The purpose of the report is to examine the activities of Google Plc in its host countries. One of the factors that will be analyzed in the paper is the performance of google in the industry in comparison to its competitors. The paper will also discuss some of the company’s operation that are located abroad and the factors that the management of Google look at before determining the viability of the host country. In addition, the report will identify some of the international business strategies that are utilized by Google to gain entry into the international market. Finally, an analysis the paper will discuss the ethical issues that relate to international business operations highlighting some of the measures that Google Plc has taken to deal with them.
Google Plc Performance
Google Plc is a multinational company, a subsidiary company of Alphabet Inc, that offers advertising services across the globe. Some of the products that the company offers include You Tube, Search, Maps, Android, Gmail, and Google play. The revenues of the business are mainly generated through brand advertising and performance advertising (Abc.xyz.com 2017, pp.2). The company is listed on Nasdaq and the stock are currently trading at $1,037. The firm has a total market capitalization of 892 billion and an asset base of 197 billion as at the year ended 2017. The business operates in the technology industry (Yahoo Finance 2018). The business seeks to increase its investments in the digital technology platform due to its huge potential of making profits in future. Some of the firm’s major competitors include Microsoft and Apple Inc. The industry in which the firm operates is characterized by numerous and rapid changes due to the rate at which technology evolves. In the year 2017, the company recorded total revenues of $110 billion which was a 22% increase from the sales recorded in the year 2016. However, in the year 2017, there was a decline in the profits of the company compared to the year 2016 due to an increase in the amount of tax paid. The revenues recorded by Microsoft and Apple Inc in the year 2017 were $89 billion and $229 billion (Yahoo Finance 2018). Therefore, Apple Inc seems to dominate the industry in terms of revenue generation and this could be attributed to the sales of gadgets that the firm produces.
Country and Product Factors
There are various factors that should be considered by Google Inc when deciding to locate particular aspect of the business. One of the product factor that Google should put into consideration is the market potential of its operations. The population size is the determining factor of the sales that the company will make in future (Danciu and Strat 2014, pp.871). Consumers are critical towards the success of a business since they buy the products sold by the company and provide the required funds for expansion. In addition, the market size of the firm indicates the economic dynamics of the host country which is imperative in the decision-making process. The other product factor that should be considered is the cost of operation in the new location. Identifying the cost of operation for a firm is vital since it determines the prices that will be charged to the consumers (Danciu and Strat 2014, pp.871). Charging a higher price that the customers expects would lead to a reduction in sales of the entity. Google should therefore select an ideal location that has the least cost of production. Another product factor that Google should take into consideration is the availability of skilled labor. Google deals with technology services and, hence, it would require employees who have an expertise in the field of information and Technology.
One of the country’s factors that Google should take into consideration while making the decision to invest abroad is the infrastructure. The infrastructure of a country are the main determinants of foreign investment in a country (Zekiri 2016, pp.184). Adequate infrastructure would reduce the cost of operations incurred by Google which is also beneficial to the customers since they would pay favorable prices for the products. Another country factor that should be considered by Google is the stability of its currency. The currency’s strength is vital since it signals the level of inflation and consumer’s purchasing power (Zekiri 2016, pp.184). Investing in a country that has unstable currency would lead to a reduction in Google’s revenues since the customer’s ability to buy products would be affected. Economic stability is the other country factor that Google should consider since it affects the disposable income of the consumers. Another country’s factor that is considered by a business while considering to invest in the international market is the legal system of the host country (Hill and Hult 2017, pp.81). The legal factors outline the requirements a business should meet for it to gain access to the foreign country. The political risk is the other country factor that multinational businesses should consider. Political risk is an important determinant of the business environment in a host country (Hill and Hult 2017, pp.82). Countries that have a political crisis would not be viable to invest in since there would be many disruptions affecting business operations.
