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Alibaba Company Analysis
Alibaba Company Analysis
March 5, 2020
Business 100-Investors
The University of Fraser Valley India
Goswami Ganesh Dutta S.D. College Sector 32-C
Chandigarh 160030, India
Group Holding Limited leading e-commerce company. Our team researched an in-depth analysis
We have gathered information about Alibaba from the company, and studying industry
profiles from different sources and compiled the information in an investor-friendly structure to
provide a much better understanding of what Alibaba's current market situation is and what
We have analyzed Alibaba's performance from the past three years 2017, 2018, and 2019.
Which will allow investors to understand how company performance is improving or degrading
Our structured report will guide you through key information like whether Alibaba is
leading in its field, its monthly active users, the marketing strategy adopted by the company. Our
consulting team has also created a well defined organizational structure of Alibaba that will help
Tegridy consultancy company endeavors to provide well structured and organized to help
your decision in investing in the e-commerce industry. We hope this report provides you every
Sincerely,
Tegridy Consulting Company
GROUP ANALYSIS ON ALIBABA Page 2
Executive Summary
company overview with key facts figure which will provide data about where the company is
situated its head office, its ticker symbol, the company website, and the company logo. The
company overview also contains a brief of a recent event that explains how Alibaba is utilizing
Furthermore, we analyzed the company situation by doing the SWOT and PESTEL
analysis of Alibaba which allows us to understand both internal and external factors affecting the
company situation like the company is situated in China which is a communist party led country
which affects the decision making of Alibaba in compliance with the Chinese laws. Further such
factors as if Alibaba is leading in technology in the industry will affect the growth of the
company to increase the customer base. Further weaknesses like the decline in operational
Our consulting team has researched Alibaba's mission, vision, and values which let
investors understand Alibaba's long term goals and objectives for accomplishing the company
mission. Alibaba’s leadership has set the vision for the company to last 102 years. Further
Culture of the company defines how operational performance of the company doing, for Alibaba
to become the more globalized company they had to make their work culture more diverse.
Although the company is moving toward more automation and identifying the digital
economy potential. The company has invested a lot in research and development promoting the
The board of directors has some independent directors and the founder of the Alibaba
Jack Yun ma who was former CEO of the company is now executive chairman. Further, the
GROUP ANALYSIS ON ALIBABA Page 4
company CEO Daniel Yong Zhang has also shown a positive and different leadership style
Furthermore, we have provided the investors with the financial performance of Alibaba
from the year 2017 to 2019 with a figure containing key ratios and data such as final quarterly
revenue, assets, liability and shareholder equity. Analyzing and observing the financial trends of
In summary, after studying the Alibaba position and global trend for a positive outlook
for the digital economy and e-commerce we would encourage the investors to invest in Alibaba;
as the company has shown a stable behavior in growth even in a crisis like Hong Kong protests,
the US-China trade war and the coronavirus pandemic. Further, the significant investment in
research and development will help Alibaba to become a leader in the e-commerce industry.
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Table of Contents
Executive Summary.............................................................................................................3
Introduction..........................................................................................................................9
COMPANY OVERVIEW........................................................................................................10
COMPANY SITUATION.................................................................................................12
PESTEL ANALYSIS...............................................................................................................12
POLITICAL...............................................................................................................13
ECONOMIC..............................................................................................................13
SOCIAL.....................................................................................................................13
TECHNOLOGICAL..................................................................................................14
ENVIRONMENTAL.................................................................................................14
LEGAL......................................................................................................................14
SWOT ANALYSIS..................................................................................................................15
STRENGTH..............................................................................................................15
WEAKNESS..............................................................................................................16
OPPORTUNITY........................................................................................................16
THREATS.................................................................................................................17
CRITICAL ISSUES.................................................................................................................17
Strategic Direction....................................................................................................................19
Objectives..................................................................................................................20
GROUP ANALYSIS ON ALIBABA Page 6
Organizational Structure...........................................................................................................22
Company Culture.......................................................................................................24
Board of Directors.....................................................................................................24
CEO...........................................................................................................................25
Financial Performance..............................................................................................................26
Comparative Analysis................................................................................................29
Marketing Strategy............................................................................................................32
Target Market............................................................................................................32
Product Strategy.........................................................................................................34
Pricing Strategy.........................................................................................................35
Promotion Strategy....................................................................................................35
Distribution Strategy..................................................................................................36
Company Position......................................................................................................36
Company Outlook....................................................................................................................37
Recommendation......................................................................................................................38
Appendix............................................................................................................................40
Board Members........................................................................................................................40
Occupation/Industry.................................................................................................................40
REFERENCES..................................................................................................................42
GROUP ANALYSIS ON ALIBABA Page 7
List of Figures
Introduction
Alibaba group As it is requisition from you, the investor, Tegrity has composed the
following report to explicate the positive and negative of Alibaba group as a company and its
investment potential. This document is meant to supply you with all the necessary information to
you before you make an investment decision, as well as furnish you with our proposal on
Our survey was created using diverse resources including the company’s website and financial
documents as well as sources that have an outside point of view of the company. This
information allows us to access and analyze how the company sees itself and how they believe
they are performing, it also allowed us to follow the hypercritical manner of trends to see how
For each category that this Broadcast covers our consulting team highlighted all the
information related to the section of the report followed by an analysis of each section to
determine how they found information affects or has affected the organization. Our analyses
supply the crucial information needed to form our recommendation for your investment decision.
