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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Alibaba: Competing in China & Beyond
This case discusses the success of 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,, 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), 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.

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?

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


Alibaba: Competing in China & Beyond

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...

References: 2. Justin Deobele, “B2B for the Little Guys,”, July 24, 2000.
3. “Alibaba’s Magic Carpet is Losing Altitude,”, April 9, 2001.
4. “eBay and EachNet Team up in China,”, March 17, 2002.
5. “Alibaba is to Land at Japan, as Planned,”, October 17, 2002.
7. Susan Kuchinskas, “Jack Ma, CEO, Alibaba,”, October 22, 2004.
8. “eBay Outlines Global Business Strategy, February 10, 2005.
9. Justin Doebele, “Standing up to eBay,”, March 18, 2005.
11. “Open Sesame to the Net Highway,”, April 17, 2005.
13. “Meet Jack Ma, Who Will Guide Yahoo in China,”, August 12, 2005.
14. Bill Powell and Jeffrey Resner, “Why Ebay Must Win in China,”, August
22, 2005.
15. Ina Steiner, “Alibaba Calls on eBay to Make China Site Free, eBay Responds,”, October 20, 2005.
16. “Alibaba’s Chief Vows to Beat Google in China,”,
November 17, 2005.
17. “Watch Jack Ma,”, November 19, 2005.
18. Chua Chin Hon, “Yahoo! Jack Wants it to be No.1 in China,”,
April 28, 2006.
19. “ Launches B2C Services,”, May 10, 2006.
21. John Heilemann, “Jack Ma Aims to Unlock the Middle Kingdom,”,
October 2, 2006.
22. Matt Marshall, “China Wars: Zhou Fights Back, Says Alibaba’s Ma is Desperate,”, November 5, 2006.
23. “eBay’s Exit from China Opens the Door for News Corp.,”,
December 21, 2006.
24. Sonia Kolesnikov-Jessop, “Spotlight: Jack Ma, Co-founder of,”,
January 5, 2007.
25. Christopher Bodeen, “Yahoo China Portal to Be Reorganized,”,
January 8, 2007., January 11, 2007.
28. “,”, May 29, 2007.
29. “ Triples to Beat eBay,”, July 25, 2007.
30. Simon Burns, “Going Local No Help for eBay in China,”, August 23,
31. “CNNIC Reports Baidu with 74.5% Market Share,”,
September 25, 2007.
33. “ Opens its First European Office in Geneva,”, October 2,
34. “Alibaba IPO Approved in Hong Kong,”, October 6, 2007.
35. Bei Hu and John Liu, “ Offers $1.3 Billion Share Sale,”, October
15, 2007.
36. “Baidu to Enter Chinese E-Commerce Market,”, October 17, 2007.
37. “Baidu Faces off Alibaba in Online Trading Market,”, October 18,
38. Karen Cho, “Alibaba Bumps up IPO Price,”, October 23, 2007.
39. Mark Lee and John Liu, “Alibaba Shares Triple in Hong Kong Trading Debut (Update8),”, November 6, 2007., November 7, 2007.
41. “Alibaba IPO Boosts Yahoo!”, November 7, 2007.
42. Fara Warner, “’s Helm,”, November 26, 2007.
43. Clay Chandler, “China’s Web King,” Fortune, December 10, 2007.
44. “China’s Aims to Expand in Europe through Acquisitions – CEO,”, December 28, 2007.
45. “Internet in China: Taobao Transaction Volume Tripled in First Half of 2007,”, 2007.
46. Elmer W Cagape, “Baidu Corners 61.5% Market Share in China Search Engine Market
in Q3,”, 2007.
47. “210 Million Internet Users in China,”, January 21, 2008.
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