• KORAY GÜNER • KADİR DEMİR• SERCAN İLKBAĞ• ERDEM CEYLAN

CONTENT

• GLOBALIZATION AND SOCIETY

• ‘‘ MNE’’S AND THEIR ACTIVITIES

• WHO IS GOOGLE ? GOOGLE IN CHINA

• QUESTIONS

1.What Philosophical principle did Google’s managers adopt when deciding that the benefits of operating in China outweighted the costs ?

2. Do you think that Google should have entered China and engaged in self censorship giving the company’s long standing mantra Don’t be evil. Is it better to engage in self cencorship than have the government censor for you?

3. If all foreign search engine companies declined to invest directly in China due to concerns over censorship , what do you think the results would be? Who would benefit most from this action? Who would lose the most?

WHAT IS THE GLOBALIZATION ?

Globalization is expressed as primary economic phenomenon, including the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows. It is the raise in connective ness and a procedure where geographical distance becomes less important in the establishment.

Globalization actually brings wonderful opportunities and benefits. The survey shows that 24 developing countries that increased their integration into the world economy over two decades ending in the late 1990s attained higher growth in incomes, longer life expectancy and better schooling.

These countries got an average 5 percent growth rate in income per capita in the 1990s compared to 2 percent in rich countries. Many countries like China, India, Hungary and Mexico have adopted domestic strategy and institutions that have enabled people to take advantage of global markets and have thus sharply increased the share of trade in their GDP.

• The Good: Globalization is a very empowering thought. Imagining the implications of global connectivity with

regards to education and business has excited many an economist and politician. The Communication Revolution that we are currently amidst has added color to the concept, with distances being covered in seconds. With internet technology at our finger-tips, it is not very difficult to envision the subsequent capital flow or migration.

• The Bad: Globalization is not a concept without explicit scope for internal policies protecting respective industries or

the implication of diminution of enforced restrictions on exchanges. While crossing borders and integrating a complex system of trade and production seems very attractive, one cannot ignore the 'flattening' effect of the practice. Globalized trade and dedicated outsourcing of resources are bound to result in a conflict between various distinctive political forces.

• The Ugly: The growing concern towards the implications of global terrorism is not without base. Global conflicts are

inter-woven with the attempts at globalization. The strategy also has a very negative impact on cultures around the world. The influx that is the outcome makes it impossible for a society to check the disregard of what is uniquely their's. Acceptance of imported goods and services do affect national income. Internal and external migration and investment opportunities tip the balance required for nations to enjoy the status of 'developed' or 'developing'.

• ADVANTAGES AND DISADVANTAGES OF GLOBALIZATION IN DEVELOPING COUNTRIES

THE ADVANTAGES

• GDP Increase: If the statistics are any indication, GDP of the developing countries have increased twice as much as before.

• ·Percapita Income Increase: The wealth has had a trickling effect on the poor. The average income has increased to thrice as much.

• ·Unemployment is Reduced: This fact is quite evident when you look at countries like India and China.

• ·Education has Increased: Globalization has been a catalyst to the jobs that require higher skill set. This demand allowed people to gain higher education.

• ·Competition on Even Platform: The companies all around the world are competing on a single global platform. This allows better options to consumers.

• ADVANTAGES AND DİSADVANTAGES OF GLOBALİZATİON İN DEVELOPİNG COUNTRİES (CONT.)

THE DISADVANTAGES

Uneven Distribution of Wealth:

Wealth is still concentrated in the hands of a few individuals and a common man in a developing country is yet to see any major benefits of globalization.

Income Gap Between Developed and Developing Countries:

Wealth of developed countries continues to grow twice as much as the developing world.

Different Wage Standards for Developing Countries:

A technology worker may get more value for his work in a developed country than a worker in a developing country.

HOW GLOBALİZATION AFFECTS CHINA

In a short span of 30 years from 1978 to 2008, China's GDP increased from $147.3 billion to $1.6494 trillion with an average annual growth rate of 9.4%. Its foreign trade rose from $20.6 billion to $1.1548 trillion, averaging an annual growth rate of over 16%..

• High expectations We in China have identified the goal for the first 20 years of this century. That is to firmly seize

the important window of strategic opportunities to build a moderately prosperous society of a higher standard in an all-round way for the benefits of our over one billion people.

