The Present Strategic Decision of Google in China - Term Paper Example

Google in China Case Study - Evaluating Strategy (Executive Brief) Table of Contents Introduction 3 Strategic capability of the organisation 3 Organisation’s Strategic position 4 Business Environment 6 Corporate Governance and Stakeholders Power 7 Existing Strategic Decision 7 Conclusion and Recommendations 8 References 10 Introduction Google, based in United States of America has been the leading internet search engine in the world. It started providing services to China in the year 2000. Although it began as the leader in the Chinese market, soon it began to lose its share of the market at a fast rate. The internet content is greatly censored by the Chinese government. That is why the users of Google have to face inordinate delays in viewing the site. This has reduced the popularity of the site in China considerably. Moreover ‘Baidu’, a search engine company based in China has emerged as a potential competitor (ICMR-a, n.d.). The project tries to elaborate on the present difficulties faced by the company in China. It discusses the strategic position and capabilities of the organisation in China and the business environment in which it works. It discusses the role of stakeholders and the corporate governance of the company. The present strategic decision of the company has been presented in the project. Lastly it recommends suitable actions that can be undertaken by the company in facing the potential barriers in implementing its future strategies. Strategic capability of the organisation Among the strategic capabilities of a company the most important one is the opportunities that exist for economising on the present set of tangible and intangible resources of the company. It also finds the possibilities of employing the present assets of the company more profitably. The company has taken up the most challenging mission “to use the power of information and technology to address the global challenges of our age” (Brilliant, 2009). To attain this mission the most important resource that Google uses are its employees. The company attracts the best talents in the world. Its human resource includes technical and engineers mostly. These resources have been found to be most effective during times of depression and crisis. Its main strength lies in its products, employees and technologies. Google has a number of potential partners which has helped it to meet challenges successfully and fastened it progress. The company has been trying to encourage both private and public partnerships to move forwards. Its innovative and scalable technology is the main factors behind the company’s success. Its team of technical talent, technology and global partners can be accounted responsible for its success (Brilliant, 2009). Google follows a certain code of conduct while operating. Its code of conduct is “don’t be evil” (Google News, 2009). The concept is built surrounding the fact that all that Google does in connection with its work should be measured against the greatest possible standards of any ethical business. The standard has been set high for both practical and aspirational reasons. The company’s commitment towards high standards helps them to get the best of talents. It also helps to attract a great number of loyal users. Mutual respect and trust prevailing among its employees forms the basis of success for the company (Google News, 2009). Organisation’s Strategic position China has been trying to modernise its market and trying to become the largest market player globally. As it became a part of the World Trade Organisation, China opened its market to the foreign companies. Google entered the Chinese market with a large internet market. One of its important moves was launching of google.cn in China. It worked successfully in the Chinese market for quite some time. Google has made a number of acquisitions lately. One of its important strategic moves was its acquisition of the visual search engine called Like.com. Earlier the company had also made purchases of other businesses like mobiles and videos. However recently, the company faces the threat from big competitors like “Microsoft’s Bing search engine and Facebook” (Paid Content, 2010). Such companies have posing serious threat for Google. In fact recently it was reported that Google’s recent purchases were mainly aimed to defend the company. The company’s purchasing companies like Aardvark, Like.com, ITA Software and Slide are primarily in defensive in nature. Recently the company’s strategic position is not as strong as it was previously. In 2006, the company had to declare that it would censor the content that was made available at China. The Chinese website that was started by company would be censored by the company as per the instruction of the Chinese Government. It was subjected to strict regulations made by the Chinese Government. It was also seen that the company was losing many of its users in the country. The company’s plan to launch google.cn was aimed to make a productive presence in the rapidly transforming country that is one of the most dynamic countries in the world (ICMR-b, n.d.). From the financial perspective of the company, China presented itself as a fast growing, dynamic and competitive market for Google. The internet market in China was the second largest only after United States. It had 105 million numbers of users in the nation. Although this site was subjected to a number of regulations in China, other competitors like Yahoo, Microsoft MSN decided to go for self censorship. Its most important competitor, Baidu was increasing its market share rapidly. The market share of the company had grown remarkably from a mere 3% to as large as 58% in the country (Wilson, et al., n.d.). Business Environment The internet market in China was growing at a fast rate. Moreover, there were 350 million users of mobile phones in China which was expected to rise 57 million every year. Google was already existent in the Chinese market before the launch of Google.cn. Google.com was existent in the market as it had been present all across the world. Among the primary users of the website were the pro-western businesspeople in China. However the problem arose when the computer users were not being able to access google.com. The site was blocked by the government and this caused the users to begin using other websites. They were diverted towards the rivals of Google. The move was taken also as a step towards attaining internet security. Some people also think that the move had political reasons. It was made to support the growth process of the local website called Baidu (Wilson, et al., n.d.). The potential of the market of China was tremendous, but the strict regulations were responsible for reducing the market share of the company. Between 2002 and 2006, the