The Internationalisation of Google - Research Paper Example

The Internationalisation of Google Introduction Internationalization is the process of increasing the level of involvement of a business organization in international markets beyond the confines of the domestic market. Businesses embrace internationalization as a way of increasing their influence and profitability through an expansion of their influence (Kaarna 2010, p560). A number of theories have been developed to explain the process of internationalization for multinational organizations like Google. Google is a multinational internet related business based in the United States that has revolutionized internet searches through the development of strong search engines. Google offers a range of services including search engine, free email services, cloud computing and android related software for smartphones. However, the company has improved its revenues through the introduction of Ad Words, an online advertising platform that allow individuals and businesses to advertise their products near the search results. Google has grown from an American company formed by two PhD students to become a multinational with presence in different parts of the world. The success of the internationalization has been attributed to the growth of the company into new markets across the world including Africa, Asia and Europe. In this paper, the internationalization program for Google using different internationalization theories will be discussed to evaluate how they have affected the success of the company in international environments. Uppsala model of internationalization The Uppsala model of internationalization was developed from the Uppsala University by a trio that was critical of the models that were used during the mid-70s to explain the process of internationalization. According to the Uppsala trio, the models that were developed were inconsiderate of the implications of culture on the process of internationalization. Most of these theories also ignored internal foundations and beliefs on the impact they had on the process of internationalization and entry into new businesses (Johansson & Vahlne 2009, p.1411). Based on the Uppsala model, four unique steps exist that must be followed during the process of internationalization and these steps cannot be addressed without considering the company situations, market and the market information available. First, the Uppsala model highlights the presence of a sporadic export program, which is not controlled by companies but the forces of demand and supply. The export process is also achieved through the help of independent representatives who operate a foreign sales subsidiary within the country of interest (Johansson & Vahlne 2009, p.1411). Finally, the Uppsala model is based on the adoption of a foreign manufacturing and production of units, which will be used to meet the demands of the market by the multinational. To achieve this expansion program, companies such as Google must start their internationalization program in a physic approach, focusing more on nearby markets. This is important in acquiring enhanced knowledge on the operations of the market and to pool together the necessary resources needed to expand to more distant markets (Johansson & Vahlne 2009, p.1411). Google first increased its operations to various markets in the United States at the beginning of the millennium as a way of acquiring critical market information and the resources needed to operate in such markets. Beyond the domestic market in the united states, Google entered Canada and Mexico to enhance its understanding of multicultural environments and prepare for major expansion in different parts of the world especially Europe. The second step of the Uppsala internationalization model includes the establishment of various foreign and domestic subsidiaries to augment the functions and operations of the business beyond the local market. Google adopted this approach as it acquired other companies based in the United States and beyond as a way of reaching out to the international market and succeeding in its internationalization program (Paul & Gupta 2014, p.599). Google acquired YouTube, Picasa, dMarc and Nevengineering to enhance its operations and internationalization program beyond the United States. Though most of these subsidiaries are based in the United States, others are foreign technology companies that were acquired to enhance the internationalization process of the company. For example, the company acquired Aegina from Ireland, @last software of the United Kingdom and Germany and Neven vision KK of japan. Google has also established various subsidiaries in other countries such as Google Korea, japan, Italy, Israel and Netherlands in order to improve its operations in the international business environment (Evers 2012, p.141). This is based on the Uppsala’s model second step in the process of internationalization as has been adopted by most multinationals before Google. Uppsala model of internationalization does not agitate for the use of joint ventures in the process of internationalization and Google has adopted this model. With joint ventures, firms share the revenues from the operations of the business within the foreign environment. However, the Uppsala model revolves around acquisitions, which give the company entering international markets a better control of its operations in the global business environment (Verbeke, Zargarzadeh & Osiyevskyy, 2014, p246). This approach also restricts businesses from independently acquiring information from the market, as the co-owners are involved directly in the process of acquiring the needed information. Countries with short psychic distance from the host countries are preferred during the initial process of internationalization due to limited cultural and economic gaps (Kahiya 2013, p19). Success in countries with short psychic distance forms the basis for entry into other countries, which a greater psychic distance as adequate information has been acquired from the success in the nearby countries. This is the reasoning that is inherent in the Google’s expansion program and approach as it embraced countries such as Canada and Mexico during the initial phases of internationalization. Entry into countries, which are geographically closer, is a demonstration that Google understood the high chances of success in nearby countries such as Canada and even South America (Mahnke & Venzin 2003, p.115). Though Google has witnessed significant success with the adoption of the Uppsala model of internationalization, this theory has received criticism from other theorists. The model has been criticized due to its failure to completely describe the total internationalization process and how changes in the environment influence the success of entrants. Cultures adopt either individualism or collectivism cultural dimension approach and this is influenced by either the existence of capitalist or socialist ideals within them. The expansion of Google operations to international markets such as the United States resulted into the merger of two culturally identical regions. Individualism concentrates on the use of individual skills, power and knowledge in the development of a plan or the implementation of a policy. Network model of internationalisation for international new ventures  The network model for internationalisation was developed after it became evident during the mid-80s that companies were adopting a more rapid approach towards internationalisation. Most ventures entered international markets immediately after establishment without following strong fundamental international models as developed by the Uppsala trio (Finke, 2012). Oviatt and McDougall developed the network model for internationalisation to highlight new approaches that organisations can adopt in pursuit of new markets in foreign countries. While Vahlne and Johansson of Uppsala developed the stage model of internationalisation as has been discussed in the paper, Oviatt and McDougall developed a network approach that