The Influence of Facebook on the International Business - Term Paper Example

International Business The paper mainly highlights on the influence of the firm on the international business and it develops a conceptual framework for analyzing its influence and impact on the international business. Facebook has developed due to globalization and has resulted in the fast advancement in the information technology .The use and the popularity of face book has increased throughout the world and it is spreading globally that is widening and expanding the free and smooth flow of the information. Face book is being considered as the important part of the non-profit organization. Face book provides and creates and effective platform for developing and improving the partnership between the development of the business and the non-profit organization for conducting good social programs. Face book alone serves and includes 1.11 billion users across the world. Facebook can be considered potentially for providing business to the millions of users in the new and emerging market. The development of the face book across the world has increased the complexity of the world. The complexity comprises of the opportunities and the obstacles for carrying out international business that are challenged continuously. Face book has failed to enter and penetrate in the Chinese market because of the rumour which in indicates that it may enter into partnership with Baidu which will penetrate the Chinese market and will overcome the barriers that have settled or established the internet brands of US in China. But it is likely that face book may face the censorship which is practiced by all Chinese websites. Introduction The changes and modification in the technology have developed the mechanism towards the growth and development of the international business. The reduction of the barrier in the movement of the trade and the capital has resulted in the flow of the import, export and the foreign direct investment. The multinational organization has developed as the prime agent of the coordination of the international economies. The international business promotes and improves the ability for generating innovations and delivering the goods and services in the market. The growing and development of the new industrialized countries such as China has lead to the development of the activities related to international business. At the firm level the productivity, cost and the market share are all considered as the prime indicator for increasing the competitiveness in the international business. The economies have widened and expanded in the recent years due to the development in technology, communications, finance and transportations. Earlier there were few barriers for conducting business and trade across the world but the development in the communication and technology has resulted in the significant growth and development which includes the innovation undertaken for carrying out business and trade across the world. The impact and the influence of the various dynamic factors have played and performed unique role in the field of the international business the development of the international business has lead to the diversification of the brand and service across the world. The modern business has influenced the international business significantly (Paul, 2008). Case presentation Facebook was founded in 2004 by five founders namely Zuckerberg, McCollum, Moskovitz, Saverin and Hughes. It is an online social networking service that has its headquarters located in California. Mark Zuckerberg was the key individual who was behind this creative idea and his idea was further supported by Harvard University students. In the initial stage of its designing the website was confined only to Harvard students. Website membership was given only to these students. This idea was later expanded into colleges located across Boston area. Stanford University and Ivy League were the major universities who gained accessibility to such website. In present scenario Facebook allows any individual to access its website who is 13 years old or above. Users operating in this website cam create their own profile and add other members as their friends. The basic functionality which is offered by Facebook are message exchanging, post status photos and updates, receiving notifications, chatting, updating profile information, and sharing videos or photos. It can be stated that this platform has enabled individuals to develop healthy global relationships and understand cultural element prevailing around the globe. Through this online social networking website one can join common interest user groups, structured on basis of schools, colleges or workplace. These friends can even be categorized into different segments. As per 2014 the social networking site encompasses 1.3 billion active users. There is wide array of data which is collected by the website about users and this gives birth to privacy issues. Facebook has gained significance across the globe as an effective social media. While operating in China, Facebook had to witness a lot of hurdles and this was due to its open nature. There are many countries that have banned or interfered in its accessibility such as China, Iran, Iraq and Syria. In China, open communication network is strictly prohibited. On the other hand, this website particularly deals with large volume of personal information. This can easily lead to exploitation of such wide base of user’s information. Facebook in China was blocked after Urumqi riots had taken place in 2009 (Lee, 2014). This was because Xinjiang independence activists were utilizing Facebook as an essential component of their overall communications network. There were even tremendous problems observed between Google and China. This in turn had made many Chinese users believe that Facebook’s growth in Chinese market was limited. In China there exists a well known social networking site called as Renren which possesses similar characteristics as that of Facebook. However the entire procedure followed in Renren is well aligned with PRC Government regulations. These regulations are maintained by Renren in terms of content filtering. Facebook was unable to incorporate the concept of content filtering into its system and this lead to its withdrawal from Chinese market. China’s government is focused on control Chinese speech in context of Internet (Luthans and Doh, 2015). The government either blocks or changes the content of a website that it predicts to be harmful for present or future scenario. Facebook’s server is located overseas and hence the safest mode for Chinese government was to block this website. International business comprises of all forms of commercial business transactions. These transactions usually take place between more than one countries, regions or nations. Private sector companies basically incorporate such transactions so as to gain high profit margins. On the other hand, government enters into this form of transaction for generating profits as well as political reasons. It usually refers to business activities that encompasses cross border transactions of resources, goods or services between two nations or more. There are different business sectors that are focusing on the concept of international business. In overall context through this approach a firm is able to gain competitive advantage and even expand upon its customer base. It can be stated that Facebook’s withdrawal from Chinese market is an international business case. This is because Facebook has its origins tied to United States and it has entered into different markets across the globe (Daniels, Radebaugh and Sullivan, 2007). Chinese market can be regarded as a foreign market for this social networking site. There is highly distinct culture maintained in Chinese market which led to facebook being banned in this region. The major objective behind expansion into this foreign market was to increase on its user base. However Facebook was unable to retain on its user base in