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Alibaba Group A Case Analysis
Alibaba Group A Case Analysis
A Case Analysis
Submitted By:
CABABAT, Zoreyn
SAJULGA, Jason
VALMORIDA, Kareem
Submitted To:
Mr Eliel Daang
I. COMPANY BACKGROUND
The Alibaba Group burst into the global e- commerce division with Alibaba.com. It is a
web service which advances B2B (business to business) trade all over the world and to
became one of China’s first online businesses. Alibaba has grown excellently from its
early beginning as a broad e-market to a giant e-marketplace. Most buyers and
suppliers consider Alibaba as a grand B2B dating site. Businesses can upload specific
products that they are looking for in the hope to match it with potential suppliers. They
can also effectively search Alibaba for business customers who have already registered
their searches; it is like they have this memory for every detail of transaction.
The 4p’s of their marketing strategy contributed to Alibaba’s success. First is the
Product, products that can be marketed which includes physical goods, service, places
or in the deeper sense the product they offer is not just any physical item but the
perception of the consumer. Alibaba also offers a broad variety of services; they made
sure that they can establish trust and safety in their online payments and other
transactions in order to maintain customer loyalty. Second is the Pricing, competition
pricing is setting a price in comparison with competitors. Alibaba Groups uses
competitive pricing so that the price they offer does not have an extreme difference with
its competitors. The company gives low prices and ensures good quality products so
that it can attract the targeted market. This pricing method increased the sales of the
company. Third is Promotion, they promote their services through the use of the
internet, media advertising and sponsoring events. Alibaba uses the internet promotion
strategy because internet is the best in terms of how cost effective it isand it’s also the
fastest promotion tool in the market place.
The presence of the Alibaba company profile in major search engines like Yahoo gives
the company a global exposure and creates awareness among buyers/importers
effectively. The availability of internet banners about Alibaba that take the searchers
direct to their main website. Fourth is their distribution or Place strategy, Alibaba uses
the internet as their channel intermediary to geographically promote their products
across the online world, Alibaba Groups has several online B2B marketplaces that
potential buyers and suppliers from around the world can obtain its products and
services.
Apart from Alibaba, the Alibaba Group has diversified its efforts with other e-commerce
sites such as Taobao, Alipay and etc. These web services expand the Alibaba Group’s
business portfolio to include services like retail websites, and business management
solutions, making it one of the largest and most comprehensive providers of internet
retail and B2B services.
Aside from having a race in the market with its competitors, Alibaba juiced an
advantage from this; it is to carry out cooperation from competition to generate potential
ideas and be beneficial to each other.
III. STATEMENT OF THE PROBLEM
How will Alibaba Group get by in the market as the company becomes more exposed to
greater competitions.
IV. OBJECTIVES
V. AREAS OF CONSIDERATION
Alibaba.com was one of the few companies in China that did not copy existing
business models in the US or Europe
It provides a platform for buyers and sellers, and proposes news, analysis
and timely price lists, and development team works research new
technologies and functions to support their website which help to enhance
their service and reduce operation cost and obtain large profit.
Its business model aims to structure an efficient, flexible and responsive
structure in front of a demanding customer demand and information society
opportunities.
Its network of partners for creating, marketing and delivering value and
relationship capital to one or several segments of customers under B2B in
order to generate profitable and sustainable revenue streams with its
business model
STRENGTHS:
-The company's primary target is to maintain its great market share there in
china,because mainly china has the largest population worldwide.
-Customers/consumers prefer online shopping which is trustworthy, of course, who
would want to waste or give away their hard earned money?
-Customers would feel the security of their transactions through the third party payment
of www.Alipay.com
WEAKNESSES:
-Entrepreneurs who aren't risk takers would have second thoughts of having
transactions with their clients through Alibaba.
OPPORTUNITIES:
-Having ranked and known as a reliable e-commerce site, customers from different
parts of Asia would prefer Alibaba as their provider of online goods because of the less
risk for the package to be delayed the distance of the ocean is not quite far.
-Alibaba group of companies found a way to maximize their aces, the payments of their
clients are funneled to Alipay
THREATS:
-Alibaba profits mainly in China, but China b2b business environment has constrained
the further development of Alibaba, such as a sound law, loopholes in online payment
security, not so good infrastructure in some cities, which will hold back the development
of Alibaba.
-B2B business site model, not only in the last few years with the rapid development of
the world, and gradually formed a trend - e-business alliance - that is, the trend of
mergers and cooperation, which will lead to more competition
-The infrastructures in China is not yet fully developed to support the development of
Alibaba.
Advantage: Being competitive in the domestic market, in their own country first, will
help the companies under Alibaba Group acquire more useful strategies that can
help them overcome the threats they will be facing once they try to venture outside
of their current market.
Disadvantage: If the company decides to focus more on their domestic ventures and
activities, it might be possible that venturing outside of the country and their current
scope will prove to be more of a challenge as international relations and markets are
very different waters compared to what they have to deal with domestically
speaking.
Alibaba group of companies should participate outside of China and take risks in
order to further their market share.