Aspects of the Business Located Abroad
Some of Google’s operations that are situated in foreign countries include data centers, search engines, and patents for their technology (Google.com 2018; Abc.xyz.com 2017, pp.3). One of the aspect that Google considers while selecting the suitable host country is the level of security in a country. In the year 2010, the search engine in China was shut down due to cyber risk and cases of hacked Gmail accounts (Waddell 2016). Another factor that Google considers is the laws and policies of the host country. For Google to survive in the Chinese market it was required to adhere to the government policies (Waddell 2016).
International Business Strategy
The strategy adopted by the management is critical for the firm’s success since it leads to the creation of a competitive advantage (Hill and Hult 2017, pp.182). The strategy adopted by Google would require the firm to invest heavily on research and development since providing technology services is the main purpose for its existence. All the countries in the world use at least one of the services provided by Google. However, due to the increased competition from companies such as Microsoft and Apple, the company has to keep on innovating on a regular basis. Notably, the company has to charge fair prices for its products to increase its revenue capacity.
New Trade Theory
The new trade theory would best explain the strategy that Google uses to sell its products abroad. The new trade theory posits that firms that survives in the industry are the ones that created unique products before their competitors (Hill and Hult 2017, pp.162; Krugman 1987, pp.131). Notably, the new trade theory is based on the view that firms must create economies of scale to survive in the industry. The creation of economies of scale leads to a reduction in the cost of operations which is one of the measures companies utilize to create a competitive advantage. Also, the new trade theory states that firms must be willing to create a variety of products to survive in the industry. Google has created numerous products and this could be its main reason for dominance in the market. The provision of many products has also enabled Google to create a ‘one stop shop’ for consumers looking for technological services. The early entrance of Google in the provision of search engine is the factor that has made the business survive in the industry. In addition, Google’s Gmail product is efficient and was also among the first entrants in email services. Google has created an economy of scale since it has a large customer base and this has led to lower cost of production.
Entry Method
The entry method that a firm uses to gain access to the foreign market is critical for its survival in the industry (Nisha 2016, pp.20). Some of the factors that company consider while determining the entry method that should be utilized include the cost, the products being sold, skills required, competition in the host country, and resource requirement. The cost and the resources available in the host country are the most critical since they determine that prices that will be charged to the consumers. Charging higher advertising cost for the consumers using the search engine would lead to loss of business in the foreign states. The appropriate entry strategy for the search engine in the host country would be licensing. Licensing is a mode of entry that is used by firms that deal with the provision of technology and intangible assets (Gunnarsson 2011, pp.14). The entry strategy has been successful for the business since it has led to the growth of the company’s revenue. In addition, licensing would be the most appropriate entry strategy for Google since the business mainly deals with the provision of services. Notably, the cost incurred from licensing the search engine is minimal since the firm only requires to have a strong and secure platform to store the data.
Ethical Issues
Ethical issues in the international business context arise due to differences in laws, culture, economic development, and politics between various nations (Hill and Hult 2017, pp.129). In essence, ethical problems would occur because different countries view various practices from a different perspective. Therefore, it is the role of the management to ensure that all the standards of the host country are clearly understood.
Ethical Issues in International Business Context
One of the elements that could constitute an ethical issue in international business is the employment practice. The multinational company must adapt to the acceptable practices of labor in the host country. The employees should be treated in a fair way to avoid boycotts and unrest in the work place. If the foreign policies of employment are higher than those of the multinational company, the latter should be willing to upgrade its standards to match those of the former (Hill and Hult 2017, pp.130). Some of the factors that are considered in the employment practices include the working hours and minimum wage rate. If the multinational company has pays higher wage rates compared to the host country, it may decide to emend the payment structure to save on cost. However, the decision to change the wages should be analyzed critically since it could portray a negative image about the firm.
