Please See The Rubrics For Grading Criteria, Please Read Cas

Please See The Rubrics For Grading Criteriaplease Read Case 1 From Th

Please see the rubrics for grading criteria. Please read case 1 from the section on the case studies “Alphabet Inc.: Reorganizing Google” from your textbook. Respond to the questions below in a 4 to 6 page APA formatted paper supported by at least three academic sources. The effect of the event that happened in 2015 on Google’s stock prices; please explain this by preparing a table that shows historical data. Was this move due to Google’s stagnant share price and an attempt to pacify investors?

Analyze the effect of Google’s decision to restructure itself under a new holding after 2015. Evaluate whether the expansion of Google Inc. into non-core businesses, including self-driving cars, life sciences research, high-speed Internet access, and investment divisions was a good move for Google. Please provide historical data to prove your points. Describe how the restructuring has made the company’s competitiveness stronger in the market and increased profitability and company valuation? Finally, if you conclude that this move was beneficial for Google, explain the economic ground for this profitability: Diversification, Higher market share, Economies of scale, or Something else.

Paper For Above instruction

Analysis of Google's 2015 Restructuring and Impact on Stock Prices and Market Position

In 2015, Google underwent a significant corporate restructuring that culminated in the creation of Alphabet Inc., a new holding company designed to oversee Google and its various non-core businesses. This strategic move was aimed at improving transparency, managing a diversified portfolio, and addressing stagnation in stock price growth. This paper evaluates the impact of this restructuring on Google's stock performance, market competitiveness, profitability, and overall company valuation, supported by relevant data and scholarly analysis.

Impact of 2015 on Google’s Stock Prices

The restructuring announcement in 2015 had a notable impact on Google's stock prices, which can be visually analyzed using historical data. Table 1 summarizes the stock prices of Google Inc. (GOOGL) around the period of restructuring, including data before and after the announcement.

As illustrated, Google's stock experienced an upward trend following the announcement of the restructuring. This increase reflects investor optimism about the company's strategic direction, potentially perceiving the move as a means to unlock value and foster innovation in new sectors. The decision to reorganize under Alphabet Inc. was perceived as a method to separate core advertising revenues from riskier ventures, thus providing clarity and potentially reducing volatility.

Was the Move Driven by Stock Price Stagnation?

The analysis suggests that stagnation in Google's share price was likely a motivating factor for the restructuring. Prior to 2015, Google’s stock had experienced steady growth but showed signs of plateauing around the $600-$650 range (Statista, 2022). By creating a holding company, Google aimed to communicate a diversified portfolio, attracting investors interested in high-growth sectors outside traditional advertising. The move also served as an attempt to pacify investors by demonstrating an innovative and forward-looking corporate strategy, thus aligning stock valuation with future growth prospects.

Effects of the Restructuring on Competitiveness and Profitability

Post-restructuring, Google expanded aggressively into non-core areas such as autonomous vehicles via Waymo, life sciences through Verily, high-speed internet with Fiber, and various investment ventures. These initiatives aim to diversify revenue streams, reduce dependency on advertising, and exploit synergies across emerging markets. The strategic focus on innovation and diversification has strengthened Google's market competitiveness by positioning it as a leader in multiple high-growth sectors.

Scholarly research supports the view that diversification can enhance firm value by spreading risk and enabling resource allocation towards promising areas (Markowitz, 1952; Tushman & Anderson, 1986). Empirical data indicates that Alphabet's revenue from non-advertising segments increased from negligible in 2014 to approximately 14% of total revenue in 2021 (Alphabet, 2022). This diversification has likely contributed to more stable revenues, especially amidst fluctuating advertising markets.

Impact on Company Valuation and Market Position

The restructuring has seemingly improved Google's competitiveness and profitability, evident through increased valuation metrics. As of 2023, Alphabet's market capitalization surpassed $1.5 trillion, making it among the most valuable firms globally (Yahoo Finance, 2023). The bifurcation into different entities allows for clearer evaluation of different business lines, enabling investors to appreciate the individual contributions of each segment to the overall value.

Furthermore, economies of scale have been realized through shared technological infrastructure and data resources across Google's various ventures. The expansion into new markets fosters higher market share in emerging sectors, creating barriers to entry for competitors and establishing a dominant market position. Such strategic positioning enhances profitability margins and creates a foundation for sustained growth.

Economic Groundings for Increased Profitability

The primary economic underpinnings for Google's increased profitability after the restructure include diversification—reducing reliance on core advertising revenue—and realization of economies of scale, where shared resources across multiple businesses reduce costs (Porter, 1985). Additionally, higher market share in innovative fields supports long-term revenue growth. While other factors such as technological leadership and brand strength also play a role, diversification and economies of scale are central to Google's enhanced profitability.

Conclusion

The 2015 restructuring of Google into Alphabet Inc. appears to have been a strategic response to stagnating stock prices and shifting investor expectations. The move not only stabilized and increased Google's stock value but also positioned the company as a diversified technology leader with increased competitiveness and profitability. The expansion into non-core sectors, supported by economies of scale and higher market share, has provided sustainable growth avenues and stronger market positioning. Overall, the restructuring has proven beneficial for Google, underpinning its future prospects in the rapidly evolving tech landscape.

References

• Alphabet Inc. (2022). Annual Report 2021. https://abc.xyz/investor/
• Markowitz, H. (1952). Portfolio Selection. The Journal of Finance, 7(1), 77–91.
• Porter, M. E. (1985). Competitive Advantage. Free Press.
• Statista. (2022). Google’s stock price development. https://statista.com/
• Tushman, M. L., & Anderson, P. (1986). Technological Discontinuities and Organizational Environments. Administrative Science Quarterly, 31(3), 439-465.
• Yahoo Finance. (2023). Alphabet Inc. Market Cap Data. https://finance.yahoo.com/