Why Google failed in China?

1. OOGLE IN CHINA Corporate Strategy
Group Presentation
Nguyễn Đức Thi
ARLET Philippine
Nguyễn Hoàng Quân
Nguyễn Hương Thảo*
Phan Thị Mai Linh

2. 1. INTRODUCTION
2. ANALYSIS THE CASE
3. UPDATE AND RECOMMEDATION
OUTLINE

3. Mission
“To organize the
world’s information
and make it universally
accessible and useful”
Slogan
“Don’t be evil”

4. •1996: founded by Larry Page and Sergey Brin in California
• Specializing in
• Internet-related services and products including search
• Cloud computing
• Software
• Online advertising
• Business strategy: DIFFERENTIATION
INTRODUCTION

5. • 1996 founded by Larry Page and Sergey Brin in California
• Specializing in: Internet-related services and products including search,
cloud computing, software, and online advertising
INTRODUCTION

6. • Quick decision making & encouraged innovation (20/80 policy)
• Optimize marketers’ investment in Google
• Faster, better search with many enhanced features
• How Google do that:
• Robust data centers world over
• Unique search algorithm
• Continuous improvement through innovation
INTRODUCTION
DIFFERENTIATION STRATEGY

7. 2.ANALYSIS
VS

8. GOOGLE IN CHINA
Google
'Tempora
rily
Unavailab
le'
•2002
Google
China
Launches
•July 2005
Launch
Of
Censored
Search
•Jan. 2006
Google
Admits
Problems
•Jan. 2007
YouTube
Blocked
In China
•March 2009
Outages
And
Obscenity
Claim
•June 2009
Google
China
Shakeup
•Sept. 2009
Digital
Books
Copyright
Feud
•Oct. 2009
Google
Threatens
To Leave
•Jan. 2010
Google
Leaves
China
•March 2010
Timeline

9. SWOT ANALYSIS
STRENGTH
• Search engine
• Many of products and services at no-cost to the average user.
• Advertising content
• Android platform

10. SWOT ANALYSIS
WEAKNESS
• Search engine is not tailored to individual cultures
• Google offers many services

11. SWOT ANALYSIS
THREAT
Inculturate code or make the
company code consistent with
Chinese Laws.
Chinese government

12. SWOT ANALYSIS
OPPORTUNITY
China
-Massive internet
market
-Google possesses
16.6% of the market
-Market leader:
Baidu
google
hardware and software
sides of the Android
devices
Opportunities

13. PORTER’S FIVE FORCE INDUSTRY ANALYSIS

14. PORTER’S FIVE FORCE INDUSTRY ANALYSIS
POTENTIAL ENTRANTS
EXTREMELY LOW
• The Chinese Government Control
• Starting business in China is more difficult
• Requires a highly skilled and well-balanced assortment of
professional: well connected businessmen, highly innovative
computer programmers, etc

15. PORTER’S FIVE FORCE INDUSTRY ANALYSIS
BARGAINING POWER OF SUPPLIERS
LOW
Strong market dominance
• Internet search engines
• In advertising

16. PORTER’S FIVE FORCE INDUSTRY ANALYSIS
BARGAINING POWER OF CONSUMERS
MEDIUM TO STRONG
• Vast Revenues from advertising
• End- users: substitutes in search and
software
• Network partners: no single buyer has a
controlling interest.

17. PORTER’S FIVE FORCE INDUSTRY ANALYSIS
SUBSTITUTES
None-very low
• No substitute for Internet and search
engines
• A substitute product can be invented in
future, but there are no obvious
substitutes to organize information on
the Internet

18. PORTER’S FIVE FORCE INDUSTRY ANALYSIS
 RIVALRY
STRONG AND TRENDING UPWARD
• A handle of major players
of the size and depth of
service that compete in
China

19. PORTER’S FIVE FORCE INDUSTRY ANALYSIS
 RIVALRY
STRONG AND TRENDING UPWARD
• A handle of major players
of the size and depth of
service that compete in
China

20. PORTER’S FIVE FORCE INDUSTRY ANALYSIS
 RIVALRY
STRONG AND TRENDING UPWARD
• A handle of major players
of the size and depth of
service that compete in
China

21. CENSORSHIP
• GOOGLE had to censor their website >< company core values “don’t be evil”
• THE GREAT FIREWALL OF CHINA  LACK OF QUALITY OF SERVICES
• GOOGLE was able to provide to its Chinese customer (Access was slow and unreliable) >< THE HUNGRY OF
BETTERMENT and SPEED IS PRIORITY strategy (the ultimate search engine)
PRIVACY RIGHT
• Google had to give up private information of its China users if the Chinese government require it, even use it to
incriminate person >< GOOGLE ‘s FOCUS ON USER STRATEGY
• Google’s server was hacked in China.
WHY FAILED IN CHINA
GOVERNMENT LAWS
CENSORSHIP & PRIVACY RIGHT
CHINA DID NOT CHANGE, GOOGLE FORCED TO CHANGE

22. Poor service
• Chinese Internet users found Chinese-based internet search companies better and more reliable service
Reason:
• The Chinese-based internet search know What “terms” should be blocked at the end speeding the processing time.
• The Chinese-based internet worked closely to the Chinese government
Justification:
• Google did not anticipated well the poor service quality due to the great firewall
• Even though Google had democratic approach with Chinese-language version but they did not well prepared for the
local law applying in comparison with what the competitors were doing at China market
Low adapt to culture compared to local company
Reasons:
• The Chinese companies understood what the Chinese user want than did Google.
• Favored chat room over mail
• Piracy of games, movies, and songs was very popular
Dilemma: US legal issues >< piracy
WHY FAILED IN CHINA
POOR SERVICE
& LOW ADAPT TO CULTURE

23. Poor performance of Google and
Outstanding performance of Baidu –
the market leader
 a Decline of Google’s market share in
China
WHY FAILED IN CHINA
LOSS OF MARKET SHARE

24. THE CREATION OF ALPHABET
RECOMMENDATION

25. THE CREATION OF ALPHABET
A NEW NAME FOR A NEW AMBITION

26. THE CREATION OF ALPHABET
• Google will refocus on the Internet
• And Alphabet will carry all other projects out
• More transparency, less danger
• A way to get round the law
A NEW NAME FOR A NEW AMBITION

27. COME BACK TO CHINA
A new approach to enter the Chinese Market
• Comply with Chinese regulations
• Receive recognition from the public by “going local”
• Easier with Alphabet
RECOMMENDATION

28. THE END. Corporate Strategy
Group Presentation