alibaba global strategy

Team 7Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy1

Vision

We aim to be pioneers in the revolution of global trade. We envision that our unique team will build the future infrastructure of commerce, which will serve our clients in parts of three different centuries.

Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy2

Mission

Alibaba’s Mission is to make it easy to do commerce anywhere:

We operate leading online and mobile marketplaces in retail and wholesale trade. We provide technology, logistics, payment platforms and fulfilment to enable consumers and merchants to conduct commerce in the most convenient and reliable way possible.


Strategy

Connect suppliers and buyers globally to become the worlds largest online marketplace in terms of turnover in the next five years. Through an innovative, integrated and reliable platform we will create consumer trust.


Core Values


Superior Performance Cycle

Core Competencies• Culture• Deliver on

Promises

Firm Activities• Marketing• Supliers &

customers• Technology• R&D

Competetive Advantage• Network Size• Econ of Scale• Econ of

Scope

Superior Firm Performance• International

Presence• Largest

e-marketplace

Resources• Network• Products• Scope/Costs

Capabilities• Easy Pay• Easy Delivery• Low Price

Rethink, Reinvest, Hone, Upgrade

Rethink, Reinvest, Hone, Upgrade

SWOT AnalysisSTRENGTHS:• Leading position as the largest internet

market • Brand popularity & investor trust

increasing internationally • Good relations with Chinese Government • Expanding network orchestrator –

increases customer traffic and value• Connected with own payment system

(ALIPAY)

WEAKNESSES:• Easy to imitate business model• Counterfeits • Influenced by Chinese Government• Chinese culture is not innovative enough • Disorderly business platform • Slow delivery time

OPPORTUNITIES:• Government Support / Regulations• Growing internet penetration• Increasing delivery efficiency • SMEs moving away from own web shops

towards online marketplaces• Strong economic & Industrial background

THREATS:• Government Regulations / Nationalization• E-commerce competition • Possible M&A of other players • Global Economic Crisis • Growth of M-commerce • Disruptive new Technology (e.g.: A.I.)• Lawsuits from brand holders


PESTEL: CN e-Commerce

STRATEGIC GROUP

INDUSTRY

ECONOMIC• Growth Rate • Levels of employment • Interest Rates• Inflation• Currency exchange rate

SOCIAL/CULTURAL• Demographics • Education • Immigration• Emigration

TECHNOLOGICAL• Online payment • 3D printing • Internet penetration

ECOLOGICAL• Low Impact

LEGAL• Chinese vs. US

government • IP rights protections• IP taxes • Privacy • Consumer rights

POLITICAL• Strong Relationship with Government• Pros – access and strength in CN• Cons – Limits to other countries

Porter’s Five Forces


Rivalry(HIGH)

Threat of Substitute(HIGH)

Threat of New Entry(LOW)

Power of Suppliers(LOW)

Power of Buyers(HIGH)

- Many small suppliers- Margin matters- Need many customers

- Capital Facilities- Government- Scale / Volume

- Many buyers- Price matters- Commission from seller

- Offline Retail- Disruptive technologies- Social Commerce- M-Commerce

- Logistics- Trust - Price

ERRC Strategy Canvas

00

01

02

03

04

05

Offlin

eInfrastructure(Shops,

Wareh

ouses)

ProductDescrip

on/Quality

CustomerSupport&OtherServices

Innova

veM

arke

ng/Promo

ons

LoyaltyProgram

/Reten

onRate

Convenience/CheckoutProcess

Fast&ReliableDelivery

Brandaw

aren

ess

Personaliza

on/BigDataAnalycs

Price(Lowest–5,H

ighest–1)

Assortment/Quan

tyof

Products&

Sellers

ProductOfferingEvalua

on(0—5)

Compe ngFactors

OfflineMalls(RaffleCity,…)

ChineseOnlineMalls(Tmall,JD…)

Interna onalOnlineMalls(Amazon,…)

