A PESTEL/PESTLE analysis of Google
Google is famous as a search engine but the brand has extended its presence in several other new areas too in the recent years. From email to maps, cellphones, laptops and cloud services, Google makes and provides a wide range of products and services meant for individuals and businesses. Apart from that Google also seems to be planning to delve deeper into financial services with its wallet payment services. Still, most of Google’s business is present online and while it may be trying to fast extend its presence into related areas, there are several pressures in the external environment, it will be faced with. From political to economic and technological, all these challenges are important and have a substantial impact on the business of any international brand. Here is a PESTEL analysis of Google that analyses the kinds of pressures and opportunities that these forces subject Google to.
While Google is mainly into internet based businesses that does not mean it is immune to the political forces. These political forces can have a deep impact on Google’s business. The best example is that of EU’s drive against the technological giants of US. EU has been targeting the US based technological firms, especially the large multinationals like Google and Amazon through its laws and regulations. Recently Google too became its target in relation to Anti-trust issues. The European Union had charged it with the promotion of its own shopping services In this case, Google faces fines of up to 3 Billion Euros. The political environment differs from market to market and the business environment is not friendly across all the nations. In some markets anti US sentiments can lead to retaliatory action against the US based technological giants from governments and government agencies.
Economic forces also have an important impact on the business and profits of Google. During the recession, economic activity was reduced which led to reduced purchasing power of individuals and businesses. Such fluctuations lead to cost cutting and this affects the large businesses in turn. Google sells a wide variety of products and services, several of which are meant to be consumed by businesses and large corporations. The better the economic scenario, the higher is the consumption by these big businesses and the higher are Google’s profits. In case of its advertisement business too, higher economic activity signifies more online business and more expenses on advertising. This is profitable for Google. Apart from it, other economic factors that affect Google are the fluctuation rates of dollar internationally, changing interest rates etc. However, most of these risks are mitigated by the leadership position of Google in most markets and its brand recognition.
Socio-cultural factors too have a deep impact on Google’s business. New social trends and changing demographic patterns can be favorable or unfavorable for Google’s business. In the recent years, the use of social media has increased which is beneficial for its competitors like Facebook. Facebook has emerged as its biggest competitor in mobile ads. Increased use of mobile devices is a trend having both positive and negative implications for Google. On the one hand it has led to increased competition between Google and Facebook, on the other, it has brought some new opportunities for Google. The increased use of virtual teams and other trends like telecommuting have also led to increased use of Google apps and services. Demographic changes and changing consumer attitude towards online services too have an impact on Google. The millenials access a wide range of services online. They are one of the most important customers for Google and its social media channels like YouTube and Google Plus. Google’s popularity as a search engine is a key factor driving its business and revenue and still a lot depends on its social perception. Google is marketing its brand in various cultures using localized marketing techniques to create a better brand image and perception.
Google is a technological giant and therefore any kind of technological change can have a deep effect on its business. The entire business model of Google is based on technological innovation. It invests a lot on research and development to keep ahead of its competitors. However, Google’s competitors like Microsoft and Amazon are also just as relentless in terms of innovation. This keeps the pressure of competition very high for the technological giant. Its competitor Apple is trying to close Google and Microsoft out of its eco-system by developing services that cater to its customers without depending on Google. It is planning to throw Google out of Apple devices by making use of Artificial Intelligence. Apple products are made in a manner to be compatible with Apple’s products and services mainly. Google has added voice recognition feature to its search engine which had led to increased popularity of the search engine and its brand.
Sustainability is just as important for Google as the other major businesses. Investing in sustainability does to just reduce operational costs for the technological giant but also improves its brand recognition and image. Apart from investing billions in renewable energy projects, Google is also focused at building products and services that help others do business sustainably. Its earth engine creates a living map of forest loss and Google also tracks illegal fishing over billions of square miles in the ocean. Google is not just committed to reducing its carbon footprint and increasing the production and use of renewable energy but to the protection of environment in many other ways.
Legal factors are another important area that require careful attention from the big businesses. Compliance is important. Otherwise, the fines can reach billions as came to light in the anti-trust cases. The fine amount in the case of EU anti-trust issues can be 3 billion Euros. Other legal areas that can influence Google are intellectual property rights and privacy of the users. Google makes its privacy and user data related policies public before collecting data for various purposes. Now, when Google is entering financial services too, an additional set of laws will be its problem. The world of financial services is webbed by laws and regulations which can be an additional trouble for the search giant.