company’s share of the market had reduced significantly. One of the main competitors which have been capturing the market was Yahoo and Microsoft. Recently the number of competitors of the company has grown substantially. Among the list of competitors, mention may be made of Facebook, Yelp, Twitter, and travel sites like Kayak and health sites like WebMD. The growth of the social networking sites, Google is facing stiff competition from them. In fact a number of innovative and user friendly sites have emerged posing threat to the company. Kayak is an example of a website which allows “people to root through scores of airlines for the cheapest flights” (Swift, 2010). Another innovative concept has emerged like the mobile applications like iPhone which allows consumers to access the internet without using the search engines. Corporate Governance and Stakeholders Power Corporate governance is given extreme importance in China, not only in the state owned enterprises but also in the private sector. In fact, the corporate governance followed in the telecom sector and the internet networks is set as an example all across the world. Google has been accused regarding its corporate governance considerably in China. However this is considered to be paradox faced by Google in China. Google is said to conduct many of the functions of the government. It even functions like a state in a number of territories and in various occasions. It acts like a filtering mechanism which controls the information flow according to its own protocol or logic. Google is not considered to be very open or free but it functions quite independently “and it is precisely this independence of protocol that is threatened when its search function is required to play host to third-party code, third-party keywords, and third-party rationality” (Peckham, 2010). The keywords, filters and regulations that the government imposes in Google are not updated. The company feels that the government has been encroaching into the territory of the former. It feels that the government has not been meeting the interest of the company nor is lending enough support towards the same. That is why it has been trying to maintain its protocol which is considered to a violation of government rules and regulations (Peckham, 2010). Existing Strategic Decision Presently the company aims to make its presence felt in China. In 2000, it was operating extensively and providing 24 million web pages in the Chinese language. In 2002, the company had gained immense popularity because of it was simple and allowed searches to be carried out effectively. It was of the opinion that launching google.cn would be willingly accepted by the government and all its users. However it was not launched on ethical grounds. It was not filtered and was not considered acceptable to China. But a number of analysts felt that google.cn would be beneficial for the nation. It would be considered to be the most preferred search engine to its users. It was prevailing in a strong position in the nation. After some time the emergence of Baidu was a serious threat to the company. The new company was also provided enough support by the government. Presently the company should strategically try to regain and retain its users which were lost to Baidu. But it should not do so by imposing threat for the latter. Posing competition for a local company would not be considered to be an effective way of regaining its image. It would rather aim to lend support for the new company. The strategic motive which would go a long way in regaining its success is to collaborate with the new company and coordinate its functions (ICMR-c, n.d.). Conclusion and Recommendations Most importantly the company needs to start self censoring. This would be an important step towards maintaining ethical practices in the company. Any activity which harms the image of the country should be banned at once. Since the company has lost much of its image its main aim would be regain the lost image. This could be achieved only by gaining back the confidence of the people of China and most importantly the Chinese government. The website had been stopped for quite some time from operating. However, now it has been allowed to resume operations by the government. Google should make an aggressive comeback which should be made on ethical backgrounds completely. Google requires reformulating its strategic plans going by the reduction in market share of the company in China. It has two alternatives to choose from. It requires deciding whether it will increase its operations in the country for having to self-censor. It must formulate a new approach in recapturing the market in China. Until recently the firm would automatically redirect its users to the unfiltered site. Now it should not continue with this strategy any more. In order to retain its market, it must abide by the regulations of China (BD News line, 2010). References BD News line. June 30, 2010. Google in ‘new approach’ on China. [Online]. Available at: http://www.bdnewslive.com/2010/06/google-in-new-approach-on-china/. [Accessed on December 10, 2010]. Brilliant. February 23, 2009. The Next Chapter for Google.org. [Online]. Available at: http://blog.google.org/2009/02/next-chapter-for-googleorg.html. [Accessed on December 10, 2010]. Google News. April 8, 2009. Google Investor Relations. Code of Conduct. [Online]. Available at: http://investor.google.com/corporate/code-of-conduct.html. [Accessed on December 10, 2010]. ICMR-a. No Date. Googles Problems in China. [Online]. Available at: http://www.icmrindia.org/casestudies/catalogue/Business%20Environment/BENV001.htm. [Accessed on December 10, 2010]. ICMR-b. No Date. Googles Problems in China. [Online]. Available at: http://www.icmrindia.org/casestudies/catalogue/Business%20Environment/Google%20Problems%20in%20China.htm. [Accessed on December 10, 2010]. ICMR-c. No Date. Googles Problems in China. [Online]. Available at: http://www.icmrindia.org/casestudies/catalogue/Business%20Environment/Google-Business%20Environment-Management%20Case%20Studies.htm#The_Road_Ahead. [Accessed on December 10, 2010]. Paid Content. August 27, 2010. The Look Ahead: Google Narrows Its Acquisition Focus. [Online]. Available at: http://paidcontent.org/article/419-the-look-ahead-google-narrows-its-acquisition-focus/. [Accessed on December 10, 2010]. Peckham, R. 2010. China Mobile, Google, and Corporate Governance. [Online]. Available at: http://kunsthallekowloon.org/archives/215. [Accessed on December 10, 2010]. Swift, M. May 11, 2010. Googles stated list of competitors grows from two to 10. Available at: http://www.physorg.com/news187517187.html. [Accessed on December 10, 2010]. Wilson, K., Ramos, Y. & Harvey, D. No Date. Google in China. [Pdf]. Available at: http://www.caseplace.org/pdfs/GoogleInChina.pdf. [Accessed on December 10, 2010]. Read More