Alibaba Company Strategic Management
Alibaba Company Strategic Management Case Study
Alibaba is a profitable, e-commerce firm that has reworked China’s Internet economy.
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Alibaba strives to achieve competitive advantage within the Internet economic system through varied differentiation methods similar to the use of technology, low-value or no listing fees for some enterprise units.
Alibaba has relied on technology to differentiate itself and create competitive benefit available in the market. Being an Internet-based mostly firm on the planet’s largest Internet market, Alibaba has used expertise to enhance prospects’ buying energy of products from different elements of the world. Therefore, consumers have all kinds of selections because of Alibaba’s technology.
Alibaba has also created a network of dealers. For Alibaba, the expanding network of each sellers and patrons create a big competitive benefit for the company. A giant community of consumers and patrons creates useful alternatives for different parties concerned. This is a type of a ‘collective entrepreneurship’ between Alibaba and suppliers in its network. The platform to market and sell merchandise from different suppliers is important for the company’s relationship with external parties.
Technology has helped Alibaba to locate several suppliers and prospects throughout the world. Today, many small suppliers depend on Alibaba’s platforms to seek out market.
The firm’s market scope
Alibaba pursues a broad market technique by way of its business mannequin. The largest network created by the Internet has ensured that the company can focus on totally different suppliers, clients and diverse market segments.
For instance, Alibaba provides totally different platforms such as Alipay (e-commerce transaction), Alibaba International (international trade neighborhood), Alibaba China (domestic market), Taobao and (shopper-to-shopper) amongst others to meet wants of its customers. This broad strategy creates economies of scope and scale for Alibaba. The company saves costs as a result of it could possibly present a platform for gross sales of different products. In addition, larger volumes of gross sales generate big incomes for the company.
Currently, Alibaba’s strategic method has worked so well. In reality, the corporate’s IPO showed that it was one of the best e-commerce company in China. Alibaba has gained a status of success and development for the previous few years. The income sharing model quite than listing charges allows many suppliers to hitch Alibaba. A giant network of retailers ensures that suppliers and customers benefit from immense site visitors.
Although the strategy has worked, many critics say that it cannot be sustained in the long run because of market and regulation dynamics. First, the model has no listing fees and warehouses, which makes it prone to replication by other companies. Second, it depends on the Chinese government goodwill. Third, the Chinese Internet financial system has turn into extraordinarily aggressive due to rising competition and ease of entry. These factors will erode the corporate’s operating margins.
Current performance problems based mostly on inside evaluation
The present strategy has not driven Alibaba past China despite its global recognition. For occasion, Alibaba is rarely used on the planet’s largest financial system. In addition, it’s difficult to understand Alibaba’s profitability from all its a number of associates. Alibaba should also use know-how to cut back costs of operating its operations.
How the strategy helps or hinders the corporate in addressing the strong forces in its trade:
Currently, China’s Internet financial system has become extremely aggressive. The firm is unable to regulate new entrants due to ease of entry in the e-commerce industry. As a result, its working margins will proceed to decline.
The authorities rules on the Internet, and Alibaba’s reliance on each the government and the Internet might have an effect on its operations. In truth, Alibaba can hardly influence these external factors.
The threats and alternatives relevant to Alibaba’s future
The development of China’s e-commerce industry will definitely have an effect on the corporate’s future. This is a significant risk for Alibaba. In addition, low obstacles for brand new entrants have created opportunities for different e-commerce corporations.
On the other hand, the company additionally has opportunities to discover new markets. Globally, there are new rising markets. At the identical time, Alibaba can explore alternatives within the US Internet economy.
Environmental trends or adjustments that will affect the long run success
Alibaba has low brand recognition outside China. This is a severe weak spot, which could affect the corporate’s future growth methods. Moreover, its e-commerce know-how is very fragmented underneath a number of platforms.
It is not clear how Alibaba will compete in the future as the rate of competitors will increase from new entrants. Moreover, changes in technological environments have uncovered the company to other external threats. The company’s future and vision could possibly be unsustainable if the government goes towards it.
The major strategic issues that are going through the corporate
Viable strategic options for Alibaba
Many viable strategic choices are available for the corporate to implement. Alibaba should focus on the US market share. It can solely do that by buying a powerful firm in the US.
Alibaba should additionally attempt to acquire know-how corporations that may strengthen its IT departments and operations.
The company must additionally enhance its differentiation methods.
Alibaba has remained unknown in other international markets aside from China. As a end result, it’s imperative for the company to focus on international marketing initiatives.
One major disadvantage notable in these strategic options for Alibaba is that a few of them might be costly for the company. These might embrace buying new technology companies, international promotion and advertising in new markets and developing differentiation strategies. These options would permit Alibaba to develop within the world market and maintain its aggressive advantage.
