This PESTEL/PESTLE analysis of Google LLC provides insights on external factors in the company’s remote or macro-environment. In the PESTEL (or PESTLE) analysis framework, these external factors are opportunities or threats, which in this case influence business operations and success in the online advertising and information and communications technology and services industries. Google’s generic strategy, competitive advantages, and intensive growth strategies are partly a response to these external factors and how they shape the company’s external business environment. This application of the PESTEL/PESTLE analysis framework on Google’s business environment yields information on the opportunities and threats that affect strategy formulation. As one of the world’s most valuable companies, the information technology and services business must address the biggest threats in its remote/macro-environment, and continue enhancing its competitive advantages. In addressing the issues raised in this PESTEL/PESTLE analysis, firms like Google can expect stronger performance despite challenges in their external industry environment.
The technological nature of Google’s operations points to strategic focus on the technological or technology-related external factors identified in this PESTEL/PESTLE analysis. The online advertising, software and hardware, online services, and on-demand digital content distribution markets are all related in the company’s operations through their use of computing technologies. Overcoming the threats and utilizing the opportunities shown in this PESTEL/PESTLE analysis contribute to fulfilling Google LLC’s corporate mission and vision statements, which direct the business to maintain a strong leadership position in all of its markets and industries.
Political Factors
Governmental activities and policies affect Google’s strategies, revenues, profits, and competitive position. This part of the PESTEL/PESTLE analysis model assesses governmental influence on the information technology and services business. In considering Google’s remote or macro-environment and relative business performance compared to firms like Apple, Amazon, Microsoft, and Facebook, the following political external factors should be considered:
- Wider free trade agreements (opportunity)
- Stable political climates in most of the major markets (opportunity)
- State-sponsored online companies (threat)
Current international relations maintain wider free trade agreements, which present opportunities for Google LLC. For example, these agreements facilitate exports of the company’s products, such as Pixel smartphones. Thus, free trade agreements are political external factors that benefit Google. Also in this PESTEL/PESTLE analysis, stable political conditions pave the way for the company’s further growth in technology markets worldwide. Such stability is an external factor that makes the remote or macro-environment conducive to the growth of companies like Google. In contrast, state-sponsored or state-owned online companies in some countries are a political external factor that poses a competitive threat in the industry environment. The combination of these political factors in this part of the PESTEL/PESTLE analysis indicates that Google could focus on growing its online and non-online operations based on free trade agreements and markets’ political stability.
Economic Factors
Google’s business is subject to economic trends, which in the PESTEL/PESTLE analysis model are external factors that affect business revenues, profits, and growth, based on market growth and stability. For example, economic trends dictate customers’ willingness to pay for information technology services. In Google’s case, the following economic external factors influence the remote or macro-environment:
- Economic stability of major markets (opportunity)
- Rapid growth of developing countries (opportunity)
- Gradually decreasing cost of renewable energy (opportunity)
This part of the PESTEL/PESTLE analysis presents opportunities for Google’s business growth through economic opportunity based on major markets’ stability. The rapid growth of developing countries is also an economic external factor that equates to significant business growth opportunities for Google. For example, the company could expand its distribution of mobile computing devices. In addition, the decreasing cost of renewable energy is an opportunity to strengthen Google’s energy supply. The digital advertising services company could expand its renewable energy programs to enhance operational stability. This move would support Google LLC’s corporate social responsibility strategy. These economic factors facilitate the technology company’s growth. With the right strategies, business growth and expansion are expectable through the external factors identified in this part of the PESTEL/PESTLE analysis of Google.
Social/Sociocultural Factors
Social or sociocultural factors affect Google’s remote or macro-environment through people’s behaviors. For example, these external factors influence customers’ perception of and behavior toward the company’s online advertising operations. In this part of the PESTEL/PESTLE analysis, the following social external factors are considerations in Google’s business:
- Increasing use of social media (threat and opportunity)
- Rising diversity of online users (opportunity)
- Rising criticism against online companies’ use of personal data (threat)
The increasing use of social media is a threat because of the presence of firms like Facebook. These firms compete against Google’s business, especially in online digital advertising. The same external factor is considered an opportunity in this part of the PESTEL/PESTLE analysis because of growth in social media operations. For example, riding this sociocultural trend, Google could innovate its YouTube operations to further grow its customer base. In addition, the rising diversity of online users creates opportunities to improve the business through technological tools and innovation. Google could improve its algorithms to match the diversity of customers and their preferences. In contrast, rising criticism against companies’ use of personal information is a social external factor that adds hostility in the remote or macro-environment, especially against online firms that use personal information and related data for digital advertisements. Overall, this part of the PESTEL/PESTLE analysis of Google LLC shows that, despite sociocultural threats, there are opportunities to boost the corporation’s performance. The business needs strategies that holistically address the identified external factors. Google LLC’s marketing mix or 4Ps help entice more customers, based on these existing social/sociocultural trends.
