Abstract
This report analyzes the business plan of the Alphabet corporation, having Google as its biggest company. In the performed analysis, such methods as a case study and literature analysis involving primary and secondary sources were used. This paper focuses on vision and strategy, competitive capacity, business simulation process, performance, and IT industry analyses, ending with the discussion of Alphabet’s future plans and recommendations for them and Google’s development overall. The main argument of this report lies in the fact that Google moves towards the right way, trying to achieve set goals and realize organizational mission and values, applying modern technological advancements to engage employees in work. This is true because of the achievements made by Alphabet in the last five years: development in e-commerce, entering new markets, and being at the top of companies, working in which satisfy its employees.
Introduction
This report targets analyzing the 5-year strategy plan of Alphabet Incorporation, focusing on Google company specifically. This paper includes a description of Alphabet itself, demonstrating its history and companies under this umbrella, the vision and strategy of the corporation, and paying attention to the hiring process and organizational culture. Consequently, this report will analyze the competitive capacity of Google using Poster’s Five Forces strategy, highlighting various industries and markets that it has entered and succeeded in. Finally, this paper will discuss the results of the business simulation performed by Alphabet Inc. and the performance analysis as a whole. In conclusion, the significant part of the report will be related to the future plans of Alphabet Inc. and recommendations for them. Therefore, this paper argues that Alphabet Inc., an umbrella for companies, including Google, is moving in the right and efficient direction to follow its vision, mission, and values.
For this report, such methods as a case study and a literature review were used: both primary and secondary resources were analyzed for this paper. To begin with, scholarly articles from peer-reviewed journals related to business and management studies were considered in order to gain information about specific terms, definitions, theories, and analysis of Google’s competitive advantages. Mostly, academic articles written no older than 5 years ago were used; however, some papers studied in classes created before 2017 were also applied in this report. At the same time, news, official websites of Google and Alphabet Inc. themselves were taken as primary sources to gain information about how the company talks about and how it poses itself. Moreover, it was difficult to find a full business plan of Alphabet Inc. that is a subject to be discussed. However, there were found many scholarly articles discussing the company’s corporate culture, achievements, plans, and other information related to the topic.
Discussion
Alphabet’s Description
Alphabet Incorporation is a holding company based in the USA. Alphabet Inc. was established after Google was restructured in October 2015 because of anti-monopolistic law. According to the official website of Alphabet Inc., “Alphabet is mostly a collection of companies” (Alphabet, 2021, para. 5). In other words, it is a holding which serves as an umbrella or a parent such companies as Google, Calico, Fiber, Nest, and other former Google subsidiaries. Google, the leading company in the Alphabet incorporation, is a “worldwide Internet software corporation and market leader in the area of online search and text-based online advertising” (Wirtz, 2019, p. 207). As it is written on the company’s website, its products, such as Google Maps, YouTube, Chrome, and Android, “have over a billion users” now, and it promises to create more and more innovative technologies and apps (Alphabet, 2021, para. 2). In other words, with the highest level of confidence, one may claim that every Internet user knows about Google, and every owner of a mobile phone knows about Android. Being an essential part of Alphabet Inc, Google becomes a focus of discussion in this paper.
Concerning the market characteristic of Alphabet umbrella, it is a multisector and innovative company, often being the first among competitors to make the right decisions. It was stated by Wirtz (2019) that “Alphabet serves as a multisector holding that allows its subsidiaries to act more freely than within one company, which was necessary for Google to stay fast and innovative” (p. 209). Moreover, it should be pointed out that Alphabet is a constantly growing holding company in terms of its revenue. For instance, after the restructuration of Google in 2015, the company’s revenue increased from nearly 75 billion USD to more than 100 billion USD during a 2-year period of time, which can be called a drastic growth (Wirtz, 2019). Summing up the description of Alphabet Inc. and Google especially, one should claim that such a big and constantly growing corporation probably has unique business characteristics and can be used as an example of clearly defined values and strategies.
