Silva ArturoTepedino Gianpaolo

Final case exam: analysis & recommendation

Madrid, 19/12/2010

Situation analysis: Alibaba and its subsidiaries

Customers Wide: B2B, B2C, C2C

CompetitionPayPal (Alipay)Joyo (Taobao) Salesforce (Alisoft) Collaborators

Context Mobile trend over PCFast growing industry

Company- Competition instead of cooperating; - Decision making and structure: decentralized;- Initiatives are mostly generated by the CEO;- Span of control is getting too high (CEO);- Subsidiaries’ products: fill gaps in the market;

Definition of the problem: statement & consequences

Is the model of competition between the different companies and the current organizational structure hindering the capability of the group to use internal synergies to face new challenges and new business opportunities?

Consequences

Problem

NBD: New business development

NBDStrategy ITSales

Severely damage the corporate culture as well as the employees’ morale, bureaucracy & span of control.

Guidelines and nice-to-have instead of MUST have

Alternatives evaluated

Move to a centralized decision making structureI

II

III

Status quo (decentralization) +New supporting function for “Mobile solutions” + Chief Technology Officer (CTO)

Status quo (decentralized) +New structures (external opportunities) & synergies

Implementation: strategic roadmap

Human resources(employees’ alignment)

Organizational structure(flexibility to grow & span of control)

Corporate culture(collaboration in the competition)

Marketing & sales(consistency & no-cannibalization)

Information technology(knowledge & ideas sharing)

Strategic imperatives

Implementation: Organizational structure & SM

Mobile solutions

1

2

3

4

Implementation: Corporate culture and HR

- Seminars & events;- Define short term goals: monitoring & adjusting;- Share the changes & involve people in the process: feedback & support;

“Collaboration in the competition”. Corporate culture *

Strengthen: individual performance + group’s results

Human resources

Faster & better results

“Aligning mission and actions ”.

- Involving employees; - Identify opinion makers; - Define clear career paths in the whole Alibaba Group; - Training (courses, seminars, conferences);

* Kotter’s 8-Step Change Model. www.mindtools.com, last visited on: 18/12/2010

Risks & Contingency plan

Risk Contingency actions

Subsidiaries not willing to cooperate with the newly

created structures

- CEO communicating: 100% support - Changes are strategic to the company

People resigning - Identify top talents: get their feedback & offer them to stay as “change agents”.

IT failures Redundant solutions through the “cloud”

Mobile’s only clients are subsidiaries within the

group

- New supporting function. - Extra people will be absorbed by the other subsidiaries.

Final remarks and other recommendations

- Important way to create value within firms- Higher debt to equity ratios (D/E) in similar companies

- Diversification & growing business

Alibaba Mercado Libre

eBay Amazon Cisco

2%7% 7%

22%

39%

Financial leverage

Financing small businesses

- Lack of expertise & liquidity- No creation of synergies between the subsidiaries

Leverage more

Joint venture with a financial firm

Q&A

Thank you for your time.

Annex IPeterson’s model & scenario planning

Peterson’s model & scenario planning (1/2)

Source: Peterson’s Model for Uncertain environments. http://www.geog.mcgill.ca/, last visited on 18/12/2010.

Peterson’s model & scenario planning (2/2)

Result