A holding corporation for numerous affiliates, Alibaba Group Holding Limited, established on June 28, 1999, primarily operates in the business-to-business and business-to-consumer e-commerce, online shopping, and technology sectors (Alibaba Group, 2015). Jack Ma founded the company as an international wholesaler for the Alibaba.com commercial marketplace. Nevertheless, the business has developed and diversified into several related and unrelated areas via organic growth or acquisitions, notably enterprise-to-consumer (Aliexpress), business-to-business (Taobao), cloud computing, and information technology. The board of directors of Alibaba, under the direction of its creator and former CEO, has put into action a strategic vision, demonstrating excellent leadership skills by giving the company direction. By incorporating trends, risks, and possibilities into their strategic objectives, the executives have contributed to a positive difference. They have also consistently improved their tactics to position the business effectively in a changing worldwide marketplace and give Alibaba Group a competitive edge.
Even with its remarkable success, the business still has a long way to go as it works to keep its competitive position and keep expanding as it has for the past 20 years. This essay examines the business’s issues and offers suggestions or options for how it might handle the issues it has found.
Analysis of the External and Internal Business Environments
A review of the environment must be done to detect any obstacles or prospective issues that Alibaba may face in the coming years. Analyzing the external and internal business environments of the Alibaba group employing a variety of techniques and models is part of the environmental scanning process to detect present and possible problems or obstacles. In order to determine potential issues and difficulties confronting Alibaba Group Ltd., tools such as the SWOT assessment, the PESTEL framework, and Porter’s five forces are employed.
A typical business evaluation technique, SWOT analysis, assesses a company’s internal context to determine its strengths and weaknesses and its external setting to determine prospective and actual threats and possibilities. Leadership can enhance the company’s efficiency by addressing the firm’s flaws, enhancing the business’s strengths, seizing opportunities, and countering threats. This situation’s threats and vulnerabilities will show Alibaba Group’s future and current issues.
- Effective leadership & management. The achievement of the Alibaba group is due to its the company’s strong and innovative leadership, particularly that of its creator and former chief executive officer Jack Ma, who stressed the need to put consumers before shareholders, in contrast to most businesses, which do the opposite (Bhowmik, 2012). In addition to creating an organization, Jack Ma and his group of leaders guided it toward brilliance and ethical conduct, as advised by the three interrelated leadership operations.
- A very sizable clientele. A significant portion of Alibaba’s and its affiliates client base is growing as more individuals in China and around the world embrace online shopping. Due to its location in the nation with the largest population in the world, Alibaba has easy access to both present and potential clients.
- A sizable and well-rounded range of products: The company’s diverse portfolio of goods and brands allows it to compete on several fronts while creating synergies within the group.
- Strategic collaboration. The corporation has strategic alliances with other businesses, such as Alipay, providing a competitive edge.
- Positive ties to the Chinese government: The corporation has a good working connection with the Chinese government and is unlikely to experience unfavorable government reactions.
- A dominant market presence in China for both b2b and retail e-commerce: According to exhibits 7 and 8, the corporation dominates China, holding nearly half of the market’s share in business transactions, along with more than 50% in online retail.
- Awareness of the brand is high both nationally and abroad thanks to Alibaba’s and its affiliates and goods’ widespread recognition.
- Control of counterfeits and quality: The business offers an environment for online sales, but it receives flak for its vendors’ sales of defective or fake goods. The company asserts that it invests millions in the battle against counterfeit goods.
- Excessive reliance on the Chinese market: A great deal of the company’s revenue comes from the Chinese marketplace, making it very vulnerable to the collapse of the Chinese economy.
- The company’s strong ties to the Chinese government are also a problem because they give the impression that the authorities may be in control of it.
- The intricateness of its corporate organizations: It could be challenging to optimize every business because of its size.
- The business can enter new foreign markets, including Latin America, the Middle East, Africa, and Europe.
- Development because of increased internet usage.
- Possibilities for expansion as the Chinese economy grows.
- As the internet and processing power improves, expand the analytics, cloud computing, internet of matters, and machine learning industries.
- It has enhanced regional and international competition. Chinese companies like Tencent, JD.com, and Biadu are posing growing competition for the company. On a global scale, the company is up against fierce competition from companies like Amazon, eBay, Flipkart, Oracle (cloud computing), and Best Buy.
- Trade disputes. In the event of trade conflicts that make it difficult for sellers to ship or bring in goods, the company revenue may decrease.
- Interference by the government. Interference from national and international governments could jeopardize the company’s development and capacity to achieve its objectives by passing burdensome rules and legislation.
- Legal actions brought about by faulty products sold on the website. A client may start something.
PESTEL is a macro-environment assessment technique to examine an organization or company’s external and overall surroundings. The model analyzes possible and factual issues that the Alibaba Group is experiencing or may experience due to the macro environment. The following elements of the overall environment serve as the foundation for the model.
Political variables include taxation, trade regulations, rules, government stability, and welfare programs. They include influences brought about by the activities of political actors, including the government and its governing bodies. Although the political climate for the Alibaba Group is mainly positive in China, it runs the danger of political environment modifications, trade restrictions, and high taxation laws in other countries, including the US.
Impacts like GDP growth rates, total demand, employment, rates of interest, disposable income, and inflation are examples of economic forces. Due to their potential to affect consumer demand, these variables may impact Alibaba’s success. Alibaba’s sales and certainly its earnings will therefore rise as demand rises.
Changes in social statistics, attitudes towards work or leisure, educational attainment, lifestyle changes, social mobility, financial inequality, and consumerism are just a few examples of social variables. Because the acceptability of online retailing is mainly responsible for Alibaba’s success, any change in how people view it will affect the company, depending on whether the attitude rises or falls in demand for e-commerce.
The influence of technological developments and advances on a firm is referred to as a technological component. These elements may involve the company’s technological investments and advancements in the larger market. Alibaba’s broad use of numerous technologies, including artificial intelligence, machine learning, and cloud computing, among others, is one of the leading causes of its success (Balaba, 2016). Clients of Alibaba can use its “Tmall Global” portal to monitor and verify the delivery status of their international goods. The business has also made significant financial investments in Cainiao, a logistics for transporting items. Additionally, a cloud-based RMS (Remote Management System) is used by the Cainiao platform. The company’s AI Chatbot also facilitates communication between buyers and sellers by interpreting the other party’s words in their native tongue.
Conclusion and Recommendation
Alibaba Group’s capacity to be the leading platform for monopolistic firms that can offer affordable business solutions for small enterprises without the cloud to negotiate for lower costs underpins its unique technology solutions and sheer market strength (Balaba, 2016). Alibaba’s exclusive technologies give it the appearance of a monopoly (dominating the market and generating revenue via its monopoly hold), but at the same time, the way it operates as a global intermediary corresponding to both B2B clients and monopolistic market players (small businesses that rely on the Alibaba trading platform) gives Alibaba’s prospects on both the consumer/buyer and producer/supplier sides of the supply chain great competitiveness, openness, and price-setting adaptability.
Focusing on providing value-added to clients and consumers on both ends of electronic trading activity by providing cost-efficient solutions that operate while generating value downstream, including the final customer base, is the most effective method to maintain.
Alibaba Group. (2015). Company Website. Retrieved from http://www.alibabagroup.com/en/global/home.
Balaba, J. (2016). External and Internal Environment Analysis of the Alibaba Group Holding Ltd. ResearchGate.
Bhowmik, R. (2012). Analysis on the Business Model of Alibaba.Com. Retrieved from http://www.slideshare.net/ronibhowmik/analysis-on-the-business-model.