Vision and Strategy
There are several components of strategic planning, which include vision, organizational mission, and values. Firstly, a vision provides a clear direction where the organization will move and what its goals are, and workers should easily understand it. Alphabet Inc. targets innovations, and its vision is about moving towards technological advancements. Secondly, the organizational mission comprises a couple of sentences highlighting the essential purpose of a corporation itself, reminding workers what they stand for. As it was stated on the website, “We are still trying to do things other people think are crazy but we are super excited about,” this can be called Alphabet’s mission: make revolutionary ideas real (Alphabet, 2021, para. 2). Finally, values are a set of organizational principles that direct the way in which the business is running, providing the framework for all decisions. According to the official website, “Alphabet is about businesses prospering through strong leaders and independence,” which can be called as core values of the corporation (Alphabet, 2021, para. 6). Thus, Alphabet values strong leaders and independence, which help corporation to move forward and achieve goals.
Concerning Alphabet’s hiring strategy and organizational culture are reasons for the corporation to take the leading role in innovations and employees’ satisfaction. As it was claimed by Zulfan et al. (2020), Google’s organizational culture is one of the fundamental reasons it has become one of the most influential players in the modern reality of information technology, rapid digital growth, and in the 4th Industrial Revolution. Scholars relate the 4th Industrial Revolution to the creation of “the Internet of Things (IoT), Virtual Reality (VR), and Artificial Intelligence (AI)” (Zulfan et al., 2020, p. 25). Free food and an opportunity to bring a pet into the office is an everyday reality of Google’s organizational culture and one of its most efficient way to engage employees (Zulfan et al., 2020). Concerning the hiring strategy in Google, Shrivastava et al. (2018) claim that Google uses mathematical algorithms involving statistical analysis in hiring management, considering the rejected applications by HR managers. Thus, the company analyzes all the profiles and is less likely to miss the talent.
Competition Analysis
Porter’s Five Forces analysis is used to identify companies’ strengths and has an emphasis on identifying threats by substitutions, new entrants, buyer power, etc. According to Green et al. (2020), as Google’s customers have many social media, apps, and email options, their power can be a major threat because buyers can easily choose other companies’ options if they are better. Moreover, as Google is at the top of having web pages with high traffic, Supplier power is also high for the company. As Google is operating in a highly competitive field, it has many competitors. Thus, the threat of substitution is also high enough for Alphabet Inc. Finally, according to Heitzman (2017), Google holds nearly 80% of the global search engine market share. Therefore, the threat of new entrants is low: even though new companies have all the opportunities to enter the market, they are not likely to compete with such a big corporation as Alphabet.
What concerns Alphanet’s competitors, there are many of them, including Yahoo, Bing, Amazon, Microsoft, Apple, Meta, and others. This is true because Google creates products related to different technologies: apps, mobile operating systems, searching engines, artificial intelligence, mobile market platform, and etc. According to Wirtz (2019), “Google constantly aims to enter other markets and enhance its position in the Internet market,” meaning that each year it receives more and more competitors on the market (p. 221). It is worth mentioning that Google’s advancements in e-commerce are also highly significant, and in recent years the company achieved high results in the area of online trading.
Regarding internal capabilities, Alphabet Inc. is strong in terms of its strategy, structure, and resources competencies. For instance, Alphabet / Google has a dominant position in the online and mobile advertising market, broad advertising networks and a range of online services (Wirtz, 2019). Thus, hiring strategy using mathematical algorithms, organizational structure and culture, human and technological resources result in the company’s leading position in the market.
The industry of companies related to information technology tends to suggest innovations and perform change management among employees. This trend means that companies finance employees’ education more nowadays, in order for them to suggest revolutionary ideas, as Google values. Therefore, Alphabet’s attractiveness for buyers and customers lies in the fact that they can provide technological advancements in various products, making people’s lives more comfortable and convenient. Moreover, Google attracts other businesses, making them their customers who buy online advertisements for their services in the Google Chrome Internet browser and web pages.
