ALIBABA: COMPETING IN

CHINA AND ITS BEYOND

INTRODUCTION

Alibaba group was founded by Jack Ma in 1999. Launched chinas first commercial website. Mission:- To help small & medium enterprises. Started with 2 websites www.alibaba.com & www.china.alibaba.com Focused on various business models:- B2B, B2C, C2C. Alibaba went for IPO in October 2007. Alibaba ranked 8th in world for e-commerce services in 2008.

ALIBABA IN INTIAL STAGE.

Raised money from Venture Capitalist. Platform for trade B2B. 2 Lac member at the end of year. Attracted other companies into e-commerce. Stood hard in dotcom bubble.

OBJECTIVES:

Gather work force. Build customer Base Establish Brand name

Strengths
Leadership. Free service. Simplicity of website

Weakness
Infancy. Limited focus area

SWOT
Opportunities
Emerging e-commerce. Increasing broadband usage

Threats
New entrants. Limited usage of credit cards. Trust factors. Consumer psyche.

Phase 1 1999 to dotcom bubble

Case analysis

Raised money from venture capitalist. Goldman Sachs, Fidelity investments, Investor AB, Templeton Dragon Fund inc. and Transpac industrial holdings limited- raised US $5 million. Platform for the trade- B2B. 2 lac members signed up with alibaba.com till the end of the year. Attracted other companies into e-commerce as the growth prospects seemed to be vey high. Stood hard in dotcom bubble.

Objectives

Sustain for 102 years. Gather work force. Build customer base through aggressive promotion and efficient services. Establish brand name.

Marketing

Customization. Segmentation and targeting. Delivering highest value to the customers. Free services. Alibaba China was launched in 1999 was a website in chinese language serving domestic B2B trade in china. Alibaba international was an english website which connected Chinese SMEs. It had around 2.5 million users present in around 200 countries in 2007.

Operational

Service design. Buyers and sellers- focused on SMEs. Suppliers were allowed to list their products and buyers could post their request on the board. The buyers also had the facility to chat online with the supplier if he was online.

Finance

Venture capitalist. Softbank corporation- US$ 20 million and at that time softbank was the largest investor in internet business.

Human Resources

Autocratic leadership. Corporate culture. Appointment of Goldman Sachs chairman- Peter Sutherland. Appointment of Softbank CEO- Masayoshi Son. They were made the members of alibabas board of advisors.

Leadership

David wei- CEO of Alibaba.com. An influential leader. Was foreseeing. Forecasted the growth in internet business.

We cannot create beautiful power points,but we know how to listen to our customers.

Phase 2 2000 to 2003

Case Description

Dotcom Crash Advertising Revenue Bankruptcy Mergers Early 2001 Alibaba offered Alibabies Late 2001 created a Community China Suppliers Set a Trustpass Membership.

Objective

Withstand Dotcom Burst Consolidate Firms Position Image Building Retain Employees

Marketing

Back to China- Concentrated on China Back to Central(i.e. Shanghai) & Back to Coast- Concentrated on coastal areas, the richest region in China. Offered customized online marketing place for its members called Alibabies. Taobao was launched in May 2003 in competition to eBay EachNet and became Chinas most popular C2C trading site. Introduced Alipay which was an escrow-based payment solution which was allowed customer to safely and quickely send and receive money online. Allowed buyers to call sellers before buying a product.

Finance

Selling of Advertising Space Selling statistics & reports on various sellers. Charging of Membership.US$ 3000 per year which gradually increased to US$ 8000 per year.

Human Resources

Retention of Employees in tough Times Appointment of GEs CEO

Leadership

Conservative Motivating Down to Earth.

Lets make one Dollar Profit for the whole year. We Spend US$ 5 Million, We should make at least one back.

Phase 3 2003 to 2007

Case Description

Entry into C2C and B2C Winning over eBay Yahoo! china Acquisition

Objectives

Expansion within China Global Presence Better Revenue Model

SUSTAINING LEADERSHIP

Convincing SMEs about the safety of online transactions with Alibabas system by emphasizing on Alibabas partnership with a leading bank in China. Alibaba formulated three strategies to deal with dotcom crash : Back to China Back to Central Back to Coast Taobao was launched to compete with eBay. Launched AliPay an online payment system.

CURRENT STRATEGIES

Part of HKSE composite Index Ali-ADvance Bidding Site Use of 3G Networks Advisory Services

Marketing Solutions
Organizational Development New Competitors Youa Baidus C 2 C website Kaixin001 Social Networking Site

TYPES OF MEMBERSHIPS AT ALIBABA

Free Membership : They were offered basic services free of cost. Trust Pass membership : It was a paid service where the member had to pay US$299 and would be verified by a third Party credit reporting agency. Gold Supplier: This was primarily for export oriented suppliers . The suppliers were classified into 27 industries which enabled the buyers to locate the companies easily.

NEW BUSINESS PROPOSAL

Vision for the future as per Jack Ma-My vision is to build e-commerce ecosystem that allows consumers and businesses to do all aspects of business online.
Development of New Browser Added Features Built-in Yahoo! China Search Engine Local Language Light, Hence Faster Revenue Model Pop-Up Ad Blocks Aggressive Promotion Targeting College and Young Working Class

FUTURE CHALLENGES

Baidu strong domestic player

Free services provided by Baidu and Google

Conversion of free model to paid model

STRENGTHS
Diversification Financial Structure Understanding of Local Markets

WEAKNESS
Brand ambiguity Yahoo! China Under Positioning Dilution of Management

SWOT
OPPORTUNITIES
IPO Untapped Market Segment

THREATS
Google and Baidu New Entrants

THANK YOU
PRESENTED BY: ADITYA SETH ABHISHEK ANAND ANKIT AGGRAWAL ADITI CHAUDHARY