Term Paper on "Business Models and Planning"

Term Paper 5 pages (1680 words) Sources: 1+ Style: Chicago

[EXCERPT] . . . .

Business Models and Planning

Analysis of the Google Business Model

What is unique and highly differentiated about Google's business model as a business is that it costs nothing for it customers to use, is continually being improved for those users, and builds revenues based on advertising, value-added services for businesses, and increasingly a concentration on how to create learning and collaborative communities online. In addition to these core aspects of Google's business model, there are connected activities including investment in communications hubs and cellular telephone technologies that the company has used to create a development platform for their search engines' use on cell phones, PDAs, and other Internet-capable devices.

From this standpoint, Google's progression as a business model from purely being a search engine to the most profitable advertising model online is analyzed in this paper. Many scholars including Castelluccio (51), Falcioni (4), Sloan Management Review Editors (49) and Wolcott & Lipptiz (83) content that Google's primarily advertising-based business model which is highly profitable can over time position itself to be immune from commoditization and price competition by ensuring there is a consistent stream of new services introduced globally. This is consistent with the concept of continually pursuing new capabilities to deliver increased customer value, thereby strengthening and extending the advertising business model Google is based on.

The research completed by SG Thompson, M Cioffi, H Gharib, N Giles, Y Li, TD Nguyen (29, 30, 31) illustrate that the fundamental technologies that Google is based on also serve as a strong foundation for further advertising-based services to compliment AdWords and AdSense, Google's two dominant advertising-related businesses today. Ozmutlu (656) discusses in his research the technological side of Google and how advancements and developments in search clarity and ranking have a direct and immediate contribution to advertising sales. From this standpoint of the technology side of Google contributing to advertising business model validation including advertising rates, fees, cost structures, and value to customers, it becomes clear that the company has defined processes that quickly turn technological advantage into competitive and financial gain.

As these technology gains are quickly translated into revenue, and the value of advertising itself goes up because the searches are more accurate. It is rare to find companies who can translate investments in technology to increased revenues as quickly as Google can. As AdWords is based on both cost per click and cost per impression charges to advertisers, the better the search completed using the search engine, the more precise advertisers can be in defining which keywords or search terms they want their ads to be seen with. Google has been able to make major strides in their use of the technologies the search engine was originally based on by investing heavily into research and development. Examples of the research completed can be seen online at Google Labs (et.al.).

The Business Models of Google

Google does not charge to use its search engine, yet this is the area that the company invests the majority of its research and development dollars. Search is the foundation for all other services in the company as it drives traffic which in turn is used in computing advertising rates for AdWords, AdSense and other advertising programs. Google competes using the measure of how many billions of pages are indexed vs. its competitors to further distance itself from Microsoft and Yahoo. Google engineers are focusing on getting their search techniques to be even more accurate so that AdWords and AdSense advertising programs will be more effective for advertisers, meaning more accurate. In addition, Google has also launched Google Scholar, which is an index of scholarly and academic materials. The business concept of this is similar, where Google charges advertisers a fee for using both AdWords and AdSense created specifically for users of the Scholar search engine.

Google also has also applied their search engine technology to books and created Google Books in 2006. This service now has well over 1 million books referenced, in 9 languages, from 10,000 publishers. Google makes it possible for publishers to provide a link to sell their books off of their own website. In addition, Google is considering selling the books directly online in Adobe Acrobat format. Publishers however are afraid this will lead to them losing control of their customers and have blocked the move. Google Books however does bring much more traffic to Google as many people want to see the actual contents of the book, which Google Books provides, if the publisher approves it.

One of the biggest developments for Google this year has been the acquisition of YouTube, the online video site, for $1.65B. Google plans on using the video content on this site for both creating online learning systems and also using its advertising model to generate revenue from the YouTube purchase as well. It is also expected that video advertising space will also be sold on YouTube eventually too, at a price premium due to sound and video being available.

Advertising is the largest business that Google is in, and the two programs of AdSense and AdWords generate the majority of the company's revenue. Because it is very cheap to being advertising with AdWords, many small businesses only rely on this form of advertising. Google has created a special program for large advertisers where they can create literally hundreds of ads for AdWords and upload them by the hundred. This is called Google AdWords Application Programmer Interface (API) Program and is being used by all the major auto companies in the U.S. And Europe.

In addition to all these businesses, Google has also aggressively pursued bringing their advertising model to other nations, in addition to the U.S. Google is now translated into more than 100 languages, and Google News is produced in 39 languages. According to the website, 46% of revenues are from international sources. Google's spending on research and development to create search engine technologies that can manage to work well in these many languages, then quickly make an impact on advertising is another reason why Google is the epitome of the perfect business. Taking what worked in English and making the search engine work in so many other foreign languages has become nearly half of Google's business.

Google's Future

There are many, many sources on the Internet that attempt to predict what Google will be like in five or ten years. Some say that Google has forever changed how online businesses operate and have said that online services will have to concentrate first on driving customers to their sites Schrage (10) first, then charging for advertising. Others are saying that Google will eventually become a telecommunications company that has Internet-based telephone service. Google has just begun to work on their programs for mobile-based access of their search engine according to Falcioni (4) and have also launched their free word processing, presentation graphics, and spreadsheet software as well. All of these efforts are to bring more traffic to the website and increase the advertising rates charged in AdWords. it's very clear that Google will continue to add services that drive up the amount of traffic to their site to increase the potential of earning additional advertising revenue. That will continue to happen through acquisitions and new product development. Google acquiring Pyralabs, Upstartle, JotSpot, Adaptive path (GIS), YouTube, DoubleClick (for advertising, and Postini (e-mail slam filter) show that the company is thinking about how to create a single, central content system for individuals and companies alike, so they only need to come to Google for all content needed. Google as the information hub or communications hub is definitely a possibility for the company's future, where advertising revenues are generated through AdWords place in each service of the hub. Google may charge a premium for higher levels of service through the communications hub as… READ MORE

How to Reference "Business Models and Planning" Term Paper in a Bibliography

Related Term Papers:

Business Models Evolution Article

Business Models

Evolution of Business Models:

From Early 20th Century to Today - a Critical Analysis

Business models continue to grow in complexity and the level of integrative processes that… read more

Article 6 pages (2175 words) Sources: 12 Topic: Business / Corporations / E-commerce

---

Business Model What Does Competing on Price Term Paper

Business Model

What does competing on price mean? Can you name some companies that compete on price?

Of the many forms of competitive differentiation available to companies including striving for… read more

Term Paper 2 pages (580 words) Sources: 0 Topic: Business / Corporations / E-commerce

---

Business Models Methodology Chapter

Business Models

What is meant by the term business model?

Used universally to define the coordinated synchronization and sequencing of processes companies rely on create value for their customers, a… read more

Methodology Chapter 3 pages (856 words) Sources: 5 Topic: Business / Corporations / E-commerce

---

Business Plan for Organic Fertilizer Business Plan

Business Plan for Organic Fertilizer

Business Plan for an Organic Fertilizer Company

A company in this day and age should be environmentally aware and take steps to protect the planet.… read more

Business Plan 8 pages (3068 words) Sources: 8 Topic: Business / Corporations / E-commerce

---

Business Plan for a Company Business Plan

Business Plan

IDC Interiors aims to open a small business venture with the aim to attract clients as much as this venture can of both types of customers (residential or… read more

Business Plan 12 pages (3240 words) Sources: 5 Topic: Business / Corporations / E-commerce

---

View 100+ more related papers  >>