Category: Alibaba

Introduction

The contemporary world is known for the fast progress in digital technologies facilitated by the internet that provides total and ubiquitous connectedness on the global level. As a result, the businesses involved in online retail have a massive advantage to expand their customer base and increase their income. The focus company of this paper is the Chinese e-commerce giant called Alibaba Group  the largest retail and wholesale company specialized in the online trades. Alibaba Group is known for its rapid expansion and the development of a broad ecosystem that secured a variety of competitive advantages for it.

Company Profile

Alibaba Group Holding Limited is based in the Peoples Republic of China; however, its business operates globally, and the company has customers in every continent. The leader and the major founder of the company is a businessman and a former teacher of English, Jack Ma. Today, he is known as one of the wealthiest people on the planet and his business success and strategy are admired and studied in the business schools as exemplary. Initially, Alibaba Group was organized with one main objective  to create marketplaces for the small domestic businesses of China (Alibaba Group Holding Ltd (BABA.N), n.d.).

Company History

Jack Ma and 17 of his associated founded Alibaba Group in 1999 (The History & Timeline of the Alibaba Group, 2014). Focused on their role of the providers of the growth opportunities for the small domestic manufacturing companies, Alibaba Group took the Chinese trades to the new level. As a result, today, the Chinese business tend to produce more goods than the local consumers need as they rely on the customers from abroad. As the e-commerce business of Alibaba grew, the company became to penetrate many other spheres of life of their customers. These days, they B2C and B2B online platforms specialized in retail and wholesale such as TaoBao, Aliexpress, and T-mall, mobile payment (Alipay) and Cloud computing services; the company also is involved in the entertainment sphere owning a TV channel and producing motion pictures, mobile games and supporting a mobile browser (Alibaba Group Holding Ltd (BABA.N), n. d.)

Mission and Vision

According to the website of Alibaba Group, its mission is to make it easy to do business anywhere (Company overview, 2016, para. 1). The focus on the expansion of the business and growing its ecosystem is the main idea of the companys vision and its primary goal. Small businesses remain the main target of Alibaba Group (Culture and Values, 2016).

Competitive Advantage

The competitive advantage of Alibaba Group is its size  the e-commerce giant is larger than several platform that operate in Europe combined which reflects in its level of income (Heres Why Changing Market Dynamics Should Worry Alibabas Investors, 2014). Besides, the strong and all-consuming ecosystem provides a larger client base and secures the companys dominant position in more than one market.

Problem Statement

One of the biggest problems Alibaba Group has to deal with is the heavy presence of counterfeit goods in its e-commerce platforms. In fact, most of the companys current income originates from the activities of the counterfeiters selling know off items via the Chinese platforms. The leaders of the company are known to overlook this issue offering their marketplaces on mild conditions to all kinds of businesses (Buchwald & Neckes, 2014). Some of the worlds most renowned brands such as Gucci and Yves Saint Laurent noted that they were willing to press charges against Alibaba for the support of knockoffs that harmed the original manufacturers (Raymond, 2015).

Reference List

Alibaba Group Holding Ltd (BABA.N). (n. d.). Web.

Company Overview. (2016). Web.

Culture and Values. (2016). Web.

Heres Why Changing Market Dynamics Should Worry Alibabas Investors. (2014). Web.

Raymond, N. (2015). Alibaba sued in U.S. by luxury brands over counterfeit goods. Web.

The History & Timeline of the Alibaba Group. (2014). Web.

Even large companies face impressive challenges in the global economy, which can be clearly seen when studying the example of the Alibaba group. Despite having gained much attention in the global economy, the company still requires the support of its numerous partners. Thus, considering cooperative alliances and joint ventures as a likely solution to the issue of risk management is quite important to keep the companys growth constant.

In this paper, the joint venture known as AliExpress Russia, as well as American Marriott (Gupta, 2019; Brennan, 2019). The specified jot ventures have a critical importance for Alibaba since they have provided the organization with an opportunity to penetrate a foreign market and immediately leave a mark in tit by partnering with large business conglomerates. The specified joint ventures created the premises for the company to expand actively into the new markets without the necessity to establish itself in it first, which is critical for gaining traction in the target economic environment immediately.

Both of the cooperative strategies that Alibaba has recently decided to follow can be described as joint ventures. The decision to select the specified type of partnership in a new market was dictated by the fact that the company had to reduce the extent of risks that it would face in its new economic environments (Burton et al., 2016). Indeed, without the assistance that Marriott and AliExpress Russia gave it, Alibaba would have not been able to develop the marketing approach and the financial resilience needed to sustain its influence in the specified markets. Moreover, the opportunity to share the related financial risks and expenses has made a joint venture a particularly important decision in Alibabas joint venture policy for Marriott an AliExpress Russia.

Moreover, the creation of a joint venture with Marriott and AliExpress Russia has given Alibaba quite a competitive advantage that would not have been developed otherwise. Specifically, the drop in the range of expenses that Alibaba had to suffer when establishing its services in the respective countries has made it to gain an advantage in the target market. With new spare financial resources, the company could develop a stunning campaign that would allow it to create an entirely new product or a memorable brand, therefore, focusing on research and development.

In addition, Alibaba may spend its newly acquired financial assets on investing in talent management as the main tool for gaining relevance in the target market (Burton, Yamin, & Young, 2016). By creating a team of diverse and talented experts, who are willing to gain new skills regularly, the company will be able to adjust to rather harsh economic settings that it would have not survived without the cooperative agreements.

However, the joint ventures with Marriott and AliExpress Russia have also exposed Alibaba to several risks that the firm will have to face respectively. The company will need to address inconsistencies between its leadership style and those of Marriott and AliExpress Russia as one of the main points of conflicts. Due to cultural differences, as well as differences in perspective, the companies use the leadership styles that are drastically different from that one of Alibaba (Bruner, 2016). Therefore, the company will have to compromise by selecting a situational leadership approach to provide each of its staff members greater flexibility in its new environment.

While the risk described above can be addressed comparatively easily and without many conflicts involved, the problem of the lack of commitment will be much more difficult to address. Once a joint venture is established, the staff members representing the other company are unlikely to become immediately invested in the needs and performance of the firm with which their organization has formed an alliance.

The lack of insight into the corporate philosophy of the new organization and its goals will reduce the extent of staffs commitment. The specified issue can be managed by introducing incentives and extra opportunities for professional growth (Said & Korby, 2017). Given AliExpress focus on talent management, offering employees from Marriott and AliExpress Russia extra options for learning new skills will be a rather easy and effective step.

The analysis of the strategic alliances that Alibaba has made over the past few years has provided several important lessons to learn. First, the importance of joint ventures for entering new markets has been recognized. Partnerships with organizations that have an established presence in a specific economic setting is quite important for a company that is new to its selected market. In addition, the issue of culture clashes that will occur during the first several months of the joint ventures functioning needs to be acknowledged and addressed to encourage further progress (Burton et al., 2016). The specified lessons have proven to be the most important takeaways form the case under analysis.

By having recently created joint ventures with AliExpress Russia and Marriott, Alibaba has managed to receive an impetus for exploring the Russian and American markets immediately and not having to build a presence that would have helped the firm to develop an entirely new customer base from scratch. Instead, the organization gained the support that it required to grow within the target market and explore new financial and economic opportunities.

Therefore, the joint ventures in question can be considered as an important step in Alibabas exploration of the global market. The support of two corporate giants that have built quite a reputation for themselves in their corresponding markets is currently critical for Alibaba since it will offer the firm a chance to experiment in a new economic setting without facing tremendous risks.

References

Brennan, T. (2019). AliExpress Russia JV deal closes. Web.

Bruner, R. F. (2016). Applied mergers and acquisitions. New York, NY: John Wiley & Sons.

Burton, F., Yamin, M., & Young, S. (2016). International business and Europe in transition. New York, NY: Springer.

Gupta, N. (2019). Alibabas Russia joint venture takes shape. Web.

Said, K., & Korby, F. B. (2017). Asymmetric alliances and information systems: Issues and prospects. New York, NY: John Wiley & Sons.

The benefits and cost of use Alibaba.com

Comparison analysis

Grieve companys goal is to create industrial heat processing equipment and sell it to customers. The export strategy relies on the existing untapped global market. Locating customers, informing them on product features and shipping sends a challenge to Grievess global business. The sale of finished products includes several relevant steps of realizing returns on investment. Using business-to-business sites is a good way of presenting information on new products, and it becomes easy to circulate it online for potential buyers to view. Interested customers place their orders using the same sites. Besides, the company does not need to have many regional offices since customer interaction is through the site.

Shipment service providers locate manufacturers such as Grieve on the same online trade sites. The company has the opportunity to compare the prices of the competitors using posts placed on the sites. Pricing information is vital to any competitive market. The cost of doing business reduces significantly. Grieve company only needs to be a member of any of the online trade sites by paying the required premiums. Finally, Grieve stands to benefit from a growing market that would be difficult without the sites that make it easier to locate a new market.

Trade Overview

All companies have high traffic with millions of visitors daily. This is a key indicator that the online trade venture has experienced massive growth over the years. All sites are business to business targeting customers ranging from small business to big manufacturers. The sites have prioritized buying and selling a concept that aims at connecting buyers and sellers globally. All companies generate revenue in membership charges, as well as advertisements on their sites. There are membership premiums as well.

