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Case study analysis of Alibaba.com

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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. 1. Jasim Alam(1426) Prabal Jain (1418) Vivek Anand(1444) Indian Institute of Forest Management (IIFM)
  2. 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. 3. 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.
  4. 4. 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.
  5. 5. 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
  6. 6. 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.
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. 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%
  11. 11. Financial analysis
  12. 12. GMV
  13. 13. 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
  14. 14. 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.
  15. 15. Business Model
  16. 16. 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
  17. 17. 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
  18. 18. Fiscal Year 2015 Highlights
  19. 19. Fiscal Year 2015 Strategic Highlights
  20. 20. Fiscal Year 2015 Strategic Highlights
  21. 21. Fiscal Year 2015 Financial Highlights
  22. 22. 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.
  23. 23.  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.
  24. 24. FY2016 Strategic Priorities
  25. 25. Thank You !!!!!