Simulation Performance Results
Business simulation is a process that is implemented in order to test and analyze current and those that have not yet been adopted decisions. Thus, it can be called a mechanism that includes the analysis of how business is built through imitation. In particular, the SWOT analysis is a tool that allows managers to evaluate the business process and suggest potential alterations to the existing business model, according to which the company is operating. Moreover, to change the business model using the business simulation in the most efficient way, a company should use the adopted code of corporate ethics. For instance, there is an open document for all Alphabet’s employees, claiming that its workers should “follow the law, act honorably, and treat co-workers with courtesy, support, and respect” (Alphabet, 2021, para. 1). Google also values Privacy, Security, and Freedom of Expression and encourages its employees to follow its code of conduct, ensuring these values.
Alphabet follows the Environment Social Governance (ESG) principles and has been working on several projects related to the field of sustainable business in the past five years. For instance, Alphabet seeks to build a more equitable workplace in its corporation. In other words, now and in recent years, the company had to perform some imitations regarding this issue related to the change management process and the business simulation itself. According to Parker (2021), who is a Chief Diversity Officer in Google, the company “set out to improve leadership representation of Black+, Latinx+ and Native American+ Googlers in the U.S. by 30% by 2025” (para. 3). Concerning the results of this target, she highlights that they have “already reached our goal, and we’re on track to double the number of Black+ Googlers at all other levels in the U.S. by 2025” (Parker, 2021, para. 3). This program of equitable workplace relates to the business simulation, as, according to Parker (2021), the process needs a great number of investments into hiring, onboarding, progressing, and retaining underrepresented employees. Therefore, this aim required elaborated SWOT analysis and application of other tools in order to distribute the investments in the right way and define the most successful way of achieving the target. Moreover, Google has been moving towards this aim successfully in the last few years and continues achieving the required results through the business simulation process.
Performance Analysis
One of the most important and unexpected events that happened during the 5-year period of time can be definitely called the COVID-19 pandemic, which threatened all types of business a lot. As this event was not expected, the decisions made during the past three years by Alphabet Inc. can be analyzed as a part of the corporation’s event responses. For instance, companies under the Alphabet umbrella gave an opportunity for employees to work remotely and created an app for people around the world. Google COVID-19 community mobility reports were highly useful during lockdowns and overall provided statistics related to the topic of infection.
Among the opportunities for development and economic growth for Google, Valsamidis et al. (2018) pointed out the potential growth in internet usage, an increase of the worldwide online ad spending, and new products (such as Google+). Truly enough, after the start of applying Google Photos using the machine learning tools in 2015, Google started developing deep learning models to apply them to Google Maps and YouTube (Croak & Dean, 2021). The strategy towards innovations remained actual during the past five years as well. For instance, the creation of new approaches to health-related problems, such as cancerous cells and breast cancer, were designed to be implemented by 2017 and 2020, respectively (Croak & Dean, 2021). Moreover, they were successfully created and started to be used in the planned dates, demonstrating the company’s planning and right business model in product development.
An interesting program launched by Google was food forecasting in 2018, which became real with a better understanding of aerial imagery due to the achievements in deep learning. Concerning the 5-years business plan, the company targets covering more than 360 million people in 2021 with this food-related program (Croak & Dean, 2021). However, the realization of this program, especially covering such a number of people living in different places, requires the achievements made in the technological area and the work of logistic offices, which works with high efficiency.
As mentioned earlier, concerning decision-making and strategy in HR, Alphabet Inc. has aimed at a more equitable workplace. It is necessary to say that although Google set the deadline for the increase the representation of different races in the company by 30% by 2025, it has already made huge progress in this. Finally, Google’s revenue increased from nearly 75 billion USD to more than 100 billion USD during a 2-year period of time, which can be called a drastic growth. This means that in terms of decision-making related to finances and the company’s revenue, Alphabet also follows the right strategy.