This report contains a quantum of information from different areas including who the
company is, how the organization trend affects the firm, as well as the area that covers the
company’s financial performance and their market strategy our analysis will not provide a long
history of Alibaba group. However, it will only cover the information that is related to your
question as an investment decision today. The following categories provide a brief overview of
the Alibaba group as a company and also provides significant information to help you in making
an investment decision
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COMPANY OVERVIEW
Company overview provides an all-inclusive understanding of Alibaba’s brief history,
financial highlights, and current events happening in the company that could affect investment
commerce, global retail market, utility services, tech companies, and entertainment
(Alibaba, 2020a). Jack Ma (co-founder of Alibaba) drove a team of 18 people and established
Alibaba in 1999 (Alibaba, 2020b). Alibaba is also the world's most valuable non-US retail brand
(Yuen, 2019).
a.)
Head Office Alibaba Group Holding Limited
969 West Wen Yi Road
Hangzhou
Zhejiang
CHN
b.)
Phone (+86) 571-8502-2088
c.)
Website www.alibabagroup.com
d.)
Revenue CYN (million) 376,844.0
e.)
Revenue USD (million) 56,971.2
f.)
Financial year-end March
g.)
NYSE Ticker BABA
Logo
(a
Alibaba (2020). b Alibaba (2020), c Alibaba(2020), d Marketline(2019), e Marketline(2019), f
Marketline(2019), g Alibaba(2020))
GROUP ANALYSIS ON ALIBABA Page 10
On the financial ground, the September quarter 2019 financial highlights of the Alibaba group
have shown:
o Growth of 40% with an investment of US$ 4.5 Bn EBITA (Earnings Before Interest Tax
o The Alibaba Group also confirmed in their quarterly report that they have 785 MM monthly
Alibaba is also expanding into the African market, recently Alibaba group and
Platform) Hub in Ethiopia (Alibaba, 2019, November 25). The company vision is to increase
cross border trade with smart logistics like e-commerce and fulfillment services to assist
Ethiopia’s small and medium-sized enterprise to reach markets of China and the world (Alibaba,
Besides from e-commerce, the company has structured and focused on their research and
development (MarketLine, 2019, September 27), in utility services as Alibaba cloud one of
Alibaba’s business have shown 64% revenue growth and innovative initiatives shown to increase
in revenue by 14% (Alibaba, 2019, November 1) indicating the company has planned their
The Alibaba has also focused on fin-tech (financial technology) to help economies
become digitalized, for this Alibaba has announced a comprehensive strategic partnership with
Ant Financial and ICBC (Industrial and The Commercial Bank of China) for improving and
said, “We hope to generate more chemistry to promote innovations in the Chinese finance
industry and further improve the quality of financial services in the coming future”
(Davos,2019).
Furthermore, the increasing popularity and application of web-based tools into modern
businesses with Artificial Intelligence and Machine Learning identifying such opportunities
could interest many investors. CEO Daniel Zhang said “Our digital economy continues to thrive
and prosper” (2020). Further, he added, “Alibaba aims to have over one billion annual active
consumers and before 2025 help merchants achieve over RMB10 trillion in annual merchandise
volume” (Zhang, 2020) that indicates the predictable increase in future revenue and investment
growth.
COMPANY SITUATION
PESTEL ANALYSIS
Political Economic
o China is a Communist party-led state o Subsidized innovation and
o US-China trade war and increase of entrepreneurship
15% on tariffs of Chinese Imports o 2014 fiscal reforms.
Social Technological
o Commercialization of AI and Cloud
o 16 years legacy of historical brand
computing
value
o Concept of Digital economy
o Culture of entrepreneurship
o Fine-Tech innovation
Environmental Legal
o “Green Packaging” initiative o New China and US e-commerce laws
o “Green Warehouse” initiative o Government action against
o Reduction by 15% in the material counterfeiting and IPO warning for
used in packaging 250 million dollars.
Figure 2: PESTEL ANALYSIS
GROUP ANALYSIS ON ALIBABA Page 12
POLITICAL
Alibaba has a lot of political influence on itself as China is a communist party-led state
and Chinese leadership always tends to adjust the policies to maintain the dominant role of the
are, according to him, important components of this great revival of China ”(Newyorker,
Chotiner, para.3, 2019, May 22); however, with the ongoing trade war with the USA, Alibaba
will have a hard time entering the US markets with increased tariffs, restrictions, and the
ECONOMIC
(WorldFactBook,2020, February 5); however, Chinese leader’s pledge in 2010 to double China’s
GDP in 2020, but it didn’t seem to be much optimistic, as the GDP growth graph has shown a
downward slope since 2010 (WorldFactBook,2020, February 5). Furthermore, to deal with it in
2014 Chinese government introduced fiscal reforms to overhaul the subnational debt
SOCIAL
Alibaba has always played a crucial role in China’s struggle in economic growth, as 16
years ago Alibaba launched its platform to help millions of Chinese sellers looking for a medium
to sell because of which Alibaba has become a brand most preferred by Chinese small and
of state contrary to the business owned by people through the years we can say how
GROUP ANALYSIS ON ALIBABA Page 13
entrepreneurship has flourished among Chinese people. Even during the Hong Kong protests,
Alibaba raised $11.2 billion which shows even in an imbalanced political situation people were
TECHNOLOGICAL
and cloud computing technologies to provide data, analytics and data visualization to big
organizations, currently Alibaba has 46 organizations as a customer for their cloud computing
platform(Featured Customers, 2020, February 8). Furthermore, the advancement in the machine
learning algorithms have made storing large data more applicable and have also dropped the cost
of storing it; besides, Alibaba is also providing Fin-tech (financial technology) with Ant financial
and ICBC (The Industrial and Commercial bank of China) (Alibaba, 2019).