Technological Factors
The technological nature of Google’s business means that technological external factors significantly impact the firm and its remote or macro-environment. The PESTEL/PESTLE analysis model considers technological trends as makers or breakers of technology businesses. The following are the technological factors in Google’s industry environment:
- Growing Internet access in developing countries (opportunity)
- Rapid adoption of mobile devices in the global market (opportunity)
- Growing use of cloud services worldwide (opportunity)
Google has the opportunity to grow based on increasing Internet access in developing countries. This technological external factor in the PESTEL/PESTLE analysis translates to market growth in these countries, where the company could offer more of its hardware, software, and online services. Also, the continuing worldwide adoption of mobile devices gives the corporation the opportunity to grow through higher sales of its smartphones and wider use of the Google Play Store via devices with the Android operating system. The company could improve the mobile-friendliness of its products to ensure wider adoption among mobile users. Furthermore, the growing use of cloud services is a technological factor that gives Google the opportunity to improve its revenues in this market. For example, the company could implement more aggressive marketing strategies to grow its cloud computing services. The external factors in this part of the PESTEL/PESTLE analysis of Google show that there are various business growth opportunities based on technological trends influencing the company’s remote or macro-environment.
Ecological/Environmental Factors
While Google LLC generates most of its revenues online, the firm is subject to ecological or environmental external factors. In the PESTEL/PESTLE analysis model, these external trends influence business strategic direction, such as among companies in the cloud computing services industry. The following ecological external factors affect Google’s remote or macro environment:
- Continually growing support for environmentalism (opportunity)
- Growing interest in sustainable business among suppliers (opportunity)
Strengthening environmentalism is an external factor that affects the industry environment of companies like Google. For example, environmentalism makes green technology products more attractive. In this PESTEL/PESTLE analysis case, Google’s use of renewable energy makes its services satisfactory with regard to customers’ preference for green technologies. Similarly, the technology giant’s suppliers are increasingly taking interest in sustainable business practices. This ecological trend creates the opportunity to further strengthen Google’s corporate image by doing business with suppliers with sustainable operations. This part of the PESTEL/PESTLE analysis emphasizes ecological external factors that create opportunities to improve the technology company’s business through ecologically sound strategies. Google’s corporate social responsibility strategy helps ensure that these opportunities are addressed.
Legal Factors
Google operates within limits imposed through laws or regulations. In the PESTEL/PESTLE analysis model, regulatory requirements influence what firms can do, such as the extent of companies’ use of online users’ personally identifiable information. The following are the legal external factors that shape Google’s remote or macro environment:
- Increasing regulations on online privacy (opportunity)
- Stronger regulations on intellectual property rights (opportunity)
- Growing restrictions on the use of customers’ personal information (threat and opportunity)
Increasing regulations for online privacy is an external factor that gives the opportunity to improve products and increase customer satisfaction. In the PESTEL/PESTLE framework, addressing this trend could make Google’s products more competitive against companies with weaker privacy protections. In relation, stronger regulations on intellectual property rights are a legal factor that presents another opportunity for the company to improve its technological goods and services. For example, in relation to the operations of Alphabet Inc.’s other subsidiaries, Google could strengthen its intellectual property filings while providing tools for individuals and organizations to ensure the protection of their respective intellectual properties. On the other hand, growing regulatory restrictions on the use of customers’ personal information is a threat, considering the company’s dependence on using customers’ individual and aggregate data to support services like online digital advertising. Nonetheless, in this PESTEL/PESTLE analysis, such an external factor creates an opportunity for Google to build on its existing systems and processes to enhance its consensual use of online users’ information. Such enhancement could make the company’s image more satisfactory among target customers in the online environment. These legal external factors relate to the competitive factors identified in the Porter’s Five Forces analysis of Google LLC.
Recommendations based on the PESTEL/PESTLE Analysis of Google LLC
This PESTEL/PESTLE analysis identifies various trends and external factors that present opportunities for growth and higher business performance for companies like Google. However, some of these external factors threaten the technology business and its remote or macro-environment. Considering the diversity of its operations, Google has the resources, systems, and business capabilities to exploit these opportunities and reduce exposure to the threats. For example, the company could improve the performance of its Pixel devices to capture a bigger market share of mobile users. Also, this PESTEL/PESTLE analysis indicates that Google could develop new operations or acquire existing smaller firms, to address technological trends influencing product design and development, and ecological trends pertaining to sustainability. The approach should improve organizational capabilities through rapid innovation to match trends in the market for information technology and online services. Strategies maximizing the strengths identified in the SWOT analysis of Google LLC could optimize business performance amid the opportunities and threats discussed in this PESTEL/PESTLE analysis.
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