What Is Google's Business Model?

What is Google's business model?

CEO of Google, Eric Schmidt, sums up their business model as to make "all the world's information accessible and useful". Their goal is to target segments of technology products they feel are not effectively serving their purposes and find radical innovations that allow users to have better accessibility and functionality for these products while providing them for free. This started with their internet search engine and has expanded too many different products and functions. The revenue that Google generates is mostly all from advertising. But, by harnessing superior products they use the information that people are in need of as the medium for their revenue. This is a fairly unique model that only a few companies have the capacity to harness. For example, Facebook employees a similar model but are faced with much more scrutiny because they are accessing critical information that users input. This makes users feel that they are being taken advantage of sometimes, because Facebook is leveraging their personal information. Google's info gathering is more passive, where it is collecting browser history. A historic model comparison would be the razor and blade model, where Google first presented its site without ads and allowed users free access. This is a classic example disruptive innovation by Google, where initially performance was low and upper competition conceded lower less profitable segments. After time and continued innovations Google has taken over more and more segments see Exhibit 7.7 from Strategic Management concepts. By offering more free products, i.e. Gmail, Google Maps and Google Docs, they have improved on existing products and grabbed market share while offering these products for free. This drives people to gather information more effectively and generates revenue for Google.

What are Google's unique resources?

Google has developed and continues to develop economies of scale as it grows to horizontally integrated into the market place. See Table 1 for a list of resources. It has been able to do this by being very selective with hiring and investing in its primary resource, the engineers that work at Google. The hiring of these employees is handled through making sure that they fit well with Google's Core Values and Culture, which is just one part of Google's organizational design. The keys to the development of the organization are based on Google's Statement of Philosophy and their Ten Golden Rules, see Table 2 and Table 3. With key principles like "Don't be evil", "Encourage creativity", and "Communicate effectively" Google looks for intelligent, idealistic, team players that are willing to learn, collaborate and communicate.

With the large amount of revenue that they generate, Google provides great benefits