As opposed to this, Alibaba has a greater global outfit than both TradeIndia and TradeKey together, it is evident from its traffic and several different buyers and sellers. TradeIndia has focused mostly on the Indian market as opposed to other new entities. Both TradeIndia and TradeKey have a better new product update than Alibaba. Alibaba has clear safety and security centers to ensure that the users remain safe from fraudulent activities on the sites, more than the other two entities that have no elaborate security details.

The cost of doing business has reduced greatly after the entry of online trade sites. Companies reported reduced expenditure on global missions to expand markets. Entry into a new market became much easier with little infrastructure development in the new market. Since the global trend is going online, companies are shifting to online trade to be part of this new development. Companies left out risk loss of market among other grave losses in the future.

The short period of doing business makes online trade between companies the most suitable. Loss of person-hours faces a downward trend in the future as companies conduct their transactions in the comfort of their mother locations. Meanwhile, due to a reduction in the cost of doing business revenues increase. This invites competition: putting companies without proper online structures at risk of loss of business.

Impact of the global financial crisis

The global financial crisis has recently hit the money markets hard. Established markets, such as the European market, emerged as there was a threat of the crisis that could ruin former big economies. Following this change in business activity, Alibaba stands to benefit from the investors fleeing European markets to stable locations such as the Far East. The new entities provide opportunities for the growth of online trade.

Emerging economies, such as Africa provide great opportunities to Alibaba business models. Alibaba is located in the worlds fastest-growing economy by trade-China. After the global financial crisis turbulence shook the West, Alibaba tremendously experienced growth in traffic as more customers opted for Chinese products.

On the other hand, Alibaba faces competition from other established online companies that have shifted attention from its areas of operation. After the crisis, firms directed resources to the stable markets in a bid to rescue their business entities. Competition by these firms brings a major threat to Alibaba as they compete for market share. New entries often satisfy demand if the existing companies are overwhelmed.

Otherwise, the new entities set in competition to the existing firms in new markets. Alibaba also faces a loss of business in the crisis-prone markets. Less traffic flows from such areas due to reduced business potential and reduced activity. However, with the resolution of crises such as the Eurozone debt, Alibaba may continue experiencing an upward trend in its online trade growth.

Having made an early entry into business to business (B2B) portal market in China (1995), Alibaba.com concentrated on small and medium sized businesses (SMBs) given their favourable numerical strength.

The portal market company capitalised on the fact that SMBs found it difficult to link up with the rest of the global firms given their limited capacity and language barrier.

Alibaba.com assisted the SMBs by organising their information, and then linking them with international firms (buyers). This saved the local SMBs time and money they would spend in attending trade fairs and exhibitions in search of global business partners.

As such, the main lock-in effect that Alibaba.com used to woo SMBs their way was language. To date, it organises, translates and acts as a link-up between Chinese suppliers and global buyers.

Introduction

A strategy direction is an overall plan for deploying organizational resources with a view of establishing a favorable business position. It shows a company’s awareness of its competitors. Attracting and retaining customers is the ultimate goal of strategic management in the achievement of economies of scale.

A number of factors that include the company’s structure, competitive position of the organization, current policies, and functional processes play a crucial role in determining the viability of strategies that need to be implemented in the business.

However, such factors have to be evaluated profoundly according to the recommendations for execution of the strategies. The Alibaba Company is an online marketing business that bridges wholesalers and retailers all over the world. A robust online marketing strategy is the sole determinant of the company’s success.

Innovation requires establishment of a stable and competitive position in the ever-dynamic online business. This essay critically discusses the interplay of the abovementioned factors with a view of highlighting apt ways implementing the strategic recommendations.

Recommendations for the Management of the Alibaba Company

To remain abreast with modern business activities that are driven by unpredictable technology, the Alibaba Company is recommended to invest in innovation, web-based customer services, employee training, and electronic human resource (EHR) systems.

A vast application of information technology in present-day business has become a norm in modern organizations. The Alibaba Company is faced with a challenge of handling a million inquiries from its enormous customer pool worldwide.

Establishment of a web-based customer support forum will not only handle common customer questions at a time but will also minimize communication costs that are incurred by the company and its customers.

Frequent questions that pertain to the location of the business, working hours and types of services and products will be answered via the web easily rather than making calls to the individual customers.

Secondly, the Alibaba Company has an enormous employee population. Workforce issues form an integral part of human resource roles. With this high number of employees in different countries globally, it has become an enormous problem for the human resource managers to handle individual cases.

Therefore, there is a need to establish electronic human resource services in the company to handle cases that arise from the infinite number of employees.

The implementation of a web-based human resource site that allows employees to report working hours, tax withholding options, and beneficiary services, among other responsibilities will be an efficient method of minimizing the operational costs of the company.

At the Alibaba Company, employees have to send a request for change through the central human resource office and remain hopeful that it will be considered. This situation has created an obstacle to the employees since most of them do not understand the manipulation of taxes and payrolls.

Therefore, designing a user-friendly tool that allows individual employees to input most of the information in a computer interface creates an immense workload relief to the human resource staff. This situation creates more time for the HR department to provide a quality response to the customer needs; hence, the employees remain motivated.

There is also a need to train employees on self-management skills to minimize unnecessary consultations that can lead to time wastage within the organization. This situation will also reduce instances of authorizations that direct report managers have to approve. As a result, redundancy of the HR activities will be lightened.

Changing the office of the HR manager to a portal is the primary objective of this strategic recommendation. Today, many firms provide universal access to HR services using technology and web-based applications. This situation has radically changed the practice of human resource management.

These changes often result from the need to cut costs, expand, and improve services. Organizations that adopt refined HR technology tools outperform those that do not. Therefore, implementation of this recommendation is paramount to the success the Alibaba Company.

It will help the HR to change the business operations of the company. It will also cut unnecessary costs. Moreover, the Alibaba Company should document transaction records using various means such as hand-written books, physical storage vaults, electronic, and/or online data recording avenues.

These methods of storage will result in increased savings since the time for reviewing and approving manual records will be reduced significantly. For instance, in case operators make mistakes during data entry, electronic systems will prompt them to make real-time corrections to prevent adverse effects on company data.

Functional Policies that Favor Implementation of Strategic Recommendations

Functional policies are a set of standardized guidelines or procedures meant to guide an organization’s workforce on proper ways to provide products and services.

It is the sole responsibility of management to outline these procedures, especially for an international business and ensure their strict adherence for the business to remain competitive and operational. Standardization ensures stability of the company’s capital activities and fosters productive relationships of employees.

A careful study of the Alibaba Company reveals that there is a need for the management to redefine its structure to keep its workforce abreast with the dynamic environmental and technological changes in the modern regardless of the functional rules in place.

The management will need to standardize its processes by preparing precise instructions for the employees to ensure efficiency and proper organization of the business.

Some of these directions include proper analysis of all business operations of the Alibaba Company, preparing the company for change, process monitoring, developing a plan for streamlining and formalizing the company processes, and identifying the company’s weaknesses in effectiveness and performance.

Change management is necessary as it handles human behavior and attitudes, some of which hamper the success of projects due to a tendency to resist change. On the other hand, process management involves specific tasks executed by the company’s workforce and systems in a guided way to attain specified objectives or results.

The marketing strategy recommendation forms an integral part of the Alibaba Company. Senior managers in the company need to understand the importance of inculcating an innovative culture.

This situation can be achieved by engaging key decision-makers, marketing managers in fundamental marketing functions of the company, such as strategy formulation. It is important to engage managers in strategy formulation to ensure smooth implementation of changes in the organization.

This situation reduces chances of resistance. There is a need to ensure respectable personal interactions between senior managers and departmental managers. Therefore, removing organizational communication hurdles can fruitfully encourage mutual consultations among management.

In the prevalence of technological dynamism, creating a room for rapid and timely flow of information is inevitably important. As an online-based business, the Alibaba Company must ensure fast communication processes.

It is also important for the company to delegate authority to marketing managers as this move enhances flexibility to adapt to changes. The senior management should create a favorable atmosphere of innovativeness, responsiveness, and openness. The strategy of empowering the marketing manager is very effective.

It ensures the development of personal values and interpersonal relationships. This situation encourages them to engage other stakeholder firms actively. The ultimate goal of authority delegation to marketing managers is provision of support to innovative practices in the organization.

Fostering interactions amongst different management levels fosters commitment and trust. The marketing department of this company will explore ways of remaining knowledgeable of the latest market trends through conducting a market survey over the internet.

The information gathered will be weighed against the current position of the organization. This survey will entail new trends such as social media marketing and advertising, brand recognition, and company’s growth rate against competitors, among other market-related variables.

The company will also look into its current position concerning technological changes. In the advent of online marketing, which has been adopted by many business organizations, the management cannot relent on keeping abreast with the latest online marketing practices.

The management of the Alibaba Company has recommended training its Information Technology (IT) department to keep pace with technological advancement. This responsibility is crucial to positioning the company competitively up-to-datee technologically.

Some key roles of the IT department would include prompt updating of information on websites regarding products descriptions and their prices. Furthermore, there is a need to ensure availability of promotional services and products to attract more customers.

The strategic role of top management is to provide the necessary support to the IT managers to ensure that plans to keep pace with technological changes are implemented in time.

Evaluating the Organizational Structure of the Alibaba Company

Organizational structure influences information flow, coordination of work, and decision making as part of strategy implementation. A company’s structure is based on some proportions, which determine the successful implementation of top managerial strategic directions.

