February 6, 2012
Google's Business Environment
Investigating Google as a leader in the search engine industry proved to be extremely interesting. The company began back in 1996 under the guidance of Larry Page and Sergey Brin both graduate students from Stanford University. The original search engine was called “BackRub” a search engine working with connecting the importance of web pages using links. Google with such humble beginnings offered the services in a single language and offers their services in scores of languages. After careful review of Google’s income statement balance sheet and cash flow statement information it was clear the company is a leader in the industry. There are many companies trying to develop as large a customer base as Google but none to date have passed this Internet giant. While reviewing the annual data Google’s total revenue for the past three years has been on a continual increase. Recent conditions in the economy have not seemed to be a major hindrance to Google and seem not to have deterred its growth over the past few years. The statement tracks annual total revenue with numbers in thousands in December 2009 of $23,651,000 growing to $29,321,000 in December 2010 and an increase to $37,905,000 in December 2011 The growth shows an increase of almost 6,000,000 in 2009 -2010 and another $6,000,000 in 2011. With a potential climb of this magnitude for the years to come Google will be a force to be reckoned with on a continued level as it has been to the present day. The report also gave a gross profit figure with a continual annual growth gaining on a greater percentage level as well with an ability to add a larger amount of funding toward research and development increased by almost 2.4 billion dollars in three years. Finally there was a net income applicable to common shares with a growth from 6.5 billion in 2009 to 9.7 billion in 2011. In further review of Google’s balance sheet and cash flow statement information, Google shows a marked growth in cash and marketable securities from close to 24.4 billion in 2009 growing to a whopping 44.6 billion in 2011 listing total assets of in excess of 72 billion in the fourth quarter of 2011. Reviewing the statements the predominant concern should be when if ever there will be a potential downside to the growth of Google. It has been on a steady climb and the statements portray continual growth for Google. Therefore there is usually concern with all growth in a positive direction slowing down over time. Many of the world’s industry leaders have a tendency to fall over time if growth is not clearly studied and additional products along with continued development of traditional products maintained. If the company can no longer keep up with demand or because growth in the industry inspires competition to develop, Google may lose some of the momentum. In the past former Google employees formed Twitter. Twitter has not been a problem for Google but as another company developing it can be in time. This along with others that may form due to the nature of the business can be a problem in the future. Google has been envied over the way they run their management teams. It has been said by many other managers employed by other companies the way Google approaches innovation is superior to many in the market today. The engineers are never expected to be non thinking. They are encouraged to dream and work with their own pet projects. Google encourages this and ensures the best ideas get the funding. According to Google’s Chief Executive Officer Eric Schmidt Google set up innovation reviews allowing department heads the opportunity to look at and compare all ideas discussing those with promise and allow those to proceed. This was due to the fear of ideas set aside and not allowed to develop. The concept was that one of those...