Alibaba

Strategy Map

C2C B2C B2B

Aliexpress

Alibaba

Ebay Amazon

Taobao

Do

mes

tic

Inte

rnat

ion

al

Made in CN

1688

Groupon

VRIO MODEL

YES YES YES NO

Resource: Database of Sellers & Buyers

• Ownership• Counterfeits• Doesn’t control

affiliated businesses

TEMPORARY COMPETITIVE ADVANTAGE

• Unique Database

• Well recognized platform

• Brand• Relationships• Data• Scope of

business

AFI Model: 3D Printers

ANALYSIS FORMULATION

IMPLEMENTATION

Future Scenario:Emerging of 3D printer at home

• Install innovative system • Increase Marketing (online, newsletter)• Grow finance services

Strategic Plan:• System to trade IP • Build a Bank New Vision:• Become Global leader

in 3D/IP trading

Strategic Option:• Highlight 3D printed

products • Analyze non-3D market • Create new AFI • Push Finance Services

Feedback loop:MonitoringPerformance

Activate New PlanIf necessaryDiscard Dominant Plan

If necessary


AFI Model: M&A Amazon & JD.com

ANALYSIS FORMULATION

IMPLEMENTATION

Future Scenario:Amazon & JD.com M&A

• Strategic international partnerships• Open foreign headquarters

and sales offices abroad

- International supplier relationships

- Sustain relationships in China

- Compete on cost level- Improve delivery system

Strategic Option:• M&A with eBay• Create new AFI • Push Finance Services• Vertical Integration

Feedback loop:MonitoringPerformance

Activate New PlanIf necessaryDiscard Dominant Plan

If necessary


Recommendations

• Strategic alliances for consumer trust

• Highlight Vision, Mission, and Strategy

• Based on strategy map – clear positioning

• Take control over ecosystem

• Improve delivery speed

• Overall Alibaba is doing well and only minor adjustments needed



Q&AAlexander Kudasov [email protected] Tangga-An [email protected] Grecu [email protected] Embley [email protected] Olea [email protected]

mailto:[email protected]





Alibaba Group: Zoom Out


Core Competence Market Matrix

Existing Market New Market

New

Co

mp

eten

cies • Delivery Speed

• International Delivery Reliance• Alliances/Creating Related

Diversification

• Disruptive Technology• Forward Integration into

Smartphones

Old

Co

mp

eten

cies

• Ease and Speed of Payments• Lower Prices• Scale/Product Offerings

• Entering International Markets• Trading Physical Commodities

ALIBABA.com

Organizing Economic Activity: Firm vs. Market

Firm «Make» Markets «Buy»

Ad

van

tag

es

• Command and Controlo Flato Hierarchical Lines of

Authoroty• Coordination• Community of Knowledge

• High-Powered Incentives• Flexibility

Dis

ad

van

tag

es • Low-powered Incentives• Principal-agent problem• Administrative Costs

• Search Costs• Opportunism: Hold-Up• Incomplete contracting

o Specifying and Measuring Performance

o Information Assymetrics• Enforcement of contracts

ALIBABA Marketplace

• High Market Orientation• Vendors can design

sales as they want• Buyers can look for

sellers how they want• Through Internet and

optimization Alibaba tackles Search Costs

• Not Involved in Buyer/Seller Contract

• Merely a «Middleman»

Alibaba Group: Zoom Out

Alibaba Group Core

- Alibaba.com

(Global Wholesale – B2B)

- 1688 (China Wholesale)

- Aliexpress

(Global Wholesale –[CN]B2C[World]

Related Diversification

- China Smart Logistics

-Alimama (Marketing Services)

- Juhuasuan (Group Markeplace)

- TMALL (High End Brand Marketplace)

Forward Vertical Integration

- Aliyun (Cloud Computing)Unrelated Diversification

- Weibo (CN Twitter)

Backward Vertical Integration

- Alipay (Payment System)

Ant Financial Services Group