ENVIRONMENTAL
packaging, that uses biodegradable courier bags, plastic-free boxes and packages recycling bins,
and warehouses, which run completely on solar energy(Alibaba,2020). Alibaba baba’s Cainiao
network created a packaging algorithm to optimize and reduce the material used in packaging by
15% and was implemented in the packaging of 250 million delivery boxes and courier bags in
2018 (Alibaba,2020).
LEGAL
However, the new counterfeiting laws are giving Alibaba a hard time, Reuters reported:
“Alibaba to pay $250 million to settle a lawsuit over the pre-IPO warning on
counterfeiting”(2019, April 29). The lawsuit was filed against Alibaba back on July 16, 2014, for
failing to disclose security frauds, the further Chinese and US government has introduced new E-
GROUP ANALYSIS ON ALIBABA Page 14
commerce laws to prevent counterfeiting and fraud on the online platform; however, for big
SWOT ANALYSIS
Strength’s Weakness
o Focus On Research &
o A Decline in Operational
Development(R&D)
Performance
o Leading in innovation
Opportunities Threat’s
o Sellers Compliance with Tax
o Positive viewpoint for the
Collection on Alibaba's platform.
worldwide online retail market
o Intense competition
Figure 3:SWOT ANALYSIS
STRENGTH
Alibaba is focusing on putting resources into new innovation with a vision of moving
toward automation and optimization of the underlying processes (MarketLine, 2019, September
27). In FY2019, the organization contributed CNY17,060 million on R&D exercises for product
development (MarketLine, 2019, September 27). As of March 31, 2019, Alibaba had 12,321
patent applications and 5,536 issued patents in China (MarketLine, 2019, September 27). The
company also publicly filed 9,163 patents in different countries and had 2,874 issued patents
globally (MarketLine, 2019, September 27). Alibaba’s focus on R&D will enable, the company
to be in a better position according to changing economies and will make it a leader in the yet
developing field of Artificial Intelligence and Machine learning against its competitors like the
Amazon.
GROUP ANALYSIS ON ALIBABA Page 15
WEAKNESS
The Alibaba displayed a gradual decline in operational performance during the audit
year. The company’s operating margin decreased from 26.9% in the fiscal Year 2018 to 15.1% in
the fiscal Year 2019 (MarketLine, 2019, September 27). The Feeble work execution shows the
absence of effectiveness in cost management. Its operation expenses increased from 73% in the
fiscal year 2018 to 84.8% in the fiscal year 2019 (MarketLine, 2019, September 27).
Furthermore, the organization's net overall revenue plummeted from 25.6% in the fiscal year
2018 to 23.2% in the fiscal year 2019 (MarketLine, 2019, September 27). Ineffective operational
performance could critique the organization's ability to pursue growth and development plans.
OPPORTUNITY
Alibaba has myriad opportunities in different sectors like forming new contracts and
agreements, the Cloud computing market, and global strategic expansions. The online platforms
are developing at a quick pace lately and becoming the most favored channel for different
activities among consumers over the globe. It could empower the Alibaba to extend its business
opportunity around the world. Indicated by an in-house report, the worldwide online retail
CAGR(Compound Annual Growth Rate) of 13.4% during 2017-22 to reach US$ 1,740.8 billion
THREATS
Tax collection is also an important aspect for Alibaba for maintaining the legal aspect of
the company as E-commerce in China is developing and the Chinese government need platforms
like Alibaba to work with them to ease the process of tax collection because of which Alibaba
has to make strict policies and implement in proportion to the revenue generated by the operators
on the Alibaba’s platform and this could, in turn, develop into a bad customer experience
situation. There could be instances for like some sole-proprietors didn’t fulfill the tax
requirement and are operating on Taobao which could affect Alibaba’s integrity (Alibaba’s e-
commerce website).
Intense competition
With many competitors like the Amazon, eBay, Baidu, Tencent and more, Alibaba has to
compete to attract buyers. Alibaba also has to compete to get sellers based on the size and
MAUs(monthly active users) which in return could hinder Alibaba’s business's financial
condition.
CRITICAL ISSUES
The SWOT and PESTEL allow us to understand some of the critical issues Alibaba is
facing like the decline in the operational performance and the US-China trade war which is
making it a hardship for the Alibaba to get into the US market in 2020 where small and medium
enterprises are much significant for western expansion. President Donald Trump increased the
Chinese goods tariff to 30%(Rappeport, Bradsher, 2019, August 23) by accusing China to not
GROUP ANALYSIS ON ALIBABA Page 17
meet the standards of a trade deal due to which Alibaba reported a 51% growth in the March
quarter, which was the slowest since 2016(Zhong, 2019, May 15).
