谷歌公司的风险管理分析作业

谷歌公司的风险管理分析
 

本报告将分析谷歌的商业模式，风险敞口和风险管理战略。要确定公司的风险，首先了解了公司目前的业务，其业务模式是非常重要的。这些见解，认为谷歌是暴露的重大风险进行讨论。风险分析将分为确定的和未知的风险。然后，对谷歌的风险管理策略进行评估。这些策略将分为显性风险管理策略和隐性风险管理策略。最后，提出了一整套建议以提供给风险的进一步减少。
 

在互联网搜索引擎服务行业，作为市场领导者，谷歌拥有领先的互联网搜索引擎——Google.com。谷歌的商业模式是从它的使命宣言得出：“整合全球信息，使人人皆可访问并从中受益。”（谷歌，2010年a）。这个任务是针对其最终目标鼓励带路谷歌。为了实现其使命和放纵自己的目标，谷歌已经创建了一个先进的、革命性的商业模式， 

Risk Management Analysis Of Google Inc Economics Essay

 

This report will analyse the business model, risk exposure and risk management strategies of Google. To identify the company risk, it is important to begin by understanding the company’s current business and its business model. With these insights, major risks that Google is exposed will be discussed. The risk exposure analysis will be divided into identified and unidentified risks. Then, Google’s risk management strategies will be assessed. These strategies will be divided into explicit and implicit risk management strategies. Finally, a set of recommendations will be provided to further improve the reduction of risk exposure.

 

As the market leader in the internet search engine services industry, Google owns the leading internet search engine, Google.com. The Business model of Google is derived from its mission statement: “to organize the world's information and make it universally accessible and useful.” (Google, 2010a). This mission is an encouragement to lead the way for Google to target its ultimate goals. To achieve its mission and gratify its goals, Google has created an advanced and revolutionary business model, which is to become an extremely large and diversified information provider beyond the meaning of an online search engine. Google has turned its business model into the business blueprint via key assets. The key assets of business model bring both strengths and vulnerabilities to Google. The business models’ weaknesses expose Google to risks of macro-environment factors, industry factors and firm factors.

 

The key assets of Google are its diversified products and services, “market position” and brand value, “significant infrastructure base” and customer relationship (Datamonitor, 2009).

 

Google delivers diversified products and services based on a large base of products and services, such as “Google.com, Communication, Collaboration and Communities, Downloadable applications, Google GEO, Google AdWords, Google AdSense”. “Adwords and AdSense”, the most important assets, contribute to nearly all the revenues Google accomplishes (Datamonitor, 2008). Google AdSense was initiated in 2003 (Datamonior, 2008). Google launched “Adwords” in the following year, (Google, 2010b). The company primarily generates revenues via these two corresponding services networks, Google AdWords and Google Adsense (Google, 2010c). In fact, AdWords is the corporation’s worldwide advertising project that is broadly identified as the web’s most capable advertising tool. Through AdWords, advertisers are able to reach end users who are browsing for needy information relevant to what certain advertisers have provided through “41 different interface languages”. At the same time, Google Adsense program helps the company to deliver advertisements for presence on the third parties web sites, which are part of Google network members. The complimentary and powerful AdWords and AdSense business model create business profits through offering services to 160,000 global advertisers and millions of daily end users. The strong revenues and profits prepare the company to invest in potential future opportunities, incorporating new products innovation, global expansion and positive acquisitions in multi markets and multi regions. (Datamonior, 2008)

 

Another significant asset of the business model is market position and brand value for Google. As a global leading internet search engine, Google serves search results in 160 realms with more than 117 languages (Datamonitor, 2008). Hence, Google has shaped a vigorous market position in its diversified markets it operates. For example, Google has three worldwide markets, embodying U.S, Europe and the rest of the world. Specifically, according to total number of exclusive surfers, “Google is the leading search engine in Argentina, Australia, Belgium. Brazil, Canada, Denmark, France, Germany, India, Italy, Mexico, Spain, Sweden, Switzerland, the UK and the US.” In addition, YouTube internet video, incorporated in Google services has grown to an internet media traffic leader, holding strong market share in the social network platform (Datamonitor, 2009). Furthermore, dominant market position has driven Google develop into top valued internet brands in the world. According to market research firm Miillward Brown, Google has been ranked for the third successive time as the globe’s most valuable brand in 2009, continuing to overshadow Microsoft and other well-known brands like General Electric Company, Coca-Cola, Wal-Mart Stores and IBM. At the same time, Google has turned into the global first $1000 billion brand. Dominant market position and premier brand reputation of the company consolidate investor interests and customer brand loyalty as well as employees confidences. All the factors above generate revenue growth (Datamonitor, 2009).