• Implication of Globalization in China: The advent of Globalization in Chinese economy had been immensely beneficial in the sense that

it brought along with it, numerous developmental opportunities as well as challenges for the nation in the economic spheres. .

In fact, these were the challenges, which once meted up, would take the national economy on the path of success and affluence. However, Economic Globalization in China was also accompanied by advantages and drawbacks as well.

HOW GLOBALIZATION AFFECTS CHINA (Cont.)

Chinese Globalization and International Economy:

The contribution of China in world economy is not at all a one-way traffic, but interrelated. In fact, the Globalization of the Chinese economy has helped the East Asian economic conditions to revive and improve as well. Chinese Economic Globalization also provides the world with the largest rising economic market, generating more demand and encouraging extensive foreign trading activities. This development in turn, help the Chinese population to come out of the agonizing poverty, and become financially affluent.

Future Prospects of Economic Globalization in China:

The future of Chinese economy under Globalization shows immense potentialities of further economic growth and development and opening up for more opportunities. In fact, the Chinese commercial sector has taken up the challenge to face violent competitions both in national and international markets, and grow economically despite all impediments and shortcomings.

MULTINATIONAL ENTERPRISES

• A multi-national corporation (MNC) is a business organisation which has its headquarters in one countrybut has operations in a range of different countries. There are numerous examples of such organisations, car manufacturers like Ford, Toyota, Honda and Volkswagen, oil companies like Shell, BP and ExxonMobil, technology companies like Dell, Microsoft, Hewlett Packard and Canon and food and drink companies such as Coca Cola, Interbrew and McDonalds. The following is a quote from the Ford Web site which highlights the idea perfectly:

• Ford has manufacturing operations in six continents - in Europe alone there are around thirty-five sites in nine separate countries. These include assembly plants, stamping plants, engine plants, and casting,forging and aluminium plants.

MULTINATIONAL ENTERPRISES (cont.) Duties and Activities of MNCs

• MNCs have an obligation towards employers, customers,governments, suppliers and communities as well as towards shareholders. This is known as Corporate SocialResponsibility(CSR):Most agree that CSR includes a duty to behave honestly,legally and with integrity, not to be corrupt but to deal fairly and obey the host country’s laws. Some MNCs would say that no more than this bare minimum can be expected of them. They would argue that the cost of CSR could eat into their profits and push them out of business.

MULTINATIONAL ENTERPRISES (cont.)

TYPES of Business Enterprises And MNE

There are many business enterprises these include international, global, multinational and transnational firms. 

• – An international enterprise is an organisation which conducts business operations in cross national borders.

• – Global organisations are known as national firms having international operations.

• – MNE are companies that undertake production, research and development, finance and marketing on an international business in more than one country.

• MULTINATIONAL ENTERPRISES (cont.)

Do MNCs help or harm?

• MNCs can help to reduce poverty.

• They can bring money into a country through employment and investment. Three quarters of

international investment in developing countries is from MNCs and private sources.They can create jobs and raise labour standards.They can pass on expertise in their field.

• A MNE investing in an area may result in a significant injection into the local economy.

This may provide jobs directly or through the growth of local ancillary businesses such as

banks and insurance. It might initiate a multiplier process generating more income as newly employed workers spend their wages on consumption.

• MNEs may provide training and education for employees thus creating a higher skilled labour force. These skills may be transferred to other areas of the host country. Often management and entrepreneurial skills learned from MNEs are an important source of human capital.

MULTINATIONAL ENTERPRISES (cont.)

• BUT they can also harm…

• The MNE may employ largely expatriate managers ensuring that incomes generated are

maintained within a relatively small group of people. The attraction for the MNE may be the large supply of cheap manual labour who they can employ at low wages. This may contribute to widening of the income distribution. It will also not lead to the transfer of management skills.

• MNE investment in LDCs often involves the use of capital intensive production methods. Given that many LDCs are often endowed with potentially large low wage labour forces and have high level of unemployment this might be considered inappropriate technology. More labour intensive production methods might be a more appropriate option for alleviating poverty and aiding development. Any resulting growth might be considered anti-developmental.

• MNEs engage in transfer pricing where they shift production between countries so as to benefit from lower tax arrangements in certain countries. By doing this they can minimise their tax burden and the tax revenue of national governments.

• As many MNEs are very large and have considerable power they can exert influence on governments to gain preferential tax concessions and subsidies and grants.

• MULTINATIONAL ENTERPRISES (cont.)

