alibaba case study on strategic management

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By:- Jasim Alam(1426) Prabal Jain (1418) Vivek Anand(1444)

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Page 1: Alibaba Case Study on Strategic Management

By:-Jasim Alam(1426) Prabal Jain (1418) Vivek Anand(1444)

Page 2: Alibaba Case Study on Strategic Management

About Alibaba.com The company was founded in 1999 by 18 people led by Jack Ma, a former English

teacher from Hangzhou, China to support operation of B2B market places.

In Oct. 2000 Alibaba launched the Gold supplier membership service for Chinese exporters.

On November 6,2007, Alibaba.com debuted on the Hong Kong Stock exchange, raising US$1.5 billion.

By the second quarter of 2007, Alibaba.com was the largest online B2B e-commerce company in china.

The English-language web site alibaba.com specializes in business-to-business trades, especially for international buyers trying to contact Chinese sellers.

Japan's Softbank was one of the earliest investors in Alibaba.

On 18 September 2014, Alibaba's IPO priced at US$68, raised US$21.8 billion for the company and investors making it the biggest U.S. IPO in history.

Page 3: Alibaba Case Study on Strategic Management
Page 4: Alibaba Case Study on Strategic Management

General Environment

Economic Segment-SME contribute 68.8% to the nation’s GDP.SME’s are estimated to rise from 31.5millionin 2006 to 50 million in 2012

Policy Segment-“11th five year plan for the Development of e-commerce” encouraging SME’s to use third party e-commerce platform.

Page 5: Alibaba Case Study on Strategic Management

General Environment

Global Segment-From early 21st century Alibaba launched different sites in different national languages to cater the global market. E.g.-English, Korean and Chinese versions.Technology Segment-Internet penetration improved from 12.3% in 2007 to 49.03% in 2015.In 2006,28% of SME’s are utilizing 3rd party B2B e-commerce platform in china which is expected to rise up to 82% in 2012.

Page 6: Alibaba Case Study on Strategic Management

Industry Environment

Barriers to Entry (Low)High returns results in new entrants, decreases profitabilityMore new websites try to copy the business model of Alibaba.comTarget market to a single industryfinechemical.com textilehome.com Share the special market of Alibaba.com

Page 7: Alibaba Case Study on Strategic Management

Buyer Bargaining Power (Medium)•the customers are generally the medium and small-size firms which don’t have the ability or don’t need to build up their own websites •these firms don’t have too many advantages to fight for lower cost and nearly all the standards are decided by the Alibaba.com •With the development of B2B websites, the customers may have the opportunity to choose the other platform and that will also be the opportunity to negotiate with Alibaba.com for more rights.

Page 8: Alibaba Case Study on Strategic Management

Supplier Bargaining Power(limit & stable)

It is not a manufacture firm but an e-service one

The most important suppliers are the firms supply the advertise for Alibaba.com, such as the famous magazines, newspapers and websites.

These suppliers are not a union and the price is generally based on the market

Page 9: Alibaba Case Study on Strategic Management

Availability of Substitutes(Medium)

Web search engines like google, yahoo, rediff,

self-websites of large companies.

The customers which prefer to make business with large companies, they will not turn to Alibaba.com but directly contact with the companies themselves

Page 10: Alibaba Case Study on Strategic Management

Competition(Medium)

E-bay, Amazon, Baidu, jd.com, hc360.com

Already established brands

Possess global identity hence large customer based

Big Players having similar models

Page 11: Alibaba Case Study on Strategic Management

Competitive analysis

Competitor Market Share(2007)

Advantage over Alibaba

Global Sources 21.3% • 38 years of experience in business

• 14 online marketplaces in 2007

• Publishes 13 monthly magazines

• 9 trade specific exhibitions

Made-in-China.com

14% • Cheaper price• Use of agent system

ChinaChemNet 3.8% • Vertical coverage of Chemical industry

Page 12: Alibaba Case Study on Strategic Management

Financial analysis

Page 13: Alibaba Case Study on Strategic Management
Page 14: Alibaba Case Study on Strategic Management

