QUESTION
International Strategy for Alibaba.com
SOLUTION
International Strategy for Alibaba.com
Alibaba.com is one of the strongest and expanded group of online business group that has a already received a great peak of achievement within a short span of time. It has a strong brand building in the Chinese market and now they are becoming global with several of their expansion planning and strategic expansion planning. As per the case study it is also very much clear that they are one of the most emerging online market place for the SMEs and small business enterprise that is helping the new and developing entrepreneurs to grow their business around the world. They have also come up with their IPOs for the fund raising, that shows their future planning are again high and they are continuously working over their dreams and vision to make them on the top in e-commerce listings in fortune 500 companies.
I would like to recommend few strategies which may be helpful for the Alibaba.com expansion in global market.
1. Global Alliance for the expansion in global market: They should move to the foreign market by various strategic alliances with the effective and growing organizations. This strategy will add some value to show their calibre in the developing companies with their alliances to that particular company. They can go for the partnership, Joint venture, mergers and acquisitions and franchisees development. These strategies will help Alibaba.com to move and expand their market in new places and countries and also help in grabbing a strong market with the existing organization of that particular country. It will be a kind of synergy for the organization to grow and develop in the new market in an exponential way.
2. Research and Development for the innovative ideas for the expansion: They should also go for the R&D team development. This will add some value to them and their strategic decision making team to improve their value and considerations in the present marketplace. They should encourage their team for the brainstorming and idea generation to support their management team in strategic decision making and value addition. This may provide some innovative ideas for the brand building and promotion to attract the global market players and business towards Alibaba.com.
3. Making more user friendly ecommerce-marketplace for the global consideration: In most of the developing countries, still the consumers are not very much familiar with the ecommerce marketplace. This is a great opportunity for Alibaba.com to come-up with a smooth and user friendly software and ecommerce marketplace that may encourage the new users to inculcate the ecommerce marketplace for their buying and selling purposes. This will work as a strategic enforcement for the company to grow their business in the global market. The new consumers will surely be attracter towards their new strategic enhancement and user friendly ecommerce marketplace.
4. Grabbing the market in developing countries: Developing countries are one of the best market for the development of the ecommerce marketplace. Most of the developing countries are still untapped and away from the ecommerce. Alibaba.com should go for the analysis of the market in the developing countries and based on those results they should make further strategies to grab the untapped market in the developing countries that will again help them to make a strong viewpoint and standpoint for the newly developed customer to adopt the ecommerce marketplace for their buying and selling purposes.
5. Segmentation strategy for the best possible market penetration: They can also go for the market segmentation in the new marketplace to grab the best suitable market place and segment of the customers available in the market. Segmentation is again the most critical strategic analysis that helps the organization to understand and define their customer for the long term growth and customer relationship. If the organization is able to successful and effective customer segmentation then the half of the task is already done. Now we just need to show the path to the customer segment and they will surely become our prior and privileged customer. It may take some time but the segmentation strategy will surely work and help the organization to gain competitive advantage and grow in the global market.
These strategies will be based and supported by various internal and external environmental analysis and considerations. Based on these internal and external analysis of the ecommerce industry and the market need, Alibaba.com should adapt the best possible strategy that will help them to penetrate and expand with an effective and integrated strategic planning and consideration that will further help the organization to grow and expand exponentially.
There are need of following stages that shall be considered and implemented while the implementation of these strategies for the global expansion of Alibaba.com.
1. Planning: Planning is the initial and most important stage for the strategic alliance and the decision making for the organization, whether its expansion or any product development or any other strategic function. In all these decision making there is a requirement of proper planning for the better understanding of the effects and outcomes of the strategy which is going to be developed in coming days.
2. Organizing: After making plans, the organization needs to organize all the resources for the better and optimal planning and their working for the long term goal achievement, such as global expansion in the international market. There should be a better and friendly relationship with the suppliers, buyers and stakeholders for the long-lasting business relations.
3. Controlling: The organization again need to keep a control over all these strategic advancement and the functions to make an effective planning for the better risk management and crisis management.
4. Implementation: After all these steps the organization need to implement their strategic decisions and functions to the real word phenomenon. This is again a critical factor and stage in strategic decision making. The implementation of the planning should be done in an effective and integrated manner that will surely work for the betterment of the organization and help the organization to grow in the global market.
These steps will be helping them to grow in a strategic manner that will further help the organization to achieve their vision and objective for the long term growth and sustainable development in the long run of the business.
Key focus areas:
The organization should also focus on some key area for the better performance and strategic enhancement of the organization while going global. The main focus areas are as follows:
1. Training and Development: Human resource is one of the most important factor for the organization while going globally or operating globally. The employees shall be given proper training and developed in an effective manner that will help the organization to grow their business in the new market. The employees should understand the language preference, cultural diversity, geographical diversity, demographic diversity and other phenomenon to make an effective move to any particular country.
2. Strategic Human Resource Management: While operating globally there is a great need of strategic human resource management in the organization. Alibaba.com should also work upon their strategic human resource team to develop their team in a strategic manner keeping all the diversity and challenge in their mind.