MNE IN CHINA• During the past two decades, China has become one of the most important home

countries for inflows of foreign direct investment (FDI) in the world.• -(1) The total value of investment and the value of average single investment have

increased dramatically.• -(2) A significant portion of capital inflow has shifted from labor-intensive

industries to technical-intensive industries.• -(3) Huge multinational enterprises (MNEs) have entered the Chinese market

systematically. They have been successful in defeating some of the major Chinese domestic companies and significantly increased their market share in a small number of key industries, or almost totally occupied the market in some areas, e.g. cosmetics and detergent industries. In detergent industry, almost all major national firms became joint venturesand changed the brands of their products recently.

A SHORT STORY OF GOOGLE

Google began in March 1996 as a research project by Larry Page and Sergey Bring, Ph.D. students at Stanford working on the Stanford Digital Library Project (SDLP). The SDLP's goal was “to develop the enabling technologies for a single, integrated and universal digital library." and was funded through the National Science Foundation among other federal agencies.

* Originally the search engine used the Stanford website with the domain google.stanford.edu. The domain google.com was registered on September 15, 1997. They formally incorporated their company, Google Inc., on September 4, 1998 at a friend's garage in Menlo Park, California

* By the end of 1998, Google had an index of about 60 million pages. The home page was still marked "BETA", but an article in Salon.com already argued that Google's search results were better than those of competitors like Hotbot or Excite.com, and praised it for being more technologically innovative than the overloaded portal sites (like Yahoo!, Excite.com, Lycos, Netscape's Netcenter, AOL.com, Go.com and MSN.com) which at that time, during the growing dot-com bubble, were seen as "the future of the Web", especially by stock market investors.

* In March 1999, the company moved into offices at 165 University Avenue in Palo Alto, home to several other noted Silicon Valley technology startups. After quickly outgrowing two other sites, the company leased a complex of buildings in Mountain View at 1600 Amphitheatre Parkway from Silicon Graphics (SGI) in 199

• The Google search engine attracted a loyal following among the growing number of Internet users, who liked its simple design. In 2000, Google began selling advertisements associated with search keywords. The ads were text-based to maintain an uncluttered page design and to maximize page loading speed Keywords were sold based on a combination of price bid and click-throughs, with bidding starting at $.05 per click. In 2006, Google bought the property from SGI for $319 million

GOOGLE NAME Founders Larry Page and Sergey Brin named the search engine they built "Google," a play on the word "googol,"

the mathematical term for a 1 followed by 100 zeros. The name reflects the immense volume of information that exists, and the scope of Google's mission: to organize the world's information and make it universally accessible and useful.

HOW GOOGLE WORKS Google the fast growing Internet search engine company was established with a clear mission in mind: to to

organize the world's information and make it universally accessible and useful. Google has built a highly profitable advertising business on the back of its search engine, which is by far the most widely used in the world. Under the pay-per-click business model, advertisers pay Google every time a user of its search engine clicks on one of the paid-links typically listed on the right hand side of Google’s results page

Google has long operated with mantra ‘’Dont be EVIL’’. When this phrase was originally formulated, the central message was that Google should never compromise the integrity of its search results. For example, Google decided not to let commercial considerations bias its ranking. This is why paid links are not included in its main search results, but listed on the right hand side of the results page.

HOW GOOLE WORKS ( cont.)

As a company, Google focuses on three key areas: Search, Ads and Apps. Search is their core technology; ads are their central business proposition; and apps are the umbrella over their web-based software that you can access anywhere, any time. While each of these has a lot of technology under the hood, the basic tenets for Search, Ads and Apps are very simple. They’ve created some short videos explaining the principles behind our core services.To watch the videos (http://www.google.com/howgoogleworks/)

A-) Search: When you visit www.google.com or one of more than 150 other Google domains, you can find information in many different languages (and translate between them), check stock quotes and sports scores, find news headlines and look up the address of your local post office or grocery store (Google Books , Google News Archive.)

Search is how Google began, and it's at the heart of what they do today. Google devote more engineering time to search than to any other product at Google, because they believe that search can always be improved.

