Alphabet owns a variety of subsidiaries under one corporate structure for several benefits. This allows acquisitions to be faster by eliminating cultural matching needs. It also allows each subsidiary to focus on innovation in their sector while benefiting from Alphabet's resources. Having autonomous subsidiaries also reduces antitrust scrutiny that would arise if all were under Google. However, costs include funding subsidiaries that are not yet profitable and potential reputation impacts if a subsidiary faces negative attention. Alphabet chose a decentralized structure to allow subsidiaries more power and autonomy while eliminating risk of becoming irrelevant. Benefits are faster decisions, effective local management, and autonomy, while drawbacks include lost central control and potential unhealthy competition between subsidiaries. Experts view Alphabet's

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Prerana Rawat (20DM158) Raju Kumar (20DM167)
Rishab Adarsh (20DM172) Rishabh Das (20DM173)
Sanjay Pareek (20DM187) Shivangi Gupta (20DM199)

2. Why does Alphabet own widely different subsidiaries under
the same corporate structure?
 The creation of Alphabet which allowed conglomeration of different
subsidiaries under one corporate structure was to make the core business
(online advertising) "cleaner and more accountable".
 Alphabet owns different subsidiaries under the same corporate structure to
create more value for the company. For example, “YouTube” was one of
their acquisitions, which they bought for $1.65 billion. Nobody thought it
would be successful. However, since Google is all about software and
YouTube too, they managed to make it profitable, and in 2016 it made
several times the acquisition price in revenues. When you search for a video
on google, it immediately shows you YouTube videos making one company’s
user a user for both.

3.  Also, it allows the subsidiaries to have more autonomy since each
subsidiary has its own chief executive which allows them to have focused
management for their set of business.
 Further, having different subsidiaries under one corporate structure helps
reduce the attention on antitrust scrutiny on Alphabet since each company
sells its products in different sectors. However, aggregating all the
subsidiaries under the search engine umbrella (Google) would invite more
scrutiny from regulators due to the uniqueness of Google's business. But
having the different subsidiaries under the umbrella of Alphabet supports
the argument that each subsidiary within the conglomerate operates
independently from Google's search engine.

4. What are the benefits of this choice?
Since, it is a giant corporation and has tons of different things to offer;
therefore, hopefully, get more revenue. One corporation can get customers
from the other, and if they do good, then customers will want to keep using
products from that corporation. It is all about the name of the company.
1. It helps to speed up acquisitions due to elimination of the need to match
cultures since each company is independent.
2. It allows to focus on innovation efforts and to diversify by innovating in
areas outside Google's business but fit well into Alphabet's business.
3. It provides the company with a bigger talent pool by attracting talents
that might not fit into Google's culture but fit in another subsidiary's
culture.
4. It provides each subsidiary with autonomy to make key decisions on their
respective organizational culture which is different from Google's culture
but aligned with their business model and strategy.

5. Costs
It is more expensive to have more corporations because they have to pay for
labour, financial, and administrative costs. Also, they are new to some things, for
example, software and hardware. They were used only to do software, and they
are good at it. They know how to do it fast and have the best people. But, when
they decided to do hardware too, they don’t have that competitive advantage
there, they have to learn, and that is costly. Some companies are not profitable,
so the other companies have to take care of it.
1. The biggest cost to the restructuring is that Google has to fund the operations
of the subsidiaries since majority of them are yet to become profitable.
2. Since the subsidiaries rely on Google to promote their branding, a negative
public attention on a subsidiary might reflect bad on Google as most people
view the companies as one company.

6. What is the rationale behind the decentralized structure
chosen by Alphabet?
 The rationale for the decentralized structure was explained by one of
Google's co-founders in his letter to investors. He explained that the move
to restructure was to allow Google to focus on delivering what it delivers
best while eliminating the risk that the world might evolve around it and
leave the company behind like a dinosaur from a different era that is
irrelevant in the modern era and in the future.
 They chose to change to a decentralized structure because by doing
this, you give more power to every single company. Now they don’t all
depend on the same one. Nest was seen as a beneficiary; they would enjoy
independence and financial support.

7. What are the benefits of this conglomerate structure?
The advantage of a decentralized structure is that the CEO of each
company has the power to make decisions; therefore, you save time and
money to the company.
1. With a decentralized structure, there is a wide span of control and
reduced need for middle managers which reduces overhead costs.
2. It allows fast decision making due to few layers of bureaucracy which is
important in a highly competitive sector like the tech sector.
3. Better and effective tactical-level decisions are made in a
decentralized structure because employees have the best knowledge
base from which to make decisions.
4. It gives more autonomy to employees which reduces turnover.
5. Decentralization allows delegation of tasks to local managers which
also acts as training for higher positions.

8. What are its drawbacks?
1. The drawback of this structure is that you lose control of the
company by giving power to others. Also, now it is not all under the
same umbrella company.
2. It might result in control problems due to many procedural
differences from each subsidiary in different areas of authority.
3. There is high likelihood of unhealthy competition for capital and
recognition between subsidiaries which might result in silos and
reluctance to share information.
4. It makes it hard to implement uniform organizational procedures and
policies.

9. Is Alphabet's corporate governance (and, in particular the
presence of dual class shares) appropriate for the
organization?
According to corporate governance experts, the co-founders of Alphabet
owning shares with more voting powers is not a good governance model for
the organization. The experts assert that the discrepancy between
economic ownership and control reduces the level of accountability to
shareholders of the organization (Yan, 2021).
Benefits of this governance model
1. Dual class shares allow majority shareholders to fend off attempts of
hostile takeover.
2. It enables the business to create a firewall of protection from short-
term market pressures.
3. Allows the senior management to focus on growth projects and long-
term strategy because they can outvote proposals that might derail
growth (Yan, 2021).

10. Costs of this governance model
1. If the founding shareholders mismanage the company or make bad
decisions, other shareholders (unaffiliated shareholders) cannot do
anything about it.
2. Many founding shareholders have low equities which means that their
mismanagement and bad decisions has little impact on them but
affects unaffiliated shareholders to a great extent (Yan, 2021).
 We don’t believe it is an appropriate Alphabet’s corporate
governance, and the results showed it.
 In August 2014, when Google became public, the demand was lower
than expected. Also inconvenient was the dual structure where Class
A shares have the right for one vote, and Class B was reserved for
google insiders only and had the right for ten votes. This is not seen
right because people didn’t want to invest because they didn’t have
the right to vote.