Report Proposing a Strategy for Alibaba towards Becoming a Trillion-Dollar Organization

Executive Summary

Alibaba was formed by 18 people in the year 1999 the team was led by an individual known as Jack ma who as an English teacher from Hangzhou, China.  The founders had the main aim of becoming champions to the small businesses. The company mainly used the internet as a technological as well as an innovative tool that was to provide leverage for the demands of the small enterprises. It expanded them and even ensured that they competed in the domestic and global marketplace. Asides from that, the firm wanted to change the eCommerce marketplace for the small Chinese entrepreneurs, manufacturers, and even exporters. Jack ma, who was among the founders, had known about the story of Alibaba and the forty thieves, which was a story from the Arabic stories that were called One Thousand and One Nights (Weise, 2014, p. n.d). Alibaba’s parent company is Group Holding Company. The form used its subsidiaries to provide products, services, and technologies that supported businesses and vendors to operate internationally and in China. Currently, the company operates in more than 200 nations, and it has been described as the largest business-to-business trading platform around the globe. It has three major segments. The first is the English- language portal whose site is Alibaba.com that connects the sales between the exporters and the importers. The other is the Chinese portal, which is 1688.com, which helps china’s in-country business trade. The final portal is the retail website, which is AliExpress. Com, and it connects the buyers who want to buy small quantities of products at wholesale prices. Thus, this is a strategy map for Alibaba Company.

• Introduction

Alibaba was a company that was formed in the year 1999. The organization has come from far, and it has faced stiff competition from companies like Amazon. The principal founder is known as Jack Ma. Jack Ma, in a recent interview, claimed that e-commerce was becoming a traditional business due to its rapid spread globally. The company’s vision is unconventional. The company uses a business-to-business model that connects merchants from economies such as China, Thailand, China, Pakistan, India, and even the USA with buyers around the globe (Blystone, 2015, p. n.d).  Thus, this is a strategy map for Alibaba Company.

2.0 Organization Background

Alibaba has a mission statement which “To make it easy to do business anywhere.” He above mission statement is inclusive and broad, and it aligns itself with the company’s strategy and ambitions. However, he stated that purely e-commerce businesses would face enormous challenges. Alibaba gives its retailers choices to make, and it transforms the retail industry to be driven by the integration of logistics, data transmission, and even online shopping. Technology is not mentioned in the mission statement, and in most cases, SAS (service cloud offerings) and PAAS (platform as a service) are used on online portals. Alibaba has Amazon as its main competitor. Amazon has a vision of being the most customer-centric firm that builds a place where people find as well as discover anything they may want to buy online. Online explains that it also uses technology in its activities. Alibaba has a vision, which is to last for 102 years, is among the globe’s top 10 internal sites, and for it to be an essential partner for the business people (Team, 2016, p. n.d).  Jack Ma stated that 102 years was chosen for a reason since by adding 2 to 100 years showed people that the firm was severe and 102 years meant that the company would last for three distinct centuries. The company has tried to achieve its mission and vision by putting the customers first and promoting teamwork and collaboration with them for it to be successful and profitable with time.  It also embraces change and promotes flexibility to adapt to the changing business objectives. The company is also trying to make the mission and vision statement a reality by reaching for greatness and building a great relationship with the people for the firm to know what people expect from it and how they can make changes within it.

3.0 Brief Analysis of Strategic Environment

Current Strategy

Alibaba’s business strategy is based on B2B (business-to-business), which is a trading model in which the online platform is used to connect the manufacturers and merchants with global consumers.  The company mainly uses the prowess of the online marketplace in a bid to eliminate the need to warehouse and hold inventory by using the software platform to facilitate the exchange of merchandise between the consumers and sellers. Alibaba’s strategy is accurately bolstered by its use of reliable, innovative, and integrated online platform that is leveraged by the purpose of enabling and advanced technology.  Its business strategy is also based on the supportive search engine. Across China, the company uses affiliation with Baidu, which is the leading search engine. However, Baidu’s spider is denied from directly indexing both the Taobao and Tmall portals. It ensures that the finals search results are not shown on the websites. It means that the consumers have to perform a direct search on both Taobao and Tmall and this adverts from the enlisted merchants on Alibaba, and it pops up alongside the search results.

The graph below shows Alibaba’s Strategy Map.

