Decision making in business is considered a key aspect to its success. That is particularly so when it comes to matters relating to mergers and acquisitions. Firms engage in takeovers in order to increase their revenues as well as widen their markets. In most cases, businesses fail to evaluate all aspects of their integration or acquiring of other companies forcing them to experience reversal hostage situations (Welch & Welch, 2007). In this paper, Google’s tactics of acquisition of other firms will be evaluated. Google Inc. is a global technology corporation based in the United States that focuses on Internet-related products and services. Currently, the business accounts for about 70.69% of the search engine market. Besides the search engine, the company engages in cloud storage services, productivity software such Gmail, social networking services and office suite.
The essay seeks to study Google’s operations to establish its organizational culture, strengths, and weaknesses. Besides, the paper will respond to the internal and environmental necessities available to the corporation to engage in competitive as well as successful and sustainable mergers and acquisition processes. That will also include possible firms that may be lined up for takeover in the future. Further, emphasis will be placed on the critical behaviors necessary for guaranteeing Google’s success. Furthermore, those priorities will be justified depending on the reasons why each of them was selected. Finally, the paper will make explanations on the assessment procedure of the merger and acquisition process in ninety days, one year as well as five years period. A conclusion on the process, its effectiveness and success will be drawn based on the data provided in the essay.
Strengths, Weaknesses and Culture
The company operates through an open source approach for its products and services. That allows its services and products to gain accessibility without limitations from any operating system. Moreover, the software used provides access through mobile devices. The products and services mainly entail data organization and facilitate access globally, and thus touché virtually i every country in the planet. Additionally, Google has created an own brand through its premium and quality services that have assisted in retaining most of its customers.
Further, the products offered by the company provide its clients with required experience to operate on the Internet. Next, the firm has dominated the Internet search engine segment taking a share of above 70%. That provides it with a big financial muscle that goes unchallenged by its closest or virtually all its competitors combined. Additionally, the corporation has set a strong patent portfolio. For example, in the year 2012 alone, a total of 1,151 patents were added, ranking it at the 21st position worldwide. The importance of intellectual property in keeping competitors away cannot be underscored.
Furthermore, Google uses a product integration mechanism that interconnects its products together. That enhances customers’ experiences as well as encourages them to continually use its services and products. Lastly, the firm highly promotes innovations. Every year, consumers enjoy new innovations from the company. In fact, in 2012, Boston Consulting Group ranked Google as the world’s number two in terms of innovative business.
One of the biggest challenges for Google is its overreliance on the online advertisements. That could be under the threat of several factors that would lead the company to losses in the future. Firstly, the global economy appears to be supported by the emerging economies. Although the company has a foothold in those countries, too, the risk of low advertisement charges exists. Secondly, with new firms entering the market and technology’s ever changing nature, the huge market share may be eaten up in the future (Jurevicius, 2015). That would particularly happen on the mobile devices software industry.
Another weakness of the company is the presence of unprofitable products. There are numerous services and products that generate no income and thus make the businesses expenses increase with no returns. Again, the company is faced with a number of litigations on patents. Such court cases consume a lot of money and time that would otherwise been channeled to profitable activities.
Google has an open form of culture similar to the one used by the majority of start-up businesses. That allows the employees of the company to make contributions while making decisions. Again, workers are made comfortable at sharing their opinions as well as ideas. The company highly prioritizes teamwork and communication. As such weekly meetings involving all employees are conducted in addition to a connecting email system (Jack Welch Management Institute, n.d.a). At the meetings, executives answer questions raised by their workers on any matter that touches on the company.
Further, the office designs as well as that of the café are such that they promote interactions among the Googlers both from inside and across various teams. Such practices ignites conversations on work related issues and hence good relationship among the employees. Furthermore, the company operates a democratic as well as casual atmosphere through its flat structure of organization. Employees are given freedom to work differently from what they previously practiced or what has been traditionally done as long as it benefits the company and the society. In respect to that, the corporation aligns its culture with that of the country from which it operates (D’Onfro, 2014). Additionally, Google discourages any form of discrimination or nuisance among its workforce or customers. Above all, the company hires smart and strong-minded individuals who share a similar dream as the firm and with ability to bring about extra innovations.
Environmental and Internal Necessities for a Successful Merger
During the stages of takeover negotiations, Google team seems to be most interested in people with curiosity to do things differently. Considering that Information Technology industry experiences vast changes within short periods, the innovative capability of the acquired firm has to be real. That will secure Google’s future competitiveness in the development of software that satisfies the customers. Besides being innovative, the company up for the takeover is required to demonstrate high ability to propel growth. In situations where the productivity of the acquired firm fails to meet the expected targets for acquisition, Google definitely pulls out of such negotiations. According to the winning Jack Welch’s book Winnings, mergers and acquisitions are vital in creating the “missing link” that could eventually slowdown prospective future of the business (Welch, 2005). With takeovers or amalgamations, firms are able to get to the areas they could not reach before.
