Case Analysis Alibaba Alibaba started his business-to-business

January 30, 2019 Critical Thinking

Case Analysis
Alibaba
Alibaba started his business-to-business (B2B) in 1999. Connecting Chinese manufacturers
with global buyers. Initially making way for to do business worldwide. Since the group
intent to become the largest e-commerce company globally. On September 18, 2014, at an
initial public offering (IPO) price of USD 68 per share, China’s Alibaba Group raised an
whopping USD 21.8 billion on the New York Stock Exchange (NYSE), making it the largest
IPO in U.S. history.
This was the beginning, that put Alibaba’s valuation more than Amazon and eBay’s valuation
combined. The Alibaba group claimed the title for the world’s largest IPO in history. For the
fiscal year ended March 31, 2017, Alibaba had an GMV of (USD 43 trillion) and 454 million
active buyers on its marketplace.
In this case analysis we give you an overview of his business strategy and how did he
managed using its platform and big data technology which enabled his small business to
compete more effectively.
Vision: He was born in China and wanted to himself worldwide : Jack Ma has an long vision
for his company. How he wants his company to become an truly global company, by
providing solutions to real world problem and using e-commerce to help globalization by
making trade more inclusive and transparent.
?To last 102 years
?To be one of the world’s top 10 internet site
?To be essential partner for all business people
The group’s vision is to build long term plan and drive synergies for its global business
through organic growth and strategic acquisition. The group’s operations have been anchored
through e-commerce. The Alibaba ecosystem expanded into areas such as digital
entertainment, innovative initiatives, local services and infrastructure through investment and
organic growth.
The Alibaba group focused on following business models
?B 2 B
?B 2 C
?C 2 C
The business model of Alibaba is very simple. His main aim was to help buyers to meet
sellers. More than that, He provides his service business?to?business (B2B) platform where
sellers could meet buyers globally transparently. The company normally offers two platforms,
one for local Chinese market, and another for the international customers.

Customers are both the sellers and the buyers, who are able to post “storefronts” to advertise
their products or needs. Alibaba offers several services. By June of 2007, Alibaba had over
19.8 million registered users, with 16.6 within its Chinese market place. 219,098 of these
19.8 users where paying members.
the workflow includes:
1. Suppliers and buyers will provide their listings, matching the inputs from the company’s
strategic perspective.

2. Listings are searched/matched, contacts are made, and information is exchanged between
the suppliers and buyers. This will include product specifications and capabilities. This
corresponds to the information manipulation the company’s servers and software use to
generate the value for the customers.
3. Customers then will negotiate with each other, which is the final agreement of the
workflow.
4. All the communications between suppliers and buyers is enabled through tools within
Alibaba’s software.
The O2O features a longer value chain that extends from online to offline scenario. O2O
plays an important role in driving foot traffic for retailers. Alibaba is the most successful
player in China’s O2O market as it is closest to completing an O2O ecosystem.
The biggest challenger for Alibaba and group is the Tencent Corporation. The two
found themselves in heated competition in the O2O arena.
The best way to understand Alibaba is a, he is a blend of Amazon, eBay and PayPal and
Google all together, all of them with some Chinese characteristics.

Like Amazon, which buys goods from suppliers and sells them to customers, Alibaba is like
a middleman, who connects buyers and sellers and facilitates transactions between them.
This not an auction company, the middleman role is similar to the one played by other
company like eBay. Taobao, Alibaba's biggest website, is like a biggest Chinese bazaar with
about 760 million product listings from 7 million sellers.
Businessmen don't pay to sell products on Taobao- and that fee-free model is a big part of its
appeal in China. Rather, they pay Alibaba for their marketing and other services to allow
them to stand out from the others. Something like Google, the ads from merchants appear
with Taobao's product-search results.
With the global economic slowdown, profits at Alibaba group have also declined. Chinese
exports, as well as from the rest of the world, have declined as global demand has fallen
drastically. While some companies would see as this is an environment which causing a need
for reduction, Jack Ma sees it as an opportunity for expansion and started hiring more and
more employees.