businesses use in pursuit of new operational environments. The network model of internationalisation laid emphasis on the process of market entry and how foreign businesses can become part of a strong network within the market (Deutschmann, 2014, p36). This is unlike other models of internationalisation, which concentrate on decisions made, and the planning process that are integral in internationalisation and market entry. To achieve a strong network based on this model, businesses can develop strong relationship with foreign countries and negotiate how to become members of the business networks. Network model believes in the development of a strong cooperation with local and foreign entities, which are in the same area of operation as the business, which in this case is Google (Finkle, 2012, p.871). With this model, businesses do not have to relocate their physical assets to the foreign market as the network can support its operations with its physical assets based in the domestic country (Mahnke & Venzin 2003, p.115). The network also provides access to critical information, which a business can gain without going through the experiences that other businesses in the same industry have undergone. The network model of internationalisation also advocate for the division of businesses into four categories for the internationalisation process to significantly succeed (Acs & Terjesen, 2013). The first entrant into the market is used to gain significant influence in the network and become close to the members while testing the viability of the market. It is known as the early starter and presents significant opportunities to the success of later entrants into the foreign market (Kiss & Danis 2010, p269). A starter cannot actively engage in export business as the success of such a process may be limited by several factors including lack of adequate market understanding and proper business relationship. To succeed, such a venture must engage agents who can distribute its products into the foreign market without facing market challenges, which are faced by the starters. The second stage of entry into international markets based on the network model is known as the lonely international which has gained significant experience from the starter and can operate in foreign countries through the strong relationship developed (Mahnke & Venzin 2003, p.115). Lonely internationals have significant knowledge and means to handle the challenges inherent in the international market without having to rely on relationships and local networks. In order to meet the needs of the market successfully, such an entity may be forced to operate in conjunction with foreign suppliers as a way of enhancing competitiveness. The fourth stage is the international among other, which is a foreign business with different operational networks and has the power to use its different networks to achieve the sales target (Plakoyiannaki, Kampouri, Stavraki & Kotzaivazoglou 2014, p190). Network members and suppliers of a foreign company that has reached this level are also independent in their operations and can be categorised under highly internationalised networks. Digital internationalisation  In the face of emerging technological applications, internationalization has embraced a completely new model that is based on the need to reach out to both physical and virtual markets. The two other internationalization models that have discussed have been used to meet the needs of the physical markets and are therefore suitable for businesses with physical products and targeting physical customers in foreign markets. However, Google is a digital based company that offers its products to online and internet users across the globe without physically meeting the target market. Most of the products of the company target companies, individual users and small businesses that intend to advertise their products online through the company’s advertisement platform. Due to the nature of Google’s business, digital internationalization approach as was developed by Reuber and Fischer fits it best (Grochal-Brejdak & Szymura-Tyc 2013, p.43). However, the United States mobile market has continued to slip from the hands of Google and this has been attributed to the massive campaign launched by Google and Microsoft to sell their android and Microsoft software for mobile phones respectively (Puig, González-Loureiro & Ghauri 2014, p660). Google’s android software has raked into the United States market and today controls over 79% of the total market compared to the 13.2% controlled by Google phone operating systems. The current trends post a worrying state for the company even as it continues to introduce more innovative products into the market using their traditional software platform (Acs & Terjesen 2013, p.530). Mobile phones are based on platform markets, which are very essential in the success of any company, new or old in this market. In the platform model of marketing, the use of third parties is so common and this is the approach that Samsung and Nokia have adopted by using Google’s android. In this situation, other companies like Google build products on top of those already constructed by a company like Nokia and this increases the popularity of such products (Plakoyiannaki, Kampouri, Stavraki & Kotzaivazoglou 2014, p190). Google however manufactures both its mobile phone gadgets plus the operating system upon which they operate Digital internationalization model advocate for the use of effective digital communication and interactive platforms to enter foreign markets without having to use networks or subsidiaries as is the case with the Uppsala and network internationalization models (Laurell, Anderson & Achtenhagen 2013, p.300). The emergence of interactive web 2.0 designs and social media has enabled businesses to overcome traditional challenges that have been attributed to the failure of most businesses (Achtenhagen 2013, p.310). The success of digital internationalization program rely on the presence of a strong digital strategy as seen with Google which has enabled it to become number one internet based company in the world. Google has embraced the digital internationalization platform from different angles, which has been attributed to its success. First, the company has improved the use of digital and social media platform to conduct foreign market research as a way of assessing its readiness to meet the needs of a new market (Nowiński & Rialp 2013, p220). This forms part of the company’s effort to know its current and future foreign markets and introduce products, which are designed to meet the needs of such a market. Getting the feedback of its customers through its online interact platforms has enabled Google to relate positively with the foreign market. Most of the online interactive channels developed to collect foreign market information enable the target market to raise issues of concern to them and give Google the opportunity to listen and develop the right response approach. This has contributed to the company’s high foreign market knowledge as compared to other digital businesses in United States. Social media monitoring and interaction tools also enable businesses to monitor the communication effectively that occur among the product users within the markets. This is critical in developing a prompt response to the challenges that such a market may present in case the company implements a comprehensive expansion program. The impression that Google has on the internet has also enabled it to embrace the digital internationalization approach successfully with ease as compared with the other models that have been discussed. By developing multilingual website profiles, Google has enabled its products to be used in countries, which are non-English speakers such as the Arabic countries in the Middle East. This has given Google a positive first impression, which has enabled it to enter more culturally conserved Islamic countries with ease as compared to its main competitors in the digital industry. 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