The directions include formalization, centralization, and specialization. A formal structure is the one governed by rules and procedures that provide a means for defining appropriate work practices. The Alibaba Company currently adopts an organic structure. Horizontal and vertical communication models characterize this structure.

Although this structure enhances flexibility of roles, it cannot be the best for the company. To encourage a collaborative and innovation supported culture, the organization can do better with a structure that removes superiority. Since the Alibaba Company is an online business that primarily depends on dynamic market changes, it should adopt a centralized structure.

To achieve innovation and achieve strategic marketing directions the company will adopt the specialization structure. This structure allows specialist to tackle tasks that they are best suited. This phenomenon will ensure that within the departments only the specialists handle the relevant tasks.

For instance, the marketing department can focus on cooperative promotions and advertising, pricing, distributor relations and proper identification of market segments. E-marketing forms the basis of the company. Specialization in the marketing department will contribute significantly to the company’s success.

The Company’s Culture

Organizations culture comprises shared beliefs, norms, and values in an organization. It is the basis for strategic directions as its influences formulation and successful implementation.

Culture influences strategy implementation in various ways. A flexible and stable culture brings about partnerships, togetherness, teamwork, and cooperation among the company’s workforce. On the other hand, a culture of resistance will derail success of the business.

As an online business, the Alibaba Company will create and sustain a collaborative culture that will ensure active interdependent interactions among department managers and the top management. This situation will create an amicable environment for creative consultations besides encouraging support for new ideas.

The Alibaba Company will focus on cultural alignment. When the culture sides with strategy implementation, the company positions itself efficiently in the international market. Culture allows staff to practice dedication and honesty when working individually or in a team.

For technological innovation to be successfully implemented the company will need to encourage an innovation culture through the provision of necessary support. This support can be based on managerial, financial, or labor aspects. This situation calls for the entire company workforce to be well aware of the importance of innovation.

Next, each person will see the need to support new ideas. The ultimate achievement is success of the company. Adaptability to the rapid change in the modern-day business calls for a culture that allows employees to switch to new ways of doing business.

Proposed Functional Tactics, Cultural, and Structural Changes for the Alibaba Company

The company will need to address functional policies, culture, and the current structure if successful implementation is to be realized. Change and process management procedures will be properly executed to keep the employees and departmental managers focused on the goal and processes of the company.

The top management of the Alibaba Company has to outline rules and procedures to avoid duplication of processes and deviations. These policies should be enforced in each department. Proper training is also required for the employees to understand the importance of adherence.

Successful implementation of the marketing strategies will require delegation of authority to managers. It is advisable for the company to discard the formalized structure and embrace specialization as the latter ensures that activities are not generalized.

Only specialists in the particular departments handle them. This move avoids unnecessary costs by eliminating incompetent decisions that result in losses and poor performance. It also ensures time efficiency because experts formulate the implementation decisions.

Cultural alignment is paramount to fruitful strategy implementation. It ensures that the company to encourages adaptability and stability. Employees should be thoroughly educated on the importance of the vital cultural practices. The management can achieve this through goal definition and goal unification.

Managers should define culture in terms of performance, development, customer orientation, goal orientation, and administration to take care of the overall objectives of the organization.

Obstacles/Constraints and Management Solutions

The management can face a number of obstacles during implementation of strategies. Such obstacles include financial constraints to fund market surveys and research. In addition, the company can face employee resistance in cases where change has to be implemented.

Insufficient guidelines can result in poor execution of business strategies. Inexperienced employees lack adequate knowledge about implementation of new strategies in the business. To improve the application of new strategies, some elements need to be tackled.

The management should be in a position to ensure availability of important resources, communication channels, and distinct action plans. Failure to empower people in the organization creates an inferiority complex. This state of affairs hinders the motivation among employees.

Conclusion

From the above discussion, it is evident that strategy implementation is not an easy task. It is the duty of the management to outline functional policies. It should also adopt an appropriate structure that aligns with the organizational culture.

Coupled with the involvement of the management, innovation, and technological competency, this situation will ultimately lead to the overall success of the Alibaba Company.

The key strategy of online marketing requires a specialization structure that calls for recruitment of competent specialists in various departments in the organization.

Company Description

The Alibaba Group Holding Limited is an online shopping company which offers e-commerce trading in China. Founded in 1999, the company has been active in offering electronic payment, cloud computing, and online shopping platform services to customers within the China market.

The company is currently valued at $231 billion. The group has affiliate companies such as Toaboa, Alibaba.com, Juhuansuan, Tmall.com, Alipay, and eTao among others. Alibaba Group Holding Limited has employed the laggard activism strategy to not only capture the Chinese market, but also leapfrog the dominant e-commerce companies.

The Alibaba Group Holding Limited has good knowledge of the Chinese market. The company operates on the Customer-to-Customer (C2C) platform and Business-to-Business (B2B) platform. In order to penetrate the expanding Chinese market, Alibaba Group Holding Limited’s business platform was modified through introduction of services such as premium customer experience, compact support from the community, and low charges for small businesses.

Mission Statement

The mission of the company is to proactively create a reliable and sustainable future e-commerce infrastructure across the globe to meet the expectations of the customers. The mission has internalized the aspects of quality services, affordable products, and long culture of reliability.

The business strategy of the Alibaba Group Holding Limited in achieving its mission functions on the parameters of brand momentum, market innovation, and product excellence. Under the brand momentum, the company has created an effective system for maintaining purity and product strength to position the Alibaba Group Holding Limited brand as a market leader.

As a result, the elements of digitalization, brand recognition, and direct market interaction have become part of the company’s business culture. The attitude of the organization towards localization is an indication of clear vision within the Chinese market.

The goal is to concentrate on the local market through the use of an open-system business model. The strategy was meant to take advantage of the challenge of ‘smallness’ to defeat the giant companies, which depended on the closed-system approach in the execution of their business strategies.

Internal Analysis

The Balanced Scorecard (BSC) system offers the opportunity for an organization to fill the vacuum that often exists between actions and strategies adopted. The system engages a multi-user board in planning for the immediate and long term strategies.

The system has application for tracking feedback against the progress of each strategy and records any changes in the business environment. Thus, the BSC system can be described as a necessary tool for systematic evaluation of the strategies in place against future focus in order to successfully translate the strategies into deliverable variables that can be quantified. This part of the paper carries out internal analysis of the Alibaba Group Holding Limited through use of the balanced scorecard.

The balanced scorecard for the Alibaba Group Holding Limited

Since the Alibaba Group Holding Limited operates in a dynamic and highly competitive e-commerce industry in China and across the globe, it is important to develop an explicit Balanced Scorecard that captures the company’s key success factors such as enhancing learning and innovation, internal business process, financial, and customer management. The Balanced Scorecard in summarized in the tables below for each success factor.

Perspective: Learning and Innovation

Perspective: Internal Business Process

Perspective: Customer

Perspective: Financial

The financial ratio performance of the company as compared to its major competitor is summarized in the tables below.

The Alibaba Group Holding Limited

eBay China Company

The profit margin for the The Alibaba Group Holding Limited declined from 33.63% in 2012 to 18.42% in 2013. The value increased to 18.78% in 2014. On the other hand, it can be observed that the profit margin for its main competitor, eBay China Company, declined from 10.93% in 2012 to 9.69% in 2013.

The ratio further declined to 9.43% in 2014.Thus, it can be noted that the profit margin of the Alibaba Group Holding Limited is higher than that of eBay China Company. This implies that the Alibaba Group Holding Limited performs better in terms of profitability than its main competitor.

Besides, it may also indicate that the Alibaba Group Holding Limited is more efficient in managing cost of sales and operating cost than the eBay China Company.

Applying the Balanced Scorecard

The Alibaba Group Holding Limited’s retail model targets user consumers who form the majority of its market catchments. Since this target group frequent The Alibaba Group Holding Limited online platforms, the company has been in a position to conveniently direct the customers to their designated delivery points and stores without having to directly deliver since the customer perspective is properly implemented.

The Alibaba Group Holding Limited has merged the strategy with advertisements since this group of consumers has access to social media. Due to exposure to information sources such as new papers, television, radio, and magazines, product announcement through these avenues has come in handy.

The decision on the best product relies on information feedback after multiple exposures to different competing products. This approach has been successful towards dominance as it offers a variety of options to consumers, while at the same time, maximizing benefits of economies of scale to the company.

Alibaba Group Holding Limited is the leading company in the e-commerce industry in terms of design and innovation in China. The company is associated with new innovations and attractive designs that appeal to their customers across the world.

Thus, through integration of the training and innovation elements within the Balanced Scorecard, the Alibaba Group Holding Limited has benefited from this strategy in terms of market expansion. Specifically, through product development, the company has been in a position to optimally exploit opportunities available in the innovation market segment and gain a significant share in the e-commerce market in China.

Company’s Major Strengths and Weaknesses

Strengths

The Alibaba Group Holding Limited Company depends on the local means of production in running the business. The company’s business model was to create a decentralized system in terms of a management line of the expansion within the Chinese market. The Alibaba Group Holding Limited rolled out an interesting entry into the Chinese market by concentrating in the affordable traditional methods of advertising.

This strategy ensured that the company is sustainable even when it is offering free services as was the case within the first three years of operation. The affordable and visible traditional methods of advertisement ensured that the targeted market was in a position to distinguish the business from its rival. Besides, the company introduced very low charges for its services, which could not be matched by its rivals.

