Running Head: ALIBABA.COM
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Alibaba.com:
A Repository of Businesses Conducting Business Globally
Taryn Bernadette Johnson
Boston University
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TABLE OF CONTENTS
INTRODUCTION………………………………………………………………………… 3
The Business: Alibaba Group ……………………………………………………. 3
Mission and Vision statements …………………………………………………… 4
The Customer, Customer Valuations in the Market and Value Proposition……… 5
SWOT ANALYSIS …….………………………………………………………………… 5
Strength
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Weaknesses ……………………………………………………………………… 8
Opportunities…………………………………………………………………….... 9
Threats…………………………………………………………………………… 10
STRATEGIC MANAGEMENT FACTORS …...……………………………….……… 10
IMPLEMENTING AN E-COMMERCE BUSINESS MODEL ……………………… 11
CONCLUSION …….………....……………………………………………………….…13
REFERENCES …………………………………………………………………………. 14
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Alibaba.com: A Repository of Businesses Conducting Business Globally
INTRODUCTION
The Business: Alibaba Group
In the world today, the internet is paramount to the success and visibility of a business in
the global markets. The technological computing use of the internet revolutionizes and continues
to metamorphose from traditional ways, to where small businesses must stay current to remain
competitive. Alibaba Group, offers a model in conjunction with the internet to accomplish this.
Alibaba Group or Alibaba started in 1999 as the brainchild of Jack Ma with eighteen people in
his apartment from Hangzhou, China (Wong, 2015). Alibaba.com is the original business and
one of many business units and subsidiaries of Alibaba Group forming an open e-commerce
Ecosystem (see figure 1). It is the leading online marketplace for business-to-business (B2B) ecommerce platform for the global wholesale trade, for small businesses in China (Roy, 2014).
The revenue stream from Alibaba.com comes from subscription and transaction fees from
sellers, as well as from ads placed by merchants on the site (Zucchi, 2014). A few of the
subsidiaries and business units, that generate revenue are Taobao.com, a consumer-to-consumer
(C2C) business unit, TMall.com, a business-to-consumer business unit (B2C), Alipay.com online
payment platform and 1688.com, a B2B which is part of Alibaba.com (Roy, 2014).
Figure 1. (Wong, 2015)
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Mission and Vision Statements
The mission of Alibaba.com is to make it easy to do business anywhere (Wong, 2014).
In a 2014 article Kim, notes what Jack Ma asked of a waitress in a coffee shop, “What do you
know about Alibaba”? According to the same 2014 article, Kim notes that the waitress replied,
“Open Sesame”? This saying comes from the story of Ali Baba and the Forty Thieves from the
classic tales known as Arabian Nights. As Jack continued to ask many people from various
nations (i.e. India, Germany, Japan and China) on the streets the same question it was concluded
that Alibaba was known globally (Kim, 2014). This is an interesting name and concept to adopt
for a company. Ali Baba a poor woodcutter happens to find a cave full of hidden stolen treasures
he steals over time, making him wealthy. Alibaba’s B2B business e-commerce model is helping
everyday people aspire to supporting themselves legally and rise to a new found wealth not the
way Ali Baba acquired his wealth as the story revealed.
The vision of Alibaba.com is to solve the challenges of small business in the areas of
procurement, sales, marketing, management and financing through information technology
(Wong, 2014). Alibaba is a repository, utilizing the internet, as a B2B type of e-commerce,
where suppliers showcase their products to businesses and businesses showcase to consumers
their products while residing anywhere in the world (Wong, 2014). Alibaba has other ecommerce business models such as B2C (TMall) and C2C (Tabago) according to Laudon and
Traver (2015) are structured after the brick-and-mortar stores, but are online retail or e-tailers
known today as bricks-and-clicks (p.74). As of today, there are over 240 countries and regions
with 2.8 million suppliers and 36.7 million registered users on Alibaba (AlibabaGroup.com,
2015). Alibaba’s vision encompasses a true market creator environment where SMEs who have
buyers and sellers meeting in a virtual marketplace. Alibaba’s long- term vision is to exist for at
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least 102 years while maintaining its’ core of six values known as Our Values in the business
units and subsidiaries are, Integrity, Customers First, Embrace Change, Teamwork, Passion and
Commitment (Culture and Values Alibabagroup.com, 2015).
