Google is one of the largest companies in the US having a worth of 23 billion with soaring share prices and soaring heights of profits. Google’s fame is not only related to its search engine and advertising services but also with how it treats its employees. The culture being followed in Google is highly innovation centered. Such high level of innovation which is unrestricted results in many of its employees leaving to start their own ventures, such as in the case of Twitter which was started by the company’s former employee. Google has implemented, since start a highly unconventional and unique administrative system that has been given the name of ‘chaos by design (Hardy, 2006; Bloomberg, 2007). The report provides an internal analysis of the value chain of Google which depicts how work gets done within the organisation under the chaos management framework and what key strengths the company has. The report also provides an industry insight to the ‘best practice’ relating to the business model used in the technology industry by other leading companies using the tool of benchmarking.
Value Chain Analysis
Primary Value Chain Activities
Inbound Logistics and Outbound Logistics
The main inputs for Google are its talented employees who produce the profitable ideas for the company and outputs are the cash generating applications for internet users, such as Gmail, Google Scholar, etc aimed at making information accessibility and advertising innovations such as Google Adsense etc which are its main source of profits (Business Week, 2009).
Google is a company operating in the information age and is a leading provider of information services to clients. The traditional model of production and manufacturing, distribution and sales does not exist for Google. Instead, multiple processes prevail alongside with short deadline which are operated in teams and conducted in the way best suited for the urgency of the project (Hardy, 2006). Google is a follower of Chaos management practice, whereby desks are loaded and cluttered, there is a multiple use of various different technologies to correspond with and coordinate with the other members of the organisation across the world to respond to the varying short term deadlines and still management to pull it all off and have plenty of spare time to unwind! Where Google, follows the traditional work procedure for human resources, finance and operations, the rest of the work which falls under the software engineers and marketers is solely based on innovation where employees are free to develop their own way of working (Curtis, 2006).
Marketing and Sales
Google’s main revenue stems from online ads but its purpose is to use this tool to not only benefit itself and the commercial clients but also to inform internet users about different things and happenings, as its mission is to provide useful information. Google has encountered ‘click-fraud’ accusations in the past years alongside Yahoo but has proven its ethical business practice (Business Week, 2009).
Google provides search (web search, Google Chrome, Google News, and Google scholar), communication (Google Docs, Google Translate, Google Plus and Google Talks) and business associated Google Adword, Google AdSense, Google Analytics, Google apps, Google checkout) services (Hardy, 2006).
Support Value Chain Activities
Google has had five evolving business models, starting from Google 1.0 to 5.0, growing each time a successful application was launched, such as Google’s Gmail, Google Earth, etc. Google has its operations set up around the world that are directly linked with the head office in the Silicon Valley, California. As the organization grows, its challenges and opportunities grow with it (Curtis, 2006).
Google follows a task-oriented, people, innovation and risk taking culture where employees are treated as the strongest power of the company and are encouraged to utilize their skills and talents in taking risks and bold steps which allow the company to benefit in return (Lashinsky, 2006). The culture resembles that of campus life where the students are free to do what they like but submit projects on time. They are offered various leisure and recreational activities to take part in to ease their minds off the work (Business Week, 2009).
Google’s major source of attraction for employees is its management style and the motivation practices being undertaken by the human resource managers (Hardy, 2006). Google is a follower of Chaos management practice, whereby desks are loaded and cluttered, there is a multiple use of various different technologies to correspond with and coordinate with the other members of the organisation across the world to respond to the varying short term deadlines and still management to pull it all off and have plenty of spare time to unwind! This chaos management style does not offer employees restrictions and constraints for work. There are minimum boundaries and maximum opportunities for growth (Curtis, 2006).
Chaos management style is followed in Google’s organization where systemic, structured and authorative managerial practices are not found to exist. Instead, in a flat organization, employees are given minimum supervision and are free to work in self-managing teams and meet multiple deadlines.(Bloomberg, 2007).
Google demands one thing from its staff: innovation in every process and work area and offers endless rewards in return (Lashinsky, 2006). The employees are offered a 20% work space where they can chose a day in the week to work on their separate chosen projects) (Hardy, 2006). The rest of the work they chose is what they find most interest in. in a way they end up doing exactly what they love. Where this helps motivate the employees and be enthusiastic about the work they chose and never feel imposed or over burdened with work, this also leaves a lot of boring work and teams to be left out which no one wants to do and work with for completion of certain important projects. Where Google, follows the traditional work procedure for human resources, finance and operations, the rest of the work which falls under the software engineers and marketers is solely based on innovation where employees are free to develop their own way of working (Schermerhorn, 2010). There are three main ways how Google is motivating the employees: job enrichment, employee stock ownership program and the fringe benefits (Business Week, 2009).
Human Resource Management
Google receives thousands of applications every year as almost any intelligent, energetic, internet and technology enthusiast employee is interested to work for Google considering the high rewards it offers to its workforce. This results in havoc for recruitment and selection. The human resource managers at Google have a refined process of recruitment and selection which is based on a traditional model but is carried out in a modern fashion (Curtis, 2006).