Additionally, the firm has also come up with an extensive ecosystem that is made up of online companies. This strategy helps it by complementing its global operations. Alipay is an online third-party payment plant that is commonly used by Alibaba to escrow its transactions and even provide payments (Blystone, 2015, p. n.d). On the other hand, Alimama is a marketing platform that gives merchants and Alibaba marketing and advertising services. The company also uses China Smart Logistics, which could be described as an online proprietary platform (Freese, 2013, p.467). The platform gives sellers and buyers real-time access to data. Aliyun is also crucial since it develops data management, and it also provides Alibaba with cloud computing platforms that support e-commerce portals online trade and transaction numbers in Alibaba.

SWOT Analysis

Alibaba has a global leader in terms due to its strengths that entail its entity in the scale of operations.  It has become a market leader even in the most populous countries like China, and it has made it possible for it to come up with a growth trajectory through the market expectations that are domestically extended. The company has also enjoyed the most significant market share in China, which is at 58%, with its closest rival having a market share of 22%.  The firm also has pride in its visionary leadership, which is led by Jack Ma, who is its iconic image, and it has continued to improve its brand popularity (Glowik, 2017, p.25). The company’s strategy is also based on building a successful relationship with its partners who are the merchants, consumers, and the third- party. It aims at doing this by creating an enabling environment that provides people with scalable platforms, real-time data, cloud storage, and even financial scheme (Bhasin, 2017, p. n.d).  Nevertheless, Alibaba has also taken advantage of the international knowledge and experience that is used in leveraging against costs and risks of losing the market presence. It ensures this is possible by upholding an innovative culture that is based on the development of new software platforms and even third party partnering.

Furthermore, the company also has its weakness, which lies in the high discounts that it offers, further restraining the opportunity of the sellers to sell their products profitably. The firm has had a considerable number of registered sellers who have continued to increase internal competition, and this has made some of the reputable brands to pull out of the platform (Bhasin, 2016, p. n.d). The company has also been ineffective in handling counterfeit products, and this has ruined its venture causing unnecessary interference from the Chinese government. On other occasions, the buyers complain of late delivery of ordered merchants citing logistical issues on the part of the sellers (Glowik, 2017, 32).  However, with the increasing demand for e-commerce portals, Alibaba has proven to be experienced, and this has given it a better opportunity to enhance the market share and even get in new economies more competitively. For instance, Alibaba is currently enhancing its reputation, increasing its market share, and even optimizing user- experience as ways of tapping global opportunities in the top- tier cities (Wang, 2016, p.n.d). The company can also replicate its aggregate based on other markets, and this helps in lowering its operational costs. It uses the growing internet penetration to tap other global markets.

Moreover, the main threat that the company faces is based on the rising competition from other e-commerce rivals such as Amazon and eBay. Local competitors such as Tencent, JD.Com, and Taobao are also its rivals (Glowik, 2017, p. 43). Even though Alibaba has dominated the domestic market, the company’s profits have been declining due to reputational issues. Future e-commerce technology is disruptive to the company’s operations.  Alibaba’s growth and revenues would be affected by the possible global economic turmoil.

4.0 Critical Analysis of the Strategic Organization for the Trillion Dollar Target

Below is a diagram of Alibaba’s VRIO analysis.

The first component of the VRIO analysis is value. It mainly focuses on where Alibaba is capable of giving adequate resources to the customers. If the firm is not at its competitive advantage level, there is a need for it to reassess its capabilities and resources in a bid to uncover issues related to its value. Alibaba has established its value, and it has also come up with different strategies to be on a  competitive advantage level with other companies.

The other component of the analysis is a rarity. It finds out whether an organization controls its limited capabilities and resources.  Alibaba does not follow rarity.  If there is a high demand for a specific item, it does not find suppliers.  It means that the firm has value, but it does not have issues related to rarity, and that is why it falls under the level of competitive parity. It means that all resources are available even though they are common, and this makes competition to become even harder across the diverse marketing platforms (Knott, 2015, p. 1813). On the other hand, if the value and rarity have also identified, the next move is imitability.

Imitability brings about the question of whether it is expensive to duplicate all the resources and capabilities within the organization (Chatzoglou et al., 2018, p.66). It is hard for Alibaba to do this, and it has temporary competitive advantage. If an organization has both rarity and value, it gets a temporary advantage, and this is the case in Alibaba. The company continues to put massive efforts into staying ahead of its competitors. If Alibaba can offer something rare and valuable, and but becomes hard to imitate. Thus, it is vital to put more focus on the organization.

The organization is the last part of the VRIO analysis. It focuses on whether Alibaba can implement the advanced forms of management structures, processes, and systems. When the correct implementation of internal organization and support is absent, it is hard to realize the importance of rare and value together with the cost of imitating resources. Correspondingly,   the organization will have the ability to encounter issues that are related to its competitive advantage, and this makes it be focused on. It looks at the different methods of making the organization successful. All four parts of the VRIO framework help the company to achieve its ultimate goal, and even it gets a sustained competitive advantage.

