Introduction
Managing an international company is a complex process, as numerous issues must be considered. The top management has to realize the culture in regions selected for expansion, the peculiarities of local markets, and opportunities for business growth. Moreover, every country has laws regulating foreign companies’ work and creating a specific business environment. Under these conditions, managing global corporations requires considering the existing opportunities and whether a certain strategic decision does not violate the company’s values. For instance, Google’s attempt to enter the Chinese market and its decision to leave demonstrates the critical importance of the factors mentioned above.
Challenges of Managing an International Business: A Case of Google
The company’s CEOs concluded that the state’s laws contradicted its values and stopped working in China. It resulted in significant financial losses and the empowerment of major rivals. Thus, Google’s decision can be considered an erroneous one as it deprives the company of the chance to generate benefits and preserve its leading positions. Nowadays, China is one of the most powerful states with a fast-evolving and robust economy. It has demonstrated a stable rise in all spheres, making it extremely attractive for potential investors and foreign companies. At the same time, the country has specific laws regulating people’s access to information and establishing censorship (Kharpal, 2022).
It is linked to the peculiarities of ideology and the distribution of power within a state. It might be one of the barriers preventing international companies from entering the region and offering their services to local customers. These factors were relevant to Google’s attempt to dominate the segment.
The corporation accepted the rules introduced by the Chinese government and started operating in the region. However, over several years, the company altered its position, referring to specific hackers’ attacks and issues with censorship (Waddell, 2016). It became a wrong decision, and as a result, Google lost access to a giant and fast-evolving market and betrayed its own values.
Legal and Ethical Dilemmas in Foreign Markets
Analyzing the situation, it is critical to admit the importance of the legal aspect of international corporations’ work. The fact is that a company that wants to do business abroad has to observe local laws (Waddell, 2016). They might differ from the regulations existing in their countries and can imply restrictions on speech (Waddell, 2016).
Google used to work in an environment with permissive freedom-of-speech laws, meaning that it had to adapt to Chinese regulations (Waddell, 2016). Moreover, the company had been working in the country for a particular period, which evidences its readiness to follow the laws, although they contradicted the corporation’s values. It means that the desire to enter new, promising markets was strong enough to outweigh the risk of potential harm done to Google’s reputation.
Furthermore, Google’s decision to leave the Chinese market can be viewed as unethical. Immediately after its start, the company emphasized its focus on helping Chinese users realize the restrictions on accessing specific information in their country by indicating that some results were hidden because of censorship (Sheehan, 2018).
However, the closure of Google’s search engine in 2010 deprived users in the region of a chance to acquire this information (Waddell, 2016). It violated the company’s values, which focus on supporting the freedom of speech and access to various information. Google’s proclamations that the censorship was too strict cannot justify the decision, as companies should plan how to deal with free-speech issues in advance (Waddell, 2016). In this case, Google failed to support its users in the region and maintain its reputation.
Business Consequences of Exiting the Chinese Market
Finally, Google’s decision to exit China was disastrous from a business perspective. Currently, the country has around 900 million active Internet users, comprising around 20% of Internet users globally (Xiao, 2021). The given segment continues to grow because of the constantly increasing accessibility and affordability of technologies. This means that China is one of the most attractive markets that can provide companies with an opportunity to generate high income.
However, Google’s decision to leave the area deprived the company of access to this segment. Moreover, it provided the main competitors, such as Tencent or Baidu, with a chance to occupy the niche and operate in an extremely attractive and promising environment (Kharpal, 2022). The erroneous nature of the decision is proven by Google’s attempt to reenter the market in 2018 (Kharpal, 2022). It failed because of the lack of support and the previous tensions with the Chinese government.
Conclusion
Altogether, Google’s decision to leave China was a great failure. The company infringed on its own values because it could not provide local users with at least limited access to specific information. Moreover, it could not plan its work in terms of the Chinese legal environment, meaning its strategic management was ineffective.
Finally, the company lost the chance to enter the most promising and fast-evolving market and generate benefits. For Google, it was critical to continue working in China and observe its laws while warning individuals about censorship and restrictions. It would help to maintain its reputation, avoid ethical issues, and struggle with competitors to control the Chinese market and provide services to the fastest-growing target audience.
References
Kharpal, A. (2022). Google shuts down Translate service in China. CNBC. Web.
Sheehan, M. (2018). How Google took on China—and lost. MIT Technology Review. Web.
Waddell, K. (2016). Why Google quit China – and why it’s heading back. The Atlantic. Web.
Xiao, B. (2021). Google pulled its service from China more than a decade ago – can Australia learn from it? ABC News. Web.