Analysis of Google in Relation to Its Expansion in China

Introduction

Google was established in 1996 in America, founded by Sergey and Larry Page, it is the leading multinational technology firm by providing online advertisement, software, hardware, search engine and cloud computing. Currently it is a subsidiary of the holding company of Alphabet Inc. which currently are involved in a diverse range of businesses including YouTube, Dialogflow, AdMob, Google Japan, Android and Google environment. Google provides more than 50 internet services including Gmail, GoogleDocs, GoogleDrive cloud storage and Android (software).

PESTEL Analysis of Google

The PESTLE analysis is used for strategic planning and management. For a technological aspect a large company like Google, the PESTLE analysis is very primary key as their services perceive every major aspect of the market conditions analyzed. The following are some of the important assessments that can be obtained from carrying out a pestle analysis for Google.

Political factors

Inspecting the political factors, Google has to value the political environment and influence of information dissemination as well as technological services. This will cover tariffs and taxation as well as state regulations and restrictions. For instance, Google has in the recent past had to deal with political problems with countries such as China. This is due to the laws and regulations concerning access to sensitive information in China. Google is still dealing with censorship issues and has even lost market to a major Chinese search engine called Baidu. Such political factors can prevent Google from developing in certain countries.

Economic factors

Many companies are usually affected from economic factors and Google is not an exception. Inflation rates, economic growth, tax regulations, interest and exchange rates can all fall under economic assessments. For a labor-prospective venture, economic issues can trickle-down to employment problems. although Google has not experienced any stagnation despite the recent economic upheavals in US and other countries. As for tax concerns, Google is still in discussions with France over alleged tax noncompliance.

Social factors

These involve the cultural, social groups and safety that popularly use technological services. For example, in China, Google users were found to be mainly between 18 and 25 years of age. The majority of those users were well educated and situated in urban areas and also of a higher upper social class. The safety of these users has to be taken under consideration and Google thus has to constantly implement measures that protect its users in accordance with the local regulations.

Technological factors

This involves areas such as R&D as well as automation and making changes in the technological area. As a large technological company, Google invests heavily in R&D and implements several changes to satisfy its huge clientele base. This influence new entrants in the technological service market as they can hardly compete with Google.

Labor laws and regulations

There are many laws and regulations that govern information and technology sectors. Google has to comply with these laws and regulations. These may involve in-laws that has restriction to technological services or those that govern tax payments. The French tax compliance case against Google is one such regulatory factor that the company that has to deal with.

Environmental factors

Within the technological sector, environmental factors mainly affect the users and their safety. Google has to make sure that its users are protected from fraudsters, hackers and other internet factors or hazards.

SWOT Analysis of Google

Strengths

• Providing the best user and unmatched experience when it comes to search. Google’s search algorithm is constantly updated so that users are constantly provided with only the most relevant searches while still catering to commercial clients with an efficient advertising platform that reaches only the most relevant of consumers.
• Google controls over 90% of the internet market in most European Union member states.
• Google’s first-mover advantage has helped it to gain at least 80% online traffic giving it a competitive advantage to its competitors (Cooper 2017).
• Google’s search dominance. Google has dominated the search engine market commanding a market share of 86.02% as of 2017.
• Big brand name. Google has become a household name, currently ranked the 3rd most valuable brand (behind Apple and Amazon) by brand consultancy firm, Brand Finance.
• Google’s pre-installed software in android phones has helped the company to expand globally, increase its revenue and profits.

Weaknesses

• Google’s partnership with Huawei is a weakness that affects the company’s US operations. According to Wojazer (2018), the strategic partnership has been seen as the company’s collaboration with China Government mostly because the tech giant refused to renew its research partnership with the US Department of defense. The US government claims that this partnership poses a security threat to the USA and consumers.
• Low presence in China since it gives it a competitive disadvantage against Chinese tech companies like Alibaba.

Opportunities

• Millennials love for technology offers a growth opportunity for Google.
• The rise of smart speakers is a growth opportunity for Google with its smart speaker continuing to be among the top selling.
• USA’s strong economic growth is a growth opportunity since it has boosted consumer confidence and buying power.

Threats

• The EU proposed copyright rules are a threat to web platform companies like Google since it would require huge investments to comply with copyright changes, massively affecting American users.
• EU GDPR privacy rules pose a real threat to Google because they ultimately strike at the very heart of its operations, data collection.
• The rivalry between China and the USA is a threat to Google since its likely to affect its operations in the USA.
• The rise of seamless integration as user platforms such as Facebook or Amazon increasingly offer users one seamlessly integrated user experience is a threat to Google since it doesn’t offer the service.
• Adblocking  is a threat to the company since consumers are continuously searching for ad-free browsing
• The rise of AI and integrated voice search is a threat to Google especially the integration of voice search within other platforms such as social media (Facebook) and e-commerce (Amazon) which pose a real threat to Google’s dominance of search.

Conclusion

In conclusion, Google has created a niche for itself in the technological sector. Despite the economic challenges that have faced most countries and companies in the recent times, Google‘s growth has not slowed down. The company has to deal with the regulation compliance problems that are a big obstacle to its growth and market access. Google has enjoyed success through the years surpassing its competitors like Yahoo and Microsoft. However, environmental analysis has discovered market trends that are likely to negatively impact the company’s growth and revenue.  

The rivalry between the USA and China is a major trend the tech giant should watch out for as it will affect its revenue and expansion. The Trump China tariffs as a result of the tension between the two big powers is a major threat since the company and most of its competitors have operations in China or rely on China’s technology for most of their products. The new laws like China’s cybersecurity laws and the new EU proposed copyright laws should as well be watched out for as they will affect the company’s revenue and profits.