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1. Is the industry Google Alphabet in, an attractive industry? What does it take to remain
competitive in this industry?

With the advent of technology and increase in internet users, the industry in which Google
Alphabet operates is not only attractive but also have potential to revolutionize the technology
and internet world.

Porter’s five force model and TOWS matrix analysis will help to understand factors that will
help Google to remain competitive in the industry.

Five Force Analysis of Google LLC Low Moderate High

1. Rivalry among existing firms High
Intense competition in the industry High
Diverse range of products with diverse applications High
Cost of switching of customers is low High
2. Bargaining power of suppliers Low
Huge number of suppliers Low
Switching cost is very low. Low
Diverse set of suppliers for diverse products make supplier Low
weak.
Size of Google is larger than its suppliers and in many cases Low
only buyer from its suppliers.
3. Bargaining power of buyers Low

Huge and increasing demand of technological products Low

Over dependence of Google services Low
Dominance of Google through its search engine platform on Low
internet.
4. Threat of substitutes Low
Cost of switching from advertisement on Google to Moderate
substitute products such as TV, radio is moderate
Excessive use of Google as search engine due to its customer Low
friendly features
Substitutes of Google do not offer same level of Low
convenience, information and speed.

5. Threat of New entrants Low

Very difficult to build brand by new entrants. Low

Huge fund required to develop infrastructure to render Low
services to customers.
Very difficult to enter into search engine service as Google Low
has more than 85 % of online advertisement revenue.
Strict licensing and regulatory requirements to enter in the Low
industry.

TOWS Matrix Analysis

Strength Weakness
 Excessive
 Strong brand image advertisement on its
with presence in the products such as you
whole world. tube, browser, Gmail.
 Intellectual property  Huge reliance on
rights on its products. advertisement revenue.
 Leader in web search,  Failure in retaining
video sharing, online talented personnels.
advertisement,
browsing and many
other products.
 Strong financial
position with efficient
acquisition ability.
 User friendly products.

Opportunity  Investment in cloud  Avoidance of unrelated

 Huge demand and computing, Google ads on its platform and
increase in internet fiber expansion and display user need
users and mobile Android OS to based ads.
phone users. increase its non  Offering better job
 Google Fiber, Cloud advertisement revenue. positions, opportunities
computing, Artificial  Continuous and pay to its talented
intelligence, Android technological employees to make
OS upgradation in Android them loyal.
 Focus on Non ad OS to capture mobile  Development of
business such as industry and compete innovative non ad
 Market penetration in with rivals such as based revenue
consumer electronics. APPLE IOS. generating products
 R & D in Google  Developing and and penetrating new
Glasses and Google designing user friendly markets through
Play and other products in consumer diversification.
innovative electronics segment.
technologies.
Threat  Use of its strong brand  Reduction in
 Intense competition reputation and patent advertisement and
 Antitrust controversies rights to dominate over banning of bad content
with European Union competition in market. ads to keep customers
and US law makers.  Acquisition and satisfied while using
 Investment in moon Investment in Google services.
shot projects and other promising business  Focus on other
bets whose success is opportunities where products more
uncertain. success is viable in intensively to increase
 Downgrading of short interval of time revenue rather than to
market share in online and reduction in focus on advertisement
advertisement. businesses which is revenue.
non value generating
to the organisation.

2. Identify and critically evaluate Google Alphabet’s resources and capabilities using relevant
BB835 frameworks and concepts. In your answer you should use your evaluation of resources
and capabilities to assess how Google Alphabet achieves competitive advantage in its
industry.

Value Strategy Value created V R I O Result

chain
activity
Inbound Sustained
Logistics Competitiv
e
advantage
Content that Google shows No inbound Yes yes yes yes Sustained
to its users on search results logistics cost for its Competitive
come from private and search engine advantage
organisational internet users business.
free of cost.

Extensive range of hardware, Capacity to meet Yes yes yes yes Sustained
equipments and tools to unlimited search on Competitive
 conduct its operations. its search engine. advantage

Use of dedicated supplier Protection of new Yes yes yes yes Sustained
site to maintain strong products and Competitive
relationship with its services’ ideas to advantage
suppliers. its competitors.

Employees of Google are More free apps Yes yes yes yes Sustained
major inputs who develop than competitors. Competitive
profitable ideas and convert advantage
them into Google services. In
the software application
android, inbound logistic
begins with cell phone apps
created by developers.

Operations Temporary
competitive
advantage
Its offices are designed Promotion of Yes Ye No yes Temporary
creatively with various innovation and s competitive
features such as sharing innovative thinking advantage
cubes, video games, pool within the
tables, pianos, cafes and organisation.
others.
Operations are based on Innovative products yes yes No Ye Temporary
thinking out of the box and to remain s competitive
doing things in competitive in advantage
unconventional way. market.

