that middlemanagement gets in the way of creativity. Both Drucker and Gitman strongly agree that
Managing InnovationEngineers were encouraged to spend 20% oftheir time working on projects of their own choosingBrin maintained that all Google‟s new product ideas emerged(6)teams of 3-5 people…. We try to have as l.Personalized Search, which ordered search results based on analysisof the types of results a user had clicked on in past searches. (7)Observers cited two reasons for Google‟s superior performance. First, Google betteredOverture‟s policy of ranking paid listings based solely on CPC bids by also considering listingrelevancy. Second, by late 2005, Google‟s paid-listings network had attracted two to three timesas manyadvertisers as Overture‟s. Advertisers were drawn to Google because its network offeredmore search traffic and allowed lower minimum CPC bids than Overture‟s(8)banner ads andvideo ads.“Longer-term opportunity for Google was targeting ads based on users‟ demographics,psychographics, and/or online behavior, in addition to keywords” (8)Gmail and PersonalizedHome PageSome say Google is God. Others say Google is Satan. But if they think Google is too powerful,remember that with search engines, unlike other companies, all it takes is a single click to go toanother search engine. People come to Google because they choose to. We don‟t trick them. (9)—Sergey Brin Industry pundits issued warnings about the company‟s everexpanding scope and itsenormous influence. Even foreign governments voiced their concerns. In
August 2005, French President Jacques Chirac announced a loan program for the development ofa Franco-German multimedia search engine on the grounds that Google was “a tool of U.S.cultural imperialism. (9)Yahoo! management resolved to end thecompany‟s dependence on third parties for algorithmic search and paid listings(10)Google‟s prowess in developing ad-supported virtual softwareapplications challenged Microsoft‟s traditional model of charging users a license fee forsoftware.(11)Customers shopping for a product could visit eBay‟s marketplace to find a qualifiedseller, or they could search for a vendor through Google. In fact, many of Google‟s advertiserswere also eBay sellers; these small companies carefully compared eBay‟s transaction fees to thecosts of generating leads through paid listings. (11)In early 2006, managers in technology and media companies around the world observed Googlewith awe, envy, and fear. The company‟s opportunities seemed boundless (12)One option was to stay focused on the company‟s distinctive competence: developing superiorsearch solutions and monetizing those solutions through targeted advertising. (12)build Google into a portal like Yahoo! or MSNSchmidt- „Are the things that we‟re doingconsistent with the mission of the company?‟ We‟re not in the portal business, we‟re in thebusiness of making all the world‟s information accessible and useful.”To that end, Google has persistently pursued innovation and pushed the limits of existingtechnology to provide a fast, accurate and easy-to-use search service that can be accessed fromanywhere.…..Larry Page, “would understand exactly what you mean and give back exactly whatyou want.” Given the state of search technology today, that‟s a far-reaching vision requiringresearch, development and innovation to realize.(20)Ten things Google has found to be true1 Google has steadfastly refused to make any change that does not offer a benefit to the userswho come to the site:• The interface is clear and simple.• Pages load instantly.• Placement in search results is never sold to anyone.
• Advertising on the site must offer relevant content and not be a distraction.2 It‟s best to do one thing really, really well.3 Fast is better than slow.-Google may be the only company in the world whose stated goal is to have users leave itswebsite as quickly as possible4 Democracy on the web works.PageRank evaluates all of the sites linking to a web page and assigns them a value, based in parton the sites linking to them. By analyzing the full structure of the web, Google is able todetermine which sites have been “voted” the best sources of information by those most interestedin the information they offer. (20)6. You can make money without doing evilSo, only certain searches produce sponsored links above or to the right of the results. Googlefirmly believes that ads can provide useful information if, and only if, they are relevant to whatyou wish to find.Getting the most out of knowledge workers will be the key to business success for the nextquarter century. Here‟s how we do it at Google.At Google, we think business guru Peter Drucker well understood how to manage the new breedof “knowledge workers.” After all, Drucker invented the term in 1959. He says knowledgeworkers believe they are paid to be effective, not to work 9 to 5, and that smart businesses will“strip away everything that gets in their knowledgeworkers‟ way.” Those that succeed will attract the best performers, securing “the singlebiggest factor for competitive advantage in the next 25 years.”Hire by commite, Cater to their every need. Pack them in, Make coordination easy, (gmail) Eatyour own dog food, Encourage creativity(23)Strive to reach consensus, Don‟t be evil, Data drive decision, Communicate effectivelyProblems:Microsoft responded by proposing a joint venture with AOL to develop search-relatedadvertising. Some observers perceived Google‟s success in deflecting this challenge as evidencethat Google‟s management team was mastering the art of strategic deal-making. Battelle noted:“This is Google‟s first test as a chess player in a major corporate battle. They are saying, „Wewill take some of our pawns and block the move to our queen by Microsoft.‟” But this raisedthe question: Whatmoves should Google make next?(Harvard 2)
“techno arrogance.” Engineers are competitive by nature and they have low tolerance forthose who aren‟t as driven or as knowledgeable as they are… t inflexible person on a team canbe deadly. (24)A related problem is the not-invented-here syndrome. A good engineer is always convinced thathe can build a better system than the existing ones, leading to the refrain “Don‟t buy it, build it.”Well, they may be right, butwe have to focus on those projects with the biggest payoff. Sometimes this means going outsidethe company forproducts and services.Gitman2 Making ethical decilsions and managing a socially responsible business6 Management and Leadership in Today‟s Organization7 Deesigning organizational Structures9 Motivating employees