3. Technological advancement: Technology is essential part for the ecommerce and gives a prime support to the expansion of the ecommerce business. Alibaba.com should adopt with an updated and effective technologies to make their portal more human friendly and safe to use.
4. Team Synergy: They should also concentrate on the team synergy that will help the organization to gain competitive advantage and sustainable development in the new marketplace for the long run of the business. It will also help the organization to cut the competition in the market.
These aspects should be taken an extreme care while moving to the global expansion of Alibaba.com. If all these aspects are being taken care and handled effectively then there are great chances of the success of the organization and their business in the new market in the international aspects.
Conclusion:
Alibaba.com is one of the most emerging and growing B2B e-commerce companies and they are achieving their objectives in an integrated manner with their strategic planning and competitive strategic enhancement. But this is not the end, they have also realized it and they are now moving to the global market for their international expansion rather keeping them within the Chinese market. They have got a great response in the Chinese market and which is one of the mostly populated marketplace. This indicates a good sign for Alibaba.com and supporting to the new objectives for the global expansion of their business in the international market. They are also working towards this goal and that is why they have come up with their IPOs recently and they have been able to raise the funds from the public for their international expansion. Now it’s the time to move ahead with their strategic enhancement and planning to make their dream true and alive.
As per the reports and facts in the case it is quite clear that there is a great market demand for the ecommerce marketplace among the consumers. And the customer demand is increasing time to time. So this indicates, Alibaba.com has shown their capability in Chinese market and grabbed the number one position in ecommerce marketplace development. They can utilize their strategy and advantage for the global expansion of their ecommerce business in an effective and efficient manner. This will also help them to gain competitive advantage and exponential growth in the international market.
4) Alibaba can survive in the competitive environment and sustain its Success.
The Strengths Of alibaba.com are:
1) Strategies which the company has developed, for its marketing and positioning for its different products
2) Strategies which the company has made for retaining its customers and building an image for itself in the marketplace.
3) The brand image has earned a lot of revenues, and this is because of the effective services provided by it to its customers
The weakness of Alabama business is:
The focused mainly on the Chinese market and ignored the opportunities viable in different countries whereas their competitors were doing so.
Their employees were not trained enough to tackle the external environ business and this created problem for them.
The opportunities and threats are defined, by the external analysis of the company, its environments and competitors.
1) People need and wants are changing and accordingly their demands, so it is opportunity for Alabama to work on this issue and diversify itself in its local market itself
2) They can hire the local market specialist who understands the foreign market and will help them to expand further
The basic threats on which Alabama should work upon are
New local competitors coming up in the market for which alibi is not doing anything now, but should be done should that they are not beaten by their competitor.
It should develop strategies to fight the competition given by global sources so that they can survive in this business.
In order to decide if Alibaba can sustain its business or not, it is necessary to do a proper environmental scanning of the organisation’s business.
Strengths:
If one has to talk about strengths of company, it would obviously be the kind of titles that they have and serve with to customers. This strength has not been achieved instantly but has been developed over a period of time after initial intent to do so. This strength has enabled it to serve the largest possible and segmented customers serving across segment. This strength is directly reflective of the strength of its understanding of the market and consumer needs and also in its ability to interpret those needs and aspect and come out with plans to capture that.
One critical strength that company has developed by way of it’s over the years fight for survival and growth is of serving the same set of consumers with various platforms i.e. it is capable and equipped enough to fight and survive with any of the market dynamics a change and can adopt itself to capture that before competitors take away all market from it. It huge brand name in market all over world with a rare combination of such a large brick and mortar plus online presence make is such a big candidate for great valuation and dynamics.
Weaknesses:
The inherent weakness that has continued till date has been the fact that company has time and again have failed to acts and respond to needs proactively and also the fact that there has been numerous and drastic changes in management and leadership.
Talking about the pro-activeness, we have seen that company and industry have gone through much revolutionary change in this small span of time and so has company but company have time and again failed to recognise such needs proactively. This failure on its part has cost it profits, time and lot more. This is so because had this been recognised it would have resulted in huge saving in forgone profit and cash and also it might have enabled extra profits as pro-activeness would have enabled it to take proactive remedy measure and a first mover would have enabled it earn huge profits. This pro-activeness we cal as weakness for this company because from such a market leader it is expected.
The other aspect of Management change is also very serious since with each change in management and leadership comes a new vision and additional need for synergies. This aspect has effected company due to its multiple and regular changes and can be quantified in terms of profits and cash also.
Opportunities:
The market for online shopping is transforming on a regular basis but one thing is constant that the number of consumers is growing rapidly on a regular basis. This increase is across categories and new and new categories nod new and new way to capture and satisfy them is innovated daily.
It is interesting to note that despite the introduction of increased usage of technology based through various formats the market for online shopping has not declined and the both markets co-exists. Alabama has been decent in capturing these various markets but has not been very impressive in light of the market knowledge, dominance and information that it had. Since the market is again going though new changes and new technologies and is prefer a brick and mortar plus technology based platform, time is perfect for Alabama fro capture this market and needs.
