Googles International Business Strategy

Published Date: 02 Nov 2017

When Google is targeting a foreign market they are providing first translated versions of their original platforms. Then according to the international business strategies types we can see that this is a standardized offer with adaptations of minor features. In that case we can say that Google is adopting a Global strategy. However, to be more relevant in some areas the search results are adapted to the markets localized versions of its search engine, there is some specific result for France for example. Then we can say that Google is using Global strategy but in some countries they also make a Regional Strategy because of their regional search results. This strategy is successful, giving Google the best results in each country they are, attracting more traffic than any other competitor.

Google’s foreign markets entry modes

For a company that wants to be implemented in a country, we can distinguish different modes of entry. First, there is the export. It means to manufacture a product in one country in order to sale it in another one. It is the most simple, least risky and cheapest mode. The second one is the licensing. With this mode the company that gives the license to the other allows it to use its intellectual property in exchange of a compensation named royalties. This option advantages are that there is no extra capital investment, no direct involvement and no disruption of home operations. However the company could face legal issues and even creates a local competitor. The third one consists for the parent company called the franchisor in granting the right to do business in a prescribed manner to another independent entity called the franchisee. Then there is the Management Contract that is useful in a country where there is a lack of qualified and experienced managers. It is consist for the company to transfer its management talent to assist a foreign company for a specified period for a set fee. The next mode is the Turnkey Arrangements that a contract between a company and another in order to build complete, ready-to-operate facilities. The last one mode is the Foreign Direct Investment (FDI). It can be for different reasons and the major one is the access to new markets. This mode can be implemented in different ways. There are investments in commercial or production facilities depending on the company strategy. Then the company can choose if it wants an external growth through an acquisition or an internal growth meaning start the new venture by constructing new operational facilities from the ground up which is called "Greenfield" investment. However, the company should make the choice to be independent in owning wholly the subsidiaries or sharing them through a joint venture.

What we can observe from Google Inc. is that is an IT company specialized in the segment of the search engine. The company is producing smart applications which are free for the users. However, their revenues are coming from advertisement on their platforms. Indeed, their platforms aim is to bring a maximum of traffic and offer a great visibility to their customers. For that we can distinguish two products that are AdSense and AdWords. Therefore, we can analyze the Google’s foreign markets entry modes, according to the different modes of entry, with implementation’s examples of the company. The first one is in South America, through the partnership with Universo Online (UOL) in 2001 [1] with the largest online service and Internet Service Provider in Latin America that allows its customers to use the Google interface. With this partnership, Google can access to a traffic from South America an indeed provide visibility on its platforms for this area. In that example, Google makes no investment in the country and used the UOL "distribution channel" to access on this area. Then, even if IT products are quite different from traditional services and products, we can say that Google is "Manufacturing" it’s product in USA. Indeed, their data center where customers can access to all the data from South America Users are in USA. Therefore, in this example Google access to the market by exporting its products. With this choice, Google became the search engine N°1 in South America minimizing its investment in a time where Google still had limited financial resources. Today, Google still is the N°1 of search engine in this area, for that we can say that their strategy were successful. Therefore they use similar strategy with Web.de in Germany, Daum.net in Korea, or NetEase and Yam.com in China. However, Google used also two others market entry strategies. On a more Global level, Google used licensing agreement with companies such as Yahoo International, AOL international in order to sell its search engine services to portals that integrate Google’s search technology into their websites [2] . The last strategy is the Foreign Direct Investment. In order to have its sales force, they introduced resellers through Greenfield investments. This strategy is primarily y in the Asian region, in particular in China, however they own sales offices in over twenty countries. Therefore they benefit from their market knowledge and also from their proximity.

What we can say about how the firm typically enters foreign markets is that they are adapting their strategies according to the specificities of the market they want enter in. In addition, if we take a look on their market shares that are above 80% [3] worldwide we can say that their strategies are the most often successful.

Corporate-level strategy

The directions of business growth chosen by Google

On April 18, Google Inc is expected to publish his results for the first quarter of 2013. The company preserves an outstanding popularity among investors due to the promising growth prospects, which is wholly supported through technological innovation. The fact that Google has upheld its results and reputation, in spite of a strong competition from companies such as Microsoft Corp and Apple, is remarkable.

In order to pursue its development, Google Inc chose two direction of business growth. The first one was to concentrate its original business, which is making money from advertisements. The firm decided to increase its sales and its market share by developing its services on the net such as Google+, Google Chrome, and Google music… Furthermore, Acquisitions have a main role in this industry to improve growth. Google purchased Youtube in 2006. This acquisition has been really helpful for the growth’s firm. In fact, the website still growing and it produce more then $1 billion per year with the ads.

The second recent direction implemented by Google was to diversify his business. In 2012, Google acquired Motorola Mobile. This strategic acquisition allows Google to compete directly on the Smartphone and tablet market. In order to succeed, the firm combines MM with an older acquisition, which is Android. Several companies on this market have used Google’s open source operating system, Android, already. Into this related business, Motorola Mobile contributed to 8% of the annual revenue of the company. However, also with the aim of doing a horizontal diversification, Google last project is to develop the Google driverless car.

