Introduction

Introduction
This paper will evaluate and analyze the current situation and strategy of Google's Android division and provide the author's strategic
recommendations for the company. Android is a software package for distribution in mobile cellular smartphones. Google offers this
software to smartphone manufacturers at no cost.

Industry Situational Analysis

Industry Situational Analysis

Dominant Economic Characteristics of the
Industry Environment
When evaluating an industry environment, the two most important factors to look at are the industry's market size and growth rate. The
market size for the smartphone industry in the first quarter of 2009 was 36.5 million units. The market size for the first quarter of 2010
was 54.3 million units. At an average price of $130, the 2009 and 2010 markets come to $4.75 billion and $7.06 billion, respectively.
(Tudor, & Pettey, 2010) It is expected to continue increasing by 24.5% into the end of next year. ("Android Windows Phone," 2010)

Industry Key Success Factors

In the smartphone phone industry there are several characteristics necessary in order to operate as a successful competitor. In order to
compete effectively, a smartphone company must possess the following attributes:

1. Innovative - Products have trendy features. Development in line with market demands.

2. Reliable - Products have reasonable battery life and reception. Technical support is easy and helpful. Product quality must meet its
usage.

3. Expandable - Products offer third party applications. Products receive timely software updates.

4. Usable - Products have intuitive user interface. Products are designed well.

5. Financial capability - For product development shifts. For promotion. For acquisitions.

Driving Forces shaping the industry

In the smartphone industry there are several forces shifting its direction and growth. The five main factors are as follows:

1. Geographically advancing usage of the Internet.

2. A new connected generation gaining access to money and employment demands.

3. Increasing global competition and fast-paced work culture (due to Internet) and need to be available.

4. Lower priced manufacturing and distribution of smartphones.

5. Increasing cellular coverage.
Industry Competitive Landscape Analysis
Porter's Five Force Model
Michael Porter's five force model is an excellent tool for evaluating the attractiveness of an industry. This model takes a 360° look at all
possible threats in order to best evaluate the external environment of an industry. (Thompson, Strickland, & Gamble, 2010, p. 60)

In the smartphone industry, the threat of rival sellers is strong. There are five major competitors in this industry and all are highly
profitable organizations seasoned in the art of innovation and competition. Each of these main competitors is stable enough to use its
cash reserves in promotional campaigns or strategic acquisitions to swipe market share from the Android. Since the industry is growing
so quickly, some shifting in market share without long term results can exist. (Tudor, & Pettey, 2010)

The threat of new entrants is moderate. The global distribution of cutting edge technology is nearly impossible to jump into for all but
the leading technology companies, but firms can enter into single elements of the value chain much easier. Smaller competent firms may
enter the smartphone industry in the same way Google has- by selling the smartphone operating system to existing manufacturers.
(Purdy, J. Gerry, 2010)

The threat of substitutes is weak. The smartphone exists itself as a substitute for laptop computers, netbooks, and basic cellular phones.
Because the smartphone serves as a consolidation of several units, the threat of it being substituted is weak.

The threat of supplier power is strong. In any industry related to technology, the suppliers serve a crucial role in providing increasingly
lower cost materials for manufacturing. Smartphone processors are manufactured by only a handful of companies, like Qualcomm and
Marvell. The partnerships smartphone creators make with these companies is necessary for success. Therefore, the suppliers have
strong weight in the industry. (Purdy, J. Gerry, 2010)

The threat of buyer power is moderate. In today's business and technological environment, buyers do not have much of a choice but to
purchase this product. Since buyers can neither easily use a substitute for a smartphone nor go on the same without one, their power lies
more in brand switching than avoidance.

In any industry Porter's model is applied, all five forces together influence a company's ability to operate profitably. In the smartphone
industry, no forces are fierce and only two of the five are strong which gives the industry an overall attractive potential for profitability.

Competitive Position of Major Companies

Because the smartphone industry has high entry barriers, only a handful of major competitors exist. An appropriate way to visualize the
positioning differences of these major competitors is to divide them by the company's amount of integration in the value chain as well as
by the amount of selection it offers customers. (Thompson, Strickland, & Gamble, 2010, p. 87)

RIM and Nokia are each smartphone competitors highly involved in their value chains with a large selection of products each with
slightly different features targeting different users. Apple is also highly integrated into its value chain but only offers a single product at
two different price points. Microsoft supplies its operating system to smartphone manufacturers but does not actually manufacture
anything itself. Because of its penetration with the Windows desktop operating system, Microsoft has commanded use of its software by
many different phone manufacturers. Similarly to Microsoft, Google has chosen to only involve itself in the software distribution of the
smartphone industry. Google only has a handful of smartphones using its software. (Purdy, J. Gerry, 2010)