Customers, Customers Value in the Marketplace and Value proposition of the Company
The customers of Alibaba.com are entrepreneurs displaying their merchandise using the
B2B model which is a marketplace where businesses can sell to other businesses wholesale
products (Roy, 2014). The customer value in the market comes from hundreds of products such
as electronics, agriculture, metallurgy, rubber, automobiles, construction and real estate where
Alibaba utilizes according to Laudon & Traver (2015) an e-distributor business model providing
an economical way to target sales to other businesses (p.72). The value proposition of the
company to the customers, is the voluminous number of wholesale products and services, such as
what was stated earlier in products to financial services, making it truly a one-stop shopping
online experience, available to the customers from the comforts of their home, office and now
mobile devices. A practical and useful feature for the customer is to have the option to search
and shop in their own language while on Alibaba. Alibaba offers a marketplace, search engine,
and a bank all rolled up into a one-stop shopping, customer experience (Wong, 2014). With a
computer and the internet, the customer needs are fulfilled while conducting business faster and
cheaper with cost reductions in product search, while obtaining online quotes and the
management of product delivery seven by twenty-four hours a day, 365 days a year.
SWOT ANALYSIS
According to Laudon & Traver (2015), a powerful method for strategizing a business and
understanding where the focus should be on the efforts of strategic planning, a company can
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describe its’ strengths, weaknesses, threats, and opportunities, also known as SWOT is valuable
(p.191). The following SWOT analysis, of Alibaba.com describes the internal resources and
external environment that depicts the strengths and weaknesses of the company’s e-commerce
business model to best show how Alibaba would continue if the competition becomes stronger,
or if there are emerging trends that would deter the opportunities and interfere with the long-term
vision statement of the company to exist for at least 102 years.
Strengths
Global reach
Ubiquity
Universal standards
Information density
Customization
Social Technology
Revival of Entrepreneurial Spirit
Opportunities
Innovation and Technology
New affiliations
Redefining e-commerce
Market Growth
Weaknesses
Government: China
No true brand-recognition Globally
Threats
Competitors
Internet: Security in cyberspace
Governments: Foreign
Strengths:
Global reach: As stated in the introduction of this case analysis, Alibaba.com is globally
an international business presence in over 190 plus countries and regions, with several
millions of suppliers and registered users (About Alibaba, 2015). The following pie chart
(Figure 2.) helps visualize how Alibaba.com has global presence in the marketplace.
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Figure 2. (Wong, 2014)
Ubiquity: The antiquity of traditional brick-and-mortar marketplaces comes of age with
Alibaba.com. Alibaba.com works in conjunction with Alibaba Group.com which now has
Aliyung.com (cloud computing services) and Laiwang (mobile chat app) (Roy, 2014). The
internet is the tool Alibaba.com ascribes to making it ubiquitous in the e-commerce arena.
Universal standards: As a true enabler for any user of the Internet, Alibaba allows small
businesses and consumers, to experience network externalities, since the technical standards
for conducting e-commerce is universal, as defined by Laudon & Traver (2015) meaning
they are shared by nations globally(p.13). Everyone enters into a win-win situation because
the market entry costs of products for small businesses are lower, and search costs for
consumers to find the products are significantly reduced, thanks to the Internet.
Information density: Alibaba.com has a service known as AlisourcePro that allows
businesses to get quotes, compare quotes by supplying information to the supplier about the
products the business is looking for (Roy, 2014). The suppler will be matched to the
business, based upon the information supplied on the portal. Information is dispersed in a
timely and more useful manner.