5.0 Conclusion and Recommendations

In summary, Alibaba is an online company that has gained popularity over the years. Its main competitors are Amazon and Tencent. Eighteen members founded the organization, and they had a vision of seeing the company last for 102 years. It could be assessed using the VRIO framework, which is value, rarity, imitability, and organization. The organization’s mission is to ensure that business everywhere is made easy. It has a scale of operations, and its domination in the Chinese market has made it even stronger. However, competition from other companies like Amazon have been part of its weakness.

Different recommendations can be provided to Alibaba.  The organization has to ensure that it succeeds within the competitive environment. Alibaba can grow better since it uses the B2B e-commerce segment. To begin with, the organization can expand B2B marketing operations. It means that Alibaba can do this by using its enablers and even its ecosystem. It can have more control over Alimama, Alipay China, and smart logistics. Its control could be crucial in improving efficiency. When it has more control over these enablers, it will deliver goods quickly, get higher revenues, and it will even enhance growth.

The company can also form strategic alliances. The company can do this by expanding its e-commerce retailing segments through acquiring or merging with its rivals. Nonetheless, it could also review the strategic growth plans by forming alliances with JD.com and Taobao. It will ensure the company has a more significant market share to promote the consolidation of domestic growth.

Alibaba can also increase its market growth. It improves the market presence to yield rapid growth and even improve its competitive advantage. It has to follow a market development approach by deliberately identifying as well as developing the existing or new target market for the existing Alibaba products like Alimama, Alipay, and Aliyun. It can also begin targeting organizations that provide cloud computing services, has excellent internet infrastructure, and even promotes online advertising. The company can start targeting organizations as new segments in need of cloud computing services, online advertising, and Internet infrastructure.

6.0 References

Bhasin, H. (2016). SWOT analysis of Alibaba. Pp. n.d. Retrieved from https://www.marketing91.com/swot-analysis-alibaba/

Bhasin, H. (2017). Marketing strategy of Alibaba – Alibaba marketing strategy. Pp. n.d. Retrieved from https://www.marketing91.com/marketing-strategy-alibaba/

Blystone, D. (2015). Understanding Alibaba’s business model.  Pp. n.d. Retrieved from https://www.investopedia.com/articles/investing/062315/understanding-alibabas-business-model.asp

Chatzoglou, P., Chatzoudes, D., Sarigiannidis, L., & Theriou, G. (2018). The role of firm-specific factors in the strategy-performance relationship: Revisiting the resource-based view of the firm and the VRIO framework. Management Research Review, 41(1), 46-73. DOI: 10.1108/MRR-10-2016-0243

Freese, I. (2013). The Evolution of strategic management. Hoboken, NJ: InGeniusResults.  Pp. 468- 470. Retrieved from: https://books.google.co.ke/books?id=TFivAgAAQBAJ&pg=PR1&lpg=PR1&dq=Freese,+I.+(2013).+The+Evolution+of+strategic+management.&source=bl&ots=Y-JLKrMXc7&sig=ACfU3U2tQ__WdayDX3gvqzJgneC22B7XnA&hl=en&sa=X&ved=2ahUKEwju3_3rxbLnAhUKi1wKHXwHBBwQ6AEwA3oECBQQAQ#v=onepage&q=Freese%2C%20I.%20(2013).%20The%20Evolution%20of%20strategic%20management.&f=false

Glowik, M. (2017). Global strategy in the service industries: Dynamics, analysis, growth. New York, NY: Taylor & Francis.  Pp. 24- 46. Retrieved from: https://www.amazon.com/Global-Strategy-Service-Industries-Dynamics/dp/1138927937#reader_B072BCJKX8

Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management Decision, 53(8), 1806-1822. DOI: 10.1108/MD-08-2014-0525

Team, T. (2016, October 13). A Closer Look At Alibaba’s Long Term Strategy. Pp. n.d. Retrieved from: https://www.forbes.com/sites/greatspeculations/2016/10/13/a-closer-look-at-alibabas-long-term-strategy/#388c5842bc0e

Weise, E. (2014, May 7). How did Alibaba get its name? Pp. n.d Retrieved November 3, 2017, from https://www.usatoday.com/story/money/2014/05/07/alibaba-name/8805805/

Wang, S. (2016). Alibaba CEO outlines his 2016 expansion strategy. Pp. n.d. Retrieved from http://www.alizila.com/alibaba-ceo-outlines-his-2016-expansion-strategy/