ALPHABET AFTERMATH OF RESTRUCTURING Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

ALPHABET AFTERMATH OF RESTRUCTURING Case Study Solution

Social Factors

The US is a developed market and like all the other developed markets such as the UK and EUROPE, the social trends leads to an aging population due to high social stability and economy status. This has led the organizations towards other markets and in sourcing labor from these areas, which creates unemployment for the Current Population. This is though sanctioned by the US Regulations and policies are implemented on to the organization on in sourcing labor from other areas.

Further, the AGING trend is highly negative for the ALPHABET which is a technology and a development organization due to its stance on projects for the next generations. Despite this, many organizations have considered this impact of the social and demographic changes in the environment which has led them to create newer products for the Aging population. ALPHABET also had a part to play in this, as told by PAGE that the organization is making products which will enhance the life quality of the Aging Population, but the model is currently in the X-LABS and in the research phases.

Technological Factors

Technology is the Key Strengths of the US Economy which provides social trends and people using Technology more than any other country in the world.

All organizations seek highly technological advances for their productions and to create a cost effective way for their operations. Further, the market is also concerned and readily available for any technology factors available.

As the organization is a technology leader and considered a tech company, the market conditions are ripe for organizational growth and performance.

FINANCIAL ANALYSIS

When we consider the Financial Analysis of the ALPHABET Company after the new restructuring model has been applied to the organization, the details of that are provided in the EXHIBIT -1.

During the 3 years which will be considered in our analysis, the organization is gaining in the market with an increase in the total revenue of 19% in 2014, and further an increase of 14% in 2015. This does provide for the high growth perspectives of the organization and increasing revenue per annum. Further, if we consider the Revenues for the OTHER BETS criteria, then for 2014 a 2625% increase in the revenue is noted, with a further 37% increasing in 2015. This is a positive sign for the organization, which after the management implied changes, the other sections are also increasing in their revenues and providing a good structure for the organizational growth.

The main problem does lie with the OTHER BETS section despite heavy Revenue growth; there are serious losses in the operating income with the Expense increasing many times of the revenue being provided. The expense for the 2014 is approximately 6.94 times of the Revenue, and increasing to 8.96 times of revenue in 2015. This is creating an allover impact on the total financial statements of the ALPHABET group.

A solution has to be reined in by the organization for the exact management of the OTHER BETS as this segment is a heavy loss making burden for the organization.

ALTERNATIVES AVAILABLE

1. CREATING A NEW INVESTMENT APPRAISAL PLATFORM FOR OTHER BETS SEGMENT

The first platform available to the organization is the creation of a new investment appraisal platform to closely monitor the OTHER BETS SEGMENT. It is now under the threat as the current management plan has failed in the presentation of the financial statements in the OTHER BETS segment.

A New investment appraisal board has to be created which will be autonomous to all the divisions and this would act as the supervisory and the implementation board for assisting, evaluating, and monitoring the OTHER BETS of the ALPHABET.

The members that would be available in this department will be equal number from the GOOGLE DIVISION and the OTHER BETS DIVISION, plus added other analysts for the financials and other presentation areas.

This department or division would perform scrutiny and closely monitor the results of the OTHER BETS area.

2.DISBANDING THE OTHER BETS SEGMENT AND REINFORCING BACK UNDER GOOGLE

The next method available to the organization is the disbursement of the OTHER BETS area and supplement it back under the GOOGLE DIVISION. This would make the organization revert to its prior position of GOOGLE providing the over watch over other bets and organizations. The implied investment money from the GOOGLE’s division will counter the expenses made by the OTHER BETS projects making the financial statements presentable.

This method, though will be taken by the Investor community, as a great threat to the shareholding and will be unanimously rejected by the VOTING SHAREHOLDERS. But, as though the classes of the shares at ALPHABET are still categorized with the CONTROL still in the hands of the OWNERS of the business, they can assert their power to influence the voting.

The market situation, if the organization will consider this proposal will worsen for the organization leading to lack of support and shareholder confidence. As the Organization is situated in the US Market which is a strong market, this will create ripple effects which would lead to the overall position of the organization resulting in the loss of Market value and in some cases; lawsuits by the shareholders for lack of management of their funds.

3.LIMIT THE FUNDS AVAILABLE IN THE OTHER BETS AS TO THE AMOUNT OF REVENUE GENERATED

This is another alternative available to the organization. This method will not change the management style or the structure for the entity, this is an alternative which can be directly implemented for the management of the projects under the OTHER BETS segment. As the method suggests, the organization will move towards a more corporate culture rather than an innovation culture.

This will limit the investments made by the organization in the research and the development phase, and will change the overall business and the workforce culture of the organization.

The method implemented suggests that the Investment available for the newer and the projects of the OTHER BETS will reduce by more than 80-90%. The impact on the financial statements will move towards a better presentation with high revenues and profits as Billions of Dollars will be saved in the reduction of the expenses for the organization.

Further, considering the market impacts of the organization; this will increase shareholder confidence as the management of the funds would be reliable in the eyes of the shareholders increasing the market position of the entity and the Market Capitalization.

But, the employee and the whole GOOGLE culture would jeopardize as the innovations will no longer proceed and the organization has to change its stance for the entire market.

RECOMMENDATIONS AND CONCLUSION

The recommended strategy, out of the alternatives being provided to the organization would be to suggest the “INVESTMENT APPRAISAL DIVISION” to be created. This will create the oversight combined with the experts at google and other areas to carefully monitor and nurture the projects to examine growth and future prospects of the organization.

This will not be a cash generating unit for the entity and will be separate from the entire ALPHABET organization; with its own meetings and personnel. The organization is currently not a loss making entity, and employing this will be the most cost effective way available to the organization which will no de-value the shares or the market Position of the organization.

Considering the current market factors, and the organizational internal factors relating to the ALPHABET Organization, the recommended method will provide the best value without tarnishing the image of the organization........

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