Mncs In International Markets

International Markets

Currently the revenues of Alphabet are derived from different markets around the world. The Primary market for driving revenue comes from the US market, delivering 47% of revenues for 2016. The UK managed to deliver 9% of the overall revenue for the company, with the final 44% being delivered from the rest of the world. The company has been successful in all of the markets that they have entered into, achieving and maintaining a dominant market share in the different markets. By having a presents in multiple markets at the same time, this allows Alphabet to have a diversified business operations. The rationale of having a presence in multiple markets also helps the company to hedge their risk against market performance. If one market is suffering economically, the company is not overly exposed to the risk in the market. Furthermore having a presence in multiple markets allows the company to build on synergies and lessons learned to help them to compete in globally. This can be achieved through increased economies of scale, for example in research and development and product production.

Market Entry

The approach taken by the company taken towards the markets are unique and developed specifically for each market due the differences in culture, social norms at the technology present in each market. In the case of the US market, as the market is a mature market, the company developed organically grew slowly at first before becoming a market leader. Alphabet has managed this through extensive research and development and also through aggressive acquisitions of other companies, most famously of the website youtube. The majority of users in the US access their data via personal computers. This meant that the company focused on developing apps for customers on their personal computers, rather than focusing on mobile app development.

For the UK market the entrance model was similar as above to the entry model used in the US. For the UK the development was a little slower at first. Again the majority of users in the UK market access their information via personal laptops and tablets. This again meant that the company was focused on developing and offering unique services and information services for the personal laptop. Alphabet managed to generate a large amount of their revenue through advertising on applications such as google search and via their video platforms.

For the Rest of the world, Alphabet has had to develop a different market approach to entering the market. The main reason for this is the manner in which the developing markets approach technology. In the US and the UK markets, the majority of users used traditional desktops and tablets to access their information. In the rest of the world, especially in Asia and Africa, the majority of users are engaging in technology via smart phones. Alphabet have had to focus more on mobile app development and focus more towards marketing their apps for a different market entrance. This has impacted also how revenue is generated by the company as users are not consuming data in the same manner as the other markets, thus impacting the revenue generated by users.

Overall Success

Table 1.0 Revenue by Geographical Region

Millions of Dollars

2014

2015

2016

US

$29,483

$34,810

$42,781

UK

$6,483

$7,067

$7,787

Rest of the World

$30,036

$33,112

$39,704

Alphabet has been successful in the US market as can be seen in the continued growth of revenues in the market, from 29,483 in 2014 up to 42,781 in 2016. Continued development of new products and strong performance of the overall macroeconomic conditions have helped the company to continue to grow. Through regular innovations in their products and constantly seeking to remain on the cutting edge of technology has allowed the company to continue to command a strong market dominance and this is expected to continue into the future as the company is continuously looking for new ways to improve upon their product portfolio.

In the UK market, Alphabet have struggled to maintain the same level of growth. There are a number of reasons for this sluggish performance. One of the main contributors to this has been due to increased competition from other players in the market, in particular from other online advertising platforms, namely from Facebook and Amazon. The macro political environment has caused a number of barriers to performance for Alphabet, namely an ongoing focus on perceived under payment of taxes by multinational corporations. Continuing uncertainty over Brexit negotiations are likely to cause uncertain for future performances.

Alphabet has seen steady growth in the rest of the world. There are a number of untapped growth channels that remain to be developed. This area remains a focus for the company as the market is expected to continue to grow for a number of years. Alphabet have announced a number of plans to position themselves to be in a position to dominate the market and position themselves to become market leaders in this region into the future. One of the key reasons for the current success is that the company has focused on placing the technology that customers desire at their fingertips in both a timely manner and have managed to deliver their solutions to customers in a way that is unique to the market, namely via mobile apps.

Reference:

https://abc.xyz/investor/pdf/2016_google_annual_report.pdf