The payment system of the Alibaba Group Holding Limited is internalized within the flexible platform known as the Alipay. This platform is easy to use among the Chinese customers and businesses. The current financial performance of the company is a clear indication of sustainable business since the company has never made loses since its inception in the year 1999.

Generally, when all other factors are held constant, the Alibaba Group Holding Limited is in a better positioned to sustain its business within the Chinese market due to its unique services, wide appeal to customers, and relatively flexible management model.

Weakness

The Alibaba Group Holding Limited faces stiff competition from companies such as the eBay China, which has mature formula for doing business in the expanding Chinese market. High levels of bureaucracy and inter-functional rivalry are the main reasons that impede the Alibaba Group Holding Limited’s strategy from fully penetrating the Chinese market.

The Alibaba Group Holding Limited has more presence in China than other parts of the global e-commerce market. Specifically, unlike its main competitors, the company has only three physical branches outside China, unlike its competitors. Thus, the Alibaba Group Holding Limited does not enjoy the substantive demand in the global market as its customer catchment area is restricted to the boundaries of the Chinese market.

Besides, the focus of the Alibaba Group Holding Limited is more about the small business platform. This is counterproductive in terms of revenue generation since the majority of its customers are small businesses and private individuals who cannot operate in the global e-commerce platform.

History of Alibaba Group

Alibaba Group’s origin dates back to the late 1990s. Jack Ma who was initially an English instructor in Hanzhou established the Alibaba Group in the late 1990s together with almost 20 other members. They had a common conviction that small companies had the ability to influence expertise and novelty via the internet to develop and rival more efficiently in the local and international markets.

The company launched its website, Alibaba.com that assisted small Chinese entrepreneurs, manufacturers, and exporters to sell their products on the international market. Over the years, the firm has grown into a world leader when it comes to mobile and online commerce (Liu & Forsythe, 2010). It had a successful IPO in the US that turned out to be the largest in the history of IPOs (Thomas & Barreto, 2014).

The company runs its basic operations from China. As of September 2014, it had a market value of 231 billion US dollars. Its website is also among the twenty websites that have the highest online traffic in the world accounting for a significant portion of parcel deliveries to China.

The website is also responsible for over two-thirds of China’s online sales (Liu & Forsythe, 2010). The firm is currently planning to establish businesses in India, which is one of the world’s most populous countries in its expansionary plans. India provides one of the largest markets in terms of consumers.

Alibaba’s Innovations

One of Alibaba’s greatest innovations is Alibaba.com that accounts for the huge profits that the company enjoys. The initial Alibaba.com website listed thousands of China’s factories that offered manufacturing outsourcing services for numerous sectors within the Chinese economy.

The website enabled foreign firms and businesses that were looking for manufacturers of the right kind to produce the products they needed. The innovation made the orders placed for the production of goods by the Chinese run into thousands of units.

Another great innovation by the Alibaba Group is Taobao, which is an online consumer portal that is closely similar to the United States’ eBay.com (Yang, 2006). Taobao is a consumer-to-consumer portal that enables clients to trade between or among themselves. However, Taobao was unique in some aspects. It was able to tap into Alibaba’s existing database of manufacturers and producers.

Taobao made it possible for factories and farmers to have a direct link with customers. Taobao allowed both consumers and producers of commodities to transact directly without the need for intermediaries via its order fulfilment services and centres. Taobao has been proved a powerful economic engine.

When this innovation is combined with the emerging middle class in China that is made up of at least 400 million potential consumers, the results are incredible. This innovative consumer-to-business model has completely changed the way businesses operate. The producers have taken up the roles that were initially played by businesses, thus making them improve on their profits.

This situation has necessitated the need for manufacturers to come with customised options for the goods they offer to their clients. The situation applies with intermediaries who go to the extent of repackaging and/or mixing the product to come up with a product that meets the specific needs of their customers.

Digital distribution is also an incredible innovation by the Alibaba Group. With this innovation, it is now possible to consume products such as movies, music, video games, and series over the air without necessarily having to purchase the hardcopy components.

With virtual deliveries of goods, unlike the traditional items, much of the overhead costs are eliminated. Digital distribution does away with physical storage or shipment of such items with no accompanying reproduction costs (Premkumar, 2003). This distribution innovation has inspired other innovative business models such as SaaS (software as a service).

With SaaS, users are able to test software free of charge and/or buy additional features via micro-transactions. SaaS is a model that is becoming popular in gaming (Cusumano, 2010). It is widely adopted by business-to-business start-ups that provide basic services to their clients cheaply while finding other means of charging the top-tier accounts.

To ensure success, the free trial model usually means that a developer of a given game is able to deliver frequent updates of his or her game content, including new characters, new powers, features, and levels. The company believes that to guarantee an increase in revenues, it has to lend a listening ear to its existing audiences and find out whatever it is that they desire next in relation to a given line of products.

SaaS has changed the handling of customers for the better (Cusumano, 2010). Initially, during the product era, shipment of the final iteration took place without the customers having any real say on the products on offer.

Organisational Approaches to Drive Innovations

Alibaba Group has a three-pronged organisational approach when it comes to innovation. Firstly, the firm explores the desirability of a given innovative product to its consumers. The reason for this step is to ensure that it does not invest heavily in products that eventually turn out to be obsolete within a very short time due to their inability to satisfy specific customer requirements.

Another reason for checking out for the desirability of the product among its consumers is to ensure that the company does not suffer a taint to its image that currently portrays it as one of the world’s largest e-commerce company (Fan & Huang, 2007). A disastrous innovation may serve as a steppingstone for some of its competitors who may be trying to catch up with it.

Even though the firm may institute some recovery measures to revamp its image in a case of any ruin, the damage done to the firm in terms sales may be far-reaching and almost irreversible. This human-centred approach has been responsible for driving much of Alibaba Group’s evolution.

The second consideration in warming up to innovations is viability. Any innovation that Alibaba Group considers must be in line with its business strategy. The firm prioritises technologies that are compatible with its business model. It has to enhance it to realise unprecedented growth rates.

This certainly informed the firm’s decision to buy AutoNavi, a mapping company, whose value to the company’s operations appeared strategic. AutoNavi has the potential of channelling more customers to the firm’s Taobao and Tmall (Guo & Hu, 2012). As such, it avails a complement for Alibaba Group’s core business.

It will also avail much more innovation relating to consumer preferences and whereabouts through its tracking services that will supplement offline data to online data that Alibaba Group has in its possession. Such online to offline (O2O) cohesion raises switching costs, consequently strengthening the network effects. In addition, AutoNavi will assist Alibaba Group in diversifying into mobile consumption.

The third factor in Alibaba Group’s innovation approach is feasibility. The company evaluates its ability to handle and implement certain innovations. Focus here is on the availability of the human resources that are needed to implement such innovation.

Technological advancements usually carry with them certain minimum requirements in terms of accessibility to complementary facilities and resources, some of which may not be readily available in the market. Implementation of a technology in the absence of the necessary structure can have adverse effects on a firm since this situation incredibly increases the chances of failure.

In cases where Alibaba Group does not have the required structures, it tries to explore the possibilities of sourcing for them. At times, the firm is forced to scout for talent in various areas of innovation in which it is not well endowed.

All the three organisational approaches to driving innovations have guaranteed the firm success in the launch and implementation of various innovations (Qinghe, 2013). This situation has made it possible for the firm to experience unprecedented growth without any major setbacks that might have had the effect of cutting back on the already-achieved milestones.

For Alibaba Group, being in possession of large amounts of extra cash does not mean it invests in just any kind of innovation without getting deep down into detailed information regarding the innovation’s feasibility, desirability, and viability. According to Jack Ma, success lies in being thorough in whatever one adopts to minimise the impact of setbacks that may come along the way.

Alibaba versus its Global Competitors

Alibaba Group’s main competitors in the e-commerce sector are Amazon and eBay. Alibaba Group has performed incredibly well in the face of stiff competition from both eBay and Amazon, with statistics and published reporting intimating that the Alibaba Group’s revenues surpass the combined earnings of Amazon and eBay.

Sales records for Alibaba indicate that the firm’s e-commerce business is growing faster than that of its two closest business rivals for the first and second quarters of 2014 (Fan & Huang, 2007). Moreover, the gap that separates its growth from that of Amazon and eBay seems to widen fast. This observation is a clear indication of how the leadership role that Alibaba Group plays is taking shape in the e-commerce Market (Filson, 2004).

However, there is a variation between Alibaba Group and its competitors when it comes to market dominance. For instance, Alibaba Group’s dominance is in the Chinese market where it controls an estimated 80% of the online market, especially with its Alipay and Taobao components (Shen, 2012). On the other hand, Amazon controls much of the North American market where it competes closely with eBay.

Judging by the nature of their dominance, it is rather obvious that real head-on competition between Alibaba Group and these two competitors can only take place outside their strongholds. Therefore, these firms will be targeting new markets that have not been explored much and/or where no firm has an established presence.

Alibaba Group has an added advantage over eBay and Amazon due to some of the facilities it enjoys. One of them is that it has the Chinese government’s support behind it (Qian, 2012). China is seeking to move away from manufacturing as the main economic activity into consumerism. It is counting on eBay as one of the ways out in achieving this vision.

Additionally, Alibaba Group enjoys a huge market base back home compared to Amazon and eBay. This advantage serves as a good foundation in its growth and expansion plans. With efficient plans in place, Alibaba Group does not have anything to worry about competition from its close competitors.