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Customization: On the website of Alibaba.com, there is a product detail tab with concise yet
targeted particulars of the product right down to the targeted audience. For example, the
gender and age of the target item is listed along with other group customizations
(Alibaba.com, 2015).
Social Technology: The creation of a personalized account on Alibaba.com is free. On the
account, there is the option of creating a favorites list, under the categories to buy and sell
new items and quotations plus manage orders or manage products. This allows users to
program their own content consumptions and give valuable feedback to Alibaba, about their
shopping experience (Alibaba.com, 2015).
Revival of Entrepreneurial Spirit: A major advantage of Alibaba.com is to enable and
empower the small to medium businesses (SMEs) within China and now in other nations, to
experience minimum barriers to entry, e-distributing and exchanges on the global markets.
According to Laudon and Traver (2015) for a small business to advertise, manage the
exchange of information, check out suppliers, collect prices all in one location, is a huge
benefit (p. 85). Because of the voluminous small to medium business, the economy of China
remained strong during the economic crisis, while other parts of the world economy did not
(Liquori, 2011). Today, Alibaba continues to empower and revive the entrepreneurial spirit
in the lives of ordinary people in other nations, as the massive number of buyers and sellers
contributes to the escalation of market liquidity or business transactions.
Weaknesses:
Government: China: Alibaba maintains a colossal database with data on Chinese citizens,
that is in some way or fashion, an interest of the Communist Party (The Economist, 2015).
As Alibaba continues to expand to other nations, this creates a topic of concern to those
governments in the global economy, wanting to exercise caution with respect to their citizens
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sharing personal information, such as credit cards and bank accounts with a company from a
communist nation. It is a well- known fact that China owns and controls the internet
infrastructure that Alibaba depends wholly upon. At any time, China could change the status
quo of the e-commerce Ecosystems of Alibaba for the benefit of the Communist Party.
According, to a 2014 article by Sundaram, the lack of transparent disclosure, due to the
Chinese secrecy laws, may prohibit audits by a foreign country wanting to see for example,
accounting books of a Chinese based company, such as Alibaba. Once again, the practices
and regulations of a business based in Communist China raises the question as to how much
freedom foreign B2B or C2C and B2C businesses and new entrepreneurs operating an ecommerce business on Alibaba will truly have.
No true brand recognition globally: Unlike E-bay or Amazon.com, Alibaba is not a wellknown company or its’ brand outside of China. Although the company became an IPO in
late 2014, and made its début on the New York Stock Exchange, it caught the attention of
several US investors to where Alibaba raised billions of dollars in one day. Time will
determine how well the company will do in North America, Europe and other regions in
years to come.
Opportunities:
Innovation and Technology: Alibaba.com has proven that the use of internet according to
Shiying & Avery (2009), in China, has more citizens in the world using Internet technology,
which has develop a sophisticated presence surpassing users in Western nations (p.ix). With
the creative use of innovation and technology, so noted by Shiying & Avery (2009),
Alibaba.com is a catalyst that has ushered the Chinese people into the digital age, further
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creating opportunities for developing nations to have a portal to showcase their goods and
services globally made by their citizens (p. x).
New affiliations: As noted earlier, Alibaba Group is the e-commerce Ecosystem which has
several business units and subsidiaries under its umbrella and continues to create more
services and business as it plans for future growth. (i.e. mobile services) T-mall and Taobao
on the C2C marketplace have grown exponentially and has become two of the most popular
business units with more business prospects under consideration for future growth (Alibaba
group, 2014).
Redefining e-commerce: With the outbreak of SARS in China, according to Shiying &
Avery (2009), e-commerce was thought of in a different way, in that business continued as
usual, without people infecting others (p.189). E-commerce became recognized as a good
way to do business without buyers having to leave home and physically shop among the
masses of people. Alibaba.com played a significant role in showing that when communicable
diseases threaten populations, the masses can still conduct business online, safely, using ecommerce as a tool.
