Google’s Strategy in 2010 Essay

What is Googles business model?The answer is complex beca call it makes up of lots of different factors. The top 10 principles of Googles corporate philosophy is what keeps them doing what they do best. (Gamble, 2010, pg. C-175).1.Focus on the user and entirely else will follow.2.Its best to do one thing really, really soundly.3.Fast is better than slow.4.Democracy on the web works.5.You forefathert need to be at your desk to need an answer.6.You can make money without doing evil.7.Theres always more information out there.8.The need for information crosses all borders.9.You can be serious without a suit.10.Great just isnt good enough.Their mission statement is to organize the worlds information and make it universally accessible and useful. (www.google.com). These 10 principles have helped them achieve their goal within their mission statement. Google has kept it simple but efficient. These 10 principles have guided them from the beginning and it has work. They dont need to fix so mething that is not broken. Examine the financial reports in the case to determine the companys arrive atability, liquidity, leverage and activity ratios. Based on these ratios what is your assessment of the companys performance? Justify your answer?Profitability ratios be measures of performance that indicate what the firm is earning on its sales or assets or equity. There are the operating profit margin, net profit margin, return on sum of money assets, return on equity, and basic earning power ratios. (Mayo, 2007).Operating profit margin = Earnings forwards interest and taxes/Sales8,381,189/23,650,563 = 35.4%Net profit margin = Earnings after interest and taxes/Sales6,520,448/23,650,563 = 27.5%Return on total assets = Earnings after interest and taxes/Total assets6,520,448/40,496,778 = 16.1%Return on equity = Earnings after interest and taxes/Equity6,520,448/36,004,224 = 18.1%Basic earning power = earnings before interest and taxes/Total assets8,381,189/40,496,778 = 20.6%Leve rage ratios measure the firms use of debt financing. There are two ratios debt/net price ratio and debt ratio. (Mayo, 2007).Debt/net worth ratio = Debt/Equity4,492,554/36,004,224 = 12.4%Debt ratio = Debt/Total assets4,492,554/40,496,778 = 11.0%Activity ratios measure how rapidly the firm is turning its assets into cash. The two activity ratios are inventory turnover and receivables turnover. Google does not have any inventory so there is no inventory turnover. (Mayo, 2007).Receivables turnover = Annual sales/Accounts receivable23,650,563/3,178,471 = 7.4%Liquidity ratios measure the ease of which assets whitethorn be converted into cash without loss. There are two liquidity ratios quick and current ratio. (Mayo, 2007).Quick ratio = real assets Inventory/Current liabilities29,166,958-0/2,747,467 = 10.6%Current ratio = Current assets/current liabilities29,166,958/2,747,467 = 10.6%Since Google does not have any inventory, the quick ratio and current ratio is the same. This shows that Google does have more assets than current liabilities. Overall, Google is doing extremely well all over the board. Their debt ratio is low sitting at 11 percent. They paid their bills on time because their receivables turnover is sitting at 7 percent. Investors populate that Google is a good company to buy stock into. Perform a SWOT analysis of Google.StrengthsNumber one search engine with established alludeSimple interface-user friendlyTheir interface has 88 different languages-Global usageLocalized search resultsInfrastructureWeaknessContextual ads targeted by click fraud butt jointt expand to offline productsOpportunitiesAcquisitions of other businessIncrease online advertisingAlliances/partnerships with other companiesLaunched their own operating systemGoogle TV ThreatsFacebookClick fraudYahoo, Microsoft, and Amazon slow down economyDescribe Googles value chain. What is the source of the companys competitive advantage?Since Google does not have any raw materials to process int o completed goods like a traditional company, their value chain is different. Ben Morrow (2009) their value chain is more nuanced. Google gathers all the web users it can (the raw material) by enticing them to use its stellar search product with highly relevant results delivered promptly. Then, through assorted signs (text advertisements) it directs these same web users in the form of job to its advertising partners who transform the traffic into conversions or sales on their sites (finished good). Their added value is that they know where to direct the users to their sites that they needed to go.The source of Googles competitive advantage is learning by doing as verbalize by Hal R. Varian, Googles chief economist (Lohr, 2008). Basically, they arelearning from their competitors. For example, with Microsoft antitrust problems, they are now making antitrust training is mandatory for Google managers (Lohr, 2008). Some of Googles competitive advantages are their value, rarity, imitab ility, and substitutability. Value because it is part of their value chain. Rarity because their user interface is so simple and user friendly. Also, it is hard for competitors to imitate because of the large infrastructure requirements to serve the relevant pages quickly. Google has servers all over the world all synced up and all running on a very large quantity of RAM, fast computer memory. (Morrow, 2009).ReferencesLohr, S. (July, 7, 2008). The in the altogether York Times. Google, Zen Master of the Market. Retrieved on April 11, 2012 from http//www.nytimes.com/2008/07/07/technology/07google.html?pagewanted=1&_r=1. Mayo, H. (2007). Basic Finance An Introduction to Financial Institutions, Investments & Management 9 Edition. Thomson United States. Morrow, B. (Feb. 22. 2009). Internal Analysis of Google Inc. Retrieved on April 11, 2012 from http//www.benmorrow.info/research/internal-analysis-of-google-inc/. Thomson A., Peteraf, M., Gamble, J., & Strickland, A.J. ( 2012). Crafting & Executing Strategy. McGraw-Hill.