Google Corporation in Japan

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Table of Contents

Introduction
Google’s Japan Operations
Google’s International Strategies
Japan’s Culture and Business Practices
Conclusion and Recommendations
References

Introduction

Google is a US-based global company with extensive operations around the around. Established in 1998, the tech-giant is among the biggest search engine companies in the world. Although the company specializes in this market, today, it produces other products, such as Gmail, Google-plus, and Google Drive. The company manages these products through more than 1,000,000 servers around the world (Hrones & Bailey, 2011).

This infrastructure also accommodates more than 750 million search requests monthly (Hrones & Bailey, 2011). These requests translate to more than 50% of the search engine market. In some parts of the world, like North America, the company enjoys more than a 60% market share (it is the number one search engine company in about 17 countries around the world) (Hrones & Bailey, 2011).

Relative to this success, the company reports an annual revenue of more than $10 billion (about 48% of this revenue comes from its international operations) (Hrones & Bailey, 2011). Its collective competencies have made Google the most visible global website (Facebook is its biggest competitor in this regard) (SWETA, 2009).

As shown above, Google has enjoyed significant market successes around the world. However, it continues to struggle in some key locations. Particularly, the company has had trouble penetrating key Asian markets such as South Korea, China, and Japan (although it has a strong market presence in these countries). Consequently, Google now strives to improve its performance in these markets.

This paper pays a close attention to its Japan operations by exploring its current activities in the country, the challenges it faces in this market, and possible strategies for improving its performance in the Asian market.

Google’s Japan Operations

Japan is among America’s biggest export market. It is also the third largest economy in the world (with a GDP of about $5.8 trillion) (US Department of Commerce, 2014). Based on its strategic importance to US companies, it is not surprising that American companies exported about $70 billion worth of goods to the Asian economy (US Department of Commerce, 2014).

Japan’s impressive stock market performance has also improved its attractiveness to American companies. Part of its success hinges on a strong economic model that supports the activities of local and foreign firms, such as Google. This economic model hinges on three strategies – “monetary loosening, fiscal stimulus centered on infrastructure spending, and growth-oriented structural reform” (US Department of Commerce, 2014, p. 5).

In 2013, technocrats in Japan and America agreed on several agreements that would improve the business relationship between Japan and America. The 2013 Trans-Pacific Partnership Agreement outlines the outcomes of these discussions (US Department of Commerce, 2014).

Experts estimate that this agreement would increase Japan’s contributions to the world’s Gross Domestic Product by 40% (GDP) (US Department of Commerce, 2014). Although experts do not know the effects of this agreement (yet), American companies have developed a lot of interest about it.

Particularly, American companies that seek to expand their operations globally (such as Google) have paid special attention to the opportunities that may arise from such arrangements (US Department of Commerce, 2014).

Indeed, being the fourth largest market for US products, American companies should pay attention to Japan. However, companies that wish to venture into this market need to use well-thought out strategies to succeed. More so, technology companies like Google need to show a strong business acumen when doing business with Japanese customers because Japan is already a technologically developed economy.

In fact, its level of technological development is only comparable to other developed markets. The US Department of Commerce (2014) explains that Japanese markets are important to the American economy because they bring many Foreign Direct Investments in the US (Eaton, 2014).

Concisely, Eaton (2014) says, it is the second largest foreign investor in America (with investments worth about $257 billion). American companies have reciprocated these trade inflows by investing in the Japanese market. Google leads this trend by establishing Japanese offices in Osaka and Tokyo.

Google Japan is a franchise of the US-based company. It is a key research and development (R&D) facility (the third largest in the world) and the most notable “mark” of the US-based company in Asia. In line with Google’s diversification strategy, the center operates mobile and internet services. Its mobile operations outline the most successful venture of the tech-company in Japan.

This success has increased the company’s profile in the country. For example, in a 2011 brand survey, Google won the coveted prize of being the highest valued brand in Japan (CET, 2011). This success stems from the company’s popular operating system (android), which powers many smart-phones that most people use in the Asian market. The Japanese business community (mainly) affirmed its success in this regard (CET, 2011).

In line with this success, CET (2011) says, “Businesspeople rated Google higher than Microsoft Japan in terms of corporate attractiveness among professionals, while consumers put Google ahead of Microsoft Japan on originality” (p. 4). However, Google has not experienced the same success in its Japanese search engine operations.

For example, Eaton (2014) says, unlike other markets, Google trails Yahoo as the dominant search engine company in Japan. This is surprising because the company has a very low market share in this market (in most parts of the world, Google has the biggest market share in search engine operations). To prove how Google dominates the global search engine market, the figure below shows how it compares with its competitors

Figure One: Google’s Dominance of the Search Engine Market (Source: SWETA, 2009)

Eaton (2014) explains Google’s dismal performance (in Japan) by saying the California-based company only commands about 33% of the Japanese search engine market. Comparatively, Yahoo dominates about 56.5% of this market (Eaton, 2014). These statistics show that Google’s performance in the Japanese market is dismal. Its international market strategy defines its performance.

