Google Business Strategy in 2008

Introduction

Google’s business model is successful because it has become a world leading search engine that is fast and easy to use. Their business model was to use this search engine as a platform to generate sales through advertising. Their business strategy was to expand on this concept which they did so by introducing further smart and innovative business models such as search appliance, AdWords and AdSense. These new models helped Google to remain market leaders and have a sustainable competitive edge on their rivals. Google became a powerhouse generating new products such as Google maps, Google earth, Google video and G-Mail.

Their strategy was to nurture and build on their brand recognition as this was seen to be as important to them as revenue and profit. They did this by providing these new products for free therefore enticing and luring millions of users onto their system.

One key area that shows Google’s business model and strategy has proven to be successful is their performance in the stock market in comparison to their main rivals Yahoo and Microsoft. From 2004 to 2007 Google saw a steady increase in the value of their shares with Google’s price soaring from $192.79 in 2004 to a booming $691.48 in 2007. This increase in share price was an excellent reflection on Google’s business model and strategy. The fact that it had such a high price clearly shows shareholder confidence in this company. This period also saw a steady increase for Google’s main competitor Microsoft but this increase was insignificant in comparison to Google’s. Microsoft’s share price increased from $23.35 to $32.38 in this period. Yahoo’s share price fluctuated in this period with an increase from 2004 to 2005 and a decrease in years following that. Overall from 2004 to 2007 the share price decreased from $37.68 to $23.26. 2008 was a bad year for all three companies in terms of share prices with all three companies suffering