Since the market is fast changing it better for Blockbuster to acts fast to lose opportunity. The additional opportunity for Alabama is to increase its online presence in regions where it does not have physical stores and create additional customers and valuations as preference is there for these services and not many players are there in market and even if they are there they are restricted to small markets only.
Threats:
The market has witnessed drastic changes and it has still not slowed down. This has forced many firms go out of market in no time and many firms making it big in no time. It has become all about timing, pro-activeness and efforts.
Alibaba have been fighting and surviving and growing at the same time over these 2 decades but the threat of a wrong moving and not keeping up with market needs is very eminent for firm. This we say so because Alabama has never been able to find out proactively the market needs and trend which is likely to be driving factor in future. This has led to it losing cash and profits but it has survived till date due to its efforts and ability to find ways to capture and support these requirements.
The threat lies in the fact that company in some time or now might not able to predict the future requirements with perfection and by the time it realises and does the needful, in this increased and tough competitive world any new entrants or small players can get the edge and capture the market. This is reflected in the way Global source captured the market by capturing the consumer base for online Rental platform.
Personal observations:
If one things that is to be appreciated and had been amazing is the fact that alibaba has been market leader for almost years now and has been able to sustain its market share if not grow it despite the given market going through huge and numerous changes and transition and that too very quickly. It is very impressive and appreciable that Bba alibahas been ca[able to adopt so many changes swiftly and that too with diverse platform and management team to deliver and be competitive in market.
They have been pioneer for industry and segment that they operated and made path for its followers. One things that can be stated as its weakness is that despite all these achievement there has been huge fluctuations on either ends when it comes to cash flows and profitability. It is so because they were not efficient and proactive enough to foresee the problem area and take corrective measures before it actual impacts hits hard. This has been not once and has been in fact repeated over its history and even at present the problem is in front to which solution is being found out and no proactive and foresightedness has been developed by company and it’s management
In order to survive in the market Alibaba has sto mange all its weakness and threats NAD make the optimum use of all resources, so that it can survive in the growing competitive market:
To meet Business-to-Business customer satisfaction e-commerce can be used as an effective technique. We can use website portals and we can provide all the details regarding the product or service in which we are dealing with. So the clients can directly approach to us via web-portal. This will be like integration in the process of buying and selling. Even for the purpose of after sales services the client can directly fill the query or complaints form and we can approach them quickly. So these are the modes of effective and time saving techniques to satisfy the client’s expectations in an effective and efficient manner.
After a careful scanning we come to certain conclusions which define Alibaba can sustain in the growing competive environment.
While doing a business through E commerce, there are various barriers which are faced by the Alabama and the plan maker’s. Which has to fight by alibaba, so the strategies that Alibaba should focus on are?
1) Venture capital or lack of it- E-commerce involve a lot of venture part on the part of the company itself, research activity is required how ecommerce should be initiated, why it should be done, involves the development of the website. New tools and products ha sot is developed and established. A proper supply chain activity. there are already many competitors in the market, so the strategy developed has to be very effective.thsi would a lot of investment and the lack of proper venture capital may become a loss for the company.
2) Investors expectations-every inventor has expectations for return on investment, if the, business is not lending profit to the company it will not satisfy investors and they may back out, which will reduce the business profitability and sustainability in the market
3) Government legislation-every country has to follow all the legislations while launching their business and abide by all the taxations policies, terms and conditions for each and evry countries
4) Train the new employees to adapt to new mode of doing business-this is totally a new business, and employees must be trained so that can learn how to mange the whole business process effectively. Resistance to change from the employee side will create a problem.employess must be trained to use the new system and learn the new technology.this will also help them to survive in the foreign country.
5) Customer satisfaction-customer satisfaction is not guaranteed because most of the customer prefers buying from stores rather than online and after service and customer feedback process is not as effective as is in personal selling and store selling business.So build effective stragies to retain such cutomers
6) Total cost-If we add up the total cost, there are hardware an the software cost, cost of hiring new employs to work on this sytem, train the employess.There are not monetary cost but lost of resources, time if the strategy palling is not done defectively because it a techno driven process and understanding of this process is not easy for all employs.So Company shold see that the revenue than cost, so that they can survive in the market place.
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References:
A brief History and future of Alibaba.com, by piet walraven on January 22, 2009, online available at http://technode.com/2009/01/22/a-brief-history-and-future-of-alibabacom/
[Accessed on 29 Mar 2012]
Alibaba’s corporate overview, September 2010. Retrieved from http://news.alibaba.com/specials/aboutalibaba/Culture_values.html [accessed on 29 Mar 2012]
Lacy, S. (2010 Sep 24). The unusual mindset of Alibaba’s Jack Ma, retrieved from http://seekingalpha.com/article/226969-the-unusualmindset-of-alibaba-s-jack-ma [accessed on 29 Mar 2012]
Lee, E. (2007, Nov 5). Chronicle. Retrieved from
http://articles.sfgate.com/2007-11-05/bay-area/17269589_1_alibabacom-jack-ma-alibaba-group [accessed on 29 Mar 2012]
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