Alibaba also has to deal with the intense competition in the Asian market with many
offline retailers with some brand value are going to create a lot of traffic, so it will be critical for
Alibaba to engage with its customers. Besides, Alibaba mainly has its customer base in China
only because of which the Chinese government tends to keep its dominance on Alibaba and its
affiliates.
To deal with such issue Alibaba has to keep expanding its R&D to become a leader in the
technological field for attracting western customers. As Alibaba cannot completely remove the
Chinese government's influence they could make their organization more decentralized and
globalized.
Strategic Direction
Strategic direction signifies the plans and initiative company set toward achieving the
vision for the company. By studying the Alibaba’s mission for prospect and what vision they
have for its platforms, and what values Alibaba has in its organizational culture. The strategic
direction will also mention what objectives Alibaba is set to accomplish the vision or mission,
Alibaba with its mission for making it easy to trade anywhere around the world for small
Furthermore, Alibaba is an example of “tomorrow's smart business” and with that perspective,
Alibaba acknowledges the potential of the digital economy and the future market of
consumers owing to which they have set their strategic direction to innovate company processes
GROUP ANALYSIS ON ALIBABA Page 18
to outreach every potential customer, as Daniel Zhang said, “ We have to reinvent retail before
company believes that “ the customer should meet, work, live, and breathe at
2019a, Dec 6, p.g.1). Furthermore, the company has set up its vision for 2036 to be serving 2
billion consumers globally, empower 10 million businesses and created at least 100 million
Alibaba’s mission focuses on creating its platform on the idea of commercial and social
interaction among its consumers and merchants by developing new innovative technology to
push the world toward a more digitalized economy(Alibaba, 2019c, Dec 6, p.g.1). The company
also have set the mission for expansion in international markets through the different categories
of business sectors like cloud computing, digital media, and entertainment, research, and
Alibaba has mentioned six core values for its company which are “ Customers first,
employees second, shareholders third ”, “Trust makes everything simple”, “Change is the only
constant”, “Today’s best performance is tomorrow’s baseline”, “If not now, when? if not me,
who?”, “Live seriously, work happily”(Alibaba,2020a). The company believes that only by
encouraging the creation of customer values only then the employees can grow and shareholders
gain long term profits. Furthermore, the company has put stress on the values of trust-building
and
The company wants to reflect shared values among its customers so that it could push
toward its mission of becoming a more globalized and diverse organization and outreach, the
new potential of the digitalized economy through big data analytics(Alibaba, 2019f, Dec 6,
p.g.2). By studying the example of a new merchant website launched by Alibaba for Tmall
which doubled the number of brands it previously had to 40,000 (Chen, 2019, June 26); we could
observe how Alibaba is approaching toward its mission of reaching its potential customers and
Objectives
Alibaba has set four major objectives for them which include extending mobile
commerce, increase active buyers in China and globally, expand the offering, and increase cross-
border e-commerce. Alibaba has set its five-year objective to achieve 1 billion annual active
users and has over RMB 10 trillion sales until the year 2036(Alibaba,2019, Dec 6) which CEO
The company is following a three-pillar model to pursue their objective of 2036, this
includes globalization, domestic consumption, and data collection through technologies like
cloud computing. Alibaba is realizing the potential of the digital economy in myriad sectors like
Alibaba believes that the fusion of digital technology and commerce will create a
substantial amount of opportunities for small and medium enterprises that will not be limited by
borders. Alibaba is applying the approach of “go-to-market” which means “Global Buy, Global
Sell, Global Pay, Global Delivery and Global Fun” for the development of the digitalized
Alibaba currently has 785 million monthly active users with China’s urbanization and the
young generation having technological knowledge will emerge as a huge middle-class consumer
GROUP ANALYSIS ON ALIBABA Page 20
market(Alibaba, 2019c, Dec 6, p.g.2). The company is acknowledging such trends and
developing new innovative logistics with the help of big data and cloud computing(Alibaba,
CEO Daniel Zhang has called big data and cloud computing the fuel and engine of the
digital economy(Alibaba, 2019e, Dec 6), Alibaba also mentioned that “We believe that in the era
of the digital economy, productivity will be defined by computing power”(Alibaba, 2019f, Dec
6, p.g.2). The fast and uniform flow of data is a vital aspect of today's competitive market
Alibaba has set objectives to develop Alibaba’s business operating system and develop their
capabilities in cloud computing, intelligent logistics, financial technology, and digital commerce.
GROUP ANALYSIS ON ALIBABA Page 21
Organizational Structure
The organization structure is a vital factor in the prospect and success of the company.
Alibaba’s organizational structure is planned in such a way that the board of directors governs all
the operations(Alibaba, 2020a). Alibaba organization structure has a three-level with the board,
Overall, the company is led by the “Iron Triangle” of Jack ma (founder and chairmen).
