Sei sulla pagina 1di 11

Alibaba Group

A Case Analysis

Submitted By:
CABABAT, Zoreyn
SAJULGA, Jason
VALMORIDA, Kareem
VILLEGAS, Glorenze Louise
YOUNG, Kris Pauline

Submitted To:
Mr Eliel Daang

I.

COMPANY BACKGROUND

Alibaba Group (NYSE: BABA) is a Chinese e-commerce company that provides


consumer-to-consumer, business-to-consumer and business-to-business sales services
via web portals. It also provides electronic payment services, a shopping search engine
and data-centric cloud computing services. The group began in 1999 when Jack Ma
founded the website Alibaba.com, a business-to-business portal to connect Chinese
manufacturers with overseas buyers. In 2012, two of Alibabas portals handled 1.1
trillion yuan ($170 billion) in sales. The company primarily operates in the Peoples
Republic of China (PRC), and at closing time, on the date of its historic initial public
offering (IPO), 19 September 2014,Alibaba's market value was measured as US$231
billion.
In September 2013, the company sought an IPO in the United States after a deal could
not be reached with Hong Kong regulators. Planning occurred over 12 months before
the company's market debut in September 2014. The Alibaba Reuters Instrument Code
is "BABA.N", while the pricing of the IPO initially raised US$21.8 billion, which later
increased to US$25 billion, making it the largest IPO in history. However, buyers weren't
purchasing actual shares in the group, since China forbids foreign ownership, but rather
just shares in a Cayman Islands shell corporation.
Alibaba's consumer-to-consumer portal Taobao, similar to eBay.com, features nearly a
billion products and is one of the 20 most-visited websites globally. The Group's
websites accounted for over 60% of the parcels delivered in China by March 2013, and
80% of the nation's online sales by September 2014. Alipay, an online payment escrow
service, accounts for roughly half of all online payment transactions within China.
Alibaba is planning to enter India and was in talks with Snapdeal in September 2014.
Alibaba has also reported a sale of more than $9 billion on China's Singles' Day in
2014.

II.

SITUATIONAL ANALYSIS

The Alibaba Group burst into the global e- commerce division with Alibaba.com. It is a
web service which advances B2B (business to business) trade all over the world and to
became one of Chinas first online businesses. Alibaba has grown excellently from its
early beginning as a broad e-market to a giant e-marketplace. Most buyers and
suppliers consider Alibaba as a grand B2B dating site. Businesses can upload specific
products that they are looking for in the hope to match it with potential suppliers. They
can also effectively search Alibaba for business customers who have already registered
their searches; it is like they have this memory for every detail of transaction.
The 4ps of their marketing strategy contributed to Alibabas success. First is the
Product, products that can be marketed which includes physical goods, service, places
or in the deeper sense the product they offer is not just any physical item but the
perception of the consumer. Alibaba also offers a broad variety of services; they made
sure that they can establish trust and safety in their online payments and other

transactions in order to maintain customer loyalty. Second is the Pricing, competition


pricing is setting a price in comparison with competitors. Alibaba Groups uses
competitive pricing so that the price they offer does not have an extreme difference with
its competitors. The company gives low prices and ensures good quality products so
that it can attract the targeted market. This pricing method increased the sales of the
company. Third is Promotion, they promote their services through the use of the
internet, media advertising and sponsoring events. Alibaba uses the internet promotion
strategy because internet is the best in terms of how cost effective it isand its also the
fastest promotion tool in the market place.
The presence of the Alibaba company profile in major search engines like Yahoo gives
the company a global exposure and creates awareness among buyers/importers
effectively. The availability of internet banners about Alibaba that take the searchers
direct to their main website. Fourth is their distribution or Place strategy, Alibaba uses
the internet as their channel intermediary to geographically promote their products
across the online world, Alibaba Groups has several online B2B marketplaces that
potential buyers and suppliers from around the world can obtain its products and
services.
Apart from Alibaba, the Alibaba Group has diversified its efforts with other e-commerce
sites such as Taobao, Alipay and etc. These web services expand the Alibaba Groups
business portfolio to include services like retail websites, and business management
solutions, making it one of the largest and most comprehensive providers of internet
retail and B2B services.
Aside from having a race in the market with its competitors, Alibaba juiced an
advantage from this; it is to carry out cooperation from competition to generate potential
ideas and be beneficial to each other.

III.

STATEMENT OF THE PROBLEM

How will Alibaba Group get by in the market as the company becomes more exposed to
greater competitions.
IV.

OBJECTIVES

To be able to compete with international giants such as Amazon and E-Bay in


terms of their branding, market share, as well as in their pricing.

To be able to do extensive market research and analysis as their goals of


expanding means that they will be dealing with new markets that involves different
customs and a way of life they must identify this in order to foresee problems and
threats and be ready if ever.

To be able to maintain the effectivity of their initial business model as a long term
model in building a solid foundation for business-to-business forms.
V.

