Alibaba part 2

Running head: ALIBABA GROUP 0

Alibaba Group

Table of Contents

Our team has selected Alibaba Group as a company for the research paper. Alibaba Group is an online commerce company that was founded in 1999, in Hangzhou, an eastern part of China, by a former English teacher, Jack Ma. In just a few years, Alibaba has risen to become the world’s largest e-commerce company, leaving its’ most powerful global competitors, such as Amazon, eBay, and Wal-Mart behind. Alibaba started with creating a single website, Alibaba.com, functioning as a business-to-business (B2B) web portal by connecting Western businesses with Chinese manufacturers. Further, Alibaba launched a shopping marketplace, called Taobao, as a consumer-to consumer (C2C) web platform, facilitating transactions between consumers and sellers. Finally, inspired by Amazon, Alibaba launched Tmall, as a business-to-consumer (B2C) web platform, designed particularly for international brands selling imported goods. In addition, Alibaba provides online payment services, comparison-shopping website, online insurance, and cloud-computing data storage. Being an absolute dominant in its home market, Alibaba is not planning to stop. It is primarily focused on becoming a globally recognized company, acquiring largest market share, and achieving the top position in online commerce industry. 

Alibaba became an international company with phenomenal speed. Partially, Alibaba’s global success lies in its’ internal structure. It combined Amazon and eBay altogether, added some financial services like PayPal, a search engine like Google, sprinkling it with social media. Alibaba serves as a universal mechanism, containing a huge marketplace, bank services, and powerful search engine. Combining these features and tracking its consumers through special web platforms, Alibaba was able to boost its revenues up to nearly US $ 15.7 billion as of last year (Forbes).  Alibaba is continuing is expansion overseas, trying to establish its solid presence in many emerging economies, where India is the largest target with its underdeveloped e-commerce. Alibaba sees a lot of potential in developing countries, which it considers has a huge demand for online retail. Alibaba believes it can boost its revenues easily by gaining first-mover advantage, therefore securing itself from the process of maturing Chinese market. In addition, Alibaba tries to gain a market share in Western markets, such as the U.S., by investing in vast array of its start-ups. Alibaba’s future aspirations are primarily global which include introducing non-Chinese brand to its domestic market and expanding its operations outside of its home country’s borders.

Alibaba’s internalization strategy is extremely unique which consist of three core elements. The first element emphasizes investment in e-commerce in start-up entities, specifically in regions that have a high growth potential, such as India and Southeast Asia. For instance, Alibaba has a large stake, in one of the Singapore’s largest online commerce retailer firms, Lazada Group. Another example is Alibaba’s investment in logistic services in India, such companies as Delhivery and Xpressbees, aimed to develop logistics infrastructure in this country. The second element of internalization strategy takes into account increasing quantity and improving quality of foreign products on its site. For the past year, Alibaba signed a number of agreements with foreign governments of Australia and Canada to bring these countries’ products into its Tmall online platform. Moreover, Alibaba hosted a major public event, such as Wine and Spirits festival on Tmall to introduce 100,000 international wines, whiskeys, and cognacs from over 50 different countries through its B2C marketplace. Finally, the third element of Alibaba’s internalization strategy involves pushing its agenda in overseas forums, so it becomes widely recognizable. In 2016, Alibaba’s CEO and founder, Jack Ma, participated G-20 summit, where he proposed so-called an Electronic World Trade Platform, focused to reduce any possible barriers to trade and ease the business process for small and medium enterprises. The idea of digital trade was widely accepted by the members of the summit, and became one of the key recommendations to the world trade forum.

As a result of globalization, Alibaba could gain numerous advantages. One of the major beneficial outcomes is that Alibaba was able to become the world’s largest online retailer. Alibaba serves nearly 65 million consumers in over 190 countries around the globe. In addition, globalization helped Alibaba to boost its revenues substantially that is estimated to nearly $16 billion as of 2016. Another advantage of globalization for Alibaba is ability to go public and get a worldwide recognition. Alibaba issued its first Initial Public Offering in NYSEX in 2014, claiming the biggest U.S. IPO in history with total worth of $25 billion. It helped the company to increase it revenues once again, attract new investors from all over the world, and leave aside its largest competitors. Finally, another advantage of globalization for Alibaba group is the economies of scale. Alibaba’s expanding overseas helped the company to specialize in what it does most effectively, while producing more with fewer costs applied.