Implementation – Functional Policies and Processes
Alibaba ought to revamp its operations with new IT technologies. The company’s operation would remain redundant if it cannot acquire new technologies and experience to create competitive edge within the e-commerce industry. As beforehand talked about, the company can acquire small know-how firms to support these efforts.
Alibaba lacks global brand recognition. Therefore, the company’s processes ought to concentrate on promotional and advertising activities. A good advertising strategy would expose the corporate to international suppliers and clients. This might be an important step in bettering Alibaba’s profitability and brand recognition.
Accounting and Finance
The department should present and demonstrate how profitable Alibaba is. The company has a number of small associates that contribute to its growth. The department ought to present financial projections to point the way forward for the company and the required resources to fulfill some progress aims. In addition, shareholders should also perceive Alibaba’s dividend policies on long-time period basis.
Research and Development
R&D constitutes a critical a part of the corporate’s future operations. The IT division ought to be extremely progressive when it comes to robust IT platform developments and repair improvement. As new threats emerge from competitors, Alibaba must concentrate on enhancing its current mannequin, providers and enterprise platforms. Otherwise, it won’t survive as a result of threats from the e-commerce trade.
Human Resource Management
Alibaba should introduce a coverage to help acquisition and retention of proficient employees from any elements of the world. In addition, human useful resource administration insurance policies should aim to create aggressive advantage for the company.
For any IT firm with financial assets, acquisition of small emerging technology corporations has turn into the newest follow. Alibaba should develop its acquisition policies. Such strategies should be strategic with the purpose of supporting the present business mannequin and assets required. For occasion, buying different small e-commerce corporations in China would promote Alibaba’s presence.
Implementation – Structure
The firm has many divisions corresponding to B2B, C2C, search engine, advertisement and on-line payment among others within its e-commerce platform. These subsidiaries show how Alibaba’s inner structure is fragmented beneath numerous divisions. The construction ought to create synergy and supply economies of scale and scope for the company to avoid wasting costs and maximize revenue generation.
How the current structure helps the implementation of the beneficial technique
Given these several divisions of Alibaba, it might be troublesome to find a single answer that meets all distinctive wants of various subsidiary firms. Nevertheless, Alibaba can use its present structure to implement value-saving methods and promote all its subsidiaries beneath one model.
How the current construction hinders the implementation of the really helpful strategy
The present construction is extremely fragmented due to several subsidiary corporations. Alibaba might not run efficient promotional campaigns or find a answer that meets all diverse needs of these subsidiaries. In addition, its free itemizing mannequin could not sustain revenue progress as required in a aggressive e-commerce market.
Recommended changes within the company’s structure to facilitate the implementation of the recommended strategy
Alibaba should evaluation its acquisition and world promotional strategies to help highly fragmented subsidiaries. This approach would allow the corporate to leverage on sources, purchase strategic subsidiaries and partnership and achieve world recognition, which would create competitive benefit and drive profitability.
Implementation – Culture
Alibaba’s enterprise strategic culture has focused on reaching huge growth inside the e-commerce business in China. Specifically, it strives to comprehend, exploit alternatives and lead the development in e-commerce opportunities. As a result, the company has grown within the final decade significantly.
How the current tradition helps the implementation of the beneficial technique
Alibaba has continued to determine areas of potential progress in the Chinese market and other areas. The company’s focuses on growth, notably after its greatest IPO. It is believed that Alibaba will proceed to develop its e-commerce enterprise by exploiting new alternatives.
How the present culture hinders the implementation of the beneficial strategy
The firm has not been capable of maximize its income and revenue potential because of its free itemizing method. Alibaba should evaluation this tradition so as to implement a new business mannequin that is aggressive and revenue-oriented as the business becomes highly aggressive.
Changes within the firm’s tradition to facilitate the implementation of the recommended technique
Alibaba should evaluate its revenue technique culture in opposition to operation bills. The company wants a profit-oriented tradition. Alibaba is now a publicly traded company with many shareholders, who will demand for returns from their investments.
Any adjustments to be implemented in Alibaba should be evaluated and their potential impacts identified. These modifications should be carried out over time.
Improving business processes shall be critical for the survival of the corporate. IT solutions ought to be used to improve processes and any difficulties have to be famous and solved.
The firm’s fragmented structures must be made linear to facilitate acquisition and funding in poorly performing areas. Any modifications to the current construction would require massive sources, which may affect operations and returns.
Culture change in the company could be difficult, particularly adopting a extra profit-oriented tradition. For a protracted period, Alibaba has promoted free listing somewhat than a payment-based approach to assist income development.
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