2011 principled business leadership institute case competition entry
DESCRIPTION
Our second place power point presentation. While you’ll miss out on key elements from our verbal presentation and are lacking the case itself - refer to the written report as well to clear up some gaps.TRANSCRIPT
Google and China
Mike ShannonNick CurrierKasey Gandham
2011 Case CompetitionAlpha Kappa Psi
Mike ShannonNick CurrierKasey Gandham
Our Negotiation Statement
Remain in China Operating censored
Full uncensored operations in Hong Kong & Mecau
Terms: Google will not release user informationGoogle will state reason of censorshipChina will engage in a five year contract with Google
Priorities for both parties
GoogleMaintaining core principles
“Do no evil” Obligation to shareholdersCapture Chinese market shareProtecting user’s rights
Priorities for both parties
ChinaAvoid threat to one party systemMaintaining Chinese global identity Compete economically on global scale Retaining young talent
Options for both parties
Google China
Ideal No censorship, full operations
Complete censorship
Negotiation To be discussed To be discussed
Alternative Censorship without R & D No Google, rely on Baidu
Ethical Dilemmas
Google“Don’t be evil”World’s information universally accessible and usefulEffective, quick, unbiased results Lost market share to Baidu
Google’s case to China
Achieve technological parity with western countries Reverse brain drain effect Services in higher education
Google’s case to China
“Googlization”: Google as a way of life
Google’s case to China
Sinification to develop and maintain a non-western Chinese image
Google’s case to China
Quantitative study on advertising effectiveness1 ad click$1 spent $2 revenue
For each ad click there are 5 “natural” search clicksEach click is only 70% as profitable an ad click$2($5 x 70%) = $7 revenue
$2 (ad click) + $7 (natural click) - $1 (initial investment) = $8 profit
Pro Forma Income Statement of Economic Output in China
Revenue
1 Ad Click 2.00
5 Search Clicks 7.00
Total Revenue 9.00
Expenses 1.00
Advertising Profit $8.00
For 25% of total Chinese market of on-line advertisement in billions ($1.225 billion)
Revenue
Ad Click 2.50
Search Clicks 8.75
Total Revenue 11.25
Expenses 1.23
Net Economic Output $10.02 bil
Chinese online advertising expenditures will increase from $1 billion to $5 billion by 2012. Our market share 25% of $5 billion is $1.23 billion which we project will be spent on advertising through Google. Natural search clicks are 70% as profitable.
(25% x 5 billion) x 70%=8.75 billion
For $1 spent on Google advertisement
Ad Click + Search Click - Initial Investment = Profit
Google’s case to stakeholders
Emerging economy – provide the world with information Enhance globalization Maximize shareholder value Baidu’s rapid development Uphold principles
Respect for Cultural Background
19th century trade warsOpium war Unequal treaties
Local Champions
Unequal Treaty Effect on China
Treaty of Nanjing Opened up five trade ports
Treaty of Wanghia Extraterritoriality
Treaty of Shimonoseki Now in debt to all western nations and Japan, forced to give up Taiwan
Google’s strategic plans
Terms of Agreement:1. Google will not release user information2. Google will state reason of censorship3. Google will engage in a five year contract with China
Special Administrative Regions
Google’s Case in 5 Years
Help China become a global power Communication is key to globalization Censorship is not efficient Google’s presence in the universities
Sources
Works Cited Beebe, A., Hew, C., Yuequ, F., & Dailun, S. (2006). Going Global. Somers : IBM Consulting Services. How Multinational Internet Companies . (2006, August). Retrieved January 29, 2011, from Human
Rights: hrw.org/reports/2006/china0806/5.htm John A. Quelch, K. E. (2010). Google in China (A). Harvard Business School , 2. Kennedy, L. (2011, February 4). Google in China. (K. Gandham, M. Shannon, & N. Currier,
Interviewers) Ng, E. (2010, February 11). China's Ad Spending Hits $120 Bil. . Retrieved February 1, 2011, from
Adweek.com: http://www.adweek.com/aw/content_display/news/media/e3i4c8c39f58df428b9cd3132e23a00b97d
Sands, L. (2008). 2008 Olympic's Impact on China. Retrieved February 2011, from Chinese Business Review: http://www.chinabusinessreview.com/public/0807/sands.html
Yanhong Li, R. (2005). Baidu Annaul Report . Beijing: Baudi.com, Inc. . Varian, Hal. “Online Ad Auctions,” American Economic Review, May 2006. Jansen, Bernard and Amanda Spink. “Investigating customer click through behaviour
with integrated sponsored and nonsponsored results,” International Journal of Internet Marketing and Advertising, 2006.