Market Growth: Alibaba is not afraid of change. With the recent acquiring of Yahoo China,
Alibaba sees that there is an opportunity to grow and to obtain a greater market share as it
combines its’ resources with a well-known brand Yahoo (Liquiri, 2011). Alibaba is very
aware that with the merging of network search capabilities, e-commerce in the future will
grow exponentially.
Threats:
Competition exists from a well-known, worldwide brand such as EBay. EBay has a loyal
customer base in the United States and has earned the privilege of having a gigantic global
presence in the world (Liquor, 2011). One of Alibaba’s biggest rivals is eBay EachNet.
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Alipay, the online payment tool used by Alibaba.com and the other business units, continues
to make strides and improvements. However, eBay EachNet has announced, according to
Liquor (2011), plans to invest more than 100 million Yuan in the implementation of their
own online payment tool. EBay, a proven successful e-commerce business, and a wellknown brand, was first to market, has a loyal customer base and continues to rule globally
Internet: Security in cyberspace: The threat of security in cyberspace is always a concern.
Hackers pose an imminent threat to online business who utilizes the internet for e-commerce
and financial transactions. The way hackers manipulate applications with sophisticated
programs to penetrate firewalls will always be a concern in the e-commerce arena. Such
threats as DoS (denial-of-service) can happen from hackers who can stop the access of
authorized users , for example on Alibaba.com, as well as, gain access to sensitive data such
as price lists, customer profiles and valuable intellectual property (FindLaw Reuters, 2015).
Although this has not been the case so far, but the potential exists.
Government: Foreign: Alibaba is still rather new, to where some foreign governments may
want to tighten or even deny Alibaba’s access into their country. Some companies in China
have been viewed as suspicious. This is due to the fact that the government is run by the
Communist Party and investment in a company with the home base in China raises concerns
about the government and the power it could exercise to take full control of Alibaba.
STRATEGIC MANAGEMENT FACTORS
Recently, Alibaba has had a cloud hovering over the authenticity of at least 60% of the
goods sold online, on its’ websites according to a 2015 article by Zheyu and Dongxu. All it
takes is a claim from one customer to share to the millions of online customers that there are fake
items, and Alibaba’s image is tarnished globally. This is what happened. This problem of
authenticity leads one to ask the question, how did Alibaba allow this problem to infiltrate the
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company’s e-commerce sites? Furthermore, the greater question is what is the Chinese
government doing to regulate the e-commerce B2B or C2C companies that are affiliated with
Alibaba? The 2015 article, by Zheyu and Dongxu reports a meeting called between Jack Ma, the
chairman of Alibaba Group, and Zhang Mao, the director of China’s State Administration for
Industry and Commerce (SAIC) to address the problem of counterfeit goods on its’ websites.
The news of this became worst for Alibaba especially when five law firms from the United
States, according to the 2015 article by Zheyu and Dongxu, contacted the investors to suggest a
class-action law suit, for a possible breach of the US Securities and Exchange Act. Unless
Alibaba and the senior management team moves to correct the problem, one of the six value
statements “Integrity, “ as listed on Alibabagroup.com (2015), “holding their people to the
highest standards of honesty and to deliver on its’ commitment”, has the potential of being
eradicated from the company’s core value statement.
IMPLEMENTING AN E-COMMERCE BUSINESS MODEL
The role of implementing an e-commerce business model to resolve a problem of the
company to where the business strategy according to Laudon & Traver (2015) a set of plans for
achieving superior long-term returns on capital investment, can strengthen a business (p.92-93).