Design and development of Display more yes yes yes yes Sustained
technological capabilities appropriate and Competitive
and advanced search relevant search. advantage
algorithm.
Development of innovative Unique algorithm yes yes yes yes Sustained
application for internet users tools to dominate Competitive
to suit customer needs. in search industry. advantage

Multiple projects are Enhance ability to yes no no yes Temporary

performed at same time in access to online competitive
teams to complete it in information. advantage
stipulated time to meet the
 urgency of the project.
Continuous development and Provide user yes no no yes Temporary
maintenance of mobile apps. friendly interface competitive
on mobile app. advantage
Outbound Temporary
Logistics competitive
advantage
Core business of Google is Directing high yes yes yes yes Sustained
search through its browser and quantity of web Competitive
display of advertisement into users to specific advantage
search results. There is no sites and sorting
outbound logistics associated to pre-qualified
it.
visitors for these
sites using search
history and
keywords.
Online sale channels and Delivering yes no no yes Temporary
business partners to generate information and competitive
sales throughout the globe. application based advantage
products at lower
cost to its users.
Very few physical stores for Cost reduction due yes no no yes Temporary
Google merchandise to less physical competitive
showcasing Chromebooks, outbound logistics. advantage
Chromecasts, Android phones
etc.
Revenue generation through Increase in yes no no yes Temporary
advertising products such as profitability competitive
Google Pay per click, Ad Sense advantage
etc.
Updating of Android OS on Adapt changes in yes no no yes Temporary
regular basis. Mobile operating competitive
system to its advantage
competitors and
remain
competitive.
Marketing Temporary
& Sales competitive
advantage
Integration of online and Strong brand yes no no yes Temporary
offline marketing channels to positioning and competitive
promote its online ads reach to mass advantage
business. consumers with
low cost of
promotion.
Most of the sales are done Worldwide yes no no yes Temporary
through online sales channel. presence on competitive
 internet due to its advantage
search engine.
Use of its own platform to Reduction in yes yes yes yes Sustained
promote its products and promotion cost competitive
services. advantage
Services yes No no yes Temporary
competitive
advantage
Google forum, Customer Brand association yes No no yes Temporary
helpdesk and customer and loyalty. competitive
helpline number to assist and advantage
resolve queries of customers.
Customer focused and need High satisfaction yes No no yes Temporary
based products and services. and Less lost competitive
customers. advantage
Procureme . yes yes yes yes Sustained
nt competitive
advantage
Procurement of hardware, Best technological yes yes yes yes Sustained
servers, fiber optic cable and and innovative competitive
other equipments are done products delivered advantage
using verified suppliers. to customers.
Google deals in rendering Easy to use and yes yes yes yes Sustained
information services to its customer focused competitive
clients. Major procurement applications being advantage
for Google is to hire talented designed and
people to render best developed for its
information services to its clients.
users.
Technology Sustained
Developme competitive
nt advantage
Development of new search Multiple apps to yes yes yes yes Sustained
applications such as Google keep users engaged competitive
Map, Google earth, Google & Recognition as advantage
incognito, development of innovative brand.
new and innovative apps for
android OS.
Google’s advanced analytics Creates efficiency, yes yes yes yes Sustained
in measuring the efficiency speed and competitive
of its users on search innovativeness in advantage
platform. search.
HRM
 Centered on “Googleyness,” Promotes yes yes yes yes Sustained
an intangible trait in terms of Innovation and competitive
ability to work in teams, improves employee advantage
handle ambiguity and think performance.
out of the box.
Multiple training programs Increases employee yes no yes yes Temporary
morale and job competitive
satisfaction. advantage
Culture of hiring best in the Team of best yes yes yes yes Sustained
industry and offering best employees in the competitive
salary in the industry along industry. advantage
with huge incentives.

Firm Sustained
Infrastruct competitive
ure advantage

Huge financial resources Acquisition and yes yes yes yes Sustained
with market capitalization of strong borrowing competitive
798.45 Billion with more capacity advantage
than 118000 employees.

Huge investment in data Increase yes yes yes yes Sustained

centers, switches, storage profitability and competitive
centers/ devices and fiber brand image. advantage
networks.

More than 6,00,000 servers Strong global yes yes yes yes Sustained
racked in thousands of data supply chain competitive
centers in different countries management. advantage
mostly in USA and Europe.

Huge investment in R & D Large range of yes yes yes yes Sustained
on regular basis to develop product offerings to competitive
new products and services. its users. advantage

3. What type of diversification strategy is Alphabet pursuing? Explain the organizational

structure of Alphabet using its strategic business units? What is the rationale behind this
structure and diversification strategy?

Alphabet INC is a giant conglomerate and holding company for Google LLC and more than 200
companies which are subsidiaries to it. It has online, digital and moon shoot companies under
its verticals which are independent from one another. From 2001 to 2020, the company has done
more than 200 acquisitions. If we consider companies acquired, it appear to be unrelated diversification,
however, when these companies are evaluated on the basis of their activities, most of them are
generally to support Google search advertising which is the main activity of Alphabet Inc. Acquisition of
Alphabet Inc proves to facilitate diversification strategy. These acquisitions are very specialized in social
networking, intelligent home systems, robotics, communication, e-commerce, navigation, office
software, and their core capabilities such as search engine, mobile OS, advertising or information
technology (voice and image recognition). Diversification strategy of Alphabet Inc is twofold:

Related diversification through product and service innovation and acquisition

Related diversification in terms of acquiring and developing internet and technology based
products and services to capture the global internet market such as cloud computing, Android
OS, R &D in Artificial intelligence and so on.