Competition in terms of Innovation

When it comes to innovation-based competition, one needs to consider various aspects to analyse the position of Alibaba Group in relation to its competitors. First, Alibaba Group seems to have copied Amazon’s business model.

However, to make its product better and more attractive, it has included some extra innovative components to its models as a way of customising its products to have a more desirable response to customer needs and requirements of manufacturers and other producers of commodities.

In the view of these facts, it becomes a bit challenging to come up with a clear position on this issue. If one chooses to ignore the allegations of copying on part of Alibaba Group, it is easy to say that the firm is bound to maintain dominance due to its timely and relevant innovations.

Alibaba’s Entrepreneurial Model

Alibaba Group’s entrepreneurial model is a great one. It has won the envy of other firms in the e-commerce industry and other industries as well. The company has a diversified model that consists of three main sites that run the different aspects of its business. Each site is tasked with ensuring creativity and innovativeness on its part.

Tmall deals with online sales of goods that are branded such that they focus on China’s middle class that is among the fastest growing portions of the population (Guo & Hu, 2012). Taobao is the second site that focuses on shopping.

The third site is Alibaba.com that helps in linking firms all over the world with Chinese exporters who host millions of businesses and merchants with many users. With the addition of Alipay, Alibaba Group has a big stake in the online market and hence huge growth prospects.

Conclusion: The Degree of Alibaba Group’s Success in its Approach to Innovation

Alibaba’s approaches to innovation have had great degrees of success upon judging by growth in sales and the market base that the firm has gained over the years. Some of its creative business models have introduced new concepts into the market. Such concepts have helped in terms of simplifying its business.

For instance, alibaba.com was the first website in the world to enable foreign firms to connect directly with manufacturing firms that are located in China. It made it easy for them to outsource the production of goods at low costs without having to go through intermediaries that cause the prices of various goods to go up.

Many firms have been attracted to do business with China. The result is an immense increase in the number of orders that are received by Chinese firms. In terms of financial innovation, Alipay has had a great success by attracting millions of subscribers (Shen, 2012). Alipay is currently offering great competition to PayPal.

Alibaba Group was able to outstrip Amazon of its status as the preferred e-commerce service provider in China. It has rose to become China’s preferred online transactions firm that controls more than 80% of the country’s online business. Considering the degree of success that Alibaba Group has recorded over the years, it is clear that it is headed for greater heights.

Reference List

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Fan, S., & Huang, Q. (2007). Networked Manufacturing and Mass Customisation in the E-Commerce Era: the Chinese Perspective. International Journal of Computer Integrated Manufacturing, 20(2/3), 107-114.

Filson, D. (2004). The Impact Of E-Commerce Strategies On Firm Value: Lessons From Amazon.com And Its Early Competitors. The Journal of Business, 77(S2), S135-S154.

Guo, M., & Hu, W. (2012). Tmall Incident – A Legal Problem or Business Operation Dispute. Advanced Materials Research, 472(1), 3455-3461.

Liu, C., & Forsythe, S. (2010). Sustaining Online Shopping: Moderating Role of Online Shopping Motives. Journal of Internet Commerce, 9(2), 83-103.

Premkumar, P. (2003). Alternate Distribution Strategies for Digital Music. Communications of the ACM, 46(9), 89-95.

Qian, G. (2012). Psychometric Analysis of Validity of Trust Evaluating Indicators in C2C Online Markets: A Case Study of Taobao. Sensor Letters, 10(1), 124-130.

Qinghe, Y. (2013). The online shopping change the retail business model: A survey of the people use online shopping in China. IOSR Journal of Business and Management, 15(5), 77-110.

Shen, W. (2012). Deconstructing the myth of Alipay Drama. Repoliticising foreign investment in the telecommunications sector in China. Telecommunications Policy, 36(10-11), 929-942.

Thomas, D., & Barreto, E. (2014). Alibaba’s choice of U.S. IPO spurred by rivals, Hong Kong impasse: sources. Retrieved from https://www.reuters.com/article/us-alibaba-ipo/alibabas-choice-of-u-s-ipo-spurred-by-rivals-hong-kong-impasse-sources-idUSBREA2I0OA20140319

Yang, B. (2006). Some Personality Correlates of Using EBay. Psychological Reports, 99(7), 762.

Executive Summary

Alibaba is a mega e-commerce company that has dominated the Chinese market and ventured into the global e-commerce industry. In 2014, Alibaba entered the New York Stock Exchange, which implies that it has become an international company. Recently, the Chinese government leveled accusations against Alibaba for condoning the sale of counterfeit products in its platform. Such accusations have significant implications on Alibaba if it actually deals with suppliers, who supply counterfeit products.

External environment analysis in terms of the impact of counterfeiting on Alibaba indicates that it has serious impacts. The economic impact of counterfeiting is that it makes suppliers lose billions of profits owing to considerable decrease in sales. In this view, counterfeiting makes major affiliates not to prefer selling their products through Alibaba resulting in customer decline and huge economic downturn.

Since Alibaba has carved its market niche, the counterfeiting affects the sociocultural aspects, such as customer loyalty, purchasing behavior, and lifestyles of customers. In global circles, Alibaba loses its market share because suppliers and customers prefer alternative markets. Counterfeiting reduces the safety and security of online markets as counterfeiters not only present fake products, but corrupt payment systems and supply chains.

As consequence of counterfeiting, Alibaba faces political and legal repercussions, which include trade sanctions, lawsuits, and other forms of restrictions. Counterfeiting transforms the demographics of Alibaba customers from high-end customers to low-end customers. The overall impact of counterfeiting is that Alibaba makes significant losses owing to the decline in the number of customers and suppliers.

Analysis of the e-commerce industry using Porter’s forces shows that counterfeiting destabilizes the online market. The bargaining power of suppliers increases because they are unwilling to sale their products in counterfeit markets. Moreover, the bargaining power of customers increases because customers like to purchase products cheaply, just as fake products. The threats of substitutes increase for counterfeiters come up with many substitutes, which threaten the existence of the genuine products in the markets.

Counterfeiting also increases competition and compels Alibaba to undertake extensive advertisement and improve quality of services to outcompete competitors and counterfeiters. Given that the e-commerce industry has entry barriers, such as high switching costs, and high capital requirement, counterfeiting increases these barriers because global governments impose stringent regulations, which make it difficult for new entrants to venture into the market.

Analysis of competitive environment shows that Amazon, eBay, Walmart are major competitors of Alibaba. These companies apply both horizontal and vertical integration strategies as business-level strategies of boosting their profits, sales, and market share. Financial analysis shows that Walmart is leading in the generation of revenues ($746 billion), however, it has low working capital ratio and quick ratio. Alibaba ranks second ($529 billion) followed by Amazon ($88 billion), while eBay generates the least amount of revenues ($17.9 billion).

The analysis of the case study indicates that Alibaba needs to curb the problem of counterfeiting for it to remain competitive in the e-commerce industry. Therefore, the study recommend that Alibaba should collaborate with its business affiliates, governments, business bodies, and consumers in ensuring that counterfeit products do not enter their market. To implement the recommendation, Alibaba should ensure that its business affiliates, which are major players, should supply and trade genuine products.

Moreover, business affiliates, who are suppliers, should register their products with relevant bodies so that Alibaba can take appropriate measures when they supply and trade counterfeit products. The measures should include hefty penalties and removal from Alibaba. To curb global counterfeiting, Alibaba needs to collaborate with governments and business bodies in identifying, tracking, and prosecuting counterfeiters.

For consumers to participate in curbing counterfeiting, Alibaba should educate them through press information, forums, demonstrations, and case studies regarding the harmful effects of counterfeit products on economy, company, and themselves. Education of customers changes their purchasing behavior of customers because it makes them insist on buying genuine products from online markets.

Introduction

Alibaba is one of the giant companies across the world in the e-commerce industry. It is a Chinese company that Jack Ma and other co-founders started in 1999 and has exponentially grown within a period of less than two decades. In 2007 Alibaba became a national e-commerce company when it entered the Hong Kong Stock Exchange and in 2014 it became an international e-commerce company when it entered the New York Stock Exchange.

Currently, Alibaba is a renowned e-commerce company across the world owing to its stature in the e-commerce industry. Alibaba provides diverse products to its customers through business-to-business, business-to-customer, and customer-to-customer models. The business-to-business is a leading model that has propelled Alibaba to attain international stance.

According to Yazdanifard and Li, Alibaba comprise several business affiliates, namely, Taobao, eTao, Alibaba Cloud Computing, Xia Mi, Juhuasuan, Laiwang, and AliExpress amongst others (33). Currently, Alibaba is the leading e-commerce company in Asia and offers stiff competition to American e-commerce companies, such as eBay and Amazon.

Despite the fact that the current situation of Alibaba is stable and robust, it has some challenges that need immediate redress for it to achieve optimum growth and maintain its competitive position in the e-commerce industry. Company executives and e-commerce experts hold that Alibaba experiences the challenge of identifying counterfeit products and preventing their sale through its online markets because it deals with diverse products obtained from different companies (Yan par. 5).

In this view, the Chinese government has filed a report that has sufficient evidence, which indicate that Alibaba is dealing with counterfeit products. Fundamentally, the Chinese government is accusing Alibaba for condoning illegal and unethical business activities by failing to identify and curb the sale of counterfeit products in its online marketplaces.