Advantage: Because of their record of success and reliability in China, trying to
expand on their current market and to penetrate the rest of the world will be a little
bit easier although still quite a challenge. They already have the reputation in China
and the funds to support their expansion.
Disadvantage: Because they have only been active domestically, it is also quite
possible that even with their popularity and success in China, it will be quite hard for
people to distinguish them, especially since they have yet to become familiar with
their neighboring countries, even in their own continent.
The company must create another business outside the internet sphere where
they will put up stores wherein customers could physically witness their product
displays.
Advantage: The company will be more visible, especially if they set up these retail
stores in other places they are not as active in and even in new countries so that
they can increase awareness and recognition for their company.
Disadvantage: Alibaba is composed of many manufacturers seeking to find buyers
for their products. The problem with setting up a physical store would be that it would
simply be too chaotic and some suppliers might not be able to participate, thus the
competitiveness – price-wise – will lower, not giving buyers more choices and
opportunities.
The group highly recommends the second option. Alibaba group of companies is a
successful business-to-business web service. They allow manufacturers and suppliers
to put their products on their website, using it as a platform to find interested buyers and
consumers. They are already highly popular in China and now their next challenge is to
advance out of their home country. The company’s second recommendation is for
Alibaba to venture out of China and try to take risks in investing and in expanding their
services to other countries. They are very much trying to work on finding ways in order
for them to advance and penetrate the global market so that they can compete with the
likes of eBay but before they do that, they must first establish themselves in other
foreign countries. The group sees the disadvantages of this course of action but the
advantages weigh heavier compared to it. By choosing to take risks and further their
services to their neighboring countries, Alibaba will be ensuring their growth and
increase awareness on their company, especially if they choose to focus on Asia first
before tackling on the rest of the world.
A. KEY PARTNERS
B. KEY ACTIVITIES
* Company has its own website for Payment Gateways (that is Customer Oriented)
* They have a major stake in "Sina Weibo" (China's micro-bloging website like twitter)
* They have stakes in Other Companies as well and Rules the entire China Online
Market Place.
C. KEY RESOURCES
D. VALUE PROPOSITIONS
E. CUSTOMER RELATIONSHIPS
Alibaba aims to only provide the best of what it can give to the customers through the
cooperation of its group of companies. Alibaba was also a privately held company but is
now open to the public because through the years it has dominated all over China and
extended across the other part of the world. It also has developed through the years its
user interface among its companies making their websites uder friendly and easy to use
and understand.
F. CUSTOMER SEGMENTS
Alibaba claims to have 300 Million customers summed up all over the world. The
customer segmentation depends on the website they are in. For example, companies
sell directly to the public (Tmall) and enable members of the public to sell to each other
(Taobao). Also, because of the many retail online companies that Alibaba owns, it
would provide or cater to distinct or diverse customer segments therby having a wide
scope of market.
G. CHANNELS
• Factories
• Trading Companies
• Importers
• Distributors
• Retailers
• Consumers
• Internet
The company offers variety of services such as trust and safety, online payment,
listing solutions, protection and authentication, instant messaging, member reputation
and after sales services such as warranty programs. Their customers online payment is
secured with Escrow, with Escrow the privacy of the buyer is guaranteed, buyers are
able to pay securely without exposing their details and payment is only released upon
delivery conformation. It also offers an about me page, where as suppliers can express
themselves through their own personal page. Alibaba.com has after sales services such
as a warranty program whereby buyers get up to a one year warranty in case of a
breakdown, this mostly refers to the electronic products.
Alibaba Groups uses competitive pricing so that the price they offer does not
have an extreme difference with its competitors. The company gives low prices and yet
good quality product so that it can attract the targeted market.
They use the internet promotion strategy because internet is the best cost
effective and fastest promotion tool in the export/import market place. The presence of
alibaba.com company profile and product/services in major search engines like yahoo
gives the company a global exposure and creates awareness among buyers/importers
effectively.
There are various types of channel intermediaries; they use the internet as its
intermediary. The internet has a geographically disperse market therefore niche
products will be able to reach a wider audience. They has several online B2B
marketplaces that potential buyers and suppliers from around the world can obtain its
products and services. They also use the direct distribution channel to deliver its
products and services. It has a number of outlets in countries like China, U.S.A and UK.
Services like gold membership, customer complaints and so many more are handled in
these outlets
X. REFERENCES
Liu, W., Ransom, E., Wan, Q., Yu, J. (2014). Case Synopsys for: Alibaba
Group. Retrieved from
http://www.sfu.ca/~sheppard/478/syn/1147/Group_D.pdf
Loeb, W. (2014). 10 Reasons Why Alibaba Blows Away Amazon and Ebay.
Retrieved from http://www.forbes.com/sites/walterloeb/2014/04/11/10-
reasons-why-alibaba-is-a-worldwide-leader-in-e-commerce/
Prawiro, U. (2014) Alibaba Group Corporate Overview Jan. Retrieved from
http://www.slideshare.net/UtomoPrawiro/alibaba-group-corporate-overview-
jan-2013