Alibaba Case Study on Strategic Management
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Transcript of Alibaba Case Study on Strategic Management
By:-Jasim Alam(1426) Prabal Jain (1418) Vivek Anand(1444)
About Alibaba.com The company was founded in 1999 by 18 people led by Jack Ma, a former English
teacher from Hangzhou, China to support operation of B2B market places.
In Oct. 2000 Alibaba launched the Gold supplier membership service for Chinese exporters.
On November 6,2007, Alibaba.com debuted on the Hong Kong Stock exchange, raising US$1.5 billion.
By the second quarter of 2007, Alibaba.com was the largest online B2B e-commerce company in china.
The English-language web site alibaba.com specializes in business-to-business trades, especially for international buyers trying to contact Chinese sellers.
Japan's Softbank was one of the earliest investors in Alibaba.
On 18 September 2014, Alibaba's IPO priced at US$68, raised US$21.8 billion for the company and investors making it the biggest U.S. IPO in history.
General Environment
Economic Segment-SME contribute 68.8% to the nation’s GDP.SME’s are estimated to rise from 31.5millionin 2006 to 50 million in 2012
Policy Segment-“11th five year plan for the Development of e-commerce” encouraging SME’s to use third party e-commerce platform.
General Environment
Global Segment-From early 21st century Alibaba launched different sites in different national languages to cater the global market. E.g.-English, Korean and Chinese versions.Technology Segment-Internet penetration improved from 12.3% in 2007 to 49.03% in 2015.In 2006,28% of SME’s are utilizing 3rd party B2B e-commerce platform in china which is expected to rise up to 82% in 2012.
Industry Environment
Barriers to Entry (Low)High returns results in new entrants, decreases profitabilityMore new websites try to copy the business model of Alibaba.comTarget market to a single industryfinechemical.com textilehome.com Share the special market of Alibaba.com
Buyer Bargaining Power (Medium)•the customers are generally the medium and small-size firms which don’t have the ability or don’t need to build up their own websites •these firms don’t have too many advantages to fight for lower cost and nearly all the standards are decided by the Alibaba.com •With the development of B2B websites, the customers may have the opportunity to choose the other platform and that will also be the opportunity to negotiate with Alibaba.com for more rights.
Supplier Bargaining Power(limit & stable)
It is not a manufacture firm but an e-service one
The most important suppliers are the firms supply the advertise for Alibaba.com, such as the famous magazines, newspapers and websites.
These suppliers are not a union and the price is generally based on the market
Availability of Substitutes(Medium)
Web search engines like google, yahoo, rediff,
self-websites of large companies.
The customers which prefer to make business with large companies, they will not turn to Alibaba.com but directly contact with the companies themselves
Competition(Medium)
E-bay, Amazon, Baidu, jd.com, hc360.com
Already established brands
Possess global identity hence large customer based
Big Players having similar models
Competitive analysis
Competitor Market Share(2007)
Advantage over Alibaba
Global Sources 21.3% • 38 years of experience in business
• 14 online marketplaces in 2007
• Publishes 13 monthly magazines
• 9 trade specific exhibitions
Made-in-China.com
14% • Cheaper price• Use of agent system
ChinaChemNet 3.8% • Vertical coverage of Chemical industry
Financial analysis
GMV
SWOT Template Largest online Largest online
trading trading websitewebsite
Trustpass.com Trustpass.com reliabilityreliability
Strong place Strong place in global in global marketmarket
Positive cash Positive cash flowflow
StrengthsStrengths • Low brand Low brand recognitionrecognition
• No mass No mass advertisementadvertisement
• Website: Website: Intermediary & Intermediary & replicabereplicabe
• Membership Membership system increment system increment in feesin fees
•
WeaknessesWeaknesses
• Market share Market share possibility in possibility in USUS
• Increasing Increasing popularity of popularity of InternetInternet
• China; creating China; creating regulated regulated business business environmentenvironmentOpportunitiesOpportunities
• E-commerce industry E-commerce industry growthgrowth
• Competition among rival Competition among rival websiteswebsites
• Profits mainly in ChinaProfits mainly in China
ThreatsThreats
SWOTSWOTAnalysisAnalysis
InternalFactors
Positive Negative
ExternalFactors
Business Strategies
Networking- Company believed that diversification and quality of users were critical to success of the marketplace.
Monetization of user base- company was focusing on converting its free members into paying members
Continuous expansion- exploring international markets to sell more premium services to the customers
Value added services- services like Instant messaging services, CRM and online business applications was offered to customers to improve brand loyalty.
Business Model
Alibaba.com’s value propositions
SuppliersAccess to active global buyer communityTarget marketing to reach buyersCustomer service and trainingAlways onlineBudget certainly through a fixed subscription fee model
BuyersAccess to active global supplier communityBroad selection of listingsAccess to high quality, organized informationEasy-to-use interfaceConvenient, rael-time mediumAuthentic and trust profiles of suppliers
Vision To last 102 years To be one of the world’s top 10 internet sites To be an essential partner for all business peopleMission To make doing business easy ValuesCustomer comes first Customers are everything
Teamwork and Cooperation Team interests are always ahead of individual interests
Embrace changes Go beyond yourself and welcome changes
Integrity Honest and upright, honoring commitments
Passion Never give up and stay optimistic
Fiscal Year 2015 Highlights
Fiscal Year 2015 Strategic Highlights
Fiscal Year 2015 Strategic Highlights
Fiscal Year 2015 Financial Highlights
Future of Alibaba The number of online shoppers are skyrocketing
The number of online shoppers in China grew from 148 million (in 2010 representing 11% of the population and 32% of Internet users) to 302 million (by the end of 2013 representing more than 22% of the country's population and roughly half of Internet users ).
By the end of 2020, China is expected to have more than 700 million online shoppers.
Alibaba is working with partners to improve China’s logistics network Much of current logistics network in China was built before 1990, and may be
inadequate in terms of keeping up with the growing e-commerce market. As a result, the company launched a massive logistics project teamed up with
some private equity firms and other investors in 2013. The network is expected to support annual online sales of up to RMB 10
trillion, and will play a key role in driving Alibaba's growth.
Rising competition from JD.com could impact Alibaba’s market share on B2C and mobile commerce
JD.com a direct sales retailer but has recently expanded into a marketplace model, could intensify competition.
it has strategic advantages such as a huge cash muscle as well as a close partnership with Tencent (a leading behemoth in the Chinese Internet space).
Mobile commerce is gaining traction
Mobile GMV accounted for only 1.4% of total China marketplaces GMV for quarter ended June 2011.
This figure jumped to 42% for quarter ended December 2014. The percentage has been increasing at an average rate of 6%
for the last three quarters, which suggests that mobile commerce is gaining popularity in the country.
FY2016 Strategic Priorities
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