External Environment
Opportunities and Threats
The creation of the Alphabet has presented a variety of new opportunities. For Google, the launch of a new parent firm gave an opportunity to concentrate on working as a highly successful and leading searching engine and allowed it to focus on developing digital ads and beating its strong competitors in the field of online search such as Amazon. For Alphabet itself, the following opportunities are open.
First, splitting a powerful and profitable company is a move that can please the investors, which will lead to a more active partnership. Second, the new brand will work as a blank canvas. Without the pressure of Google’s name and the reputation behind that name, it would be easier to build new relationships. Third, Alphabet can concentrate on innovative technologies, and Google does not have to worry that it would scare away the investors since Alphabet has its own investors. Focusing on innovations may lead to the creation of new products that may turn out to be highly profitable (Bright, 2015).
However, some threats also exist for Alphabet. The company has received a large flow of cash from Google; in the case of inflation, the consequences will be dramatic. The large part of the money is kept abroad. Thus, the change in exchange rates is a threat to the Alphabet. Next, because of a large number of patents that it owns, litigation may start in case of disputes with owners. Finally, Alphabet is highly dependent on energy use; cleaner energy is costlier, which may increase its operations cost (PESTLE analysis of Google (Alphabet), n.d.).
Industry Competition and Competitor Analysis
Alphabet is operating in such fields as technology, science, investment, and research. Its primary field of interest is internet information providing and data processing. In this field, the competition is currently growing more heated. Basically, the primary competitors of Google are now also the competitors of the Alphabet.
In internet information providing, Alphabet competes with strong technological company Microsoft, well-developed search engine Yahoo, business communication website LinkedIn, social network Facebook, and internet media company AOL.
In the sphere of innovations, the strongest rival of Alphabet is Uber. Both companies are seriously interested in self-driving cars for taxi and delivery services and ride-sharing. Another strong competitor of Alphabet is Apple, which is interested in innovative technologies no less that Alphabet.
Alphabet also competes with the giant Oracle that provides database and technology services, PTC, which produces software, Intel, which is focused on technology, CA technologies, also a software company, software companies Compuware and Red Hat, F5 Networks (network optimizer), EMC (a semiconductor company), Cisco Systems (a producer of protocol devices), multinational techno giant Hewlett Packard, Symantec (technological security company), another techno giant IBM, and Salesforce (a customer relationship and cloud computing company).
In the sphere of investment, its competitors are Berkshire Hathaway and Moody’s Investor Services. The media and advertising competitors include Yahoo, AOL, EXPE, Monster Worldwide, Gannett Company, the Walt Disney Company, Priceline, Facebook, Twitter, Microsoft, and LinkedIn. These competitors are strong; however, with the support of Google and effective strategy, they may be overcome (Investopedia, n.d.).
Internal Environment
Resources and Capabilities
As it was already mentioned above, the Alphabet has received a large flow of cash from Google. Alphabet possesses rather vast resources and impressive capabilities. It oversees Google and also a great number of smaller companies; all these companies are currently developing products that can become billion-dollar business projects in the foreseeable future. Google expects Alphabet to fulfill some serious acquisitions during the next year, as well as make some progress in the work on its moonshot projects.
Alphabet controls the following companies: Verily, which develops smart contact lens, DeepMind, which works on artificial intelligence and the self-driving car, Google X, also working on a self-driving car and a robots division, Google Fiber, Google Capital, Google Ventures, Sidewalk Labs, Nest, Calico, and others. These companies provide Alphabet with rich human resources, as well as capabilities necessary for working on impressive projects (Bolluyt 2016).
In combination with the financial support provided by Google, these resources and capabilities create a strong base for the future achievements of the Alphabet.
Core Competencies
Alphabet shares the core competencies of Google: ranking algorithm, computing, and data warehouse. The ranking algorithm means that a special algorithm is developed to rank the retrieved data according to their relevance, using a special matrix of webpage links. Datawarehouse means that the company is using its technology to build and maintain a database. In addition, Alphabet has a core competency of its own, which is the accumulation of the resources of both human mind and machine capabilities in order to start the innovation process and attract talents for the purpose of fulfilling this goal.
The core competency of Alphabet relates to technology in general, as well as to its use in healthcare, manufacturing, food agriculture, defence, energy, and transportation in particular. The core competencies of Alphabet are consistent with its structure, managerial strategy, competition strategy, mission, vision, and the tasks that are established for this company by the leaders of Google. If the core competencies are maintained, then, with the combination of the vast resources and capabilities of Alphabet, it would produce significant results.
Competitive Advantage
Having created an Alphabet, the leaders of Google took care of its competitive advantage, considering the heated competition in the sphere of technologies and innovations. The greatest competitive advantage of Alphabet is its blank brand which attracts investors to it rather than to its competitors. Alphabet is not weighted by the name of Google, but, at the same time, it has Google’s strong reputation, which makes investors trust in it and is, in fact, a double advantage (George 2015).
It’s another competitive advantage that is controlling many companies, it unites bright minds that are able to produce inventions. Alphabet is currently a talent magnet since the creation of a new firm that specializes in innovations leads to the creation of more job positions for talented scientists and technicians. Finally, it has the financial support of Google, which is also a strong competitive advantage (Venkatraman 2015). In combination with the resources, capabilities, and core competencies, Alphabet can use its opportunities and avoid threats (Wilson, 2015).
References
Bright, J. (2015). Alphabet and Google spell new opportunities. Business 2 Community. Web.
George, B. (2015). Google’s Alphabet move was brilliant. CNBC. Web.
Investopedia. (n.d.). Who are Google’s (GOOG) main competitors? Web.
PESTLE analysis of Google (Alphabet). (n.d.). Web.
Venkatraman, N.V. (2015). Alphabet isn’t a typical conglomerate. Harvard Business Review. Web.
Wilson, K. (2015). Four questions for Alphabet. Web.