Environmental Analysis

Running head: ENVIRONMENTAL ANALYSIS

Environmental Analysis

William Brown,

MMPBL/501

July 4, 2011

Tom Byers

Environmental Analysis of Google

Google is very well known among all of us and almost every person who is using internet is g benefitting from it. Scholars are required to make an 'Environmental Analysis' of Google. First, you should write about the industry, in which it is operating and then find macroeconomic variables affecting the industry. Additionally, find and write some challenges and opportunities for the Company. I am going to provide you an overview of environmental analysis, using Google as an example.

Environmental Analysis of Google

The industry in which Google operates is Internet Industry. Google Inc. is a publicly operating company, which is headed by Dr. Eric Schimidt (CEO), specialized in Internet searching and online marketing. In the year 1998, the company was primary incorporated as a privately held company (About Google, 2008).

The main office of the company is situated in the Silicon Valley of California. The business produces most of its profits from keyword based advertising. The mission statement of the Google is to systematize the information of world and make the information universally accessible and useful. The company believes that the most effective and ultimate way to accomplish their mission is to put the needs of their users first.

Industry Analysis:

The Internet industry's buyers have a lot of power. Internet users can use any search engine they want without any high costs. The users of Internet industry only search with Google and Yahoo because they are the best but if one more search engine comes around, the users will switch to that. Once a corporation builds a solid reputation they have some staying power. The supplier power of the Internet industry is also high (Wheelen & Hunger, 2007).

The suppliers of the industry are the people who can come up with new web site concepts, online services, and technologies. Internet companies have gained their competitive advantage through the superior technology in terms of services, communication technology or website design. For example Google was started because of a new and unique algorithm that was applied to Internet searching (Wheelen & Hunger, 2007).

The amount of competition is very high in the internal industry; there is no company that does not have to compete with some other companies. The Internet industry is in its growing stage and every company wants a large amount of profits and customer base. In this industry, the switching costs are so low that customers can shop at the best prices without worrying about costs.

The threat of substitution is also very high in the Internet industry as the switching costs are low and there are many companies competing for customers. The threats of new entry in the Internet industry are also very high (Wheelen & Hunger, 2007).

Macroeconomic Environment

An Environmental scanning is the monitoring, evaluating and disseminating of information from the external and internal environment to key people within the corporation. A corporation uses this tool to avoid strategic surprise and to ensure its long term health.

The purpose behind the environmental scanning is to learn about events and trends in the environment and project the future position to identify the favorable and unfavorable factors in the environment from the standpoint of the firm. The macro environmental survey helps to formulate strategy in line with opportunities (Ramaswamy & Namakumari, 2007).

Here are several Environmental Analysis: economic, legal, political and the socio-cultural factors, etc. The macro environment variables that affect the Google industry are economic factors, political factors, technology environment, Social-cultural factors and legal factors.

Economic Environment

Economic Environment is a vital component of the mega environment from the standpoint of strategic planning. Any industry and Business depends heavily on economic environment (Ramaswamy & Namakumari, 2007). Fortune of industry and business heavily rests on the purchasing power of the people and purchasing power is largely a product of economic environment. The economic factors that affect the Google industry are:

1. Economic Conditions of different segments of population, their disposable income and purchasing power.

2. Trends in income distribution and consumer-spending pattern, income, savings and credit availability.

3. Rate of inflation, Tax rates & Interest rates and exchange rates.

4. Behavior of capital markets: The corporate sector and capital market are important indicators of sophistication and growth of an economy.

Political Environment:

The political environment exercises great impact on industry and business. With development on the political front affecting the economy, the economic factor often becomes by-product of the political environment (Ramaswamy & Namakumari, 2007). The political factors that affect