Google †PESTEL & Porter’s Five Forces Analysis Essay

1.0 IntroductionGoogle Inc, a global technology company, founded in 1998 by Larry Page and Sergey Brin, is the most popular count engine in the world. Google provides numerous free service and products much(prenominal) as Google hunting, YouTube, Google Maps, and has transformed how people use and sh atomic number 18 learning.Googles task spans from advertising, information analytics, in operation(p) musical arrangements to technologic each(prenominal)y advanced devices such as Google Glass, Driverless cars, Solar-powered dr singles, and was recently named The Worlds Most Valuable leaf blade due to consumers perception of Google being a forward-looking company focused on innovation (Bloomberg, 2014).As of 2013, Google has 43,862 employees working in more(prenominal) than 70 offices in over 40 countries around the world with their military headquarters located in Mountain View, California, USA. (2014). For the purpose of this study, I will be basing my analysis of Google i n capital of capital of Singapore, its s step forwardheastern Asia headquarters which opened in 2007.The following sections will analyse the various factors that will influence Googles operations in Singapore, and conclude with recommendations of how Google should further improve to boost its competitive edge.2.0 PESTEL Analysis2.1 Politicalthough little political restrictions affect Googles operations due to the nature of its business, government stability is a major aspect in Googles strategic planning. Singapore had been rated Asias most politically static country (Berdzenadze, 2013), and Asias most competitive economy in the Global Competitiveness Report by the World Economic Forum (2013).When the grocery store of operations has political and economic stability,businesses will thrive and in turn advertise more, thus increasing business opportunities for Google.2.2 EconomicGoogle was hailed as being Recession-Proof when they continued to run solid earnings through the economi c megabucksturn (Quittner, 2008). It is well positi adeptd to weather the downturn, as its run are free to consumers, and advertisers substituted traditional media advertising with online advertising to cut costs.Regardless, Singapore is wide-eyedly ack this instantledged as having one of the best business environments in the world. Ranked as the worlds easiest place to do business (The World Bank Group, 2014) and city with the best investment potential (as cited by Economic phylogeny Board, 2014), Singapore with its sound monetary and fiscal policy attracts many investors.The more investment dollars pour into a business, the more they are willing to drop dead on advertisements, which increases business opportunities for Google.2.3 SocialIn Singapore where there is steep net income perceptiveness rate of 87% and peregrine penetration rate of 156% (IDA, 2014), consumers comfortable with technology much see the lucre as the first source of product re count before making the ir last purchase, making Google a very important part of the process. To increase the number of users accessing Googles services from their mobile device, Google released its own Android mobile operating system which now holds 55.8% of the mobile device market apportion (comScore, 2014). It is thus increasingly important for marketers to influence consumers final purchasing decisions by advertising in this space.However, Googles infrastructure created to customise and personalise each users search experience by storing their personal information has beenreceived with mixed reactions as some find Googles sale of such information a violation of their privacy. As peoples attitude and concern towards fostering their hidden info change, Googles business may face a panic.2.4 TechnologicalBeyond a search engine, Google constantly stick ins and develop its wide range of free products aimed at strengthening user engagement.Technology speedily advances, and Google actively takes measu res to ensure they do not fall behind. According to Bloomberg data, Google has acquired 127 companies in the past three years (as cited by Farzad, 2014). Besides buying companies, such as Waze, a GPS navigation software, and Admeld, an advertising optimisation platform, in a smart defensive play to acquire companies that poses a threat to its business, Google has been acquiring a wide range of technological companies from Humanoid robots to Airborne jazz turbines to Home automation devices.In a conspire to strengthen its business, Google is increasingly moving into ontogenesis hardware technology that has a tangible presence in consumers homes and offices.2.5 EnvironmentalIt is estimated that Google runs over a million servers in data centres worldwide, with its first Southeast Asia data centre in Singapore operating since 2013, and consumes a huge amount of electricity. Every time mortal makes a search or sends an email, they contributes to the electricity bill at Googles data centre (Tan, 2014).However, Google argues that they yield made the world a greener place considering the electricity consumption for a search in stead of a drive down to the library. Above all, unlike other companies, Google