The accusation implies that Alibaba offers liberal market where merchants can sell their counterfeit products without due regard for legal and ethical requirements of e-commerce. Since businesses are subject to legal and ethical requirements, their violation has significant impact on Alibaba because of trade sanctions and lawsuits. Therefore, this case study analyzes the impact of the accusations on Alibaba by undertaking external environment analysis and giving appropriate recommendations.

External Environment Analysis

General Environment

Counterfeiting comprise illegal and unethical business practices, which have significant impact on economic growth of Alibaba. Counterfeiters steal ideas and products from trademark owners, and thus, prevent them from competing effectively and earning optimum profits.

Chu states that Alibaba uses $16.1 million annually in curbing counterfeits in its markets (par. 7). Lewis argues that counterfeit products constitute 7% of world trade and has serious economic impacts because it costs the United States’ economy about $250 billion and 750,000 jobs annually. Given that the worth of Alibaba is approximately $230 billion, counterfeit goods make its affiliates to lose over $20 billion and thousands of jobs.

Counterfeiting also affects sociocultural aspects of Alibaba, such as consumer lifestyle and loyalty. Alibaba has grown exponentially because it provides quality products, which have enhanced consumer lifestyles and loyalty. Counterfeiting usually results in the production and sale of harmful products.

For instance, a customer in the United States purchased counterfeit drugs, which were not only ineffective, but also harmful because they caused death (48). Hence, the existence of counterfeit products makes shy away from purchasing products from Alibaba and shift their loyalty to other e-commerce companies, which sell quality products. In essence, customers change their lifestyles and purchasing behavior in favor of competitors.

Globally, counterfeiting reduces the market share of Alibaba. Yan states that Alibaba has bad reputation in global markets because customers have noted that 82% of products that Taobao sells are fake (par. 4). The effect is that current and potential customers and businesses boycott selling and buying products through Alibaba resulting in marked decrease in sales. Given that online markets are very competitive, competitors such as eBay and Amazon gain a competitive advantage and outcompete Alibaba in the e-commerce industry globally.

As counterfeiting is an illegal business practice, it affects the application of technology in e-commerce. Counterfeiters do not only have the capacity to corrupt products, but also the ability to corrupt information systems that are applicable in supply chain, logistics, service provision, and purchase of products. Lewis argues that counterfeiting reduces security and safety of e-commerce operations (53).

Thus, counterfeiting has serious impact on the information systems that Alibaba applies in undertaking its operations and logistics. For instance, markets that support counterfeit products are prone to hacking and spoofing because pirates and counterfeiters are dominant. The overall effect is that counterfeiting makes operations and logistics of Alibaba to be vulnerable to hacking and spoofing.

The illegal and unethical issue of counterfeit has marked impact on the operations of Alibaba because it violates political and legal requirements. Yan reports that the Office of the United States Trade Representative has noted that Taobao, a major business affiliate of Alibaba, deals with counterfeit products, and thus, the United States should take appropriate measures against it (par. 9).

In such an instance, Alibaba attracts political and legal measures against itself. According to Lewis, governments across the world impose political interventions, such as lower quotas, higher tariffs, and embargo, in curbing counterfeit products (56).

In this case, several governments across the world might impose such political sanctions on Alibaba if it does not curb proliferation of counterfeit market in its online markets. In 2014, Yves Saint Laurent and Gucci and other dominant brands in the United States filed a lawsuit against Alibaba for colluding with counterfeiters in selling counterfeit products (Chu par. 3). Ultimately, trade restrictions affect the market share of Alibaba leading to a massive decline in sales and profits.

Counterfeiting influences demographic attributes of customers and business affiliates that Alibaba deals with in the e-commerce industry. For example, analysis of counterfeit markets in the United States indicates that demographic attributes of customers differ considerably from that of genuine markets (Lewis 53). Hence, counterfeiting has marked impact demographic attributes of Alibaba’s customers.

In this view, Lewis holds that most counterfeiters target low-income earners, who do not mind buying fake products at cheaper prices than the genuine products (50). In contrast, given that high-income earners prefer to purchase quality products at premium prices, the existence of cheap and fake products turns them away from Alibaba. The outcome is the proportion of low-income earners increases, whereas the proportion of high-income earners declines.

Industrial Environment

In the view of the prevalence of counterfeiting, the bargaining power of suppliers increases because suppliers become unwilling to trade their products in online markets. Progress, Whilhemia, and Tarisai state that high bargaining power can discourage suppliers from selling their products through business-to-business model, but encourage them to employ business-to-consumer model (173).

Since counterfeiting reduces the demands for genuine products, suppliers make huge losses in markets where counterfeit products dominate. In this case, Alibaba experiences tough challenges in maintaining suppliers and attracting new ones.

Counterfeit products increase the bargaining power of customers because they become used to cheap prices, and thus, unable to purchase products at premium prices that suppliers set. Progress, Whilhemia, and Tarisai argue that informed customers have high bargaining power because they understand quality of products and market prices (174).

The understanding of the counterfeit products, genuine products, and their respective prices gives customers an upper hand in purchasing. In this case, Alibaba and business affiliates grapple with the high bargaining power of customers, which pressures them to reduce market prices to be in tandem with counterfeit products, which have low or similar quality.

Counterfeiting increases the threats of the substitute products that suppliers can offer and customers can buy. Progress, Whilhemia, and Tarisai state that substitute products threaten to change the dynamics of markets because they cause customers to switch to alternative products, which suit their interests and purchasing power (174).

Depending on the profitable model, suppliers can choose business-to-business model, business-to-customer model, and customer-to-customer model. To overcome counterfeits, suppliers may choose to sell their products through business-to-customer model. Moreover, the existence of counterfeit products increases threats of substitute products, as customers access diverse products, which vary according to quality and price.

There is stiff competition in the e-commerce industry owing to the emergence of information technology. Alibaba is experiencing stiff competition from numerous e-commerce companies such as Amazon, Walmart, and eBay, which are in the United States. Lewis states that counterfeiting increases rivalry among companies because counterfeit products are cheaper than genuine products (52).

In this case, it implies that Alibaba provides a robust platform for counterfeiting and fuels rivalry among competing e-commerce companies in global markets. The net outcome of counterfeiting is that e-commerce companies experience unhealthy competition, which does not favor the growth of the e-commerce industry.

The characteristics of the e-commerce industry that Alibaba operates are high fixed costs, high switching costs, high strategic states, and low exit barriers. Low exit barriers allow companies that are unable to remain competitive in the e-commerce industry to exit easily leaving competitive companies to dominate.

The threat of new entrants is very high because the e-commerce is a lucrative online market, where customers and suppliers meet. The existence of counterfeiting in Alibaba complicates entry to e-commerce industry because of the existence of barriers, such as huge capital requirement, high switching costs, expensive distribution channels, product differentiation, and government policies.

Establishment of an e-commerce company requires huge capital for the development of safe and secure information systems for database, supply chain, and payment amongst others. Since e-commerce companies monitor purchasing behavior of customers, switching costs are very high because it entails the transfer or loss of customers’ data (Progress, Whilhemia, and Tarisai 174). For successful entry, a company must construct secure distribution channels and differentiate products in a manner that is difficult to counterfeit.

Competitor’s Environment

The three primary competitors of Alibaba are Amazon, eBay, and Walmart. Financial growth of Alibaba has increased exponentially because its revenues increased from $209 billion in 2012 to $529 billion in 2014 (United States Securities and Exchange Commission par. 12). Amazon is an American e-commerce based in Seattle, Washington, which started in 1994 is currently trading on the New York Stock Exchange.

Last financial year, Amazon generated a net revenue of $89 billion, which reflects its growth in global markets (United States Securities and Exchange Commission par. 25). eBay is also an American e-commerce company based in San Jose, California, which started in 1995 and has grown exponentially to become a global e-commerce company.

The growth of eBay is stagnating because its revenues increased from $14 billion in 2012 to $17.9 billion in 2014 (United States Securities and Exchange Commission par 14). Walmart is an American e-commerce company based in Bentonville, Arkansas, which started in 1962 and entered the New York Stock Exchange ten years later. Currently, Walmart is performing well because it generated $746 billion in the fiscal year of 2014 (United States Securities and Exchange Commission par. 23).

In the aspect of business-level strategies, Alibaba, Amazon, eBay, and Walmart employ vertical or horizontal integration strategies. Alibaba uses vertical integration as a business-level strategy that has made it acquire affiliates in different regions across the world. Amazon also uses vertical integration strategy in opening distribution centers and merging with related companies for it to expand market share globally.

The business-level strategy that eBay employs in expanding its growth and diversification of products is horizontal integration. As Walmart aims to own its supply chain globally, it employs vertical integration as a business-level strategy. The key success factors in e-commerce industry are information systems, supply chain infrastructure, availability of shipping industry, the Internet, secure online payments, legislations, global trade, and liberalization of markets.

Working capital ratio and quick ratio are two ratios that effectively assess performance of Alibaba, Amazon, Walmart, and eBay. Business analyst states that working capital ratio and quick ratio are traditional financial ratios, which are appropriate in analyzing short-term financial liquidity of a business enterprise (Kirkham 2). The working capital ratios for Alibaba, Amazon, Walmart, and eBay are 1.7:1, 1.1:1, 0.9:1, and 1.5.1 respectively.

The working ratios mean that Alibaba, Amazon, and eBay can easily settle their liabilities using current assets, while Walmart is unable. The quick ratios for Alibaba, Amazon, Walmart, and eBay are 0.9:1, 0.8:1, 0.2:1, and 0.7:1 respectively. The ratios imply that Alibaba, Amazon, and eBay have more cash than inventories, while Walmart does not have sufficient cash to settle the current liabilities.