Future Plans and Recommendations
There are two dimensions in which Alphabet Inc. is planning to develop now and in a few years: products and following the ESG principles in its company. For instance, as was mentioned already, Google seeks to increase the number of equitable workplaces and provide places for Black+ by 30% by 2025. According to Alphabet’s web page for investors, this corporation targets reducing city transport emissions with Maps and artificial intelligence, which is a plan of both dimensions: applying technological achievements to achieve ESG goals (Alphabet, 2021). For instance, Google wants to make more than 500 cities and local governments reduce an aggregate of 1 gigaton of carbon emissions per year by 2030 and more (Alphabet, 2021). Moreover, another Alphabet’s plan in the near future includes the protection of kids and families on YouTube by providing more quality content. Therefore, these targets may be claimed as key decisions for the next years, requiring quality work from the whole company: HR, Finance, Marketing, Logistics, and other offices together.
From the existing information regarding the future plans of such a big corporation as Alphabet, it is hard to reveal any changes to the current strategy. Vice versa, and one may claim that the hiring strategy remains the same: the company seeks to provide a more equitable workplace, meaning that HR managers will seek to preserve the tendency demonstrated in the past 5-year period. Regarding finances, overall, Google and Alphabet Inc. are probably to keep the tendency of a constant growth in terms of revenue, which is a good sign to business development.
However, based on the performance analysis discussed in the last part of the report, one may drive some recommendations for Alphabet Inc. For instance, as one of the leading companies in existing mobile software markets, search engines, and others related to IT areas, Alphabet Inc. can generate more revenue in the coming years. To begin with, Google, as one of the major representatives of the corporation, is recommended to extend the range of payment services for mobiles. In other words, Alphabet Inc. owns Google Pay, which is a payment tool for the users’ Internet accounts that can be used both in laptops and smartphones. At the same time, there is PayPal, which is a strong competitor to Google Pay. Thus, extending the number of services supporting Google Pay will attract new customers and lead to additional revenue. The point in this recommendation lies in support of existing products, not the focus on new ones. This is true because it seems that Alphabet Inc. emphasizes the significance of modern technologies and eliminates previous creations from the official website as an attraction for investors, which cannot be counted as a purely right decision.
Conclusion
Summing all written above, it should be stated that this report included the analysis of business plans for past years and future one of the Alphabet corporation. A case study of Alphabet Inc. and Google themselves were performed, paying significant attention to a literature analysis involving primary and secondary sources. After the analysis of vision and strategy, one can point out that Alphabet Inc. targets innovations, and its vision is about moving towards technological advancements. At the same time, its values are a set of organizational principles that direct the way in which the business is running, providing the framework for all decisions. This corporation applies all the modern technological advancements not only to the production of products but also to the inner life of the company. Moreover, it tries to provide a more equitable workplace by hiring strategy and engaging as many employees as possible by the organizational culture of Google.
Consequently, Poster’s Five Forces analysis demonstrated that there is no threat of new entrants for Alphabet Inc., as Google holds approximately 80% of the global search engine market share, and it will be hard for new companies to compete with such a big one. However, there are some competitors for Alphabet Inc., such as Meta, Apple, Microsoft, Yahoo, and others, but it is necessary to state that these companies compete with Alphabet in different areas. For instance, Apple also produces mobile software, and Yahoo also focuses on a search engine. Overall, the plans of Alphabet Inc., which include development in two dimensions: products and following the ESG principles, prolong the past and existing projects of the corporation that focus on revolutionary ideas and innovations in the area of IT. Despite the fact that focus on new projects should be highlighted on the official web page, Alphabet Inc. is also recommended not to forget to extend the area of its existing products, such as Google Pay, to show the potential to get additional revenue investors.
Reference List
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