Alibaba

Topics: Alibaba Group, Strategic management, Marketing Pages: 13 (5793 words) Published: October 31, 2014
ICMR Case Collection
Icfai Center for Management Research

Alibaba: Competing in China & Beyond
BSTR288-Teaching Note

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BSTR/288

Alibaba: Competing in China & Beyond
TEACHING NOTE
CASE SUMMARY
This case discusses the success of Alibaba.com Corporation (Alibaba) in China under the leadership of Jack Ma (Ma), its founder. It talks about the transformation of Alibaba into one of the most successful e-commerce companies in China and also analyzes its business portfolio. The case explains in detail the rationale behind Ma starting an e-commerce website and his efforts to bring about the growth of the company.

Alibaba had emerged as the largest e-commerce company in China. The company tailored its strategies to meet the needs of the customers and made a mark because of its understanding of the Chinese language and culture. However, some experts have also raised doubts over the sustainability of Alibaba‟s business model.

The case highlights how Ma successfully competed with foreign e-commerce companies like eBay Inc. (eBay) by establishing a rival website, Taobao.com, in the online auctions market. However, Alibaba lagged behind in the Chinese web search market despite acquiring Yahoo! China‟s operations in 2005. Moreover, with Baidu.com (Baidu), China‟s leading search engine announcing its plans to foray into the rapidly growing e-commerce market in 2008, the competition was expected to intensify for Alibaba. After a successful IPO, the company was preparing to strengthen its competitive position in China and also to provide tough competition to other Internet and ecommerce companies in the global arena.

IMMEDIATE ISSUES
Strategies to be adopted by Alibaba to increase its market share in the rapidly growing Chinese e-commerce market.
Strategies to be adopted by Alibaba to defend its market share in the Chinese e-commerce market considering the competition was intensifying with the entry of other Chinese and global players.
Strategies to be adopted by Alibaba to capture a larger share in the Chinese web search market.
Strategies to be adopted to make its business model sustainable. Decision on global expansion – Should it adapt its business model? If so, how?

BASIC ISSUES
Industry analysis
 The Chinese e-commerce market
 Competition
Choice of growth strategies
Sustainability of business model

1

Alibaba: Competing in China & Beyond

INDUSTRY ANALYSIS
The Chinese e-commerce Market
Broadband penetration in China picked up from 2004 after it surpassed South Korea and Japan in 2003. As of 2008, China, with 210 million users, stood second in terms of Internet users after the US with 216 million users. The broadband penetration in China in 2008 stood at 75 percent. With the growth of high-speed broadband, the e-commerce market in China also grew. The concept of e-commerce was introduced in China in 1993. Though it took some time for it to catch on, it grew at a frantic pace. For instance, the market scale for e-commerce in China grew from RMB 120 billion in 2001 to RMB 680 billion in 2005. China was also one of the fastest growing e-commerce markets in the world. In the first quarter of 2008, the Chinese C2C market created a boom by generating sales of US$ 2.98 billion.

Despite huge opportunities, there were some barriers to the growth of e-commerce in China like the limited use made of credit cards. Chinese consumers preferred to pay by cash rather than through credit cards. Moreover, they did not have faith in the security of the payment...

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7. Susan Kuchinskas, “Jack Ma, CEO, Alibaba,” www.venturetdf.com, October 22, 2004.
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April 28, 2006.
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October 2, 2006.
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www.ecommercetimes.com, January 11, 2007.
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15, 2007.
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2007.
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www.bloomberg.com, November 6, 2007.
www.resources.alibaba.com, November 7, 2007.
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43. Clay Chandler, “China’s Web King,” Fortune, December 10, 2007.
44. “China’s Alibaba.com Aims to Expand in Europe through Acquisitions – CEO,”
www.forbes.com, December 28, 2007.
45. “Internet in China: Taobao Transaction Volume Tripled in First Half of 2007,”
www.designative.info, 2007.
46. Elmer W Cagape, “Baidu Corners 61.5% Market Share in China Search Engine Market
in Q3,” www.seo-hongkong.com, 2007.
47. “210 Million Internet Users in China,” www.english.peopledaily.com, January 21, 2008.
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