The performance of Alibaba, Walmart, and Amazon is robust because they have differentiated and diversified their products and ventured into global markets. The performance of eBay is stagnating because its market share is small when compared to Walmart, Amazon, and Alibaba. The future objectives of these e-commerce companies are to expand their market share and reach global markets, provide quality products, diversify services, and differentiate products.

The strengths of these companies are that they access global markets, offer diverse products, determine the supply of products in the markets, and apply information technology. The weaknesses are that they are prone to counterfeiting, shipping of products is expensive, limited to certain jurisdictions, and bargaining power of suppliers dictates their operations.

Recommendations

Given that the issue of counterfeiting has significant impact on Alibaba, the following recommendations are necessary. The first recommendation is that Alibaba should collaborate with its business affiliates in ensuring that counterfeit products do not enter their market. Analysis of business operations indicates that Alibaba do not have its own merchandise products on the online market, and thus, it purely retails products from its business affiliates, who are the suppliers.

Evidently, Taobao, AliExpress and Tmall are major business of affiliates that are notorious for supplying and trading counterfeit products in Alibaba. In the implementation of this recommendation, Alibaba needs to delegate its anti-counterfeit responsibility to business affiliates so that they can contribute to the fight against counterfeit products. Thus, every business affiliate should take responsibility of ensuring that they do not supply or trade fake products in Alibaba, and further identify and report the existence of fake products.

The second recommendation is that Alibaba should ensure that suppliers register their trademarks with relevant bodies so that they can launch legal suits in case counterfeit products appear in markets. Alibaba is experiencing difficulties in identifying counterfeit products and differentiating them from the fake products because some suppliers have not registered their trademarks.

In this case, all business affiliates, which supply products to Alibaba, must ensure that they supply registered products so that Alibaba can help them in identifying counterfeits products and counterfeiters. Moreover, Alibaba can launch litigation process that can lead to the arrest and prosecution of counterfeiters in the e-commerce industry. Hence, registration of trademarks enhances legal fight against counterfeit products and counterfeiters.

The third recommendation is that Alibaba should collaborate with the Chinese government and other international governments in curbing counterfeit products. Since Alibaba has no powers to impose trade sanctions and political restrictions, it requires the assistance of the Chinese and other international governments. The Chinese government needs to impose appropriate trade sanctions on Chinese companies that supply and trade counterfeit products on the online platforms of Alibaba.

The Chinese government should formulate stringent regulations and impose hefty penalties on companies that supply and trade fake products within its jurisdictions. Moreover, Alibaba needs international governments to aid in the imposition of trade sanctions and political restrictions.

Analysis of Alibaba shows that the American, European, and Canadian markets have reported increased cases of counterfeit products. As Alibaba has limited jurisdiction, it requires assistance of international governments for they have the ability to ensure that all companies within their jurisdictions, which trade online, do not engage in counterfeiting.

The fourth recommendation is that Alibaba should educate its consumers regarding the harmful effects of counterfeit products on economy, company, and utility of the products. Education of customers should occur through press information, forums, demonstrations, and case studies. Alibaba needs to caution customers against purchasing fake products and encourage them to purchase genuine products through newspapers, magazines, adverts, and brochures.

Forums also provide robust means of educating customers because it allows them to interact with representatives from Alibaba and have their questions answered. Given that it is difficult for customers to differentiate fake products from genuine products, Alibaba needs to demonstrate how customers can identify genuine products through online videos.

Alibaba should offer case studies in its websites for customers to give their feedback regarding post-consumption experiences so that potential customers can understand what to expect when they purchase genuine products lest they buy fake ones.

Works Cited

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Lewis, Kevin. “The Fake and the Fatal: The Consequences of Counterfeits.” The Park Place Economist 17.1 (2009): 47-59. Print.

Kirkham, Ross. “Liquidity analysis using cash flow ratios and traditional ratios: The telecommunications in Australia.” Journal of New Business Ideas & Trends 10.1 (2012): 1-13. Print.

Progress, Hove, Smith Whilhemia, and Chikungwa Tarisai. “The delineation of Porter’s five competitive forces model from a technological marketing perspective: A case study of Buffalo City Metropolitan Municipality.” Journal of Economics 4.2 (2013): 169-182. Print.

United States Securities and Exchange Commission. Alibaba Group Holding Limited. 2014. Web.

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United States Securities and Exchange Commission. Walmart. 2014. Web.

Yazdanifard, Rashad, and Merveen Li. “The Review of Alibaba’s Online Business Marketing Strategies Which Navigate Them to Present Success.” Global Journal of Business and Management 14.7 (2014): 32-40. Print.

Yan, Sophia. Alibaba has a major counterfeit problem. 2014. Web.

Alibaba is one of the most successful online sellers in the world. This online platform “dominates the world’s largest e-commerce market” (Rein 27). It earns billions of dollars each year. The company was set up in 1999 as a platform for small business and consumers who could sell and buy goods safely online (“About Alibaba.com”).

It is noteworthy that the company earned its popularity due to the large array of products available and the payment system people could trust. When other online sellers used payment systems that were little known to Chines people or could be unsafe, Alibaba used Alipay system that was safe and known to the company’s customers.

However, the Chinese platform has been criticized by various producers (including Adidas, Gucci, Yves Saint Laurent and so on) as various counterfeit products are sold and bought there (Chu). It is necessary to note that selling counterfeit goods is illegal in many countries (including China) as these goods break copyright laws, and they can be unsafe for customers (Narayanan 21).

Of course, producers of goods (especially famous brands) lose millions or even billions of dollars due to the problem. The company largely ignored accusations, but it took definite steps to address the problem in 2011 (Hu and Guo 237). Alibaba had to make such a decision to keep its customers, brands known worldwide.

The paper will include an analysis of the steps undertaken and some recommendations on the way to improve the situation. Thus, Alibaba’s spokesman claims that they keep working with various brands “to help them protect their intellectual property” (Raymond). One of the principal steps is the development of Tmall website.

This platform is characterized by sales directly from the brands’ storehouses. Of course, this site has earned trust among consumers who are sure that they buy genuine products (Rein 28). Notably, one of the first companies to join the platform was Adidas. However, it is also necessary to add that various counterfeit products are sold with the use of the rest of websites that are a part of the platform.

Another step undertaken is the development of a particular reporting system. Producers can fill in certain forms to report about counterfeit products found at the websites. However, producers argue that the new system is more complicated, and it makes it difficult or even impossible to report (Chu). Producers stress that the new reporting methods are inefficient and should be changed.

It can be recommended to change the reporting system. It should be simple, and the company should undertake particular steps to respond to each report. Alibaba’s officials claim that the company spends $16 million on tracking counterfeit products and reacting adequately. The development of an efficient reporting system will help optimize the process and reduce the expenditure. It can also be effective to launch new websites that sell goods directly from companies’ storehouses.

Old websites where most counterfeit products are found should be closed. Finally, the platform should also have a comprehensive IPR protection policy that would ensure that the producers and sellers are responsible. This policy should involve significant fines for violators as well as the possibility to restrict the activity of the violators at Alibaba. The company can also be an initiator of the creation of a single database of repetitive offenders and sellers of counterfeit products that will be available for producers and customers.

Works Cited

About Alibaba. 2015. Web.

Chu, Kathy. “Alibaba Revamps Fake-Goods Procedures.” The Wall Street Journal 2015. Web.

Hu, Weiwei, and Yimeei Guo. “Combating Against Counterfeit: Third Party E-Commerce Trade Platform’s Liability Analysis.” Research on Selected China’s Legal Issues of E-Business. Ed. Yimeei Guo. New York: Springer, 2014. 231-239. Print.

Narayanan, Sukumar. “Global Issues and Threats of E-Commerce on Counterfeit Batteries.” International Journal of Advance Research in Computer Science and Management Studies 2.2 (2014): 21-27. Print.

Raymond, Nate. “Alibaba Sued in US by Luxury Brands over Counterfeit Goods.” Reuters 2015. Web.

Rein, Shaun. The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia. Hoboken: John WILEY & Sons, 2014. Print.

Alibaba Group is a large private internet-based electronic business unit located in Hangzhou, China. The firm has online web portals, search engine for shoppers, cloud computing services, online retail, and an electronic system of payment for its users. In this study, the analysis will be based on the website alibaba. It is always important to understand that the nature of a business website is always different from that of a personal website. The website in this study is for the business purposes and, therefore, it is expected to have functionalities that are user-friendly.

According to Mack and Casey (2001, p. 89), a good website should enable the consumer to develop a feeling that he or she is in a physical store doing some window-shopping before making the actual purchase. It means that the website should use a combination of both visual and textual strategy that would help answer any question that the customer might have. The website of this company has some features that may make it be classified as a good website because of a number of reasons. It has enough visual images of the products in the store taken from the shelves. In each category of a given product, there are varieties offered for the customers (Shuen 2008, p. 45). The two images show different types of bicycles taken from this website.

