Environmental Analysis: Google Company

Introduction

The report consist of two sections. The first section focuses on the impact the micro and macro environment has on Google Company, which is the largest search engine in the world. It analyses on the factors that can be a negative or positive influence to the company. The report will first focus and analyse on the six macro environmental factors which are economical, global, political, socio-cultural, technological and demographical. Following the macro environmental factors will be the micro environmental factors which are companies, competitors, customers, public, intermediaries and suppliers. The second section focuses on the (assessment of the organizational culture)

Importance of Macro and Micro environment factors

Macro and Micro environment factors are part of the external environment. The external environment consists of a variety of factors outside the company doors that they typically don’t have much control over. Managing the strengths of the internal operations and recognizing potential opportunities and threats outside of their operations are keys to business success. An understanding of macro and micro marketing environment forces is essential for planning. It helps a business to compete more effectively against its rivals. These factors also assist in the identification of opportunities and threats and enables an organization to take advantage of emerging strategic opportunities.

Macro environmental factors

Baines et al (2009: 77) highlight that the macro environment forms the basis of various elements which formulate the larger part of the society, these factors directly impact a business. The six macro environmental factors which are being focused on will be; economical, global, political, socio-cultural, technological and demographical. A macro-environmental analysis includes examination of elements and connections in the company’s widest environment. Macro environment refers to those factors which are external to company’s activities and do not concern the immediate environment. It comprises general forces that affect all business activities in market. The macro environment cannot be controlled by the organisation and hence the business needs to adapt to the needs of the macro environment (Johnson et al, 2011: 65).

The economic environment constitutes of economic conditions, economic policies, and the economic system that is important to external factors of business. The economic conditions of the country includes the nature of the economy of the country. The general economic situation in the region, conditions in resource markets like money, material, market raw material components, services, supply markets and so on which influence the supply of inputs to the organisation, their costs, quality, availability and reliability of supply of products and services. It determines the economic strength and weakness in the market. The purchasing power of the individual depends upon the economic factors like current income, price, savings, circulation of money, debt and credit availability. People income distribution pattern analyses the market possibilities and impacts on enterprise and development process of the country. The availability of economic resources of the country and the level of the economic income of the country may also have impacts on the enterprise. These are the very important determinants of business strategy in the organisation for formulating, implement and controlling of economic policies. Economic environment refers to the nature and direction of the economy within which business organisation are to operate. For instance, in developing country, the low income may be reason for the very high demand for the product and services of the business. In countries where the investments and income are steadily and rapidly rising, business prospects are generally bright and further investments are encouraged. In developed economics, replacement demand accounts for a considerable part of the total demand for many consumers durables whereas the replacement demand is negligible in the developing countries. The economic conditions of a country control the spending power of individuals and hence the net income of a technology based organisation is negatively impacted by adverse economic conditions (Morrish, 2011: 113).

Gross domestic products (GDP) have been on the top since a very long time. They are increasing annually at the average rate of 3.20% reaching a high level of 17.20% at times. Countries like China, India, South Africa, and United Kingdom have had increases in their GDP each year since 1970 and this is a positive factor for Google. With the stable and continued growth of those countries, Google’s internal and external investments will always be high in numbers. The amount of users around those counters can impact on Google positively and lead them to establish better services and more products for their users leading the it being a strength to Google economically. Interest rate can have a positive or negative impact on any organization, these impacts are decided depending on a company’s dealings. Google is a company that relies on investments, this means when interest rates increase gradually in a country, Google benefits. In United Kingdom, the rate average is set to about 8.2% in USA it stands at 6.1% in South Africa at 13.3% in India at 6.6% and in China at 6.4%. These numbers mean that companies in that region of the world will be able to take out loans and invest or support their company. The more companies have money, the more they will be willing to spend on advertisements, hence doing through Google. However, company benefits from it and increases their overall income. In the past few years, USA, UK, India, South Africa and China 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 and this causes the companies to increase the prices of their products and getting more cash out of it.

Globalization is the closer incorporation of countries and peoples of the world which has been brought about by the enormous reductions of costs of transport and communications and the breaking down of artificial barriers to the flow of goods, services, capital, knowledge and to a lesser extent, people across borders (Joseph Stiglitz, former chief economist at the World Bank)

The impact of globalization on International business alludes to an extensive variety of business exercises attempted crosswise over national fringes. Alongside quickly expanding globalization, worldwide business has turned into a mainstream point and has drawn the consideration of business officials, government authorities and academics. International business is not quite the same as local business. At the international level, the globalization of the world economy and the contrasts between countries present both opportunity and difficulties to global organizations. Business managers need to take note of the globalized business environment when settling on international vital decisions and in overseeing ongoing global operations.

Many economists believe globalization may be the explanation for key trends in the world economy such as: Lower wages for labourers, and higher profits, in Western economies, The surge of migrants to urban areas in poor countries Low inflation and low interest rates in spite of strong development. Globalization has accelerated in the last 20 years. During a period of relatively strong economic growth, world exports as a share of GDP increased from under 20% in 1994 to over 32% in 2008, and whilst global trade fell back in 2009, as a result of the global slowdown, but bounced back in 2010. Increasing foreign investment can be used as one measure of growing economic globalization.

As the internet builds its grip on foreign business sectors, it was a natural progression for a very successful company to be born from the internet to extend its operations into these fledgling nations. While the use of internet in foreign markets, like Japan, Europe, and China for example, are simply starting to take shape, the quantity of new internet users in these business sectors is growing at a much more noteworthy rate than in the United States..

Google, which generates almost all of its revenue from advertising sales, have centred their attentions to these markets with boundless potential. Google officials anticipates as its vicinity in outside countries expands so will the development of the company and eventually the bottom line. A portion of the most recent information on Google’s financial status is that it gets somewhat under 66% of all income domestically. This information is slated to change drastically as overseas operations develop. One of the variables that have permitted Google to experience such fruitful development is that the prevalence of the brand was scattered through verbal instead of costly advertising dollars. With the populations in foreign business sectors much bigger than in the Unites States it would seem that an equation for success. Then again, what has been an equation for achievement in the United States does not generally mean success in other parts of the world. Part of Google’s plan to aid internet clients in discovering inconceivable measures of information quickly was to digitize library accumulations from the best libraries in the U.S.

Ultimately, Google I believe, has ventured into another region by expanding itself into remote markets. Likewise with all explorations there will be growing agonies. Google is determined to be victorious, as confirm by its development and its eagerness to expand. It did hit a few humps along the way, yet they comprehend them and have balanced as needs be and successfully.

I believe to be successful in foreign markets a company must utilize the tools it was founded on that allowed them to grow into globalization. A company must be forward thinking, and open minded. The company must be aware of cultural differences and be sensitive to them, and be able to adapt to different environments. We must understand that a business model that worked in one country might not work in the next country. It will be important to have proper personnel in place from each foreign market that see the vision and mission of our U.S Company, but can also translate the mission for everyone else to understand (Vise David A.2005)

References

UK Essays. November 2013. Environmental Factors Which Influence Marketing Decisions Marketing Essay. [Online]. Available from: http://www.ukessays.com/essays/marketing/environmental-factors-which-influence-marketing-decisions-marketing-essay.php?cref=1 [Accessed 12 May 2015].

Google Globalization Case.”[Online] Available from:

http://www.123helpme.com/google-globalization-case-view.asp?id=165326/ =1 [Accessed 12 May 2015].