Mapping the Business Strategy: A Strategic Management Analysis of Google Inc Introduction Google Inc was registered for

the first time as the private company, for September, 4th 1998, and went through public offering on August, 19th, 2004. Through tremendous and constant growth, by end of 2008, Google has become the most powerful search engine in the world. This improbable fast growth speaks about aggressive actions, new workings innovations, acquisitions and partnership. Moving ahead with mission and objectives of the company to provide the latest worlds information and making comprehensively accessible and useful, Google positions itself as top level company and represents itself as the gatekeeper of the world information. Google earns its income from target advertizing, connected with its Internet search, Internet shops, Gmail and many other services. As technological company, Google pays much attention to innovations, technologies and the quality of employee. Creative products and services launched by Google have become very popular. Google Desktop, Gmail, Picasa, Google Video and iGoogle are some examples. Efforts have substantially paid off, and Google takes strong positions in industry from point of view of the finance. For achievement of their goals, Google wants not only in your browser, but also in a pocket. The best option for Google to be the owner the smart phone should to be OS smart phones. Android is an open operating system intended for mobile devices and a latest push of Google in this area. Android gives a full set of the software for mobile devices: an operating system, binding ON and key mobile applications. Android has been constructed from ground up allowing developers to create attractive mobile applications which to the full usage all handset can offer.

1. The Financial and Economic Analysis The financial analysis of Google relies on 11 metrics and their analysis will predict whether shares and stock are worth buying. These are: 1. Du Point Identity Return on Equity = Income after taxes/sales * Sales/Total Assets * Total Assets/Equity = 9,737,000/37,905,000 * 37,905,000/72,574,000 * 72,574,000/58,145,000 = 2569, *5223, * 12482 = 0.16 The ratio indicates the management performance. This ratio even can go higher if there is more debt. However Google Inc does not possess that much debt and shows a good rate of return. So, we can conclude that Google is performing well in this case. (Googles Philosophy, 2012) 2. Current Ratio Current Ratio = Current Assets/Current Debt = 52, 758, 000/8, 913,000

= 5.919 The ideal ratio usually is 2. A ratio of 1 describes that the organization has liability equal to assets and if the company possess a ratio of less than 1, than the organization could face some problems while dealing with debt in short period. Anyhow, Google showing a too high ratio depicts that Google is not utilizing its assets efficiently. However by showing a high ratio is not harmful as showing a low one, so Google is said to be on safe side but not the ideal. (Googles Philosophy, 2012) 3. Acid Test Ratio Acid Test Ratio = (Cash + Account Receivable + Short Term Investments)/Current Liabilities = (9,983,000 + 6, 387,000 + 34,643,000)/8,913,000 = 51,013,000/8,913,000 = 5.723 The ACT ratio is not same as the current ratio. It tells that how the organization would be able to fulfill its short term liabilities. If the organization shows ATR higher than 1.0, then it is ideal. Google obviously possess a very high number, and can pay its debts easily. Google can convert receivables into cash quickly which is a sign of healthy cash generating. 4. Inventory Holding Period Google does not hold any inventory, as such it does not have inventory period. However, Google has approached its retailers to show their inventory which can be accessed by public. 5. Average Collection period = Days of Inv. * Account Receivables / Credit Sales Since this rate depends upon inventory of the firm. So, it cannot be available. 6. Debt Ratio Numbers in Thousands Debt Ratio = Total Debt / Total Assets = 14,429,000 / 72,574,000 = .1988 Google possess a very low debt ratio. If a debt ratio is less than 1.0, it predicts a good financial background of an organization. Googles rate shows very low, which means that for every dollar in assets, Google has 19 cents in debt. 7. Free Cash Flow Free Cash Flow of Google Inc. = 3,087,000 As we observe, cash flow is too high for Google Inc. It means that company has a capacity to generate cash, and its a good is sign of a healthy and powerful company. 3 Billion Without any doubt is higher than the average. 8. Market Value Added

Numbers not in thousands MVA = {number of shares * market price per share) {common stock + retained earnings} MVA = {323,890,000 * 614.98} {20,264,000,000 + 37,605,000,000} = 199,185,872,200 57,869,000,000 MVA = 141,316,872,200 141 Billion Dollars is a too high number for considering as market value added. In the market, if MVA is higher, the better is the companys financial health. Google shows its strength through numbers. 9. Economic Value Added EVA = EBIT (1-t) [Investors Supplied Capital * Cost of money] = 12,326,000,000 (1-.21) [23,250,000,000 * 10. Dividend Yield Dividend Yield of Google is 0%. The company does not have to pay dividends. So, by this metric, it is an opportunity for Google for investments in long terms. In addition, it predicts that Google heavily invests the money and saves revenue on dividends, if dividends are not paid; investors are attracted as they get courage to invest in establishing companies. (Googles Philosophy, 2012)