Jack Ma feels that as traveling became expensive throughout the world will forget trade
shows and will prefer to do more online interactions. He has also begun to expand in the
opposite direction by creating export within the Chinese domestic market, a system which
allows non-Chinese firms to establish Chinese language storefronts to export their products
within the Chinese market.
With a total IPO value of approximately $25 billion, the Alibaba IPO was the largest
IPO ever. Unlike other recent tech IPOs, Alibaba is a profitable company but some investors
say the company must remain stable or sustainable in the market in each quarter.
A potential short-term impact of the IPO for Alibaba will likely be assisting brands in
bringing their U.S. products to Asia. The credibility of being on the NYSE can help build
trust with U.S. brands to sell on sites like Tmall.
The IPO also gives Alibaba immediate flexibility to potentially use shares along with cash to
make acquisitions of online-only and multi-channel retailers in multiple geographies.
Alibaba isn’t the only company who will benefit from their IPO. Yahoo! invested
approximately $1 billion in Alibaba nine years ago and is estimated to make more than $8
billion from the IPO.
China's economy has suffers with the rest of the world but its economic growth has remained
strong, relative to other countries. There is a strong and growing consumer base in China, and
Ma hopes to tap into a part of that growth opportunity as well.
With Alibaba.com as the B2B component, Taobao as the retail equal, and the support
functions of Alipay, Alisoft, and HiChina, the Alibaba Group seems well positioned to change
global purchasing practices.
Jack Ma's success is based on hard work, a strong consumer focused, and a well sophisticated
knowledge of market needs. He has competed successfully against eBay in China,
contributing his success to knowing the Chinese market better, and employing Chinese
business practices.
As Alibaba seeks to expand globally it will be necessary to maintain this focus and to adopt
to the different business and cultural constraints found in the rest of the world.
B2B e-commerce is important battle for Chinese corporations to explore new market in 21st
century. It is critical for Chinese enterprises or the national 1.3 million members in Alibaba to
confirm B2B e-commerce strategies combining with practical condition.

Firstly, Alibaba should make more contribution to increase its popularization in e-commerce
industry and customize every corporation’s B2B e-commerce plan. For most Chinese
corporations, e-commerce mode or B2B are new terms for new economy. Alibaba should
make detailed plan for their future development based on integrated strategies and promote e-
commerce’s features and advantages.
The implementation of e-commerce requires analyzing corporations’ nature and size. Based
on building their online purchasing system, Alibaba can help corporations to construct
independent purchasing transaction platform which will be a good development strategy.

The core of e-commerce is to management all the information with high efficiency; help
corporations build information flow which is unblocked among internal corporations,
business clients and suppliers. With effective management, added value and application,
Alibaba can connect its clients, businesses and suppliers together and respond to its market
with fastest speed and lowest cost.

Secondly, Alibaba should optimize information service and make itself as a good information
intermediary. It can set up press corps to collect and edit primary commercial information and
give feedbacks immediately to corporations to get acknowledged of them in the first time but
not through other websites and newspapers.
As Chinese e-commerce is still in the stage of information flow, Alibaba should make great
contribution to corporations’ professional search.
Speaking of the information infrastructure construction, Alibaba should seek supports from
the central and regional governments to take active part in investment and guide capital
rationally. Latest high-speed information transmission network and broadband internet should
be built to increase internet speed and reduce network cost. Simultaneously, practical and
feasible measures should be taken to catch up with the best e-commerce infrastructure.
Alibaba can take legal regulations and industrial self-discipline principles to define their
rights and obligations of information collections and information sources according to
international common rules.

In addition, Alibaba should pay attention to its management and operational reform. He
should focus on employees’ power and capability, improve communication efficiency, and
eliminate unnecessary working contents to achieve smooth within department business flow.
Reorganized business processes should adjust the integration of market demand,
corporations’ strategies and every basic business flow and confirm that every job can add
their values from the customers prospective.

Alibaba should start to set up customers’ relationship management and supply chain
management system which are suitable for Alibaba’s group/business objectives to achieve the
smooth communication with its trade partners.
By taking interactive marketing mode, virtual context and customers’ experience, smooth
communication can be made to respond to customers’ demand and offer customers with
personalized easily available products.
Alibaba should also develop mobile e-commerce business to adapt to the era. One of the hot
topics in e-commerce filed in 2013 was mobile e-commerce. With the development of 3G
technology, it is not a problem of mobile internet searching. In 3G era, SOLOMO (social
local mobile) commercial mode will be future development trend.
However, current mobile e-commerce still remains on entertainment and social intercourse
and other layers. At the same time, mobile internet businesses concentrate more on
consumers. For Alibaba, it should develop new technology system and operation principles in
the future.

This report has analyzed the theoretical frameworks and practical application of e-commerce
for Alibaba. The largest strengths and best resources of Alibaba are its numerous corporation
members and individual members.

However, with the reduced gap among many e-commerce corporations, the competitive
advantage of Alibaba will be lowered. For e-commerce industry in Chinese market,
opportunities and challenges exist at the same time. So I use PEST mode and Poter’s five
force to carefully analysis the reason why Alibaba become so successful. Its success has
special internal and external reason.
It also analyses its problems, such as the incomplete legal system, lack of enough network
infrastructures, the degree of e-commerce safety is still low, the internet resources cannot be
taken rational use of, its website cannot be cooperated effectively. Corresponding measures
should be taken to help Alibaba to promote its e-commerce mode and gain profits in the
future.
For Alibaba, they should make more contribution to increase its popularization in e-
commerce industry, optimize information service and make itself as a good information
intermediary, pay great attention to internet safety issue, management and operation mode
reform should be focus on. Hence, Alibaba should make more contribution to its e-commerce
development. And maybe one day, it will become the second Amazon