The objective of this case is to evaluate Alibaba's strategic choices and its direction of the use of organizational...
Description
Alibaba.com
INTRODUCTION
Having achieved its objective of becoming one of the three largest internet companies in the world and having executed a successful IPO, Alibaba.com Corporations strategic calculations will now determine whether the compan! proceeds on a path toward global domination in its industr! or becomes a prime ta"eover candidate in the d!namic e# commerce mar"etplace. Alibaba.coms recent IPO secured the capital and profile necessar! to position the compan! globall!, and recent management actions substantiate the firms intent to pursue a global growth strateg!. $he objective of this case anal!sis is to evaluate Alibaba.coms Alibaba.coms strategic choices and to direct the use of organi%ational resources to ensure success. &uring the anal!sis, it is critical to address the following strategic issues.
'hat are the implications of the compan!s new ownership structure and shareholder expectations( How important is a rapidl! expanding domestic mar"et in Alibaba.coms Alibaba.coms strategic assessment( 'hat are the merits of proposed changes to Alibaba.coms pricing strateg!( How can the compan! position itself competitivel! against )*) giant, +lobal ources(
ANALYSIS General Environment
Alibaba.coms general environment is primaril! defined b! the regional scope of Chinese mar"ets, which consist of heav! bu!er b u!er and supplier fragmentation and inefficient distribution and communication communication networ"s. China is an extremel! populous nation, and the booming domestic econom! is driven b! an explosion in -s, Alibaba.coms target mar"et. Anticipated growth in in -s coupled with continued government promotion of rd / part! e#commerce platforms provide a fertile domestic environment for the compan!s operations. However, foreign foreign exchange controls and inade0uate credit s!stems s!stems do interfere with the trade process. Industr Environment
$he internet and e#commerce are emergent emergent phenomena in China. Although the! are onl! surpassed b! the number nu mber of 1.. users, Chinas 23* million internet users represent just 2*4 of the countr!s population. $he /4 annual increase in internet internet penetration does not ade0uatel! reflect the rapid pace of technological change occurring in the industr!. industr!. Online purchases are experiencing double#digit growth each 0uarter. 'ith a current e#commerce utili%ation rate of onl! *54 in China and government
Alibab.com # 2
Alibaba.com encouragement for -s to promote their businesses with /rd part! online services, the potential for )*) e#trade to grow dramaticall! in the upcoming !ears is great. ssentiall! a )*) e#commerce compan!, Alibaba.com is faced with limited domestic competition as barriers to entr! are high. $he mar"et is composed of small# and medium#scale regional and local enterprises. Communication channels for promotion of products and services are limited. Heav! fragmentation reduces the power of individual suppliers and customers. $he threat of substitutes is industr!#specific, and competition with other mar"eting service providers is indirect. However, such a growth mar"et with a low level of competitive intensit! is li"el! to attract competitors. A case in point, the direction ta"en b! +lobal ources immediatel! creates competitive ris"s for Alibab.com. And maintaining dominance in its home mar"et is critical to the success of the compan!s global growth strateg!. Com!etitor Environment
Alibaba.coms triumph over e)a!s ach6et is a real domestic success stor!. 6onetheless, international competitor +lobal ources poses a direct challenge to the compan!s domestic position and international opportunities with its portfolio of )*) services. +lobal ources online revenues are increasing dramaticall!, despite the fact that the compan! is media#centric, originall! founded on the exchange of information rather than trade transactions. As the competitor grows its online revenues, it can be expected to expand into Alibaba.coms transaction arena unless somehow deterred. A direct comparison between the two companies can provide insight into the extent and nature of Alibaba.coms rivalr! with +lobal ources. $he following table has been constructed based on data from the case. Alibaba.com Online -ar"etplaces Products89istings Annual ales 9eads torefronts Auxiliar! Products8ervices
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