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he Alphabet case is concerned with corporate strategy in a technology-intensive, fast-moving setting. The primary focus is product diversification. Alphabet has been expanding at a hectic rate into a vast array of products, many of which seem to have tenuous links to its core business of organizing and supplying information. The key learning in this case, as with all cases on diversification strategy, is the analysis of the value-creating potential of diversification, through the potential for economies of scope in shared resources and capabilities, to create competitive advantage.

However, what distinguishes the Alphabet case (and other cases dealing with diversification within the field of digital technologies) is, first, the complementarities that exist between different products and, second, the rapid pace of technological change. Complementarities create the need for compatibility, which creates dependency relationships (for example, the Google search engine must be compatible with an internet browser (a field dominated by Microsoft). Technological change creates shifting complementarities. For example, accessing the internet from mobile devices requires that Googles search engine is compatible with the operating systems of wireless phones. Technological change also means that the key value provided by diversification initiatives may be options rather than cash flows.

This emphasis on Alphabets multimarket presence among closely linked business sectors extends our analysis of diversification beyond the emphasis of Chapter 12 (Diversification Strategy) on value creation through exploiting economies of scope in resources and capabilities. Where industries have complementary relationships they may be viewed as an ecosystem, where a multimarket presence can enhance bargaining power and allow a presence in one market to create value in another. Hence, this case offers an introduction to the particular types of synergies between businesses that arise because of digital technologies.

Finally, the Alphabet case familiarizes students with some of the organizational implications of diversificationin particular, the added organizational complexity, the problems of control, the increased strain upon top management and the potential for a company to lose focus and identity.

1. What is Alphabet's corporate strategy? Does it have a clear vision of what it wants to become?

2. Evaluate Alphabet's diversification into new products and businesses, with particular reference to (a) browsers (Chrome), (b) mobile phone operating systems (Android), (c) mobile devices and (d) driverless cars.

3. What threats does Alphabet face?

4. Does Alphabet need to refocus? How should it delineate its corporate boundaries and which businesses or products would you recommend abandoning or selling (if any)?