Microsoft In China Case Study

- What are the risk that Microsoft has faced in operation in china and dealing with the Chinese government? Do you see these risks as increasing, diminishing, or changing in the future? Are these risks unique to China or present in other developing countries?
Working in China has not been easy for Microsoft. The company has been faced with so many risks. However, there are two major risks that this company has been faced with while working in China. The first risk resulted from China joined WTO. Despite the fact that China takes actions for its IPR, the rate of piracy has remained very high. So the Microsoft’s risk here with the Chinese government has been trying to lobby them to fight the high rates of piracy. Secondly, Microsoft has always had issues when it comes to nationalism in China. This has led to people and firms been unwilling to buying foreign products as well as doing business with foreign companies such as Microsoft. These risks are mostly likely to diminish in future. This is because the company has put several measures in place that will ensure good relation between Microsoft and the Chinese government. First, the Microsoft Company has developed its own way of fighting piracy of their products. These risks are not unique to china alone as other countries in Asia also present similar risks to Microsoft.
- What approaches did Microsoft take to manage its political risks in China? Why might it have favored some of these techniques versus others? Which do you feel worked best? What should Microsoft do to continue going forward?
In order to ensure that political risks do not affect their business, Microsoft Company has come up with rules that are supposed to protect the company across the globe. One of the approaches that the Microsoft Company has put in place to fight political risks in China is coming up with new terms and conditions that the Chinese government needs to sign. This terms and conditions allow Microsoft to work well and protect them from any kind of political risks. The second approach involves the company employing the local citizens. The one technique that I feel has worked best is employing the local citizens. This will ensure that the company is protected since the Chinese government values is citizens and will do everything possible to protect them. If Microsoft wants to move forward, it needs to come up with more techniques that will favor the Chinese government such as sponsoring events.
- In its dealing with China, Microsoft frequently had to deal with lower levels of government. What types of challenges and opportunities did this present?
Dealing with the lower levels of government presented more challenges than the opportunities. First, there was conflicts all the time with different levels of the government disagreeing. For instance, some of the levels felt that Microsoft needs to employ only the Chinese citizens while other arms of the government disagreed. The argument was that, if the Microsoft Company employs the local citizen, the unemployment rate will decrease significantly. On the other hand, other levels of government argued that china lacks some of the expertise needed by the Microsoft Company. This resulted to conflict of interest between the different levels of the government.
- Do other firms have the same risk management options as Microsoft? If so, why? If not, why not?
Microsoft is not the only company that is faced with these risks in China. Other big companies such as Google have previously had issues with the Chinese government. In 2010, Google China responded to a Chinese–originated hacking attack. The risk not only affected the Google Company but also other US companies. Google issued a warning that they will no longer censor all searches in China. They also warned that they will pull out of the country completely if nothing was done.
- Is Microsoft creating serious risks by supporting financing, and transferring technology to local Chinese software firms? How might Microsoft manage these risks?
Yes. Microsoft is creating trouble by supporting financing as well as transferring technology to local Chinese software firms. This is because China is one of the most developing countries when it comes to technology. If Microsoft continues to support these local software companies, these companies are likely to become more powerful and develop software that will in turn leading to competition between the companies and the Microsoft company.
- Should Microsoft follow Google in the latter challenge to internet censorship in china? What are the advantages? What are the disadvantages? If it should, then what are the implications for its business elsewhere around the globe?
I don’t think that doing what Google did will be a good solution for the Microsoft problems. First, Microsoft has a different business and can therefore not issue censorship threats. Secondly, the issues that face the company can be solved without the Chinese government intervention. Microsoft only needs to come up with terms and condition that the Chinese government will honor. Should Microsoft choose to do what Google did, they will lose their reputation and since there are other good software companies, they might be the beneficiaries.