builds most of their own data centres down to the energy-saving chips it uses, and custom-designs its servers for efficient energy use (Glanz, 2011). Itsfacility in Singapore uses recycled water for its cooling system.Although Google is a proud carbon footprint business, it has adopted a proactive strategy to hold itself up as a 3ly responsible company by making its facilities environmentally-friendly through generating its own renewable energy from solar panels, wind farms and purchasing carbon offsets by funding green efforts.2.6 LegalFrom the perspective of law and regulation, the internet is inherently transgressive and difficult to govern since it is global, and information can be instantly transferred at anytime, anywhere. Googles products collects a c luster of personally identifiable information on its users DoubleClick cookies tracking online footprints, Google wallet storing name, credit card details, and thus how this information is compiled, used or stored are a natural concern.Googles data centre in Singapore serves users around the region, and Singapores business-friendly approach with the privacy law on international transfers of data that does not restricts transfers to specific countries on their approved list, but instead puts the onus on the company to put in place measures to ensure personal data is transferred to locations with comparable standard of testimonial, makes compliance issues less complicated than that of europiums (Bratby, 2013).In general, Singapore is a relatively late adopter of privacy laws (The Register, 2014), and is macroscopicly activated rather than transformative. As such, legal issues that may arise in Singapore are likely to be those that Google already has measures or policies in place. 3.0 Porters Five Forces Analysis3.1 Threat of in the raw EntrantsAlthough the internet has traditionally been viewed as a low barrier to entry marketplace, the barriers to entry in the internet search market are high, as it would take a giant step in innovation, and a gigantic starting capital to build a network infrastructure that could compete with all of Googles services and products. The scale of Googles businesses has become a significant barrier to entry.Nevertheless, companies focusing solely on developing a single product or service that Google offers could potentially usurp Googles dominance in that area, as seen with the Rubicon Project, an advertising start-up which surpassed Googles Ad Network reach by over 6 million unique visitors (Thomas, 2012).3.2 Threat of SubstitutionSome of Googles products and services could potentially be substituted, such as users choosing GPS instead of Google Maps, but Googles primary business is their online search engine, which is difficu lt to substitute.Everyday, an average of 5.9 trillion Google searches are made (Statistic Brain, 2014). Although there are alternative sources of information such as newspapers, books, television, or radio, the internet is the preferred source for people to retrieve information as it provides information on demand. As of now, the threat of substitution is low as there are no foreseeable substitutions for online search.3.3 Supplier PowerGoogle owns its search platform and advertising services tool, thus it has very limited exposure to suppliers. Due to the advertising system used to generate revenue, both the advertiser and search engine user are Googles customers.However, websites that sport given inventory to Google for sale can be considered their supplier. As websites frequently have their inventorylisted crosswise multiple ad exchanges, Google will have to return both quantity of sales and quality of set of their buys to maintain the impressions given to them for sale by web p ublishers. So long as Google maintains strong market dominance, supplier bargaining will remain low.3.4 Buyer PowerAlthough internet users are free to fuddle to alternative platforms, most of Googles products and services that they use are at no cost to them.Whereas in the case where the buyer is the advertiser, buyer power is low as there are limited vendors they could spend with. A key feature of Googles ad buying platform, DoubleClick, is that advertisers can buy ads on three hundred different websites with a few clicks instead of making 300 calls or meetings to get the ads on all the websites.The scale of modern online media buying is staggering as Google provides access to millions of possible sites for advertising. Although Googles products are not unique, they are at scale, and can make arguing difficult for start-up and lilliputianer competitors.3.5 Industry RivalryGoogle is cognise for being the best search engine with high relevance within its searches, thus its posit ion as the market leader in the search market with closely 80% market share (Nguyen,2012). though competitors have caught up, and substitution of Google search in favour of Yahoo or Microsofts Bing is certainly possible, Googling has now been ingrained in peoples mind, and is largely a habit instead of being operate by significant product differentiation.When Google introduced the Android operating system, they have placed themselves in direct competition with Apple. Though Android phones currently has larger market share than iOS phones, Apple will not comfortably give in in the battle of mobile operating systems.Googles strategy is all about scale and interoperability. With advertising making up over 90% of its total revenue (Google Inc, 2014), it is critical for Google to protect its space, thus its entrance into the browser and mobile operating system market. When one owns the platform, one has the stage. Google tries to own as much of the overall ecosystem as they can so as to lock in its users and keep out competitors. In doing so, it does not need considerable advertising expense to stay and remain on top.4.0 resultant & RecommendationsIn terms of PESTEL analysis, I recommend that Google venture into new markets around the region. Singapore is a jump on market, thus opportunities to grow further are rather limited due to its market saturation and small population. In essence, it is difficult to justify large advertising spend when it can never attract large reciprocal sales as it simply does not have the population to support it.However, expansion into rising markets in Southeast Asia such as Indonesia or Philippines will help its revenue growth. To illustrate, Indonesia has internet penetration at 24% (Statista, 2014), which translate to 60 million users. That is 12 times Singapores population. The appetency of growth there is phenomenon. In terms of Porters Five Forces analysis, I recommend that Google alter into other ventures that helps gene rates income as it is not healthy for the company to rely almost entirely on one source of revenue. With its wide range of free products and services, Google could select a few of its products to further develop as alternative revenue sources such as its VOIP business, or licensing fees for its products.Google will also need to ensure that it maintains its impulsion in the research and development of its search engine to ensure that it is ahead of its competitor. With Microsoft and Yahoo searchs merger, the convergence of technologies will improve their search engines, and possibly catapult Yahoos more boffo products such as Yahoo Finance and Flickr.As long as Googles continue to innovate and stay ahead of its game, they will remain the market leader in the industry.5.0 ReferencesBloomberg. (2014, May 21). Google Overtakes Apple as Most Valuable Brand Video file. Retrieved 13 June 2014, from http//www.bloomberg.com/video/google-overtakes-apple-as-most-valuable-brand-PgHrIgIsQMuzLZ A4CxRJSg.htmlBratby, R. (2013) Singapore takes business-friendly approach in data protection guidelines. Retrieved June 24, 2014, from http//www.zdnet.com/sg/singapore-takes-business-friendly-approach-in-data-protection-guidelines-7000021091/comScore. (2014). comScore Device Essentials Singapore & Hong Kong 2013. Retrieved June 13, 2014, from https//www.comscore.com/content/download/23711/1282705/version/1/file/ singapore-vs-hongkong-mobile-usage.pdfBerdzenadze, I. (2013) Singapore Asias jumper cable Business Hub. CNN. Retrieved June 24, 2014, from http//ireport.cnn.com/docs/DOC-953461Economic Development Board. (2014). About Singapore Facts and Rankings. Retrieved June 13, 2014, from http//www.edb.gov.sg/content/edb/en/why-singapore/about-singapore/facts-and-rankings/rankings.htmlFarzad, R. (2014). Google at $400 gazillion A New No. 2 in Market Cap. Business Week. Retrieved June 22, 2014, from http//www.businessweek.com/articles/2014-02-12/google-at-400-billion-a-new-no-dot-2-i n-market-capGlanz, J. (2011, Sep 9). Google Details, and Defends, Its Use of Electricity. The New York Times, pp. B1. Retrieved June 23, 2014, fromhttp//www.nytimes.com/2011/09/09/technology/google-details-and-defends-its-use-of-electricity.htmlGoogle Inc. (2014) Google Annual Report 2013. (pp. 26). Retrieved June 13, 2014, from http//investor.google.com/proxy.htmlGoogle Inc. (2014) Company Google locations. Retrieved June 22, 2014, from http//www.google.com/about/company/facts/locations/Google Inc. (2014) Investor Relations 2014 Financial Tables. Retrieved June 22, 2014, from https//investor.google.com/financial/tables.htmlInfo-communications Development Authority of Singapore. (2012). Google breaks ground for Singapore data centre. Retrieved June 13, 2014, from http//www.ida.gov.sg/blog/insg/in-the-news/google-breaks-ground-for-singapore-data-centre/Info-communications Development Authority of Singapore. (2014). Infocomm Landscape Facts and Figures. Retrieved June 22, 2014, fro m http//www.ida.gov.sg/Infocomm-Landscape/Facts-and-FiguresQuittner. J. (2008, 16 Oct). descry The Recession-Proof Google. Time. Retrieved June 22, 2014, from http//content.time.com/time/business/article/0,8599,1851286,00.htmlStatisticbrain. (2014). Google Annual Search Statistics Statistic Brain. Retrieved June 16, 2014, from http//www.statisticbrain.com/google-searches/Tan, H. (2011, 21 Dec). Rainfall to cool Googles data centre here. The Straits Times, pp. 21. Retrieved June 23, 2014 from http//newslink.asiaone.com/user/OrderArticleRequest.action? documentId=nica_ST_2011_22596292&year=2011&month=12&date=21The Register. (2014). Singapore lures freehand biz with mega data protection regime. Retrieved 24 June 2014, from