Online Store for Bicycles at Alibaba

It is clear from the diagrams above that this firm is serious when it comes to offering varieties to the customers. The researcher only takes two samples, but there are numerous types of bicycles, each is with its own price, a detailed description including the brand, and the mode of delivery. The visual image helps the consumer visualize the product he or she is purchasing, while the description helps him or her understand some of the features that make the product special. This makes the shopping experience enjoyable. According to Jones and Silverstein (2009, p. 68), one of the most important factors that a business website should not ignore is the fair pricing of the product. It is likely that a customer may view a number of products before making a decision on where to make a purchase. Customers will ignore a website that does not price its products. The Alibaba website has priced all its products, making it easy for the buyer to make the relevant decision.

The Alibaba website has a number of icons that make it easy for the website user to navigate, especially because the products have been classified into categories and these categories are arranged alphabetically on the extreme left of the web page. The customer only needs to identify the category of the desired product, click on the category, identify the product and this will offer a variety of brands, types, and prices of the products that are available. This shortens the period of shopping whenever one wants to make a purchase in this website. The online payment system makes it easy for the buyers or the suppliers to make or receive payments from this company through online means.

Schmetterer (2003, p. 87) says that a good business website should be simple enough to be used by anyone who can read and follow simple instructions in the website. This is very evident in this website. Everything is so clear, and all that the customer needs to do is to click and then make appropriate payments. In case a customer fails to find the desired product in the current categories, maybe because it is a new product, this website allows the customer to key in the name of the product and a list of options will be displayed. The consumer can then proceed to make a purchase in case the product is available.

May (2000, p. 78) notes that a good website should allow direct and close interactions with the customers in order to determine any feedback from them, send them necessary information, or allow them to ask questions before the purchase. The Alibaba website enables users to create an account with them. Once the customer has an account, he or she can send and receive messages directly from the representatives of the firm. This does not only help in getting the views of the customers about the firm, but also helps in eliminating post-purchase dissonance among the customers. Any of the problems arising from the purchase can easily be addressed by the company.

For those without an account, the website offers them direct help by enabling them to leave a message in the website. The issue will be addressed and a message will be sent to the customer via a message or phone call. Finally, it is necessary to observe that this company has taken the initiative to incorporate the social media to improve direct communication with the consumers in case this may be necessary. The company uses Facebook, Tweeter, YouTube, and LinkedIn to reach out its customers. These create a platform where the firm can engage its users in a constructive debate on their products offered in the market.

Inasmuch as the Alibaba website has so many good features that make it easy to navigate and attract customers, there are some important features that have not been addressed. For instance, the website lacks the visual appeal that may draw the interest of visitors to explore the website. Its choice of colour on its home page may be appealing in the current market in China, but it may fail to attract the attention in other regions where colour means much to the customers. It was also noted with concern that in case one finds themselves in the Chinese version of the website 1688, there is no option within that webpage that will lead him or her to the English Version or any other language for that matter. This means that such customer will lose his or her way in the website, and no transaction will take place.

Website Business Strategy Alignment

Website business strategy has gained popularity in the recent past as many business units consider moving away from the traditional brick-and-moter business strategy. According to Fox (2012, p. 34), it is important to ensure that the website business strategy is properly aligned to the business goals and objectives. The website strategy is slightly different from the brick-and-moter strategy. Gamse (2011, p. 44) says that while a physical store may have a chance of using signposts to direct customers to the physical stores, the process of implementing the initial website strategy can be very challenging. The firm must find a way of leading the customers to the website so that they can view products that are available for sale. Although the website brings together people from various parts of the world, it can be very challenging to convince customers that a given message is not junk.

According to Dwyer (2003, p. 55), consumers are always irritated by junk messages seeking to advertise a given product that is not even relevant to them. They would dismiss such messages in their e-mails or on the social media without paying any particular attention. This can be very different from the approach that can be taken by a physical store. It may not be easy for a customer to ignore a beautiful supermarket located close to the road. Alibaba has this challenge in its website strategy. This Chinese firm is not as well-known as Amazon.com, especially in the market outside China. In order to align its operations to its goal of becoming a global company, the firm has been making concerted efforts to reach out to the customers using both mass and social media (Werbach 2009, p. 59).

Consumers in the West, especially the middle-aged and the aging populations, always consider advertisements in the mass media as credible. The strategy has been to pull customers to their website using mass media. After creating awareness in mass media, it becomes easy to gain credibility in the social media. Facebook, Tweeter, YouTube, and LinkedIn have been very beneficial in reaching and attracting new customers.

When using the website business strategy, it is important to ensure that the firm creates a platform that will make customers believe that they are shopping in a store. The effort that is always made in the brick-and-moter stores to arrange the shelves to appear attractive to the customers should be the same effort made by the online stores in their website (Shin 2004, p. 63). One way of aligning the strategy with the goals of the firm is to develop an appropriate transaction system. It may be necessary to understand the process of making transactions with the firm’s website. When an individual has chosen the desired price, there is an option as ‘Buy Now’ that the buyer should click, and this would lead to the payment process. The buyer will need to login to the account in order to make the payment.

The process is simple to follow, especially because most of the icons are accompanied by visual images to help the buyer understand the entire process. The process of logging into the account before making transactions was meant to enhance security of the system. The log in details are supposed to be kept secretly by the users in order to protect their accounts with the company. These features are meant to protect customers from fraudsters, who may try to access their accounts through fraudulent means. Another approach would be to maintain an active presence both in the mass and social media to increase awareness of the product among the consumers (Wong 2013, p. 96). This would help the firm achieve its objective of dominating the global market.

According to Craine (2000, p. 67), website business strategy’s main disadvantage is that it may take some time before penetrating the market. Unlike the brick-and-moter strategy, this approach can be easily ignored because of the lack of physical presence. Some consumers also prefer physical stores where they can test the product, especially when purchasing involves expensive goods, such as cars. Online transactions are also prone to be hacked by fraudsters, who may steal from the customers or the business unit. However, the main advantage of this strategy is that it eliminates the geographical barrier that the brick-and-moter stores always encounter.

It also eliminates the cost of rent, cost of development and maintenance of shelves, and the cost of hiring numerous staff to take care of the physical stores. This means that the strategy enables a firm to charge lower prices on its products. The other strategy that is available is the brick-and-moter strategy where products are availed to the customers through physical stores, as opposed to online shops.

Improvement, Recommendations and Business Future Strategy

Developing a web strategy is one of the most important tasks to any business unit operating in the current global society. According to Burby and Atchison (2007, p. 56), consumer’s behaviour is slowly changing as technology transforms families. Most of the families now have limited time to go to brick-and-moter stores because they spend most of their time at work or with their relatives. For this reason, online business has gained massive popularity in the recent past because it enables an individual to make a purchase of the desired product from office, at home, or in any other place as long as the individual has the access to the Internet. Many businesses have considered developing websites to boost their sales in the physical stores while others have become purely online stores.

Craig (2013, p. 23) says that when developing a website strategy, there are a number of factors that should be considered in order to create a platform that would be able to deliver the desired results. In this study, the researcher analyzed the website of Alibaba Group, a Chinese online store, in order to determine the appropriateness of its website in the product offering (Silver 2009, p. 83).

Although it is clear from the description above that the firm’s website strategy has been successful, there are some issues that need to be addressed in order to enable the company to have a successful future of the current business idea. The electronic business strategy is attracting many players, and only those who have excellent strategies will remain successful in the market. Firms such as Alibaba must realize that in the electronic market, the size of the business unit may not be used to define the ability to be successful in the market as the case of brick-and-moter market shows. Therefore,this firm must embrace the best practices in this industry. Based on the above observations, the above recommendations have been considered as appropriate measures that can help improve the future of this firm.

• The marketing unit in close collaboration with the technical department should consider improving the appearance of the website, especially the home page, in terms of the images and colour.
• There should be an icon that will enable an individual to change from one language to another with ease when navigating the website. This icon should be strategically located within the website.
• The website should be aggressively marketed using both social and mass media. The marketing unit has not done enough in popularizing this website, and this should be changed.
• In order to operate using the website strategy, it is necessary for this firm to ensure that its online store is properly arranged. The images placed in this website should be of high quality.
• The marketing unit should restructure the textual information in this website. Taking into account that the textual information is too crowded, customers may find it boring during their navigation.

List of References

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Dwyer, J 2003, Communication in business: Strategies and skills, Pearson Education, Belmont. Web.

Fox, V 2012, Marketing in the age of Google: Your online strategy IS your business strategy, Wiley, Hoboken. Web.

Gamse, P 2011, 42 rules for a Web presence that wins: Essential business strategy for website and social media success, Super Star Press, Cupertino. Web.

Jones, S & Silverstein, B 2009, Business-to-business Internet marketing: Seven proven strategies for increasing profits through Internet direct marketing, Maximum Press, Gulf Breeze. Web.

Mack, C & Casey, G 2001, Business strategy for an era of political change, Quorum Books, Westport. Web.

May, P 2000, The business of ecommerce: From corporate strategy to technology, Cambridge University Press, Cambridge. Web.

Schmetterer, B 2003, Leap: A Revolution in Creative Business Strategy, John Wiley & Sons, Hoboken. Web.

Shin, N 2004, Strategies for generating e-business returns on investment, Idea Group, Hershey. Web.

Shuen, A 2008, Web 2.0: A strategy guide, O’Reilly Media, Sebastopol. Web.

Silver, A 2009, The social network business plan: 18 strategies that will create great wealth, Wiley, Hoboken. Web.

Werbach, A 2009, Strategy for sustainability: A business manifesto, Harvard Business Press, Boston. Web.

Wong, G 2013, The comprehensive guide to careers in sports, Jones & Bartlett Learning, Burlington. Web.