Abstract
This paper addresses the issues that arise when corporations are required to make strategic choices regarding operation in foreign countries with diverse socio-political systems and culture, while taking into consideration all the relevant stakeholders, which ultimately affects the corporations’ current and future payoffs. Using the game theory principles we focus on Google’s internet search operations in China, particularly information dissemination decisions, and we examine how Google’s decisions affect the corporation’s success on the Chinese market, which is additionally determined by the information regulation policy of the Chinese authorities. In view of the fact that goals of Google and Chinese authorities are partially overlapping and partially conflicting this perfect information game contains both competitive and cooperative elements. In this paper we will argue that for Google or any other company in the equal situation the best strategic choice would be to respect and follow the laws and restrictions set by the authorities of the country in which the company chooses to operate. Finally, an analysis is completed through determining the optimal strategy for Google and Chinese authorities and finding the equilibrium point.
Highlights
According to Milton Friedman primary goal of any profit organization is to maximize its profits[1], improving their market performance which will result in the growth of the corporation
The chosen strategy should correspond with the interests of the most relevant stakeholder, given that corporation’s market performance decidedly depends on the nature of that relationship
Choosing the wrong strategy can result in corporations passing up an opportunity of attaining competitive advantage that is absolutely essential to compete successfully on the global market
Summary
According to Milton Friedman primary goal of any profit organization is to maximize its profits[1], improving their market performance which will result in the growth of the corporation. The efforts of Google and China to co-operate have failed essentially as the result of Google’s reluctance on following through with the commitment of respecting local differences, in consequence abandoning the policy of self-censorship, which led to the Google’s pull out from the Chinese market. The corporation had a choice between continuing the operation of its website from the United States of America, providing Chinese internet users a poor quality and slow service regulated by the Chinese authorities, and entering the Chinese market where the company would have more control over the way it manages its business. 1.1 Possible actions Google has a choice whether to filter its search results in compliance with Chinese laws or not, in the short term following its mission statement to the letter, but with different long term consequences. Chinese authorities, being in the position of power, respond to the move made by Google
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