Chinese market since it was not able to comply with government regulations. On the other hand, dealings of Facebook in Chinese market clearly portray this case to be a scenario of international business. Case Analysis Facebook has been unable to again traction in the market place of China. The founder of face book Zuckerberg was not able to find out the way in entering in China and tapping the market of China. In spite of the attempt and the effort made by goggle to enter into China over the service blockages and censorship and its attempt to withdrawal from the Chinese market (Geiersbach, 2010). The main issue is that Facebook may enter into partnership with Baidu to for penetrating in the market. Facebook may face censorship as it is faced by all websites in China. Facebook have been blocked in china from the year 2009. It is not only facebook but all the other foreign websites have been blocked in China. Facebook was blocked in mainland China under the China policy of internet censorship. The access of facebook was blocked in China after the occurrence of ethnic riot in China which caused the death of more than 140 people across the world. The central government of China has adopted all the steps and measures for restricting the access of the various foreign websites which also includes facebook. Facebook has been unable to grasp the Chinese market due to its managerial error. Facebook was under the huge pressure for its band along with the other internet companies in China and it was advised for creation of ethical standard and conducting the business locally. Face book is being considered as the leader in maintain privacy. Facebook has decided and planned to enter into initial public offering in which the companies were expected to increase 10 billion dollar for the growth and development. Face book is keen and interested for carrying out its business in China. The founder of Face book decided to enter into the Chinese market with different name but the problem is that the translation of the name of face book in China resembles something negative which implies that it is in verge of extinction. Facebook has tried its effort and was after China for entering into the market where the company has banned its service. The company has established a lease of three years for penetrating into the Chinese market. Facebook has made enormous effort and has taken initiative for penetrating into the Chinese market. The company provided a justification that China already possessed 618 million internet users which is double the population of US . The director of the state internet information has laid down the argument that the laws and regulation of China has been formulated for safeguarding and protecting the security of its consumers and also the security of its country that is China. Facebook has been blocked and banned in China. China has adopted very stringent laws in restricting the access of these sites in China (Madura, 2014). Entering into the Chinese market will earn a lot of revenue and also will serve as a source of revenue generation for face book The ban of the access of Face book China is creating problem and difficulty for the travellers who visit China. The blocking of the access of face book in China does not represent that the ban does not imply or indicates that face book can never enter into the Chinese market. China has the strength of more than 650 million online users. Facebook can enter into the Chinese market and carry out its business in China but for that it has to follow the policy that has been adopted by most of the US based companies for establishing business in China that is face book is required to enter into an agreement and joint venture with a china based company and it is also required that facebook have to share all its data related to its users with the government of China (Harvey, 2014). Leveraging the client base and also the brand facebook will be able to become the important market player in China and facebook will be able to navigate the local rules and regulations and tap the Chinese market rapidly. Facebook expected to enter into the Chinese market and establish its presence in the market but for capturing the market it has to enter into partnership with the government of China. Implications Facebook is trying to enter into china and Xiaomi wants to expand and widened its business outside China because the aim of both the companies is gaining and realizing the importance of working together with each other. Facebook has an ambition and aim towards expanding its business in one of the most populous country of the world. Facebook and Xiaomi decided and planned for investment in the mid of 2014. Xiaomi has decided to sell its stake to facebook whereas many of the social networking of US is banned in China. But Xiaomi is in dilemma that its partnership and tie up with Facebook could endanger its relationship and partnership with Google because the phones of Xiaomi are developed on the basis of the operating system of Google. Although China is considered as the largest user of internet but it has been observed that only half of the population of China uses or utilizes the application of internet. It is observed that China partnership with Facebook will include the social network of China such as the twitter of china, Renner and Weibo that have been declared as public in US. Facebook has the potential and the capability of providing Xiaomi the source of earning investment from one of the major companies in US with a customer base of 1.3 billion. Facebook has planned to tap the Chinese market by its entrance in the Smartphone market will provide advantages to it in entering and developing the Chinese market. Conclusion Facebook can be said to be the largest social networking site in the world with more than 1 billion active users as of 2014. To expand its user base the Facebook has to increase its global reach and hence increase its penetration into countries such as China which has the largest population base. However with China Facebook is facing a problem that relates to the amount of content and censorship of the data that user can post on facebook. China being a republic country is governed by the communist party for many years. In China the government likes to control and censor all the information that is ever posted on the net about the government or the country. However Facebook does not want to censor the data or filter the content of the information that is posted by its users. This is the source of all problems and a point of conflict between china and Facebook. The problem arose when Urupi riots took place in 2009. Many of the activists who belonged to the Xinjiang province of china were using facebook to voice their opinion. Chinese government did not like this fact and wanted to censor the information and filter the content to which facebook was not ready to comply. In china there is an alternative to the facebook by the name of Renren. Although Renren is similar to facebook it follows the censorship of data as recommended by People’s Republic of China and hence is allowed by the Chinese government. The question of Facebook entering into China now totally revolves around the question whether facebook will comply with the rules set down by China or not. References Daniels, J., Radebaugh, L., and Sullivan, D. (2007). International business: environment and operations. UK: Prentice Hall. Geiersbach, N. (2010). The impact of international business on the global economy. Retrieved from http://www.saycocorporativo.com/saycoUK/BIJ/journal/Vol3No2/Article_8.pdf. Harvey, K. (2014). Encyclopedia of Social Media and Politics. London: SAGE Publication. Lee, N. (2014). Facebook nation: total information awareness. USA: Springer Science Business Media. Luthans, F., and Doh, J. P. (2015). International management: culture, strategy and behaviour. New York: McGraw Hill. Madura, J. (2014). International Financial Management. New York: Cengage Learning. Paul, J. (2008). International Business. New Delhi: PHI Learning Pvt. Ltd. Read More