8PRINCIPLES OF STRATEGY AND CHANGE MANAGEMENT
Principles of Strategy and Change Management
Google Inc has maintained phenomenal growth and ability to innovate because of its ability to adapt and manage change as well as its ability to maintain a feasible growth strategy that includes acquisition and diversification of initiatives. Drawing from the case study, “Google Inc. What a Strategy ”, and application of principles of strategy and management of change, this essay identifies and discusses five resources or capabilities of Google that has helped the firm to remain successful. The essay also underscores how Google uses competitive forces of the industry to establish a competitive advantage.
Question 1. Identify and discuss five of Google’s resources or capabilities that making them successful.
Google is a worldwide technology leader focused on enhancing the ways people connect with information. The firm seeks to develop products that enhance people’s lives through its capabilities and resources. Resources entail inputs into the process of production while capabilities refer to the collective competencies and skills of a firm. Peng (2010) defines resources as intangible and tangible assets that a firm utilises to select and implement strategies.
The resources and capabilities that make Google successful include its employees, market share, hardware, technology, innovation and algorithm. Google’s success is attributed to its innovative culture, the power of its search engine algorithm and its elegant business model. Algorithm entails the formula that the firm utilises to rank Web pages from the query of a user. Google’s algorithm is smarter and effective and is subject to constant review. As regards, employees, Google has a team of competent and focused leaders and employees. Google hires the brightest of the bright and supports teamwork. Approximately, 10,000 employees work in small teams with each team comprising of three engineers. The firm is organised around it capacity to leverage and attract the talent of exceptional technologists.
Google has become a hotbed of innovation. The culture of innovation is one of Google’s capabilities. The firm’s underlying capacity for innovation and execution of novel initiatives is a set of resources that few technology-based companies can match. With regard to technology, Google has invested billions of money in its proprietary technology and its internet-based operating blueprint ( Kourdi 2015). This enables the firm to be consistent on its service levels, rapidly develop new services and quickly respond to searches. Google’s technological dynamism has resulted in initiatives that surpass the organising and accessing of information. With regard to market share, the firm has an extensive market share. It has remained a leader due to its innovations in advertising and web search. Google’s hardware creations such as the self-driving car and devices such as Google’s Nexus have enhanced the success of the firm.
Question 2. How was Google able to use the competitive forces of the industry to create a competitive advantage? How could Google sustain its competitive advantage?
According to Porter (2008), the fundamental nature of the explanation of the competitional strategy depends on linking a firm to the environment in which it undertakes its business. The environment of a firm is intricate and comprises of both economical and social forces. According to Grigore (2014), the central component of this environment is represented by the sector in which a firm competes. Michael Porter identified five forces that shape competition within an industry. These forces include the risk of entry by potential competitors, intensity of rivalry among established firms within an industry, the bargaining powers of buyers, bargaining powers of suppliers and threat of substitutes (See Figure 1).
Figure: Porters Five Forces Model
Source : (Porter 2008)
An effective strategy that promotes a competitive advantage of a firm entails a setting of management decisions regarding how to balance tradeoffs amid being effective and being efficient to attain well-established objectives (Drnevich, 2013). A competitive advantage is a condition that allows firms to operate in a more effective or higher quality manner compared to other companies in the industry, which leads to financial benefits (Mehdi, 2006). A competitive advantage develops out of value a company is able to generate for its buyers that surpass the organisation’s costs of creating it. A competitive advantage based on Porter’s model depends on a firm’s environment (Halliru, 2016).
Google has been able to use the competitive forces of the industry to create a competitive advantage. Google’s strategic choices depend on the temperament of its business and the features of the industry. The firm’s has employed intensive growth policies that have helped the firm to become a global leader in the industry. Google has become a key player in influencing the development and competitive landscape in the industry. The firm integrates its nonspecific strategy and growth strategies in satisfying its call for continued market leadership and growth.
With respect to risk of potential competitors, Google limits the willingness of customers to use newcomers’ services and products. With regard to rivalry among existing companies, Google strives to remain at the top through its innovation, production of quality products and services. The firm fosters a culture of innovation and creativity through its 70-20-10 rule. More so, the company employs a strategy of differentiation that entails development of unique capabilities that make it competitive. Its search algorithm evolves on constant basis an aspect that ensures it a competitive advantage against Yahoo, Microsoft and other competitors. Its market penetration strategy that includes acquisition helps the firm to maintain a competitive advantage. The firm has also maintained an elegant business model and a culture that strives to evolve and improve its products. Google has also expanded into many diverse areas that include mobile operating systems and a Web browser. It has also employed tactical and strategic plans in its change adoption and management. With respect to threat of substitutes, Google engages its technology, resources and capabilities to enhance market and product development. The company exploit its advertising potential of its search engine to attract and retain customers. As regards the bargaining power of buyers, Google develops products that allow people to quickly find, create and organise information. The company places a premium of products that matters to people and hold the potential to enhance their lives. The firm also offers so many free services to develop its consumer base and has always been customer-oriented (Liu & Hoon 2014). With regard to bargaining power of suppliers, Google employs a diverse supplier network that implies improved services and products for users.
Google has been able to utilise competitive forces through its market penetration, growth strategies, product development and market development. The firm has attained a competitive advantage in the industry through its constant expansions and growth, quality products and services, highly innovative technology, software technology capabilities, and hardware such as Chromebook and Motorola that promote product development. Drawing from the case study, scores of the firm’s initiatives and expansions were adding and distracting the firm’s management. However, focused leadership offered by Page and his team has been able to employ the principles of change management effectively. Although analysts challenged Google’s diversifying initiatives citing that it had done little to boost the firm’s revenue, the firm’s focused leadership has been able to manage and implement these changes. The firm’s leadership has embraced change as a process that can face resistance and touches on all the stakeholders. The leadership employed change management techniques that were specific and unique to different changes while understanding the size, nature, disruption and magnitude of change. Although acquisition of Motorola and other firms was a risky venture, the focused and effective leadership of the firm has helped the firm to extend beyond organising and accessing information. The firm’s leadership demonstrated the ability to control OS and the hardware through the risky acquisition of Motorola. The acquisition helped the film to develop its presence in use if mobile internet. Google continues to sustain its competitive advantage through service and product diversification and, enhancing its algorithm besides keeping-up with the market. However, keeping up with the market and diversification, call for effective leadership and management, and continuous market research.
Google business is characterised by swift change, converging and disruptive and novel technologies. The company faces redoubtable competition in every feature of its business. Companies such as Yahoo, Microsoft that seek to unite persons with formation on the web and offer them pertinent advertising are major competitors of Google. However, the firm has numerous resources and capabilities that make it successful. These capabilities include employees, hardware, technology, innovation, its algorithm and an extensive market share. Google has been able to utilise the competitive forces through its extensive growth strategies, market penetration and product development to win a competitive advantage. The firm can sustain its competitive advantages through keeping-up with market and embracing service and product diversification. The firm’s growth, success and competitive advantage depend on its product and market development strategies. However, to enhance is strategic position, the firm should focus on obtaining the profitability of its present products before getting on new product development.
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