The Iron Triangle strategy consists of three key term commerce, logistics, and finance, with
commerce consisting of the network of various Alibaba platforms it operates, like Taobao and
Tmall. Logistics refers to the product quality and delivery systems implemented(Passport, 2017a,
July, p.g. 32). Finance refers to Alibaba's customer relations and revenue management. based on
the Iron Triangle Model, the company has designed its organizational chart so that these
functions become a vital independent core of the company as per its functionality(Passport,
The organization chart of Alibaba also ensure that every function is overseen by the
board of directors which are nominated through an election process, further in senior
management the organization chart contains all the executive function heads with only customer
relation, governance, and research & development department is divided in the hierarchy to
specialized international and external relation departmentalization will benefit the company.
Also having a separate customer relation will help them outreach more small-medium enterprises
and consumers; however, having a board of directors and the voting process could slow down the
decision making process in the organization but could minimize the risk of errors.
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GROUP ANALYSIS ON ALIBABA M Page 22
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GROUP ANALYSIS ON ALIBABA Page 23
source:(Alibaba, n.d.-h)
Company Culture
Alibaba’s company culture is the building block of the company, as said by CEO Daniel
zhang “Culture is the bedrock of Alibaba, while innovation is in our DNA”(Alibaba,2020). The
Alibaba uses a corporate administration model that follows the paradigm of the partnership
model. The company follows the partnership model which is based on its values.
The company has also reported finishing the structural changes in the management team
on 10th September (Alibaba, 2019, Dec 6) by putting their focus on innovation and encouraging
the young developers in the company, and taking such steps for becoming more diverse and
globalized workplace.
However, the company has not been able to reflect on its value of “live seriously and
work happily” as the chairmen Jack Ma defended the company overtime work culture by calling
it a blessing which shows that there is somewhat an inbalance in the work-life culture of the
Furthermore, with the nice logistics and infrastructure and company primary focus on
research and empowering the youth for innovation initiatives will help its work culture to
develop into more modernized space and will help the company to expand internationally in a
different market; however, to do so Alibaba will have to make its company processes more
democratic.
Board of Directors
Alibaba has 11 board members which are divided into three board committees,
which are compensation committee (Jerry YANG (Chairman), Walter Teh Ming Kwauk, Joseph
C. Tsai), audit committee (Walter Teh Ming KWAUK (Chairman), E. Börje EKHOLM, Wan
GROUP ANALYSIS ON ALIBABA Page 24
Ling MARTELLO), and nominating and corporate governance committee ( Jack Yun Ma
(Chairman), Chee Hwa Tung, Jerry Yang)(Alibaba,2020a). The board members are elected by an
into three groups, the group I having terms of office until 2021 general meeting, group II having
terms of office until 2019 general meeting, group III having terms of office until 2020 general
meeting
(Alibaba, 2020b).
CEO
Since Alibaba's inception, only 2 CEO changes one was Jack Ma who is the founder and
the other is Daniel Yong Zhang. Zhang before becoming the CEO of Alibaba remained the CEO
of Taobao (Alibaba, 2020a). Before becoming CEO of Alibaba, Daniel served as a primary
operating officer of Alibaba from September 2013to May 2015(Alibaba, 2020b). He joined the
business enterprise in August 2007 as a leading financial officer of Taobao Marketplace and
served on this role until June 2011(Alibaba, 2020c). He took on the extra function of trendy
manager for Tmall.Com in August 2008, which he finished concurrently until his appointment as
platform(Alibaba, 2020d).
Daniel Yong Zhang since his take over mentioned that he wanted to reinvent the retail
before anyone does it(Soon, 2019a, October 15, para 1). Zhang wanted to launch a startup named
Freshhippo in Alibaba that will be a hybrid of restaurant, delivery app and a grocery store by
using artificial intelligence, robotics, and facial recognition to make faster and sustainable
logistics and payments (Soon, 2019b, October 15, para 3). Zhangs model of Freshhippo has
become the future face of Alibaba’s structural blueprint (Soon, 2019c, October 15, para 5). Mr.
Zhang has said “Alibaba is uniquely positioned to pull together the online and offline worlds in
groceries and beyond” and his new myriad new initiatives are integrating Alibaba into different
sectors like the healthcare, finance, and entertainment(Elstrom & Chen, 2019, September 9).
Financial Performance
The financial performance of Alibaba will enable us to interpret the financial growth of
the company through previous years of 2017, 2018 and 2019. Such comparative analysis will
allow us to understand the growth trends of Alibaba for future investments. Figure 6 depicts the
Alibaba has shown revenue growth throughout the three years being highest in the fiscal
year 2019 with a growth of over 56%(Alibaba, 2019a). Further, every year the company’s
expenses have also increased because of the acquisition of licensed copyrights, intangible assets,
growing userbase, and improving user experience(Alibaba, 2018b). Further, the cost of revenue
of Alibaba was 53% of revenue in FY2019 because of the company’s action of buying the food
delivery company Ele.me which valued USD 9.5 billion observing the potential growth in the
competitive market of China (Reuters, 2018, April 2); however, the Alibaba’s total assets and
liability have shown somewhat upward and then downward trend having a significant increase in
the year 2018 by 55.27% in total assets and 65.88% in total liabilities because of acquisition of
Alibaba stock price has shown an increase from FY 2017 to 2019 by USD 17.72(Alibaba,
2017) to USD 89.73(Alibaba, 2019a) indicating a positive trend for future investment in the
core companies like cloud computing, Cainiao network, and acquisition of shares of Ant
financial in the quarterly result of FY2019 that many potential investors like Blackrock inc.