AREAS OF CONSIDERATION

VI.

Alibaba.com was one of the few companies in China that did not copy existing
business models in the US or Europe
It provides a platform for buyers and sellers, and proposes news, analysis
and timely price lists, and development team works research new
technologies and functions to support their website which help to enhance
their service and reduce operation cost and obtain large profit.
Its business model aims to structure an efficient, flexible and responsive
structure in front of a demanding customer demand and information society
opportunities.
Its network of partners for creating, marketing and delivering value and
relationship capital to one or several segments of customers under B2B in
order to generate profitable and sustainable revenue streams with its
business model

SWOT ANALYSIS

STRENGTHS:
-The company's primary target is to maintain its great market share there in
china,because mainly china has the largest population worldwide.

-Customers/consumers prefer online shopping which is trustworthy, of course, who


would want to waste or give away their hard earned money?
-Customers would feel the security of their transactions through the third party payment
of www.Alipay.com
-alibaba group of companies formed a business web or e-commerce ecosystem to
miximize profit.

WEAKNESSES:
-Customers/consumers who haven't tried or experienced online shopping would
question the reliability of Alibaba.
-Entrepreneurs who aren't risk takers would have second thoughts of having
transactions with their clients through Alibaba.

OPPORTUNITIES:
-Having ranked and known as a reliable e-commerce site, customers from different
parts of Asia would prefer Alibaba as their provider of online goods because of the less
risk for the package to be delayed the distance of the ocean is not quite far.
-Alibaba group of companies found a way to maximize their aces, the payments of their
clients are funneled to Alipay
THREATS:
-The inevitable delay of transactions caused by the weather
-Alibaba profits mainly in China, but China b2b business environment has constrained
the further development of Alibaba, such as a sound law, loopholes in online payment
security, not so good infrastructure in some cities, which will hold back the development
of Alibaba.
-B2B business site model, not only in the last few years with the rapid development of
the world, and gradually formed a trend - e-business alliance - that is, the trend of
mergers and cooperation, which will lead to more competition

-The infrastructures in China is not yet fully developed to support the development of
Alibaba.

VII.

ALTERNATIVE COURSES OF ACTION

Boost domestic competitiveness. Alibaba Group of companies must first focus on


being competitive in the domestic market before they venture into a wider scope
which is the international market.

Advantage: Being competitive in the domestic market, in their own country first, will
help the companies under Alibaba Group acquire more useful strategies that can
help them overcome the threats they will be facing once they try to venture outside
of their current market.
Disadvantage: If the company decides to focus more on their domestic ventures and
activities, it might be possible that venturing outside of the country and their current
scope will prove to be more of a challenge as international relations and markets are
very different waters compared to what they have to deal with domestically
speaking.

Alibaba group of companies should participate outside of China and take risks in
order to further their market share.

Advantage: Because of their record of success and reliability in China, trying to


expand on their current market and to penetrate the rest of the world will be a little
bit easier although still quite a challenge. They already have the reputation in China
and the funds to support their expansion.
Disadvantage: Because they have only been active domestically, it is also quite
possible that even with their popularity and success in China, it will be quite hard for
people to distinguish them, especially since they have yet to become familiar with
their neighboring countries, even in their own continent.

The company must create another business outside the internet sphere where
they will put up stores wherein customers could physically witness their product
displays.

Advantage: The company will be more visible, especially if they set up these retail
stores in other places they are not as active in and even in new countries so that
they can increase awareness and recognition for their company.

Disadvantage: Alibaba is composed of many manufacturers seeking to find buyers


for their products. The problem with setting up a physical store would be that it would
simply be too chaotic and some suppliers might not be able to participate, thus the
competitiveness price-wise will lower, not giving buyers more choices and
opportunities.

VIII.

CONCLUSION AND RECOMMENDATION

The group highly recommends the second option. Alibaba group of companies is a
successful business-to-business web service. They allow manufacturers and suppliers
to put their products on their website, using it as a platform to find interested buyers and
consumers. They are already highly popular in China and now their next challenge is to
advance out of their home country. The companys second recommendation is for
Alibaba to venture out of China and try to take risks in investing and in expanding their
services to other countries. They are very much trying to work on finding ways in order
for them to advance and penetrate the global market so that they can compete with the
likes of eBay but before they do that, they must first establish themselves in other
foreign countries. The group sees the disadvantages of this course of action but the
advantages weigh heavier compared to it. By choosing to take risks and further their
services to their neighboring countries, Alibaba will be ensuring their growth and
increase awareness on their company, especially if they choose to focus on Asia first
before tackling on the rest of the world.

IX.

BUSINESS MODEL CANVAS

A. KEY PARTNERS
Alibaba disclosed 27 partners in their initial public offering.
B. KEY ACTIVITIES
* Company has its own website for Payment Gateways (that is Customer Oriented)
* Aliexpress - for sale/purchase through their Own Gateways
* They are establishing Few Banks in Collaboration with Government
* They have a major stake in "Sina Weibo" (China's micro-bloging website like twitter)
* They have stakes in Other Companies as well and Rules the entire China Online
Market Place.