The main service of Alphabet Inc is Google online search and major revenue is generated
through online advertisement. It has diversified into various internet related products and
services such as Gmail, Google drive, Google my business, Google map, Google photos,
YouTube; enterprise products such as Ad sense, Ad Word, Pay per click and other utility services
such as Google translate, Google news, Google drive, Google map, Google language. It enabled
the company to reach to a large number of internet users and make them dependent on its
products and services. It helps the company to create consumer base of Google dependent
internet users. It also enables the company to position itself as one stop solution venue for all
internet related services. Chrome had 60 % market share in web browsing in 2017. Google map
allows retailers to advertise their address and products through promoted place application.

Unrelated diversification through company and product acquisitions for expansion

From search engine business in 1998, Alphabet Inc. offers the widest ranges of products and
services termed as other bets. Other Bets includes businesses like Access (Google Fiber), Calico,
CapitalG, GV, Nest, Verily, Waymo, and X.
Continuous investment in development and acquisition of products such as artificial
intelligence, machine learning and robotic technology, health care, venture capital funding,
energy, self driving car, drone delivery and R& D in many moon shot projects, consumer
hardware, airborne wind turbine, learning thermostats, smoke alarms and many other business
segments have led to diversification of Alphabet’s business into other technological segments
and industries. First mover advantage is the main Alphabet competitive advantage in relation to
the majority of these products and services.

Acquisition of HTC Google will allow engineers to more tightly integrate hardware and software
and differentiate its high end pixel phone from Apple I phone X. Acquisition of Android for
smartphone OS held 85 % market share in 2017.
Alphabet INC organisation structure

Alphabet INC

Google LLC Other Bets

  YouTube  Access Google Fiber

 Google Map  Verily Healthcare

 Ad sense, Ad Word, Pay per Click  Sidewalk Labs

 Android  Calico

 Nest Labs Hardware from Google  GV venture arm for early age
such as Pixel, startups

 Chrome  Google Capital equity investment

in later stage start ups
 Google Cloud
 Jigsaw technology incubator
 Chronicle
 Deep Mind AI research
 Gmail
 X Secretive R&D Labsfor moon
 Google Play
shot technologies
 ATAP Advance technology and  Titan Aerospace solar power
projects
drone to spread internet access
 Jacquard  Makani Airborne wind Turbine
 SOLI  Loon internet access through hot
air balloons
 Spotlight series
 WayMo Autonomous driving
 Google Business
 Wing Drone delivery of Freight
 Google Play

 Google Translation

 Google Analytics

 Ad Mob

Rationale behind Alphabet INC structure and diversification strategy

 It will help company to become process driven and focus on core capabilities and
business operations of Alphabet Inc from where it generates most of its revenue.
 It aims to increase competitive features and innovation potential and competitive power of the
company.
 Related diversification enables Alphabet to extend its resources and capabilities to
create value. It will also help to develop and exploit economies of scope between its
businesses.
 Unrelated diversification enables Alphabet in attaining financial economies in terms of
cost saving through improved allocations of financial resources based on investments
and restructuring of assets.
 It will help in maximizing profit through creation of closed eco system. With inter
connected products and services in its product portfolio, users are prompted to use
additional services thus allowing company to generate profit from different products
and services.
 It will help the company to run lesser risk of anti-trust violations and is also better able
to account for income streams from various subsidiaries easily.
 It enables company to enter new markets and improve existing market shares.
 It allows internet giant to empower its current products and services through
exploration of other valuable tech ventures to flourish its technological capacities and
penetrate new market and users for its services.
 It enables interdependency across different industries and sectors by promoting
importance of internet, digital communication and other technologies in the diverse
business organisations.
 It will help to focus first on developing the user experience before monetizing a product.
 With the diversification created through acquisitions and division of organisational structure
into core revenue generating business and other bets, Alphabet will be able to manage strict
financing on the ongoing projects and create profitability for it.
References

 Prudence K Magezi ( 2019). PORTERS FIVE FORCES OF GOOGLE. Retrieved from https://
www.123 writing. com/sample/porters-five-forces-of-google-2019
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/statistics /266206/googles-annual-global-revenue/
 Nathaniel Smithson ( 2019) Google Five Forces Analysis (Porter’s Model) & Recommendations
retrieved from http://panmore.com/google-five-forces-analysis-porters-model

 Prudence K Magezi (2019). Porters Five Forces Of Google retrieved from

https://www.123writing .com/sample/porters-five-forces-of-google-2019
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analysis-ofgoogle%EF%BB%BF
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google-business-strategy-and-alphabet-google-competitive-advantage/
 Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi / Cilt: 20, Sayı: 3, Aralık 2018, 271-
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