Competitor Analysis
Strategies and Market Share of Major Competitors

Company Competitive Approach Market Share

Google Low cost, outsource 9.6%
Broad differentiation, vertical
Apple 15.4%
integration
RIM Best-cost provider, vertical 19.4%
 integration
Nokia Low cost leader, vertical integration 44.3%
Microsoft Best-cost provider, outsource 6.8%

Predicted Next Moves of Major Competitors

Company Motive Next Move

Develop competency in monetizing Deploy new strategies through
Google
ads AdMob
Develop relationships for
Gain access to enterprise/business
Apple highest quality Exchange
market
linkage
RIM Overtake Nokia in market share Invest in R&D
Nokia Offer high end product Invest in R&D
Follow Apple in computer- Integrate next Windows
Microsoft
smartphone intgration desktop OS and mobile OS

Overall Attractiveness of Industry and Competitive Environment

Factors Making the Industry Attractive

The main factor making this industry attractive is its growth rate. The rapid adoption and saturation of smartphones in the market
allows many opportunities for niches and acquisitions (Thompson, Strickland, & Gamble, 2010, p. 182-183).

Factors Making the Industry Unattractive

A factor making the industry unattractive is the high management prowess of the companies involved. Because of the strong competitive
forces of this growing industry, any mistakes can sacrifice a spot as a major competitor. ("Sec info - google," 2010)

Special Industry Issues/Problems

One unique issue faced in this technological industry is whether or not the current cellulartechnology to service the smartphones will
scale successfully with the projected rise in usage. ("Sec info - google," 2010)

Profit Outlook
The profit outlook for the smart phone industry is favorable. The main sources of revenue in the industry are the purchase of the
handset, advertising from search engines accessed via the device, and applications from third-party developers. The demand for
smartphones will increase until the market is saturated which means more smartphones are yet to be sold and more search engine
advertising is yet to come.

The overall competitor analysis shows that Google Android is in a favorable spot in a rising industry.

Company Situational Analysis

Evaluation of the Current Strategy
Google's generic strategy is be the low cost provider of smartphone technology. Google has chosen to only perform the software
distribution of the value chain. The software is available to smartphone manufacturers for free. Google's revenue in the deal comes from
advertising on mobile devices.

Google Industry Average

P/E Ratio 25.04 16.578
Market Cap $195.72 Billion $154.32 Billio

Google is a massively profitable company with vast financial resources. This competency is important in an industry that relies on
acquisitions and research and development.

SWOT Analysis
STRENGTHS

 Huge financial resources.

 Competitive position in several other related industries including Google Voice and YouTube.
 Absolute competitive lead in internet search.
 Android software is free.

WEAKNESSES

 Low integration with enterprise level requirements like Outlook.

 Upgrades dependent handset manufacturers.
 Unpolished OS.
 Relies on ads for revenue.

OPPORTUNITIES

 Require alterations or refuse to remain default search on competitors smartphones.

 Acquire competitors.
 Integrate across all consumer electronics with tablets, remotes, etc.
 Increasing ways to target ads.

THREATS

 Criticism regarding privacy policies.

 Increasing rivalry to fuel innovation from competitors .
 iPhone expanding carriers.

Analysis of Company's Price and Cost

Competitiveness
Value Chain
As part of its competitive scope, Google has only integrated itself into the smartphone industry as a software provider. ("Sec info -
google," 2010) The advantage of this method is accomplishing Google's goal of advertising revenue without heavy investment. This
method also gives Google flexibility for deciding to either vertically integrate in the future or exit without big losses. The disadvantage of
this approach is the lack of control over the final distributed software. Another disadvantage of this approach is the fact that any updates
Google makes to its software must be approved by handset manufacturers before it is finally passed on to the consumer. Lastly, Google
is dependent on advertising for any kind of revenue since it provides its software to handset manufacturers for free.