C. KEY RESOURCES
It has a list of companies and affiliated entities namely Alibaba.com, Taobao,
Tmall.com, Juhusuan, eTao, Alipay, Alibaba Coud Computing, AliExpress, China
Yahoo!, Aliwangwang, and many others. Sales for 2014 are estimated at $420 Billion. In
2012 sales were $170 Billion. This dwarfs Amazon, its closest competitor, with reported
sales of $74.4 Billion for fiscal 2013 while EBay reported sales for fiscal 2013 of $16
Billion, less than one-tenth Alibabas 2012 sales. They employ over 25,000 workers to
service the clientele. The value of the enterprise is peg at about $143 Billion based on a
12 analyst consensus valuation. That implies the offering will be around $17 Billion.
That is about $1 Billion higher than the Facebook offering.

D. VALUE PROPOSITIONS

Personalization or customization of storefront

Reduction of product search, price discovery costs

Facilitation of transactions by managing product delivery

Payment transaction through Alipay, one of its companies

Easy accessibility over the internet , promoting convenience

E. CUSTOMER RELATIONSHIPS
Alibaba aims to only provide the best of what it can give to the customers through the
cooperation of its group of companies. Alibaba was also a privately held company but is
now open to the public because through the years it has dominated all over China and
extended across the other part of the world. It also has developed through the years its
user interface among its companies making their websites uder friendly and easy to use
and understand.

F. CUSTOMER SEGMENTS
Alibaba claims to have 300 Million customers summed up all over the world. The
customer segmentation depends on the website they are in. For example, companies
sell directly to the public (Tmall) and enable members of the public to sell to each other
(Taobao). Also, because of the many retail online companies that Alibaba owns, it
would provide or cater to distinct or diverse customer segments therby having a wide
scope of market.

G. CHANNELS

Factories

Trading Companies

Importers

Distributors

Retailers

Consumers

Internet

Marketing and Distribution Strategies:

The company offers variety of services such as trust and safety, online payment,
listing solutions, protection and authentication, instant messaging, member reputation
and after sales services such as warranty programs. Their customers online payment is
secured with Escrow, with Escrow the privacy of the buyer is guaranteed, buyers are
able to pay securely without exposing their details and payment is only released upon
delivery conformation. It also offers an about me page, where as suppliers can express
themselves through their own personal page. Alibaba.com has after sales services such
as a warranty program whereby buyers get up to a one year warranty in case of a
breakdown, this mostly refers to the electronic products.

Alibaba Groups uses competitive pricing so that the price they offer does not
have an extreme difference with its competitors. The company gives low prices and yet
good quality product so that it can attract the targeted market.
They use the internet promotion strategy because internet is the best cost
effective and fastest promotion tool in the export/import market place. The presence of
alibaba.com company profile and product/services in major search engines like yahoo
gives the company a global exposure and creates awareness among buyers/importers
effectively.

There are various types of channel intermediaries; they use the internet as its
intermediary. The internet has a geographically disperse market therefore niche
products will be able to reach a wider audience. They has several online B2B
marketplaces that potential buyers and suppliers from around the world can obtain its
products and services. They also use the direct distribution channel to deliver its
products and services. It has a number of outlets in countries like China, U.S.A and UK.
Services like gold membership, customer complaints and so many more are handled in
these outlets

X.

REFERENCES

Bhowmik, R. (2012). Analysis on the Business Model. Retrieved from


http://www.slideshare.net/ronibhowmik/analysis-on-the-business-model
Cheng, R. (2014). Alibaba discloses 27 partners In IPO, Updated Financials.
Retrieved from http://www.cnet.com/news/alibaba-discloses-key-partners-inipo-jump-in-revenue/
Liu, W., Ransom, E., Wan, Q., Yu, J. (2014). Case Synopsys for: Alibaba
Group.
Retrieved
from
http://www.sfu.ca/~sheppard/478/syn/1147/Group_D.pdf
Loeb, W. (2014). 10 Reasons Why Alibaba Blows Away Amazon and Ebay.
Retrieved
from
http://www.forbes.com/sites/walterloeb/2014/04/11/10reasons-why-alibaba-is-a-worldwide-leader-in-e-commerce/

Prawiro, U. (2014) Alibaba Group Corporate Overview Jan. Retrieved from


http://www.slideshare.net/UtomoPrawiro/alibaba-group-corporate-overviewjan-2013
The
Alibaba
Group
Company
Analysis.
Retrieved
from
http://www.ukessays.com/essays/marketing/the-alibaba-group-companyanalysis-marketing-essay.php
Wright, C. (2014). So What Is Exactly Alibaba? Retrieved
http://www.forbes.com/sites/chriswright/2014/09/16/so-what-exactly-isalibaba/

from

Potrebbero piacerti anche