EXECUTIVE SUMMARY

This report is a study of the journey of the Alibaba group and their rise to market
leadership. In this report we will look into the new business areas that Alibaba
group is looking to step into and the effect of these new sections on the existing
structure with regard to where it should be placed and how it will function. We will
also study about the key factor of the organisation structure i.e. the independent
business unit and the degree of cooperation and competition between them along
with the necessary changes, if any.

We will also address the dilemmas faced by Jack Ma and his C-suite regarding the
degree of centralization and appointment of a prospective COO.
 INTRODUCTION
Jack Ma founded the Alibaba as an online trading platform for small Chinese
businesses to connect with potential buyers. From this initial idea, it has grown to
what we now know as the Alibaba Group that not only caters as an online trading
site restricted to china but a global platform for producers and consumers. Along
with this, they have moved into online shopping with Taobao, online payment with
Alipay, online advertising exchange by Alimama, internet based management
solutions through Alisoft and as an online search engine through Yahoo! China.

After becoming the market leaders with 70% online shopping market share and
half the market for online B2B e-commerce in china, Alibaba is now looking out
for the future of the group.

The questions that was keeping Ma occupied was

(a) What to do about the degree of cooperation and competition between the
subsidiaries of the company?
(b) What the new ventures should be for the company? And where to place
these new ventures in the existing organisation structure and how to go
about it?

OR

Ma wondered about the degree of cooperation and competition between the

subsidiaries of the group and the changes that needed to be made to it, if any, as
this was one of the biggest reasons for the success of the group. He was also in
dilemma about the new ventures that the group needed to pursue in order to expand
their market and the change in structure and strategy due to these new sections.
 ISSUES
The issues faced by Jack Ma and his C-suite are:

1. Defining the degree of centralization of the corporate structure and need for
a COO.
2. How and where to include the new initiatives into the structure and whom
they should report to.
3. The changes, if required, those need to be made to the degree of cooperation
and competition between the subsidiaries.
 ANALYSIS
1. Centralization of the company
 Alibaba group reached the position as a market leader because of
Jack Ma’s vision and the execution of that vision.
 The strategy that he and his team deemed fit dictated how the
structure of the firm would be.
 The decentralised model of the group is what helped them with the
edge that they had to capture the market and stay at the top.
 The decentralised structure of the company should continue
especially now when they plan on expanding to newer market
spaces.
2. The appointment of COO
 The appointment of COO is a good option as it could take away
the some load from Ma which could be focused on the new
investments.
3. Pros and Cons of reporting directly to Jack Ma
 As they planned on expanding their markets, it was important to
plan where these ventures would be placed.
 These could either be placed under existing groups or under Jack
Ma.
 The new sections should ideally be placed under Jack Ma as
different subsidiaries like they had done with all their ventures yet
as that strategy had proven time and again to be extremely
efficient.
  The con of this structure that is followed in the Alibaba group is
Jack Ma’s unavailability to focus on broader strategies and
leadership.
4. The new initiatives
 The Alibaba group planned on venturing into two new areas:
financing small businesses and mobile platforms.
 The first question was about the location of these sections in the
structure i.e. if these should function as separate subsidiaries or
under the existing boards.
 They should be placed under separate subsidiaries as they are
completely different areas of market and their strategy of capturing
market complimented their organisational structure.
5. Competition and cooperation
 One of the key differentiating factors of Alibaba’s structure was its
subsidiaries and the freedom the subsidiaries had in terms of
functioning.
 It was also one of the reasons for the group’s immense success.
 Jack Ma encouraged competition between the subsidiaries as the
aim of the subsidiaries was to be the best in their sector.
 Even though they were aware of overlapping functions and
customers, they thought it was better to have independent teams
for more efficient functioning.
 RECOMMENDATIONS
 The group should continue with the decentralised model that they follow as
it had proven to be a pathway to success which could be further used for the
newer ideas and future expansion.
 A COO should be appointed to look into the overlapping and cross
functional matters so that Jack Ma can focus on the future of the company
and planning out strategies to expand their markets.
 The new initiatives of financing small businesses and mobile platforms
should be included as separate subsidiaries like all the other sections for it to
reach its full potential efficiently like the others did.
 The subsidiaries should continue to work with healthy competition with the
goal of becoming market leaders and cooperation to the limit that is
absolutely necessary.
 CONCLUSION
The story of Alibaba group from its inception to the current situation teaches us
some valuable lessons on how to run a business. Firstly, the mission that the
founder of a firm has is important and how he/she is committed to this mission
dictates how the company performs and is perceived by the global market.
Secondly, the ownership of a firm often dictates how a company is structured.
Thirdly, to have a successful run in the market, it is important to have a structure
that allows breathing space and can change if need be with the strategy that is
necessary at a certain point of time.