Alphabet Eyes New Frontiers

Based on the Case Study of Alphabet Google.

1. PRESENTED BY GROUP 10: AKANKSHA VERMA 20DM014 AMAN AGARWAL 20 DM023 AMIT KUMAR HOODA 20DM028 ANAND VIJAY SONI 20DM030 CHITRANSH 20DM067 LEELA KRISHNA CHINNAREDDI 20DM112 RADHA GUPTA 20DM164 ALPHABET EYES NEW FRONTIERS

2. Alphabet was created through a restructuring process Several subsidiaries faced problems after restructuring Timeline INTRODUCTION 1995 2004 Expansion 1998 Incorporation 2000 Largest search engine 1997 Domain Registration 2015

3. INVESTOR RELATIONS IPO Approach to Corporate Governance Class C shares INNOVATION AT GOOGLE 20% time Casual collision Embracing failure

4. INVESTING OUTSIDE THE CORE Android - 2005 DoubleClick - 2007 Y ouTube - 2006 Moonshots

5. RESTRUCTURING Announced on Aug-2015 Segment reporting was introduced Existing share of google were converted

6. INVESTORS REACTION On the new policy, Investors reacted in a positive way. Which also showed in increase of Google shares. Performances of Alphabet is very promising and encouraging. By Feb 2016, alphabet share raised by 50% compared to summer of 2015.

7. INNOVATIONS 70-20-10 approach Organization structure, which allows Alphabet to be Innovative and stay ahead of the time. QUARTER 4 PERFORMANCE Increase in Revenue compared to last quarter 4 and also from previous quarter. ABOUT NEST Found in 2011 by ex-Apple employees. Google acquired it in 2014 for $3.2 billion.

8. OTHER MOONSHOTS Niantic Labs as an Independent entity in August, 2015. Bloomberg also part ways in 2015. LOOKING AHEAD 90% of revenue generated from search engine and advertising services.

9. Q1. Why does alphabet own widely different subsidiaries under the same corporate structure? What are the benefits of this choice? And the costs? Creates more value for the company. For example, YouTube. Giant corporation and hence gets revenues. More expensive to have more corporations.

10. Q2. What is the rationale behind the decentralized structure/ Its drawback? Under what conditions this structure is an appropriate organizational design for diversified company? RATIONALE BEHIND DECENTRALISATION To improve productivity. Trust among employees and leadership. Preparing the company for emergencies. 

11. CONDITIONS FOR DECENTRALISED STRUCTURE IN A DIVERSIFIED COMPANY In case of expansion because of diversified portfolios. In order to reduce burden from the top executives. Opportunity for greater diversification of product lines. DRAWBACKS Lose control of day-to-day activities. Different agendas of managers in the same organisation.

12. Q3.  Is Alphabet’s corporate governance (and in particular the presence of dual class shares) appropriate for the organization? What are the benefits? And the costs?  CORPORATE GOVERNANCE Corporate governance is the combination of rules, processes or laws by which businesses are operated, regulated or controlled. Reasons of low Corporate Governance rating of Alphabet: Restructuring issues Management style of Nest Composition of Board of Directors Presence of Dual Class Shares

13. In August 2014, when Google became public, the demand was lower than expected. Also inconvenient was the dual structure where Class A shares have the right for one vote, and Class B was reserved for google insiders only and had the right for ten votes. This is not seen right because people didn’t want to invest because they didn’t have the right to vote.

14. Benefits: Company can take risky bets on new technology Protects entrepreneurial management from demands of ordinary shareholders Ensures loyal investors even during rough patches Costs: Create an inferior class of shareholders Ensures reins remain firmly in the hands of promoters Allows management to make bad decisions with few consequences

15. THANK YOU!