B-) Ads:As a business, Google generates the majority of its revenue by offering advertisersmeasurable, cost-effective and highly relevant advertising, so that the ads are useful to the people who see them as well as to the advertHundreds of thousands of advertisers worldwide use Google AdWords program to promote their products and services on the web. Advertisers bid in an open and competitive auction to have their ads appear alongside the search results for particular keywords. They can specify the geographic location and time of day for their ads to appearisers who run them.GOOGLE aim to make advertising more measurable and efficient with free tools for advertisers such as Google Analytics, Website Optimizer, Insights for Search and Ad Planner. These tools help advertisers to analyze their campaigns, test them, and make them more efficient and effective.

HOW GOOLE WORKS ( cont.)

C-) Apps: GOOGLE build web applications, or "apps", to make it simpler for people to share information and get things done together. Gmail, Google Calendar and Google Docs help people communicate and collaborate more easily, whether planning a wedding or building a business itinerary. Google Apps is designed to fit the way people naturally live, work and socialize, so they can focus on what they're doing rather than worrying about maintaining the software

THE GOOGLE CULTURE

Though Google has grown a lot since it opened in 1998, they still maintain a small company feel. At lunchtime, almost everyone eats in the office café, sitting at whatever table has an opening and enjoying conversations with Googlers from different teams. They say that their commitement to innovation depends on everyone being comfortable sharing ideas and opinions. Every employee is a hands-on contributor, and everyone wears several hats.

GOOGLE MANAGEMENT

Co-founders Larry Page, president of Products, and Sergey Brin, president of Technology, brought Google to life in September 1998. Since then, the company has grown to more than 10,000 employees worldwide, with a management team that represents some of the most experienced technology professionals in the industry. Eric Schmidt joined Google as chairman and chief executive officer in 2001.The management consist of; Board of Directors, Operating Committee, Engineering, Products, Sales, Legal, Business Operations, Finance, People Operations

GOOGLE’S PHILOSOPY

1.Focus on the user and all else will follow.

2. It's best to do one thing really, really well.

3. Fast is better than slow.

4. Democracy on the web works.

5. You don't need to be at your desk to need an answer.

6. You can make money without doing evil.

7. There's always more information out there.

8. The need for information crosses all borders.

9. You can be serious without a suit.

10. Great just isn't good enough.

GOOGLE’S DESIGN PRINCIPLES

1.Focus on people – their lives, their work, their dreams.

2. Every millisecond counts.

3. Simplicity is powerful.

4. Engage beginners and attract experts.

5. Dare to innovate.

6. Design for the world.

7. Plan for today's and tomorrow's business.

8. Delight the eye without distracting the mind.

9. Be worthy of people's trust.

10. Add a human touch

GOOGLE IN CHINA

Google began a Chinese language service in 2000 although the service was operated from the US in 2002, Chinese authorities blocked the site. Would be users of Google’s search engine were directed to a Chinese rival. The blocking took Google’s managers totally by surprise. Reportedly, Co-founder Sergey Brin immediately ordered half dozen books on China and quickly read them in effort to understand this vast country. Two weeks later for reasons that have never been made clear, Google’s service was restored. Google said that it did not change anything about its service, but Chinese users soon found that they could not access politically sensitive sited that appeared in Google’s search results, suggesting that the goverment was censoring more aggressively.(The Chinese government had essantially erected a giant firewall between the Interet in China and the rest of the world, allowing its cencors to block sites outside of China that are deemed subversive)

By late 2004, it was clear to Google that China was a strategically important market. To exploit the opportunities that China offered, however the company realized it would have to establish operations in China, including its own computer servers and Chinese home page. Serving Chinese users from the US was too slow, and the service was badly degraded by the censorship imposed. This created a dilemma for the company given the ‘‘dont be EVIL’’ mantra. Once it established Chinese operations it would be subject to Chinese regulations, including those censoring information. For perhaps 18 months, senior managers inside the company debated the pros and cons of entering China directly, as opposed to serving the market from its US site. Ulimately, they decided the opportunity was too large to ignore. With over 100 million users, and that number grwing fast, China promised to become the largest Internet market in the world and a major source of advertising revenue for Google.Moreover, Google was at a competetive disadvantage relatie to its US rivals, Yahoo and Microsoft’s MSN, which had already established operations in China, and relative to China’s homegrown company, Baidu, which leads the market for Internet search in China (in 2006 *Baidu had around 40 percent of the market for search in China, compared to Google’s 30 percent share)

* Baidu: Chinese search engine that was introduced in 2001 as an early competitor to Yahoo, capitalized on the national fervor for chat and invented a tool that allows people to create instant discussion groups based on popular search queries

GOOGLE IN CHINA (cont.)