Google thrives is internet revenue stream on cloud computing. The cloud computing technical capability is embedded in the business model of Google, which allows it to handle bank loads of information and data and offer services to its billions of clients worldwide (Curtis, 2006).
Google invests considerable amount of time, money and effort to continually progress its technological capabilities centered on increasing internet security, faster download, more innovations that generate more revenues and render customers satisfied from using its services and more applications to attract more customers. Google’s focus also has been on IaaS (Infrastructure as Service) to assist enterprises in establishing cloud computing systems in their organisations, much like Amazon and other e-commerce companies (Bloomberg, 2007).
Technological development at Google has allowed it to benefit from reduction in operational costs and from the use of Paas (Platform as a Service) in terms of boosting operational efficiency (Hardy, 2006).
Benchmarking: Business Model in the Technology Industry
Google’s fame is not only related to its search engine and advertising services but also with how it treats its employees. The culture being followed in Google is highly innovation centered. Such high level of innovation which is unrestricted results in many of its employees leaving to start their own ventures, such as in the case of Twitter which was started by the company’s former employee. The ‘Googley’ way of working has attracted and continues to attract almost every individual who is passionate about innovation and computer technology (Bloomberg, 2007). The question of sustainability then comes, as argued consistently by Financial Times as to how long further can the existing model being followed by Google survive despite of having soaring shares that are reaching heights (Financial Times, 2010).
With the economic downfall occurring globally, the technology industry has not been immune to any damages and has suffered with the consequences as well. Businesses are now inclined towards sustaining their profitability through new and alternative means of business expansion. From within, the businesses have had the inclination towards obtaining alliances and partnerships to foster their business growth. This inclination is supported by the important element: the customers’ demands. Businesses, with grave concern over prompt adaptations in the highly challenging business environment, do not have time to waste on installing and assembling the operations systems, they want prompt and immediate information feedback as and when they require it. For this reason, having to deal with two or three suppliers is just a burden. With the alliances and partnerships, business now have to just attend to one stop shops to cater to their information and data center software and hardware needs (Zack, 2008).
The companies are now competing to obtain the maximum trust of the customers through providing all the necessary software and hardware requirements in one go, with minimum difficulties and complexities in the process of installing data centers, without having to take over other companies that provide either hardware or software services that one company does not. They are now competing via obtaining partnership agreements with companies whose services are complementary in an attempt to gain market share and provide one stop shop for customers (Menick, 2008).
The business model for technology companies’ partnerships contain the following components:
These include required manufacturing resources, such as the technological expertise and equipment required to produce the software or the hardware (Menick, 2008).
In the computer industry there is no survival without continuous and prompt innovation and creativity. The new business model of Hp and Microsoft takes into account the innovation component to produce better data centers that cater to various customer demands (Financial Times, 2010).
Strategy and Governance
The alliance and one stop shop concept is a differentiating element and getting the best of Hp and Microsoft from one stop is itself a unique and differentiating component for both the businesses. The product of such an alliance through SQL and data centre software along with HP’s hardware solution in one package is a differentiated one as prior to this, the business customers have had to deal with multiple suppliers of software and hardware equipment to develop an efficient and effective data centre (Zack, 2008).
Staging and Pacing
The biggest challenge in the computer industry is of staging and pacing as technological advancements are always on a full throttle and have to be adapted to very quickly. Companies like HP and Microsoft and Apple, in their separate business endeavors are continuously engaged in bringing about innovations in the market first hand. This is based on their strategic staging and pacing with the technological advancements (Farrel, 1994).
The latest and a highly important component which is reshaping the business model is that of the partnership. Partnership is part of the strategic staging of the companies to enhance their operations and provide a better and a farfetched product in the market that acts as a one stop shop. The economic outputs of pursuing such a business model are: Demand Satisfaction of the customers; Sales; Revenue; Net Income and Growth (Financial Times, 2010).
Bloomberg. (2007). Google Shares Rise; Goldman Forecasts 30% Price Gain. Available at
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acEzWJpJ9ZrA&refer=us%20(accessed%2004/04/07. Accessed 17 June 2012.
Business Week. (2009). Google’s Management Style Grows Up. Available at
http://www.businessweek.com/managing/content/jun2009/ca20090623_918721.htm. Accessed 17 June 2012.
Curtis, L. (2006). ‘Will Google become a victim of its own success?’ Admap, 41(473): 55-8.
Farrel, S. (1994). ‘Choosing how to compete: Strategies and tactics in standardization’,
The Journal of Economic Perspectives, 8(2): 117-131.
Financial Times (2010). Apple Unveils Fourth-Generation iPhone. Available at
http://www.ft.com. Accessed 18 June 2012.
Hardy, Q. (2006). ‘The Google industrial complex’, Forbes, 16: 109-12.
Lashinsky, A. (2006). ‘Chaos at Google’, Fortune, 154(6): 34-42.
Menick, J. (2008). Basic Adventure and Strategy Game Design for the Apple. Facts on the File.
Schermerhorn, J. (2010). Management. Wiley and Sons.
Zack, M. (2008). Developing a Knowledge Strategy. Prentice Hall.
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