Another factor that results to an ethical issue in the international business operation is the human rights. The human rights are a critical element since its application varies widely across various countries. A multinational organization should not operate in a country that oppresses its citizens since it could elicit a negative perception about the company (Hill and Hult 2017, pp.131). The operation of a company is a foreign country that undermines its people could imply that its main driving force is making money and not improving the well-being of the community. A multinational company serves the interest of the stakeholders and, therefore, protecting the rights of human could be one of the ways of achieving their objectives. Notably, if reputable country declines the offer of investing in a host country because of its dictatorship, the government would be compelled to respect the rights of its citizens. Environment pollution is the other ethical issue in the context of international business operation. The ethical issue arises if the host country has inferior environment policies compared to those of the host country (Hill and Hult 2017, pp.132). The company has an obligation to protect the environment in which it operates in by reporting some of the measures that have been implemented (Gallo and Christensen 2011, pp.315; Gamerschlag and Moller 2011, pp.234). Therefore, the firm should not participate in the pollution of the environment even if the standards in the host country are inferior. Instead, the multinational company should advocate for the improvement in the environment policies if it has the ability.
The other ethical issue in the context of international business practice is corruption. Some of the international businesses have thrived by colluding with the government officials in many countries (Hill and Hult 2017, pp.134). A multinational business should gain entry due to its unique products or solutions its provided to the host country’s citizens and not by paying money to corrupt individuals. However, if corrupt countries request money to gain entry, most firms fail to resist the terms since their main agenda is to make more profits.
Google’s Ethical Issue
One of the ethical issue that is likely to arise at Google given its nature of business is human rights. Google does not have the right to disclose personal information without the consent of the users. However, powerful states might compel the company to disclose information regarding certain individuals. The ethical issue would occur if Google agrees to disclose the information to the government to avoid losing business. However, the choice made by Google’s leaders would depend on their ethical values.
Ethical Issue Measures
Google has taken various measures to ensure that the consumer’s data is protected. Google has set out a clear privacy policy that informs the consumers of the measures they should take to protect data by themselves (Googleusercontent.com 2018, pp.1). The policy also outlines the ways in which data collected from the clients is used. The privacy outlines the circumstances under which the company may the consumers information without their own consent. The measures have been partially successful in protecting the consumers’ right to privacy. However, there exists a gap since Google can still share the information without the authority of the user due to a legal concern (Googleusercontent.com 2018, pp.4). There are instances in which Google has been sued for disclosing personal information. There are various ways in which Google could avoid employee disclosure of personal information (Copeland 2018, pp.1). In Germany, Google was sued to collecting personal data from WIFI network and releasing to the government by mistake (Copeland 2018, pp.1). One of the measures that Google could put in place to protect the privacy of its consumes constantly educating its employees about the relevance of personal ethics. If the employees and the managers are not ethical, they could collude with other individuals to display information. Personal ethics has a great influence on how people behave in the business setting. A strong sense of ethics in the company can only be established if the managers act by example (Hill and Hult 2017, pp.137). The business culture is also imperative in protecting the individual’s right to privacy. The management of Google should establish practices that do not allow the users’ information to be shared without consent.
Summary
One of the observations made from the study is that Google is faced by stiff competition from other multinational companies such as Microsoft and Apple Inc. To minimize the level of competition, the business has invested heavily on research and technology since it operates in an industry that is characterized by disruptive changes. Some of Google’s business aspects that are situated in abroad countries include patents, search engines, and data centers. From the report, it was observed that google takes various factors into consideration while making foreign investment decision. Some of the elements that determine the suitable country include the infrastructure, the economic growth of the country, and the stability of the host country’s currency. The currency and economic growth are vital since they determine the ability of the consumers to afford products that the company sells.
Google produces a variety of products and it is one of the strategy that the business has used to penetrate the international market. The new trade theory best explains the strategy used by Google to gains entry in the host country. In addition, based on the new trade theory, Google has created a competitive advantage in the market since it was among the first companies to introduce search engines in the industry. Google uses licensing mode of entry to gain access to the international market. Finally, the study reveals that there are various unethical issues that arise from conducting business in the international context. Some of the major ethical concerns include corruption, environment pollution, human rights, and employment policy. The ethical issue that relates to Google is human rights since the company has an obligation to protect the information of its users. The disclosure of consumers data would amount to an unethical practice which could affect the firm’s success in future. However, Google has put in place a policy statement that outlines the strategies used to protect customer’s data. The only reason why Google would disclose personal information is due to a legal obligation.
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