Again, the company uses the ‘toothbrush test’ to determine viability of the acquisition. That means evaluating the usability of the products. Without continuity, then the firm is deemed unfit for takeover. In fact, Google has more interest in usefulness as well as the long-term nature of the acquisition than the amount of money they are likely to make through the purchase. Further, the corporation also looks at the bigger picture of acquiring firms in segments and locations they have not adequately penetrated in order to raise their market share. Newly acquired businesses come along with their patents thus offering Google a new level of expertise in both developments of new technologies as well as improvement of the old software.
Another key concern for Google executive is the employee performance. The company appreciates such need for acquisitions as acquiring skilled labor force. As such when the firm makes purchases, it also negotiates retention of productive employees whom it expects to bring about the required changes. That was the case with Nest takeover, where the CEO and founder Tony Fadell was snatched up. For the internal necessities, Google has its concern on the patent. On the organizational culture, it bears no serious concerns as after acquisition effort is concerted to integrate the new workers into the ‘Googley’ culture (Stunt, 2014). However, the firms are still allowed to keep some level of autonomy. Google is likely to make acquisition of Netflix Inc. in the near future. Other likely takeovers are that of Dunnhumby, a United Kingdom-based customer service firm, and Infineon from Germany (Bryant, 2015).
Prioritizing Essential Behaviors
During the takeover periods, Google management has paid little attention to organizational culture hoping to retrain the workers and to help them adopt the customs of their new owner. However, sometimes it takes long to get the people who remain within the same old team to get used to the change. That could eventually lead to conflicts of interests among employees. To avoid such instances, personnel mixture is necessary to ensure that new workers are effectively trained on the culture of their new home (Welch & Welch, 2006). Again, the flat structure of organization used by Google could provide some level of freedom that could be misused by employees if not properly understood.
Another significant area of interest touches on the patents used by the previous firm. Takeovers by Google largely entail owning patents for products of the other company and utilizing them to make new developments and profits. Besides, there would be the inheritance of the market as well as expertise of the workers of the corporation in question. The concern here is to invest in the long-term survival of the company (D’Onfro, 2015). Takeovers are meant to last in order to help in the growth and development of their new owners.
Moreover, during acquisitions, the buyer ought to ensure that it gains control, especially, on decision making. Otherwise, the firm may continue to run policies that the new owner does not accept, thus causing mismanagement. Again, it is important to control what the buyer has purchased to bring in the change it envisions. However, during that process, caution should be taken to avoid developing “conqueror syndrome” that would lead to removing all management from the firm and substituting them with those loyal to the new owner. That would eventually kill the talent that the acquisition was meant to bring to the buying company.
In the three months after acquisition, the company should start to show some levels of market growth. Although it may not be prominent, it should be recognizable. In the case of one year after, the corporation revenues and innovations should start to show improvements. On the one hand, with the constant rise in the market, it will be expected that sales will increase giving rise to incomes. On the other hand, the new expertise will be expected to show some improvement and innovations in services and products. When the situation persists for about five years, the successes will then be featured on the stock market as well as the dividends dispersed to the shareholders. That will be an indication of the company’s growth since the acquisition. Furthermore, innovations and sales should be realized at that point. Moreover, a comprehensive plan should be put in place to ensure that the post-acquisition process runs as had been envisioned (Jack Welch Management Institute, n.d.b). Sometimes, diversion from the takeover agreements may lead to overlooking of some important aspect of the implementation thus leading the whole plan to unavoidable failures. Managers ought to ensure that both they and the employees observe the set guidelines.
In brief, Google has potential and ability to make acquisition. However, that does not mean non-existence of challenges along the way. The firm’s takeover model provides talent growth, market expansion, and patent ownership. That is guaranteed by democratic practices allowing employee participation as well as actions inspired by curiosity. Besides, the corporation fairly protects its consumer preferences. Since 2010, the company has been on a takeover charm averaging a firm per week. The strategy is meant to counter any possible threats from other players in the industry. While this would mean positivity for Google’s market expansion, it is critical to consider other factors to ensure it does not get lured to unprofitable arrangement. On the part of entry of new workers, the management needs to make a quick move to resolve any crisis that could arise from the nature of acquisitions or mergers. Moreover, an integration process ought to be commenced immediately the deal gets sealed to make sure that everybody feels that they have been brought on board.