Weighted Competitive Strength Assessment

Factor Weight Google Apple Microsoft Nokia RIM
Innovative .3 6 8 3 5 6
Reliable .15 4 5 7 8 8
Expandable .15 10 8 3 3 4
Usable .25 7 9 3 4 5
Financial
.15 9 9 9 4 5
capabilities
Total: 1.00 7.00 7.95 4.50 4.75 5.60

Google Android is the only software that allows third party software distribution without any monitoring from the distributor. (Purdy, J.
Gerry, 2010) Apple iPhone offers the most functional user interface to navigate. Microsoft on the other hand offers software that is
difficult to use. Google, Apple, and Microsoft are all very financially stable while Nokia, whose only competency is the smartphone, has
been facing declining revenues. (Tudor, & Pettey, 2010)

Strategic Issues Analysis

Google derives up to 97% of its revenue from advertising. All companies in this industry are looking for ways to make their advertising
more profitable. Google's acquisition of AdMob and Apple's acquisition of Quattro Wireless, both mobile advertising innovators, are
revealing that advertising is where the money is. The strategic purpose for Google's acquisition was to develop a core competency in
mobile advertising. Google is in the business of making the internet more useful for consumers and its competition is developing at a
similar rate.As new technology is invented, Google's advertising may be blocked. Google is also facing "intense competition" in all of its
associated industries

Most of the issues Google is facing have to do with competitors innovating technology at a faster rate than Google is. The solution to this
issue is to invest heavily on researching current moves of major competitors and attempt to leap frog their strategies while also dumping
financial resources in hiring and compensating the world's leading technological developers.

Strategy ecommendation
Google's current mission is "to organize the world's information and make it universally accessible and useful". Google's main areas of
focus are search, advertising, and business and communication computer programs. It is the recommendation of the author for Google
to focus more on making cutting edge technology a benefit for all willing people in the world.

Revised Strategic Vision and Objectives

The author's recommended mission statement: Google exists to improve people's daily lives with technology and pertinent information
everywhere it is needed.

The author's recommended vision statement: Google desires to see the world's information easily and quickly accessible to every willing
person for the purpose of living better lives.

Key Strategic Objectives

● Remain the world leader and most recognized brand in internet search and advertising by the end of 2011.

● Hire the strongest team of developers and researchers available by 2013.

● Achieve majority of world market share in smartphone industry by 2015.

Key Financial Objectives

● Grow advertising revenue by 25% by 2013.

● Grow and retain cash reserves of $30 billion for future acquisitions by 2012.

● Maintain stock price above $600 for 2011.

New Competitive and Complementary Strategies

The author's revised competitive and complementary strategies are to remain the best cost leader in computer software as well as in the
smartphone industry with superior innovation and full vertical integration in the smartphone value chain.

Functional Area Objectives

The author's recommended functional area objectives are to develop the acquire Motorola's smartphone manufacturing division by 2012
and open 300 kiosks nationwide in Sam's Club retail stores by 2014.

Implementation Recommendations
Building a Capable Organization
Strategy Critical Positions
It is critical for Google Android to remain the best cost option while developing a premium positioning.

Recruiting and Retain Talented Employees

In order to attain superior innovation, developers with the highest possible ability must be brought into the luxurious Google work
environment. It is the author's recommendation to invest in promotional elements on college campuses to brand Google as the premier
technology company for any graduate to work for. It is also the author's recommendation to use Google's advertising mastery to seek out
the world's top developers and influence them to join Google.

Strategy Critical Core and Distinctive Competencies

It is critical for Google to develop a distinctive competency in monetizing advertisements. This is crucial for its profitability.

Matching Organizational Structure to Strategy

The organizational structure of Google is conducive to innovation and development. However, the daily workplace must implement a
Results Only Work Environment for greater efficiency and effectiveness. (Bourgon, 2010)

Timing Initiatives for Strategy

Recommendations
2011 2012 2013 2014
Retain position of
Grow and retain cash Hire strongest possible 300 Kiosks in Sam's
most popular search
reserves to $30 billion team of developers Club stores
engine
Maintain stock price Acquire Motorola's Grow advertising Full line of Google
above $600 manufacturing division revenue by 25% manufactured
 smartphones

Strategy-Supportive Policies and Procedures

The author recommends implementing a Results Only Work Environment because it will maximize productivity and innovation
(Bourgon, 2010). The author also recommends appropriate management practices to remove ineffective, noncontributing employees.

Strategy Critical Management Behaviors

In order to reach these goals, Eric Schmidt, Larry Page, and Sergey Brin, CEO and Google founders respectively, must remain with the
company throughout the strategic transformation.

Conclusion
In conclusion, Google's Android division is gaining market share in an attractive industry. Backed by an extremely profitable company,
Android is ready to be manufactured and distributed in house by Google. With the financial resources available, Google can easily
acquire the world's top developers, integrate fully into the value chain, and become the world standard in the smartphone industry
within 4 years.