I don't have all the option under the "system" option and I need a configuration option to set up my google analytics.
Please can you help me add the configuration option.
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Google Analytics should already be in Magento 1.7. To find it you should look under
System->Configuration->Google Api. Here you will find that you can activate the extension and set your account number.
After setting these values you should be good to go.
If you want to see how it adds the code to your page look at the layout and template files: