As discussed in this chapter, resources that are valuable, rare, and costly to imitate can help create a competitive advantage. In many cases, firms try to "reverse-engineer" a particular feature from a competitor's product for their own uses. It is common, for example, for smartphone manufacturers to buy the newest phones of their competitors and take them apart to see what new components/ features the new models have implemented.

As the competition between Google (www. google.com) and Baidu (www.ir.baidu.com) over Internet searches in China makes clear, however, this sort of corporate behavior does not stop with hardware products. With hundreds of millions of users and growing fast, China is considered to be one of the most lucrative online markets worldwide. Baidu, a Chinese web services company, has allegedly adapted many of the search tools that Google uses. Baidu, however, modifies its searches inside China (its major market) to accommodate government guidelines. In protest over these same guidelines, in 2010 Google left the Chinese market and is running its Chinese search operations from Hong Kong. Google no longer censors its online searches as requested by the Chinese government. Baidu has some78 percent market share in online search in China, and Google less than 15 percent.

It is legal to take apart publicly available products and services and try to replicate them and even develop work-arounds for relevant patents. But is it ethical? If a key capability protected by patents or trademarks in your firm is being reverseengineered by the competition, what are your options for a response? Also, how do you evaluate Google's decision to move its servers to Hong Kong? For Google's values, see www.google .com/about/company/philosophy/.