observed(Alibaba, 2019b). Further, the company stock prices continuing to rise in Hong Kong
GROUP ANALYSIS ON ALIBABA Page 27
protests(Stevenson, 2019, November 25, para.2) and also in the current coronavirus
Comparing Alibaba’s current assets to current liability we get the current ratio with it we
can analyze how likely the company will be able to pay off its short term liabilities. Alibaba’s
current ratio was highest at 1.97 in FY 2017 and plummeted in FY 2018, as Alibaba bought
intangible assets and company's current liability increased in respective year and FY2019 it rose
to 1.75(Alibaba, 2019); however, throughout the 3 years, Alibaba had a current ratio above 1
which shows that Alibaba doesn’t have to sell their assets to pay their current liability.
Alibaba board of directors has also authorized a new share repurchase program in
FY2017 containing an amount of USD 6.0 billion to counterbalance the dilution from the
company’s compensation program(Alibaba, 2017). Further, Alibaba’s earning per share have
Furthermore, ROI (Return on Investment) was highest in FY2019 which indicated that
the shareholder's money is being invested efficiently as Alibaba is focusing itself on research and
development exploring the field of artificial intelligence, machine learning and developing more
Alibaba’s debt-to-equity ratio has decreased from 0.29 in FY2017 to 0.14 in FY2019
which shows that the company is not relying on its debt which indicates that Alibaba can pay off
Alibaba’s ratios indicate that the company can keep up with its revenue and expenses,
also providing its investors with a good return per share. Furthermore, the company is keeping
up with these trends and investing in logistics and services companies like Cainiao network,
Comparative Analysis
Alibaba is one of the largest group holding and retail company globally, its biggest
competitor is Amazon, and also eBay is not behind. The figure below shows the comparison of
Among the two competitors, Alibaba seems to do better than eBay but lag behind
Amazon, the reason for which could be that Amazon has well established its operations globally
with its global selling program(Amazon, 2020) but Alibaba is still struggling to construct an
Alibaba is lagging behind Amazon in the majority of the fields like annual revenue and
the market capital and leading in comparison to eBay. The reason for which is that Amazon has
destroyed eBay’s potential market with its platform and customer outreach logistics and being a
US brand it has roots in the American, European market, and could also be seen flourishing in
Alibaba has the highest current ratio which shows that Alibaba has a better ability to pay
off its liabilities than Amazon and eBay. Furthermore, the Shareholders' equity in Alibaba is way
much higher than Amazon and eBay combined which is favorable for the investors this is a
Furthermore, the stock price of Alibaba is less than Amazon that is USD 89.73and USD
1847.84(Financialpost, 2020, March 15); however, the low stock prices are an opportunity for
investors because Alibaba’s stock rose by 40% in FY2019 for which the author of Motley Fool
GROUP ANALYSIS ON ALIBABA Page 30
Anders Bulund quoted “Alibaba's business looks as healthy as ever and company's incredible
sales growth, which feeds into an equally fantastic cash machine of a business model”(2020).
Alibaba left amazon behind on return on Equity with 24.30% but is significantly behind
eBay which is at 46.24 which is significantly high than the average of 31.06% in the retail
Alibaba fell behind Amazon in the majority of the areas but leading eBay key point to
November 21) which is why the company operations are becoming more expensive making it the
largest spender among the three competitors, further he quoted, “if the company can maintain its
high-profit margins, which have been a lot stronger than Amazon's over the past few years, then
the increase in sales will also give Alibaba's net income a big boost as well”(2019, November
21).
GROUP ANALYSIS ON ALIBABA Page 31
Marketing Strategy
Alibaba is a big e-commerce giant and serves millions of small and medium enterprises
around the world(Alibaba, 2020). The growth of the company depends on its marketing strategy
to provide its products and services globally. We will analyze how Alibaba is reaching its target
market and how it's deciding on four Ps of the marketing that is price, product, promotion, and
place.
Target Market
Alibaba’s main customers are trade agents, retailers, wholesalers, small and medium
enterprises, and manufacturers (Alibaba, 2020a). Alibaba provides a direct buyer to buyer
interaction on its platform providing import and export supply chain services to its members like
customer clearance, trade financing, and logistics(Alibaba, 2020b). The Alibaba has customers in
190 nations (Alibaba, March 31, 2019). Alibaba was created to provide a platform for mainly
empower small and medium enterprises with a marketplace where they can reach out to the
world economies so the company business model represents that with the iron triangle of Jack
Yun Ma which represents commerce, logistics, and finance(Passport, 2017a, July, p.g. 32).
