Sunday, April 26, 2015

Google's Approach to Entering a Developing Economy

The article that stood out to me this week was about companies adapting their strategy to emerging markets. I thought this article was important because it captured a key struggle that many companies face because they overlook the importance of adapting their strategies. A key takeaway from this article is that companies have three options when working in an emerging economy: Adapt their business model, change the institutional context of the economy, or to not enter the economy.

This article provided many questions that managers can ask themselves to approach their decision making. The questions centered around analyzing the environment of the economy and the resources available. I think these are great questions to ask because it establishes the context of the economy the company is attempting to enter. So much of the decisions a manager must make in attempting to establish in an emerging economy depend of the context of the economy and the company itself. The article uses examples of companies that have been able to take different approaches either because they were able to work around the challenges of that economy or by changing their models.

I think there are a few tech companies like Facebook and Google who have done a good job of navigating developing countries. Both offer products/services that are used worldwide and they have had to use strategies discussed in the article to navigate the economy. Google used multiple strategies when entering China’s highly regulated and censored environment. When Google first entered China it attempted to alter its business model by allowing the censoring and finding ways to compromise with the government. When it was not able to come to a suitable compromise and China continued to censor its content, it left the economy (stay away approach). Eventually, Google was able to change the institutional problem when China agreed to no longer censor the material in order to gain Google’s business in the economy. This is a great example of how a company used multiple strategies to enter a developing country.

Facebook recently launched a new feature that can be related to the idea of achieving a global strategy. After this weekend’s earthquake in Nepal, Facebook launched a feature that asks its user if he/she is safe in an affected area. Though this may not be specific to one emerging economy, this weekend the feature helped those in Nepal reach out to loved ones.

dFinding ways to form a strategy around a developing country or deciding not to enter it at all can be difficult. It’s a good idea to have a methodology and thought process behind it to ask the right questions.

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