Alibaba, an established e-commerce business, has taken further steps to implement sustaining
technologies, as defined by Laudon & Traver (2015), enabling a company to improve their
products and services with technology (p.96). On the website there are links to the trade services,
where business are verified with a display status on the Trade Assurance Services portal, that
aims to protect the buyers’ payment once goods have been received (Trading Guide
Alibaba.com, 2015). A credit line known as e-credit is financing available only in the United
States and United Kingdom for buyer as well as, an option from third party inspection services,
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for a fee, to inspect anything bought on Alibaba’s websites, before shipment to buyers (Trading
Guide Alibaba.com, 2015). This is one way Alibaba is addressing the problem of counterfeit
goods on their websites. In addition to the trade assurance services, Alibaba continues to use
sustaining technologies to showcase the process, of educating the buyers ‘and the seller’s, buy
having online guides (Help Center Alibaba.com, 2015). Alibaba should take an extra step to have
a link on all its websites, listing the names of businesses, found in violation of not passing the
Business Identity process. Finally, on Alibaba.com, there is a link for businesses, or consumers
to submit a complaint, as well as, to supply feedback showing how well Alibaba is doing.
(Alibaba.com, 2015). As of today, the steps orchestrated by Alibaba, to move forward with its’
many business e-commerce models such as B2B and B2C, and using sustaining technologies are
not affecting its’ ability to earn revenue or deter the growth of new services and future business
ventures. The stormy cloud of counterfeit goods is slowly fading away from Alibaba and is
beginning to evaporate into the atmosphere.
CONCLUSION
Since the dawn of the information superhighway, also known as the internet, businesses
have immediate access to software applications and business tools online with the click of a
button, seven by twenty-four hours a week, 365 days a year. Alibaba is the dominating online
retailing company in China, and now the largest e-commerce market in the world, according to
(Economist in China, 2013). With the multiple e-commerce business models such as B2B, C2C
and B2C, it enables over 2 million suppliers, merchants and consumers to connect with one
another not only in China, but on the world state. The charisma of one man, Jack Ma, an English
teacher by training, along with eighteen comrades, revolutionized and catapulted the Chinese
entrepreneur spirit, as well as, taking the Chinese economy to a new level with online shopping,
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by creating an enormous Ecosystem between Alibaba and its’ 25 business units. This has made
the business ubiquitous and in alignment with the mission statement, which aims to create ease in
anyone doing business anywhere. Ali Baba and the den of thieves’, well- known saying, “open
sesame”, for passage into the den of hidden treasures, had taken on a new meaning with Alibaba.
Metaphorically, Alibaba.com has “open sesame”, to the treasures in the global economy, by
leveling the playing field for the ordinary SMEs who are entrepreneurs aspiring to do business
globally (Kim, 2014). The core values of Alibaba.com (2015), aims to put customers first,
adopts, integrity, passion, commitment, and teamwork in the way the business is managed and
operated. The last core value of Alibaba, embraces change, so critical in a changing global
market that businesses drives them to stay on the cutting edge of technology for corporate
sustainability. This is prevalent as to how Alibaba uses sustaining technology to conduct
business, such as online payment, merchant verification and e-procurement in many languages
just to name a few, via the internet. This case analysis has shown that the SWOT analysis of
Alibaba starting with the strengths in ubiquity, the use of universal standards, and the revival of
the entrepreneurial spirit, surpasses the weakness and threats such as governments, brand
recognition and competitors. In fact, Alibaba welcomes the threats in that this propels them into
envisioning them as opportunities. When the outbreak of SARS hit the East, Alibaba redefined
the significance doing business via e-commerce.
It is the recommendation from this case analysis that Alibaba continues down the path to
create new business venues under the current Ecosystem using multiple e-commerce business
models, and building a presence using a systematic approach (understanding of business,
technology and social issues that is working for them. According to the 2013 article in The
Economist, Alibaba was valued between $55 billion and $ 120 billion before its’ IPO début in
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2014, meaning that business and revenue growth is well on the horizon. However, as a word of
caution, Alibaba should plan in stages growth, because rapid growth too soon without adequate
resources such as management and web site optimization (static and dynamic) while aiming for
greater globalization, could deter business in new and upcoming markets, such as in recent cases
with counterfeit products on some of the Alibaba’s sites. Alibaba, just sixteen years young, has
eighty-six years to strategically plan and execute a colossal plan to maintain its’ vision to remain
in business for 102 years.
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