Google in China: Market Entry Analysis
Abstract
In today’s ever-changing marketplace, many companies have been forced with a challenge to reinvent themselves and alter their core values in the interests of profit and market share. As we move into the second decade of the twenty-first century, many critics argue whether it is possible for Google Inc., a major innovator and leader within the search engine industry, and China, a communist country, to co-exist. China in 2005, with its estimated 134 million Internet users, has been subjected to the country’s Great Firewall, which restricts citizens from accessing certain websites deemed inappropriate by the Chinese Government (Lawrence & Weber, 2011, p. 471, 473). As a result, Google must now decide whether it wants to be an active participant in the oppression of Chinese citizens or remain consistent to its core value of not being evil for increased profits (Lawrence & Weber, 2011, p. 470). There is no question that Google’s presence in China could bring substantial growth and revenue to the company; however, will it ultimately be worth the risk of compromising their core values and dealing with these unpopular censorship conditions?
Question #1: For Google in 2005, from a business perspective, what are the arguments for and against entering China?
When business transactions take place across international borders, they carry additional risks not present in domestic transactions. Foreign Direct Investment is the most risk bearing way of entering into a market. A foreign direct investment entails sole responsibility to the proprietor. From a political and economic standpoint, the CCP, Chinese Communist Party, has been known as an autocratic party that has imposed strict control over the country (Lawrence & Weber, 2010, p 470). Within the past thirty years, the CCP allowed for the free flow of money while maintaining a tight control of all institutions. With the imposing regulations of the censorship regime by the CCP, Google will be
In today’s ever-changing marketplace, many companies have been forced with a challenge to reinvent themselves and alter their core values in the interests of profit and market share. As we move into the second decade of the twenty-first century, many critics argue whether it is possible for Google Inc., a major innovator and leader within the search engine industry, and China, a communist country, to co-exist. China in 2005, with its estimated 134 million Internet users, has been subjected to the country’s Great Firewall, which restricts citizens from accessing certain websites deemed inappropriate by the Chinese Government (Lawrence & Weber, 2011, p. 471, 473). As a result, Google must now decide whether it wants to be an active participant in the oppression of Chinese citizens or remain consistent to its core value of not being evil for increased profits (Lawrence & Weber, 2011, p. 470). There is no question that Google’s presence in China could bring substantial growth and revenue to the company; however, will it ultimately be worth the risk of compromising their core values and dealing with these unpopular censorship conditions?
Question #1: For Google in 2005, from a business perspective, what are the arguments for and against entering China?
When business transactions take place across international borders, they carry additional risks not present in domestic transactions. Foreign Direct Investment is the most risk bearing way of entering into a market. A foreign direct investment entails sole responsibility to the proprietor. From a political and economic standpoint, the CCP, Chinese Communist Party, has been known as an autocratic party that has imposed strict control over the country (Lawrence & Weber, 2010, p 470). Within the past thirty years, the CCP allowed for the free flow of money while maintaining a tight control of all institutions. With the imposing regulations of the censorship regime by the CCP, Google will be
References: http://www.google.com/intl/en/corporate/index.html http://www.nytimes.com/2006/01/27/business/worldbusiness/27iht-goog.html Lawrence, Anne., & Weber, J. (2011). Business and Society, Stakeholders, Ethics, Public Policy, New York, NY, McGraw Hill/Irwin