Case Analysis 3
Thomas Edison State College
CASE ANALYSIS 3 GOOGLE 2
Google's business model is comprised of many different income generating sources. Google, Inc. is most well known for it's search engine with 96% of it's income being generated by advertising sales. Google has text only ads that appear next to their search results. These ads are targeted to consumers based on what they are searching for making these ads more appealing to the companies paying for them. These text based ads, AdWords, are targeted based on key words and companies bid on the use of these keywords through an auction based system. Most advertisers pay on a cost-per-click basis and are charged every time someone clicks on their ad. Google also has an AdSense program where web publishers share in the ad revenue that Google generates from ads placed on their websites. Google's acquisition of Double Click has allowed them to branch out into more visual advertising by selling banner ads. Google also acquired You Tube and generates income from selling ads on this website as well. Other sources of income other than advertising sales include licensing fees charged to corporations for search on their intranets or websites, licensing fees for using Google Apps document and spreadsheet software, and Google Checkout has fees charged on transactions at e-retailers. Google also has such products as Gmail mail program, Google+ social networking, Chrome internet browser and the Android operating system. All of the free services that Google offers are just more opportunities to offer advertising and generate more revenue for the company. Thompson, Peteraf, Gamble, Strickland (2012) Google's financial outlook is bright. They have had continued growth with large revenues and their net income continues to increase every year. Their revenue seems to be increasing more than the net income, but profit margins remain high every year. Thompson, Peteraf, Gamble, Strickland (2012) But in Google's industry there is rapid change and growth in technology. Investments must be made in R&D and new product development to stay current and assure continued revenue for future years. Google Inc Class A (n.d.) Google's liquidity has always been a strength over the years. Their liquid assets are consistently CASE ANALYSIS 3 GOOGLE 3 greater than 50% each year. Thompson, Peteraf, Gamble, Strickland (2012) Some argue that Google should start paying a dividend because of their large amounts of retained cash. Investors are quite happy though as the return on equity has not faltered over the years and Google continues to be a sound investment. Google Return on Equity (n.d.) Google SWOT Analysis
- #1 Search engine Top 15 Most Popular Search Engines (2013) - Brand Recognition-Google is a noun and a verb in Webster's dictionary - International company
- Innovative and not afraid to spend money on R&D and new technology - Have their hand in so many things that it's hard not to encounter them on a daily basis Weaknesses
- A lot of money has been spent on R&D and acquisitions and and it hasn't all translated into revenue Thompson, Peteraf, Gamble, Strickland (2012) - Most of the services they offer are free to consumers but cost Google a lot of money to run and update Thompson, Peteraf, Gamble, Strickland (2012) - Competition comes from some of the biggest and most innovative companies in the world such as Apple, Facebook and Microsoft Opportunities
- Providing IPhone users with with alternatives to Apple's apps. Google Maps to replace Apple Maps, Chrome...