Abstract

The case discusses the restructuring of global technology giant Google Inc. as it takes on a holding company structure that separates its highly profitable search and advertising business from its non-core “other bets”. The new slimmed down Google will focus primarily on its core search business with many of its former subsidiaries being spun off under the aegis of a parent holding company named Alphabet Inc. (Alphabet). The case discusses the rationale behind the move and how it had become inevitable for Google to opt for a change in its structure as it pursued potentially new businesses in industries far from its search-engine roots. The case highlights the benefits of the reorganization to the company, its employees, customers, and shareholders. The reform is likely to breathe new life into the company by making its investments and spending on research transparent and allowing for cleaner operations and more accountability while keeping investors happy. Though Google’s decision to restructure itself with a holding company has been lauded by investors, it is a risky bet that may create some problems for the company down the road. The case presents the challenges that Alphabet could face going forward. Alphabet’s moonshot businesses are experiencing growing pains with the company stressing financial discipline and accountability across its subsidiaries. Moreover, some key leaders have exited Alphabet over unprecedented pressure to bring costs in line with revenue. Will the creation of Alphabet spell a new successful era for Google? Can Alphabet maintain Google’s lead as an innovator and challenge competitors in a wide array of industries?

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand key issues and concepts in reorganizing and the strategy behind Google’s restructuring
• Understand the strategy/structure relationship
• Understand the pros and cons of a holding company structure
• Discuss and debate whether Google’s reorganization efforts will bear fruit for the company.
• Examine the future strategy of Alphabet

Keywords

Organizing, Reorganizing, Organizational structure, Organizational design, Holding company structure, Matrix structure, Functional structure, Restructuring, Corporate transparency, House of brands, Strategy/structure relationship, Innovation, Investor relations