Further, the company has an online marketplace website Taobao which was launched in
2003 (Alibaba,2020c). Taobao provides a personalized experience to its customer which are
mainly individuals and merchants(Alibaba,2020d). Taobao provides its users with realtime data
analytics and product trends to provide the merchants and consumers to learn about new
products(Alibaba,2020e). Tabao’s main target market is in china currently being the largest
mobile marketplace in the nation; however, Alibaba is trying hard to outreach the audience in
Alibaba Group also has a domestic wholesale market platform1688 found in 1999 mainly
based in China and has a target market of enterprises who trade in domestic products(Alibaba,
2020g). Like 1688 to outreach the international wholesalers Alibaba has its platform AliExpress
where buyers around the world can directly buy from the distributors and manufacturers in China
(Alibaba, 2020h). Further, Alibaba has websites that provide its users with options of 17
For monetizing its processes and providing its users with realtime data Alibaba uses
Alimama which was launched in 2007 which utilizes big data analytics technology and provides
the retailers and enterprises with media resources(Alibaba, 2020j). The Alimama platform also
maintains affiliation with third party entertainment media like apps and websites to provide its
For its logistics and networking the Alibaba established Cainiao Network in 2013 as
logistics being an important part of the company marketing the Cainiao Network provides the
user with delivery services(Alibaba, 2020l). The Alibaba quoted that “Alibaba Group’s logistics
vision of fulfilling consumer orders within 24 hours in China and within 72 hours anywhere else
in the world” with that vision the Cainiao Network provides domestic and international one-stop
logistics services and have a network of different transportation distributors and lessons its
customers with various other logistics service to its customers(Chen, September 24, 2019).
The third pillar of the iron triangle of Jack Yun Ma which is financing Alibaba provides
its customers with the financing of small and medium loans and also in September Alibaba
bought 33% of the Ant Financial which is a fintech company making its one of the business of
Alibaba. Now Ant Financial provides its consumers like small and micro businesses with
financial services with digital payment services and financial technology(Chen, September 24,
2019).
GROUP ANALYSIS ON ALIBABA Page 33
At last, to maintain its platforms and provide utility services to its customers, Alibaba has
and medium enterprises with storage services, modern large scale computing, data analytics,
learning platform promoting the Alibaba agenda of incorporating artificial intelligence into its
Product Strategy
Alibaba platforms mainly provide services list of the services provided by Alibaba and
are provided to you in the appendix. Alibaba utilizes technology to provide its customers which
are small-medium enterprises, merchants, and individuals with realtime personalized user
by providing loans and credits with their financial services platform Ant Financial, and logistics
The provision of loans helps the small and micro businesses to trade on Alibaba platform
further to expand Alibaba also provide these enterprises with realtime data analytics about the
products they are selling to outreach their customers according to the trends in the market.
Further Alibaba provides promotion and marketing services to its customers by associating with
third party media platforms like apps and websites to create advertisements(Alibaba, 2020b).
Further, the company provides data analytics and cloud computing services through its
platform AlibabaCloud which serves companies globally and serves 1 million customers globally
in 200 countries. The AlibabaCloud serves as IoT and cybersecurity features to many of its tech
Pricing Strategy
Alibaba’s platforms provide many packages and offer to its customers, like the sales on
special months are held. Alibaba also provides cashback and for its service platform like Alibaba
cloud a free trial period with 16 free trial products, 20 plus always free products worth of 450
dollars for 1 year and for enterprises they are providing products worth $1300 with impressive
The revenue earned by Alibaba is majorly dependent on the advertisement and marketing
they provide to their customers on their platforms with monetization platforms like Alimama
Furthermore other than that the Alibaba revenue is also generated from the customers
who take a membership. In the fiscal year 2019, the membership revenue of Alibaba Cloud
comprises a large part of the total company revenue. Overall, Alibaba tries to keep pricing at its
Promotion Strategy
The promotion strategy of Alibaba based on their affiliation with the third party media
platform and entertainment platforms of Alibaba itself with social media marketing and
promotion. Alibaba is a smart business which means it can utilize data to its advantage and
promote more trending services that are consumed by its users the most(Zheng, 2018a). The
algorithms the company platforms utilize gives the consumers an immersive experience.
Alibaba’s affiliation with the third party media platforms makes it easy for the company to
promote its services and products. Alibaba also does trade shows around the world to attract
enterprises to its platform(Zheng, 2018b). The supplier can opt for packages like trade assurance
which protects their orders from payment to delivery also the company provides premium
supplier memberships, the premium businesses on the company platform are the companies
GROUP ANALYSIS ON ALIBABA Page 35
verified by a third-party agency as a legally registered business (Alibaba, 2020). The Alibaba
also provides learning and training centers for suppliers to provide them with the knowledge of
e-commerce, international trading, industry analysis and many more, this strategy of the
Distribution Strategy
Domestic e-trade retail on the agency’s online shopping platforms, consisting of Taobao
and Tmall, generated a total sales of 247.6 billion yuan in 2019 - around seventy-one billion
yuan extra than inside the preceding year(Alibaba, 2019). According to the corporation,
initiatives such as the new Taobao app interface, greater curated posts, brief videos, and live
2018).
International e-trade retail accounted for handiest five percent of Alibaba’s revenue;
however, the segment revenue grew from 14.2 billion yuan in 2018 to 19.6 billion yuan in 2019.
AliExpress and Lazada.Com were Alibaba’s most popular pass-border e-commerce structures
with a total of more than a hundred and twenty million annual active users(Alibaba, 2019).