All of the Google’s directions are linked to each other. The first one reinforces the second one and the third one reinforces the first one. Everything has been well though in order to maximize the profit and to increase the market share against its competitors.

The models of business growth chosen by Google

In the aim of maintaining its strong growth and its leadership on the market, Google Inc chose to implement the three models of business growth. The first one is the organic growth. Google manages perfectly its internal revenue for expand its profits. The firm is using 15% of its cash flow to create new services on the net. Then the external growth model is equally as important as the first one. The company spends 20% of its cash flow for the acquisitions of rivals. The best example stills the purchase of Motorola Mobil in 2012. It allowed Google to overcome entry barriers into the Smartphone market. Finally, the firm made also some horizontal cooperation with his competitors. Google obtains royalties from his competitors that are using Android such as Apple, Microsoft, Nokia and Samsung.

Google is running out his portfolio perfectly. By always being aware about what is happening in the world, Google is maintaining the "life" of his portfolio by balancing young plus adult plus old activities. It is with this method that the company can create a constant business growth. Google is constantly purchasing new stars that may become what the firm is looking for, cash cow.

Ethical and Socially Responsible strategies

Is the firm facing any ethical or moral issues?

Google is a company who is facing few ethical problems, there is facing two main ethical or moral problems, the first one is about the Copyright Infringement and the second one is the Privacy.

Privacy

As I said above the first moral or ethical problem that Google is facing is the "Privacy"

Google has gathering an incredible numbers of data on and through the people using their searching engine.

In 2011, Google website statute that the record they stores of your searches as a tool to improve their corporate efficiency. Also they have been explaining that the data they collected became anonymous after nine months and they delete the cookies that were used to track the users and visitors after two years.

Another problem could be that the Governments use Google’s information to investigate individuals who were visiting some websites.

The Google Earth's photo collection also has raised privacy questions: In 2012, a couple sued on the grounds the online photos of their home violated their privacy.

Copyright Infringement

Google has invented Google Books, Google Books made possible for millions of users to read and view books online.

But this new idea brought some problem to Google and principally judicial problem for them. That idea generate years of lawsuit. The publishers and authors decided to attacked and sued Google to avoid them to digitize some out-of print books without getting the permission from the authors and copyright holders.

Google defended itself by arguing that they will only show some part and little portions of the books they digitize, and that is legal thanks to the copyright law’s "Fair use".

How can they solve their ethical or moral issues?

It’s difficult to say how Google can solve their moral or ethical issues, Google is a company who has a strong image and who has a very good popularity. They have some small problems and logical problems due to their power and the things they allow people to do thanks to their search engine.

Maybe they would have to be more transparent and make some agreement with nations, company, put more laws, respect the privacy of people or authors and publishers.

But as far as we know today Google is not known to have exploiting some employees or to make them work in awful conditions and very few paid.

So they will have to continue improving and to be more transparent and more aware about people issues, government rules (China).

Google’s Strategy implementation

Organizational structure of Google

As a multinational corporation Google should choose between several structures. Each structure has its benefits and weaknesses. However, because Google is seeking to have communication as open they can, it was obvious to take the global Matrix structure. Indeed, it is corresponding with the firm philosophy. The motto "Don’t be evil", the "ten things" or the "70-20-10 rule" show the way that the company wants to take. Google’s employees are mostly accountable to themselves in order to keep the spirit of innovation at the highest level. Therefore, they have the freedom to spend "70 percent of their time on current assignments, 20 percent on related projects of their choosing, and 10 percent on new projects in any area they desire". Moreover, instead to use the formal communication structure Google encourage its employee and managers to work directly together. More than the open communication and allowing employees to take some risks, Google give them the liberty to be their own leaders. Employees set their own objectives, evaluate their jobs and then propose better ways to do their jobs. Therefore, according to the cross-functional management of Google we believe that the company doesn’t need to consider an alternative structure because of the several benefits in the current organization. Indeed, this structure is attracting top talents. Employees love and many would like work for Google because of the cross-functional leadership structure [4] .

Google’s organization efficiency

Historically Google took a corporate culture linked to the university working culture with a lot of innovation and liberty. Even if the employees’ policies have changed from the start up to the multinational corporation, the culture is still there with deep benchmarks. Therefore when we see the major change for the corporate in 2011 with the co-founder Lary Page taking the function of CEO instead of Eric Shmidt [5] (who was there since 2001), the corporate culture practically doesn’t change. Indeed, it was a constructed and convergent change. The fact is that this change of function is between two persons that know each other and have the same global vision.

Therefore, Google Inc. is dealing with a very strong corporate culture that is deeply implemented from the CEO to the bottom of the pyramid. For those reasons it is quite difficult to recommend changes to the company that have the favorite corporate culture according to the employees.