Google’s International Strategies

Google’s company mission, which states, “to organize the world’s information and make it universally accessible and useful to all” (Hrones & Bailey, 2011, p. 3), shows that the company intends to have a strong global presence. However, to succeed in the global market, the company needs an effective corporate strategy. The key to this success is having an effective international strategy.

Google’s managers have realized this fact and use a standard international strategy in most of its foreign markets. This international strategy centers on using localized domain names for its global markets. It explains the company’s global market expansion (in more than 144 countries) (Hrones & Bailey, 2011).

Google’s international market strategy applies to its Japanese venture because the company uses the standard global strategy to operate in this market. Key promotional campaigns also seek to strengthen this strategy.

Promotional Campaign

Based on its dismal performance in Japan, Google has undertaken several promotional campaigns to improve the market awareness of some of its products. The California-based company has used different strategies of doing so. For example, it has installed WI-FI internet access in some Japanese restaurants to encourage its customers to try its products (Eaton, 2014).

Using tactful business strategies, such as requiring prospective customers to register their Google devices with the internet services, the company has achieved significant success in this regard. In line with its promotional campaigns, the company has launched new television spots in Japan to improve its brand image in the Asian country. Observers have different opinions about the potential success of these initiatives.

However, few of them dispute the use of unconventional means by the tech-giant to promote its products (Eaton, 2014). For example, Eaton (2014) says, “So far the process has included strange events like floating passers-by in the air under 2,500 helium balloons, and even adapting Google’s traditionally spartan (nay, empty and boring) homepage to include links to YouTube and Gmail” (p. 4).

These are some latest efforts by Google to improve the brand awareness of its products in Japan. Experts still do not know if these strategies would meet their goals, but many of them believe the tendency of Japanese customers to experiment with new things could boost the company’s performance in Japan (Eaton, 2014).

Relative to this uncertainty, Eaton (2014) says “if Google does manage to capture attention, it needs to persist in those efforts, as it could be just as easy to lose new customers as to win them” (p. 4).

Japan’s Culture and Business Practices

Venture Japan (2009) says many western companies, such as Google, view the Japanese business culture as a big obstacle to doing business in the lucrative Asian economy. The credibility of this perception is not important to this paper, but it highlights how the Japanese business culture affects the international strategies/perceptions of foreign companies in Japan.

Venture Japan (2009) also says many foreign companies fear starting a new business in the Asian economy because they rely on a misconception that the Japanese business culture is “too risky” to accommodate new ventures (especially from foreign firms). Indeed, the success of many companies, such as Yahoo, BMW, and Louis Vuitton shows that western companies, such as Google, may succeed in this market too.

However, this fact does not imply that western and Japanese business cultures are similar. Many differences exist. However, they do not make Japan a riskier foreign market destination for Google (compared to other markets around the world). In fact, experts say some aspects of the Japanese business culture can benefit Google if it learns how to “swim with the cultural tide,” as opposed to going against it (Venture Japan, 2009).

This section of the report shows the unique cultural differences that make Japan a “special” destination for Google.

Service-Oriented

Google is mainly a service-oriented business. Therefore, its Japanese enterprise needs to include the perspectives of customer services that local people have. Venture Japan (2009) says there are many differences between western and Japanese perspectives on service delivery. For example, service providers in Japan emphasize the need to give friendly customer services to customers.

For instance, luggage carriers, cleaners, and waiters at Japanese airports are respectful and polite to all their customers. Similarly, many Japanese service attendants at train stations bow or remove their hats when a visitor boards a train (Venture Japan, 2009).

The same treatment occurs in hotels because service attendants are always polite and friendly to visitors. They also like to take their time to discuss their visitors’ needs. To illustrate this fact, Venture Japan (2009) says they would easily explain the purpose of different buttons on a hotel room bed, even if a customer does not ask.

The above customer service standards are unique to Japanese service providers. Many western service providers also use the same customer service standards, but, unlike their counterparts in Japan, they need payment (“tips”). Japanese service providers do not need any “tips” because they believe their personalized services are part of their job description (Venture Japan, 2009).

Therefore, Venture Japan (2009) elaborates that their excellent customer service is not a Japanese social norm, or practice, (some people think Japanese service providers offer personal services because they are naturally polite). Granted, Japanese people are culturally polite, but they do not offer the personalized services because they are polite.

They believe their duty is to make customers happy. This business culture is useful to Google because it should define its customer service model. For example, Japanese customers may not accept paying for extra services (information) that the company provides. Therefore, they should avoid charging extra money for product accessories or “extra” search engine services.