GMV

Page 15: Alibaba Case Study on Strategic Management

SWOT Template Largest online Largest online

trading trading websitewebsite

Trustpass.com Trustpass.com reliabilityreliability

Strong place Strong place in global in global marketmarket

Positive cash Positive cash flowflow

StrengthsStrengths • Low brand Low brand recognitionrecognition

• No mass No mass advertisementadvertisement

• Website: Website: Intermediary & Intermediary & replicabereplicabe

• Membership Membership system increment system increment in feesin fees

WeaknessesWeaknesses

• Market share Market share possibility in possibility in USUS

• Increasing Increasing popularity of popularity of InternetInternet

• China; creating China; creating regulated regulated business business environmentenvironmentOpportunitiesOpportunities

• E-commerce industry E-commerce industry growthgrowth

• Competition among rival Competition among rival websiteswebsites

• Profits mainly in ChinaProfits mainly in China

ThreatsThreats

SWOTSWOTAnalysisAnalysis

InternalFactors

Positive Negative

ExternalFactors

Page 16: Alibaba Case Study on Strategic Management

Business Strategies

Networking- Company believed that diversification and quality of users were critical to success of the marketplace.

Monetization of user base- company was focusing on converting its free members into paying members

Continuous expansion- exploring international markets to sell more premium services to the customers

Value added services- services like Instant messaging services, CRM and online business applications was offered to customers to improve brand loyalty.

Page 17: Alibaba Case Study on Strategic Management

Business Model

Page 18: Alibaba Case Study on Strategic Management

Alibaba.com’s value propositions

SuppliersAccess to active global buyer communityTarget marketing to reach buyersCustomer service and trainingAlways onlineBudget certainly through a fixed subscription fee model

BuyersAccess to active global supplier communityBroad selection of listingsAccess to high quality, organized informationEasy-to-use interfaceConvenient, rael-time mediumAuthentic and trust profiles of suppliers

Page 19: Alibaba Case Study on Strategic Management

Vision To last 102 years To be one of the world’s top 10 internet sites To be an essential partner for all business peopleMission To make doing business easy ValuesCustomer comes first Customers are everything

Teamwork and Cooperation Team interests are always ahead of individual interests

Embrace changes Go beyond yourself and welcome changes

Integrity Honest and upright, honoring commitments

Passion Never give up and stay optimistic

Page 20: Alibaba Case Study on Strategic Management

Fiscal Year 2015 Highlights

Page 21: Alibaba Case Study on Strategic Management

Fiscal Year 2015 Strategic Highlights

Page 22: Alibaba Case Study on Strategic Management

Fiscal Year 2015 Strategic Highlights

Page 23: Alibaba Case Study on Strategic Management

Fiscal Year 2015 Financial Highlights

Page 24: Alibaba Case Study on Strategic Management

Future of Alibaba The number of online shoppers are skyrocketing

The number of online shoppers in China grew from 148 million (in 2010 representing 11% of the population and 32% of Internet users) to 302 million (by the end of 2013 representing more than 22% of the country's population and roughly half of Internet users ).

 By the end of 2020, China is expected to have more than 700 million online shoppers.

Alibaba is working with partners to improve China’s logistics network Much of current logistics network in China was built before 1990, and may be

inadequate in terms of keeping up with the growing e-commerce market. As a result, the company launched a massive logistics project teamed up with

some private equity firms and other investors in 2013. The network is expected to support annual online sales of up to RMB 10

trillion, and will play a key role in driving Alibaba's growth.

Page 25: Alibaba Case Study on Strategic Management

Rising competition from JD.com could impact Alibaba’s market share on B2C and mobile commerce

JD.com a direct sales retailer but has recently expanded into a marketplace model, could intensify competition.

it has strategic advantages such as a huge cash muscle as well as a close partnership with Tencent (a leading behemoth in the Chinese Internet space).

Mobile commerce is gaining traction

Mobile GMV accounted for only 1.4% of total China marketplaces GMV for quarter ended June 2011.

This figure jumped to 42% for quarter ended December 2014. The percentage has been increasing at an average rate of 6%

for the last three quarters, which suggests that mobile commerce is gaining popularity in the country.

Page 26: Alibaba Case Study on Strategic Management

FY2016 Strategic Priorities

Page 27: Alibaba Case Study on Strategic Management

Thank You !!!!!