The City and State of location:
Google’s Steep Learning Curve in China
Executive Summary
The paper will focus on some of the issues that face Google company in China as well as reasons why the company has been successful. Recession, advanced technology, and globalization have been core issues facing the company. Through improved innovations and branding, the company has been able to counter its problems and increase its profitability.
Introduction
The performance of Google is subject to external factors such as political, economic, social, technological factors, ecological, and legal Factors that prevail in China. One of the factors facing Google is globalization which falls under political factors. Even if this is an opportunity for the company, it also an issue. Globalization permits other firms in the information technology sector to venture into any market as long as they abide by the laws and regulations stipulated in a country’s constitution regarding the industry. IT firms operating in China that control other search engines pose a stiff competition to Google. Some of the search engines that pose competition to Google include Amazon, eBay, Bing, and Duck Duck go. One of the aspects that has made Google able to service in China’s market is diversification. Some of its competitors have not ventured into providing emailing services to their customers. As a result, Google has managed to have an upper hand, but still effects of globalization are being felt. Firms within China also pose a threat to Google. For instance, Baidu is the leading search engine in the country. This indicates that the largest market share of users prefers Baidu to Google. New entrants in the information technology have amplified the issue further. For example, Alibaba created Aliyun search engine that was meant to challenge both Baidu and Google in the country. The launched platform offered maps, images, news, and the internet which are some of the primary features of search engines (Sterling, 2013).
Google business operations are also subject to the recession which is an economic factor. When the economy starts indicating signs of going into a downturn, companies commence cutting jobs Google being included. This is because wages which are an expense to the company starts increasing which reduces the profits levels. In order to remain in business and maintain profits, job cuts are undertaken by Google which affects it negatively. A consequence of job cuts is brain drain. The nurtured engineers are subjected to layoffs until the company is at a position where it can cater for its wage expenses without significantly affecting earned profits. The recession also affects the strength of currency. Therefore, converting the earnings made in China to dollars might lead to bigger profit margins if a comparison is made against earnings at the end of the financial period. During a recession, internet use is limited as disposable income that is used in shopping reduces. Therefore, the use of search engines and other sites for online shopping declines.
Technology is another issue faced by Google Inc. Technological changes are considered as potential breakers or makers of firms in the information technology industry. There has been an increasing growth in internet use in China over the recent years. Also, rapid adoption of smartphones and tablets in the country has presented an opportunity to the company through an increase in the target market. However, the changes have posed an issue to the company. Many corporations and individual Android and Apple application developers have designed social media applications that have become popular among Chinese citizens. There is so much that these app users can do running from undertaking promotions, online content searching, and advertisements. Thus, the increased use of social media is a threat to the Google Incorporation. The primary reason being that their usage strengthens companies such as Twitter and Facebook among others that offer online advertising services (Rowland, 2015).
Company profile
Google was brought into being by Sergey Brin and Larry Page while they were studying at the University of Stanford. In 1998, the company was launched officially in a friend’s garage. The company managed to raise 1.67 billion dollars in its initial public offerings in August 2004. By 2014, the company had over twelve thousand employees throughout the globe (Schneider, 2014). The vision for the company is to make search engines that are so powerful such that they will comprehend “everything in the world.” Google Incorporation has a mission statement which is to organize the information of the entire world as well as make it universally accessible and useful. The company attracts and retains the brightest minds in the technology industry. Gender, ethnicity or other demographics are a concern to the company. This is why many students selected Google as an ideal place of work as workplace diversity is advocated.
Google has an organization design that is cross-functional that is theoretically a matrix organizational structure which has a considerable flatness degree. Hence, Google’s corporate design has three primary characteristics namely flatness, function based and product based definitions. The company makes use of function as a base for grouping its employees such as the sales operation team and product management team. Product base is also applied in employee grouping. For example, to group those employees who will be tasked with developing Nexus. The company’s design also has some flatness. An organizational design that is flat means that employees, groups, or teams of the company can avoid the middle management and report directly to the CEO of the company who in this case is Larry Page (Smithson, 2015).
Reasons behind Google’s success
The business strategies employed the company has been the reason behind its success. The success of the company comes from its continuous innovations as well as its management practices. The company has managed to improve its conduits of innovation through tapping the best and the most talented information technology, accountants, engineers, and managers across the globe who contribute immensely towards the betterment of the company. Letting ideas percolate up in the innovation department has led to the development of new software and upgrades of the old ones which have increased customer satisfaction. Even though Google is successful, it does not mean that it has more employees than some companies based in the United States operating in the same industry. For example, Google is smaller compared to Exxon Mobil, which has 76,900 employees and Apple which has 72,800 employees. Apart from 20,000 employees, it gained from acquiring Motorola Mobility; the company has approximately 30,000 employees (He, 2013). The company focuses on creating an arena where its staff can link up in surprising ways to come up with innovative ideas. Equally, the company has managed to make good use of branding strategy which is consistent. The company has been consistent with its logo. Also, the company plays with its logo to celebrate various international days. The main idea is that the firm has consistently established its brand image and even though it is remixed through the use of other images; this primarily adds to its brand strength.
Challenges that Google Management were facing in China operations
Shutting down the operations in China will lead to substantial decrease in revenue generated by the company. Even though the company does not have the largest market share in the country, it has a significant proportion that can generate revenue to cover its expenses and also make profits. Many individuals and companies use Google to carry out online search and advertisements, and if the company stops its operations, this will come to a halt.
Conclusion and recommendation
The company needs to optimize its search engines and focus on most typed words by internet users in the country. This will help solve the issue of words related to sexual matters popping up as preferred auto predictions. The company should also abide by all the regulations and rules governing the information technology industry. Entering into agreements with the Chinese government will see it start offering more of its services that it has blocked to Chinese local users.
References
He, L. (2013). Google's Secrets of Innovation: Empowering Its Employees. [online] Forbes.com. Available at: http://www.forbes.com/sites/laurahe/2013/03/29/googles-secrets-of-innovation-empowering-its-employees/#5f6eb23b7eb3 [Accessed 18 May 2016].
Levy, S. (2011). Inside Google’s China misfortune. [online] Fortune. Available at: http://fortune.com/2011/04/15/inside-googles-china-misfortune/ [Accessed 18 May 2016].
Rowland, C. (2015). Google PESTEL/PESTLE Analysis & Recommendations - Panmore Institute. [online] Panmore Institute. Available at: http://panmore.com/google-pestel-pestle-analysis-recommendations [Accessed 18 May 2016].
Schneider, L. (2014). Google - Overview, Company Culture and History. [online] About.com Careers. Available at: http://jobsearchtech.about.com/od/companyprofiles/a/google.htm [Accessed 18 May 2016].
Smithson, N. (2015). Google’s Organizational Structure & Organizational Culture - Panmore Institute. [online] Panmore Institute. Available at: http://panmore.com/google-organizational-structure-organizational-culture [Accessed 18 May 2016].
Sterling, G. (2013). Alibaba Creates Aliyun Search Engine to Challenge Baidu, Google In China. [online] Search Engine Land. Available at: http://searchengineland.com/alibaba-creates-aliyun-search-engine-to-challenge-baidu-google-in-china-148992 [Accessed 18 May 2016].
