Google Case Study

...

Inflation Rate will cause problem for the buyers or the customers. However, companies benefit from it and it increases their overall income. In the past few years, USA, UK, India, China and South Africa have all recorded an average increase in inflation rate of 2.5-9.5% annually. This means that raw materials in these countries are becoming more expensive every year. This causes the companies to increase the prices of their products and getting more cash out of it. This causes Google’s advertisements to increase as well as the number of clicks for each ad The result is more profits for Google from these countries.

2.3 Social Cultures Factors

Knowledge and information is a key factor of human development. Google is a leader of society that is more and more global because its mission is to organize the world’s information and make it universally accessible and useful to everyone. Socio-cultural factors for Google’s PEST analysis include traditions, values, societal trends, and society expectation of businesses. These society expectations can be grouped into population demographic, income distribution, lifestyle change and level of education.

Google is not limited to a certain demographic population, Google is a global company that offers global users with global services and global knowledge for free with only one condition of being connected to the Internet. Therefore there is no restriction on any specific demographic, culture or specific income distribution. This gives Google a very strong advantage in the market. Its tools are offered to everyone and hence anyone, anywhere in the world can advertise on Google and increase their profits.

Majority of third world countries that are prevailing with extreme poverty have access to Google through their mobile applications. Google's culture is to offer users access to the world through a simple finger tap and this information offered by Google does not have a culture or a tradition to follow. This information can be good and helpful to one person while useless or offensive to others. This could be a negative aspect for Google.

Google always strive to keep up with the social trends and lifestyle changes of its users in order to entertain and capture their attention with its services and tools while promoting customized advertisement. Google's infrastructure is built to identifying its users’ trends and habits as well as the use of information to customize their search experiences with related results based on their habits and history. Google’s application memorizes all the data entered when searching for a something and saves personal information for 24 months. In reality, Google sells some information to advertising companies. Globalization of information has a negative impact on societies concerned about protecting their private data. Google has been highly criticized by Privacy International Association and accused of harmful acts towards people's privacy. In the sense of politics, the preservation of information could lead to Google having better relationships with countries who do not like their privacy being violated hence, more business and profits. In regards to social factors, Google’s tendency to sell out their customers may harm some of them. At the moment, Google is surviving, but the human race is ever changing and if people are accepting the privacy violation now, they might not in the future. This could be a threat leading to a weakness in the future.

2.4 Technological Factors

In analyzing the technological factors affecting Google, the key aspects to consider are the level of basic infrastructure, rate of technological change, new discoveries and development, government spending on research, access to newest technology, technology incentives and technology legislations.

Google is described as a technological company that helps innovate and improve the world with its new development. Technological factors play a major role in a company like Google and it is part of the company’s competitive strategy. Google is not only a search engine,it also provides many services, tools and products free of charge through www.google.com. Google's IT infrastructure is a closely guarded secret because it is one of the company’s competitive advantages. Google has up to 450,000 server’s spreads over at least 25 locations and it uses a customized version of Linux operating systems to give them control and flexibility in finding new discoveries.

The success of Google is mainly due to its innovative concepts and technologies such as Page rank in their search engine, Ad words as advertising system, Ad Sense program, Gmail, Google Spreadsheets & Docs, Google Map, Google Fro ogle, Google Analytics, Google Desktop, Google Earth, Google Gear, Google Page creator, Google groups, Google talk, Picasa and more. All these services and tools are proposed for free with the aim to make a users life easier, efficient, practical and entertaining.

3.0 Internal Analysis

The internal analysis of Google consist Financial analysis and also strategy that been implemented by Google.

3.1 Financial analysis

The instruments that been used in this cases analysis is liquidity ,capital structure and the performances .This instruments will able to identify the financial performances of Google.

- Liquidity Ratio Analysis

The Google liquidity indicates that the company be able to meet all of the current liabilities. Google liquidity is above the industry average of 2.0. The reason because of the purchases Motorola and also the Nexus 7 . The company started manufacturing and selling hardware this required additional liabilities .Even with this additional assets acquisitions Google liquidity is still very good because the company maintain ratio well above the industry average 2.0(

Liquidity Ratios

2013

2014

Quick Ratio

3.69

3.83

Current Ratio

4.58

4.80

Google Liquidity Ratio (Data Source: Google 2014 10K)

3.2 Capital Structure

Google’s optimal capital structure is that of the mix of debt and equity that