In mid-2005 Google established direct sales presence in China. In January 2006, Google rolled out its Chinese home page, which is hosted on servers based in China and maintained by Chinese employees in Bejing and Shanghai. Upen launch, Google started that its objective was to give Chinese users ‘‘ the greatest amount of information possible’’It was immediately apparent that this was not the same as ‘‘ acces to all information’’.

In accordance with Chinese regulations, Google had decided to engage in self-cencorship, excluding results on such politically sensitive topics as democratic reform, Taiwanese independence, the banned Falun Gong movement, and references to the notorious Tiananmen Square massacre of democratic protestors that occured in 1989. Human rights activists quickly prostested, arguing that Google had abondoned its principles in order to make a greater profits.For its part Google’s managers claimed that it was better to give Chinese users access to a limited amount of information, than to not at all, the government to continue proactively censoring its research results, which would result in a badly degraded service. Sergey Brin justified the Chinese decision by saying ‘’it will be bettter for Chinese users, because ultimately they will get more information though not quite all of it.’’ Moreover Google argued that it was the only search engine in China that let users know if search resulsts had been censored (which is done by the inclusion of a bullet at the bottom of the page indicating cencorship)

1-What Philosophical principle did Google’s managers adopt when deciding that the benefits of operating in China outweighted the costs ?

-Why China is a tempting market?• Google holds around %60 market share in world, Baidu around %9•Asia Pasific is the only area Google is under %60 (%36), Baidu %27 •Asia Pasific market is nearly %30 of the total search engine market, big•In China the situation is worse, Baidu holds a market share of %60-63 and Google has a share around %26-29

STOCKS PROFITTHERE IS A BIG MARKET SHARE TO CONQUER, SO MOTTO’s FORGOTTEN AND TWO THINGS BECOME IMPORTANT

“DON’T BE EVIL” SOFTENED

GOOGLE ACCEPTED TO SENSOR HIMSELF AND ANNOUNCE

ACCESS TO ALL INFORMATION

THE GREATEST AMOUNT OF INFORMATION POSSIBLE

For its part Google’s managers claimed that it was better to give Chinese users access to a limited amount of information, than to not at all, the government to continue proactively censoring its research results, which would result in a badly degraded service. Sergey Brin justified the Chinese decision by saying ‘’it will be bettter for Chinese users, because ultimately they will get more information though not quite all of it.’’

2-Do you think that Google should have entered China and engaged in self censorship giving the company’s long standing mantra Don’t be evil. Is it better to engage in self censorship than have the government censor for you?

GOOGLE’S CHOICE – OPERATING IN CHINA

BEFORE

•SLOW CONNECTION•CENSORSHIP OF GOVENMENT•DIFFICULT TO OPERATE•LOSING MARKET SHARE

AFTER

•FARE COMPETITION•BETTER MARKET SHARE•SELF CENCORSHIP•EFFECT ON BRAND IMAGE

•Desicion was difficult to take, both upsides and downsides, both desicions does not go along with Google’s mission of "Organize the world’s information and make it universally accessible and useful”. Google decided to take the logical one as it is also responsible for it’s stockholders as much as the society.

•If you think about the alternative way, not entering the local market, because of the “Great firewall of China” users will be getting severely limited results compared to a local-service which is self-censored.

•Google also created and awerenesess of the situation in press and all over the world. Great firewall of China is known and argued by much more people. Also different then other search engines Google gives a message to it’s user that results would have been better if your government wasn’t censoring you.

3-If all foreign search engine companies declined to invest directly in China due to concerns over censorship , what do you think the results would be?Who would benefit most from this action? Who would lose the most?

•As like the other sectors in China, search engine market has an enormous size of 1.800 million CNY.

•Search engines are accepted to be one of the best cost effective solutions on marketing. Companies can not afford to lose a market size this big, even for all negative sides they are trying to gain market share still.

•Even foreign companies will decide to pull off from the market, there is a very strong local company which has a market share more than %60. So in this case Baidu will have the biggest benefit and also Chinese government which possibly will have an easier control on local companies than foreign ones.

•Chinese people who in each case doesn’t have access to the information and has no economical benefit from all these will be effected worse.

•Also we think that protest of foreign companies will not change the desicion of China in this matter and they will be left with the profit and market share loss they had.

THANKS FOR LISTENING