Case study analysis of Alibaba.com including General Environment, Industry envi., competitive analysis, financial analysis, SWOT analysis, business strategies used and future scenario for alibaba.com
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Case study analysis of Alibaba.com
1. Jasim Alam(1426) Prabal Jain (1418) Vivek Anand(1444)
Indian Institute of Forest Management (IIFM)
2. 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.
3.
4. 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.
5. 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.
6. Industry Environment
Barriers to Entry (Low)
High returns results in new entrants, decreases
profitability
More new websites try to copy the business model
of Alibaba.com
Target market to a single industry
finechemical.com
textilehome.com
Share the special market of Alibaba.com
7. 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.
8. 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
9. 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
10. 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
11. 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
HC360.com 9.7%
Others 1.4%
15. SWOT Template
Largest onlineLargest online
tradingtrading
websitewebsite
Trustpass.comTrustpass.com
reliabilityreliability
Strong placeStrong place
in globalin global
marketmarket
Positive cashPositive cash
flowflow
StrengthsStrengths • Low brandLow brand
recognitionrecognition
• No massNo mass
advertisementadvertisement
• Website:Website:
Intermediary &Intermediary &
replicablereplicable
• MembershipMembership
system incrementsystem increment
in feesin fees
•
WeaknessesWeaknesses
• Market shareMarket share
possibility inpossibility in
USUS
• IncreasingIncreasing
popularity ofpopularity of
InternetInternet
• China; creatingChina; creating
regulatedregulated
businessbusiness
environmentenvironment
OpportunitiesOpportunities
• E-commerce industryE-commerce industry
growthgrowth
• Competition among rivalCompetition among rival
websiteswebsites
• Profits mainly in ChinaProfits mainly in China
ThreatsThreats
SWOTSWOT
AnalysisAnalysis
Internal
Factors
Positive Negative
External
Factors
16. Business Strategies
Business Level Strategy: Cost Leadership
Corporate Level Strategy: Moderate to High Level of
Diversification(cloud computing, logistics
information platforms, online payment solutions, mobile applications and
smart TVs)
International Level Strategy: Transnational Strategy
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.
18. Alibaba.com’s value propositions
Suppliers
Access to active global
buyer community
Target marketing to
reach buyers
Customer service and
training
Always online
Budget certainly through
a fixed subscription fee
model
Buyers
Access to active global
supplier community
Broad selection of
listings
Access to high quality,
organized information
Easy-to-use interface
Convenient, rael-time
medium
Authentic and trust
profiles of suppliers
19. Vision
To last 102 years
To be one of the world’s top 10 internet sites
To be an essential partner for all business people
Mission
To make doing business easy
Values
Customer 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
24. 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.
25. 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.
