Category: Alibaba

Alibaba is one of the largest commerce companies working in the sphere of online and mobile retail. With three key websites: Alibaba, T-mall, and Taobao.com, the company supports its development in China. In addition, the world-renowned website Aliexpress.com offers online shopping services to customers around the globe. While the company does not sell specific products or regard the operation of an online store as a priority, it focuses on building a large marketplace for merchants to sell their products to either businesses or consumers. If comparing Alibaba to eBay or Amazon, the distinction lies in Amazon focusing predominantly on business-to-customer operations, while eBay is a customer-to-customer commerce website (Dixit and Sinha). One of the key strengths exhibited by Alibaba is the in-depth understanding of the needs and demands of the Chinese marketplace, handling of the complicated policies and regulations, and the ability to work with the government on a variety of levels.

The key focuses for Alibaba are the expansion of the global market for exploiting increased levels of social capital and merging into more efficient business units by acquiring new firms. As reported by Mozur in the New York Times article, Alibaba showed immense growth in the past couple of years despite the fact that the Chinese economy experienced a slowdown. With regard to internal strategy, the company achieved considerable success with its new cloud computing services, which Chinese businesses are currently using for increased computer power. As for the company’s external strategy, Alibaba continues to expand the range of available products and involve merchants who sell items that will not only be popular in China but also worldwide.

When exploring the internal and external strategies undertaken by Alibaba, the article highlighted the differential between the opportunities and challenges the company may experience in the future. Regarding the opportunities, the company has a chance to succeed as a result of global expansion and the acquisition of new firms. However, the Chinese business environment limits Alibaba’s capabilities in the internal market due to stiff competition and the decline of the economy. The three key concepts explored in the article include global expansion, the stumbling Chinese economy, and competition in the e-commerce market. With regard to these concepts, Alibaba is currently thriving despite the slowdown of the Chinese economy and is planning to expand its global presence and reach as many customers around the world as possible.

Internal

When comparing Alibaba to JD.com, its main competitor in the Chinese e-commerce market, it is evident that Alibaba is mostly certain of its business capabilities and showed an increase in growth in 2016 compared to its key rival (Figure 1).

For example, the company’s gross merchandise volume increased by 24% in comparison to that of the previous year. This level of increased performance is now considered to be a standard pace of the company’s development. To manage the internal market operations, the company began to look into other spheres of business in order to survive in the declining Chinese economy. For example, as mentioned in the New York Times article, Alibaba will start offering food delivery services as well as ‘trying its hand’ in the sphere of entertainment. Moreover, the company is looking to improve and develop its cloud computing services in order to deal with the primary competitors in the internal market.

Despite attempts to capture new markets and create new business opportunities in the internal economy, the company is still at risk of failing. For example, in the sector of cloud computing, Alibaba is currently unable to outperform its rivals, and the domestic challenge created by the Baidu search engine does not allow the company to quickly capture the market in the same way it did with e-commerce. Moreover, the attempts to capture business opportunities associated with food delivery may cause some issues regarding the drain on earnings due to the fact that many identical food delivery companies compete with each other and try to offer sizable commissions to drivers that deliver meals directly to customers (Mozur).

External

As to the external focus of the company, Alibaba puts an emphasis on international expansion. Despite the fact that the internal market is still the highest priority for Alibaba, in prospect, it has a similar vision to Amazon and wants to expand its reach. One of the most recent steps towards global expansion is the acquisition of Indian firms Snapdeal and Paytm in 2016. To merge into more efficient units that will gain the company more success, Alibaba also acquired a stake in Lazanda, one of the largest e-platforms in Southeast Asia. This decision made by the company’s management makes sense since Lazanda is constantly expanding the base of its consumers (approximately 200 million Internet users) (Team). The profits from the Chinese market could provide support for the company’s global expansion, and, with the help of foreign investors, the company may acquire sufficient capital for further business operations. To conclude, Alibaba is currently on its way to capturing the global e-commerce marketplace, although there is a number of internal and external factors that may create some barriers for the company and limit its competitive capabilities.

Works Cited

“Alibaba.com vs JD.com 2016” n.d. 2016. Web.

Dixit, Shailja, and Amit Kumar Sinha. E-Retailing Challenges and Opportunities in the Global Marketplace. Business Science Reference, 2016.

Mozur, Paul. “Alibaba Reports Growth, Even as China’s Economy Stumbles.” New York Times. Web.

Team, Trefis. “Why is Alibaba Expanding Beyond China?” Forbes. Web.

The benefits and cost of use Alibaba.com

Comparison analysis

Grieve company’s 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 Grieves’s 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 world’s 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.