Language Differences

Google offers its services in different languages. In the search engine market, the company allows its customers to customize languages according to their preferences. This feature allows (mainly) non-English speakers to have the same experience as English speakers do (when they use Google). Japanese customers do not use English as their primary language.

Therefore, Google’s success in Japan depends on its ability to circumnavigate this challenge. However, Venture Japan (2009) cautions the company against using general strategies when doing so. For example, in other markets, the company translates English into a foreign language and expects all users to have the same experience with its products.

This strategy would be ineffective in Japan because although many Japanese businesspersons speak English, their ability to do so does not mean they subscribe to the western business culture. For example, Venture Japan (2009) says a Japanese executive may be very polite to another person, and even praise him, but have no intention to do business with him.

Furthermore, Japanese executives may arrange several meetings with a potential business associate (to look polite), even when they have no intention to do business at all (Venture Japan, 2009). Usually, they would do so by hoping that the other party would lose interest.

Based on this understanding, Venture Japan (2009) cautions that, “Politeness and meeting manners are a key aspect of Japanese business culture and, as noted above, one which may mislead foreign executives” (p. 2).

Legal Differences

Google has to acquaint itself with the changing legal environment that characterizes the Japanese search engine market. Privacy laws are the most significant issues that affect the company’s operations. For example, the company has clashed with the Japanese government for infringing on the country’s privacy laws.

A Tokyo Times Report (cited in TNWC, 2013) clarified that the Japanese government opposed how the US-based company stored and used users’ information. TNWC (2013) explains this issue (further) by saying the company wanted to combine users’ information in one subset, such that, regardless of a person’s location, customers could easily access their information.

Since Japanese privacy laws did not allow this practice, the government started investigating Google for infringing on the country’s privacy laws. Google has had the same issue with other Asian countries. For example, South Korea had raised the same issue with the company (TNWC, 2013). To overcome these challenges the company needs to change its international strategy in Japan.

Conclusion and Recommendations

More Flexibility

Language and geography do not limit Google’s success. However, it depends on showing more flexibility in its Japanese operations. This paper shows that the company has used this strategy by adopting a narrow focus of language translation.

Indeed, while it is difficult to count all the language-specific Google applications that the company has produced (in this paper), the company has strived to produce culturally relevant materials to its global customers (including Japan). This is a key tenet of its international strategy.

In line with this understanding, Hrones & Bailey (2011) say “Realizing a need for a global internet media provider, Google has taken on more than 50 companies to extend its range of services, which would then be translated and exported” (p. 3).

This need is important to the company’s success in Asia and other non-English speaking parts of the world because Hrones & Bailey (2011) say about 65% of the global market for internet users do not speak English (as their primary language). Furthermore, the top ten languages used in the internet reach about 85% internet users (Hrones & Bailey, 2011).

Although this percentage is the majority, the rest of the market (15%) accounts for about 200 million people (still a significant number). Therefore, Google has an untapped market. Again, to exploit this potential, the company needs to diversify its international strategy of focusing on language multiplicity to include more flexibility in its international strategy.

Palich & Gomez-Mejia (1999) say the concept of relatedness, although common in product diversification literature, is important in evaluating the success of this strategy.

They also affirm the need for Google’s managers to show managerial flexibility when operating in the Japanese market because if they do not show this flexibility, the cultural diversity between Japan and western nations may derail the company’s success in this market (Palich & Gomez-Mejia, 1999). This view stems from studies, which show that cultural synchrony increases corporate efficiency (Palich & Gomez-Mejia, 1999).

Exploit Cultural Opportunities

Alongside the flexibility strategy, Google should exploit the value that Japanese customers attach to business loyalty. To do so, it can redesign its customer service model to cultivate long-term business relationships. Indeed, unlike many western societies, Japan is a highly traditional and conservative society. Its structured nature demands that all people work for the “greater good” of the society.

Therefore, people dislike individualism and selfishness. In their place, Japanese people prefer loyal and polite people. These virtues should characterize Google’s Japanese strategy. Therefore, the company needs to include these elements in its customer service model. Overall, adopting these recommendations should improve the company’s performance in Japan.

References

CET. (2011). Google Tops Corporate Brand Survey In Japan. Web.

Eaton, K. (2014). Google Plays Catch-Up in Japan With New TV Spots and Free WiFi. Web.

Hrones, L., & Bailey, H. (2011). Google Inc. International Strategies.

Palich, L., & Gomez-Mejia, L. (1999). A Theory of Global Strategy and Firm Efficiencies: Considering the Effects of Cultural Diversity. Journal of Management, 25(4), 587-606.

SWETA. (2009). Google Continues To Be The Search Engine Leader With Huge Margins. Web.

TNWC. (2013). Japan warns Google that its new privacy policy may violate data protection laws [Updated]. Web.

US Department of Commerce. (2014). Doing Business in Japan. Web.

Venture Japan. (2009). The Japanese Company In Japan’s Culture. Web.

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