Alibaba being a smart business having a technological advancement and robust logistical
distribution model has helped Alibaba in realtime access to communicate and trade to its buyers
Company Position
Alibaba provides services to its customers from starting a business on its platform to
managing and running the various aspects of it like logistics, financing and much more(Medium,
February 18, 2019a). The company has adopted the technology to its benefit, the Company’s
success is also due to its huge presence in the Chinese domestic market with almost 80% of
Alibaba doesn't own the bulk inventory of the products unlike its competitors, it
maintains a huge manufacturer base from countries like India which can connect anywhere in the
world and utilize the Alibaba logistics services to transport their shipments. Being placed in
China and Asia itself puts Alibaba in a better position as Chinese consumption provides Alibaba
Alibaba acts as a middle man it provides its customers with all the services from which
they can find a bigger market for their products, unlike its competitor Alibaba’s network of
website platform distinguishes the company from others as no other e-commerce company
Alibaba’s business model allows it to have less capital intensive operations because of its
lighter infrastructure. Further, Alibaba has listed more products on its platform than its biggest
competitors like Amazon. The Alibaba marketing business model is perfect for long term
Company Outlook
Alibaba also called the Amazon of China, is forced to have rallied this year and the whole
credit goes to it’s strengthening fundamentals. Looking at Alibaba’s stock, BABA showed
significant growth in the year 2019(Reuters, November 1, 2019).with its revenue rising by 51
percent despite many difficulties with external factors like a trade war between the USA and
China.
The strong growth has been possible only due to improvement in the company’s core
commerce, some of them are Tmall and Tabao like shopping platforms and its cloud services
which are also showing great rapid growth(Reuters, November 1, 2019). Hence, the future
At the beginning of 2020, the stocks of the company showed great increase even though
it fell after that due to fears of coronavirus. Investors can reap the benefit of this small fell in
stock and can convert this into a great opportunity for themselves by purchasing Alibaba’s shares
Most analyst underestimates the growth in stocks of Alibaba. However, the stock for
Alibaba has shown consistent growth in the year 2017, 2018, 2019 and it also has been analyzed
that the company stock would show more improvement in 2020(Reuters, November 1, 2019).
With developing micro and macro fundamentals, the stock may be able to hit $250 by
June and may reach more than $300 at the end of the year. Furthermore, market analysts also
believe that Alibaba will have a consistent 20% growth rate in the next 3 years and this growth
rate is still better than its competitor like Amazon(Reuters, November 1, 2019).
The trade war between the USA and China proved beneficial for Alibaba. Because the
price growth will be very high as both of these countries have trade agreements and also BABA
The international revenue is also being predicted to reach about 3.7 billion by the starting
of the year 2022. Alibaba is expanding globally, with Europe being a top attraction this year. The
company is undercutting Amazon seller’s fees to attract vendors. Small businesses in the region
are joining Aliexpress, but some big brands are backing out still the company is optimistic about
Recommendation
Tegridy Consultancy Company will recommend you to invest in Alibaba as the company
has shown a lot of positive outlook for the future and the ability to survive the crisis such as
Hong Kong protests and COVID19. Also, the global outlook e-commerce is changing with social
media marketing the generation z and millennial’s are very much driven toward entrepreneurship
GROUP ANALYSIS ON ALIBABA Page 38
so groups like Alibaba can provide them with the base of logistics, finance, and promotion. Also,
the company is investing a lot of money in research and development with its cloud base
business generated 62% of the revenue in the fiscal year 2019 the trend of cloud computing and
On the financial ground, the company has shown growth in each fiscal year and a healthy
rise in stock prices compared to its competitors the Alibaba was able to maintain better
stockholders' equity than its competitors. With the new CEO, the company is also investing in
new innovative startups and promoting innovation among young employees(Reuters, November
1, 2019).
The company will be able to increase its presence in western markets also like the cheap
production of China will attract the retailers and wholesalers of the west to invest in the
company. Alibaba has shown its investors a steady gain throughout the year for the long term
investments and the risk factors of investing in the company are also low(TheMotletFool,
The world is pushing toward the digital economy and Alibaba has its core businesses
already in the financial technology business and has a good customer base in the field for the
emerging Asian economies the company could also prove an important role many small and
medium enterprise and individual merchants of huge market base like India constitute the
The company has some operational performance issues which could happen in a
company whose operation is spread globally and is not much of concern. Further CEO Daniel
Zhang is taking measures to change the work culture of the company quoting “ Today’s best
performance is tomorrow’s baseline ”. The company will nurture and grow to become a stock
GROUP ANALYSIS ON ALIBABA Page 39
with great returns and has huge investment potential, we would recommend the investors to
Appendix
Business Services
Customs Clearance
Alibaba.com Trade Financing
Logistics Services
Personalized Shopping
Taobao Data Analytics for trending
products
Data analytics
Alimama Affiliate Marketing Program
Advertisement promotions
Cloud Computing Services
Database storage
Security
Alibaba Cloud Network Virtualization
Services
Management and Application
Services
Order Tracking Services
Supply Chain Management
Cainiao Network Services
Domestic and International
one-stop-shop logistic services
Financial Services
Ant Financial Digital Payment Services
Financial Technology Platform
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