 

As an information technology pioneer, information technology becomes an essential asset for Google. In fact, Google has “proprietary technology and technological infrastructure.” The search engine in the company originates from its exclusive “PageRank technology,” which links the search request to the highly relevant contents on Google’s web pages and displays. This patented “PageRank technology” will approach expiration by 2017. Moreover, “Googlebots, web-crawling robots” are applied by the firm to search the websites in order to establish an overwhelming database used by Google online search engine. By building up the index, Google ranks the largest searchable catalogues, overtaking all the other search engines (Datamonitor, 2008).

 

Additionally, Google has set up a powerful “technological infrastructure”. To reach a worldwide user base of substantial visitors, Google has accumulated 450,000 servers, mainly centring in the “US (Mountain View, California; Virginia; Atlanta, Georgia, and The Dalles, Oregon), Ireland (Dublin).” These servers are allocated to serve Google search engine, Gmail, Blogger and its web-based word processor. Therefore, they offer the most efficient performance to global customers via geographically divided data hubs and servers. Ultimately, the advance technology and strong technological infrastructure locate Google in a leader position with competitive advantages by keeping launching innovative products and services (Datamonitor, 2009).

 

Major Identified Risks

 

The major assets components have mainly dedicated to progressive revenue growth and gowning market share. In particular, based on the FY 2009 report, Google has gained $6,520,448 million net income that is much higher than FY 2008’s $ 4,226,858 million (Google Inc, 2009). However, this does not indicate that Google’s money earning logic is perfect. The key assets are also exposed to certain risks and damage the firm profits and growth.

 

Political Risks

 

Google operates towards universal users in multi regions with a considerable customer base. Similar to other multinational corporations, it faces cross country risks upon governmental laws and regulations. Because its products and services are available worldwide, although Google does not have certain local entity, staff or infrastructure, some “foreign jurisdictions” have required Google to obey their laws and regulations. The differentiated explanations and understandings on “data protection laws” and their enforcement on internet in Europe and other “foreign jurisdictions” are vague and contradictory. These laws or regulations pose risks for Google to comply with these various cross border requirements due to inconsistency with Google data protection applications (Google Inc, 2009). This will cause operational cost and customer disloyalty. Not only is personal data protection relevant, but also national data interest is involved, such as censorship. For example, On Mar. 22, 2010, Google decided to quit its mainland Chinese Google search services to switch to a Hong Kong website due to disagreement with internet censorship policy with the Chinese government. The absence of Google in world’s largest internet market will make a potential loss in the financial environment and the market share in the Chinese market (MacMillan, 2010).

 

Economic Risks

 

Economic uncertainties, in particular, economic downturn triggered by global economic crisis have placed risks on Google advertising revenue accomplishments. Google ‘s business model is an online advertising model by generating revenue almost wholly from distributing related, useful online advertising. Statistically, advertising revenues was 99% of Google’s total revenue in 2007 and 97% in 2008 and 2009 (Google Inc, 2009). The economic slowdown has encouraged online advertisers to restrict advertisement spending. Consequently, the “average cost-per-click” made by the advertisers fell as advertisers have tightened advertisement costs in reaction to the global economic recession. Additionally, advertisers have reduced their bids on keywords due to the lessening in sales through “per paid click.” Accordingly, if key advertisers decrease or stop displaying advertisements on Google due to financial budget concern, the negative damage on Google business and revenues could be severe and fatal. For instance, even though Google web sites and Google Network members’ advertising revenue has grown from increasing paid clicks on advertising projects, the ads revenue was also offset by decreasing “average cost –per-click” reimbursed by advertisers to a large extent (Datamonitor,2009).