Alibaba Group's Marketing Strategies And Online Payment Essay.

Discuss about the Marketing strategi and Online Payment Alibaba Group.

Alibaba Group (Alibaba) was founded on the belief that the advent of the Internet and related technology would be central in enabling small businesses to leverage technology and innovation to become competitive in both local and international markets. Jack Ma, a leader of a group of 18 people, founded the firm 1999. Jack Ma is a former English teacher from Hangzhou in China (Lane et al., 2014). The company mission is “to make it easy to do business anywhere” the company’s strategic development is to connect small exporters, entrepreneurs and manufacturers in China to trade their products to local and international marketplace comfortably and faster (Alibaba Group, n.d.-a, para. 1). Alibaba also operates cloud computing, mobile, and online marketplaces in wholesale and retail with the main aim is to earn profit from online marketing services provided.

Osawa, (2014) argues that today, the Group is successful more than Amazon and eBay combined in terms of business transaction, and profit gained. The company was started in 1999, but the first profit was realized two years later in 2001. Its strategic development has been a success because in 2003 Taobao was revealed offering direct competition to eBay. In the year 2004, Alipay was introduced in the market, and this enabled clients to receive products requested before the release of payment to sellers (Lane et al., 2014). In 2005, Alibaba entered into a partnership, and this helped it acquire China Yahoo. In 2007, Alibaba Group introduced its share to Hongkong Stock Exchange followed by the launch of the Tmall portal in 2008, but this was only available for business between customers. Two years later in 2010, the company established its R&D and came up with an eTao search engine. The portals have been successful since they were introduced and they have handled $170 billion worth of sales. The group also has a mobile operating system designed by their cloud computing team (Shiying & Avery, 2009).

To Solomon, (2014) six segments can affect the Alibaba capability. The environmental analysis focuses on economic, technology and global segments. In the economic Segment, both Small and medium companies contribute substantially to the Gross Domestic Product (GDP) of a country. These include employment and trading activities in China. Alibaba makes it possible for the business to reach target consumers across borders effectively. In the global segment, companies now seek products and services from any corner of the world with the help of internet connectivity and online security. For example, using Tmall.com business people from North America use the avenue to sell agricultural products to Chinese consumers (Rogers, 2014). However, the group face a threat from sales of counterfeit good by SME’s operating in the platform (Wall Street Journal, 2014).

Development of Strategy

On the technological Segment, the pace and the direction of technological developments determine the Business models used. The availability of Internet connections, smartphones, and security makes online shopping reliable and possible. For instance, consumers and vendors use online money transfer medium such as PayPal to transact business across countries (Costill, 2013). Besides, there is the low threat of new entrants because of the strong existence of significant entry barriers such due to extensive capital required and high switching costs for buyers. A massive network of business operating through the platform occasions this. Further, there is a high cost of exiting because investors wishing to enter the business require injecting huge capital to be competitive and also encroach on market share from dominant firms like eBay, Alibaba, Amazon (Solomon, 2014).

The section explores the development of a strategy at business, corporate and functional level. According to Lane, (2014) at the firm level, Alibaba uses Cost Leadership to gain a competitive edge through large scales. Economies of scale when employed by the company enable expansion of market opportunities and satisfaction of market demands. Besides, those trading under their platform have access to cost-effective opportunities to reach consumers. At the corporate level, Alibaba group has adopted moderate to high-level strategic moves with the aim of attracting buyers and sellers by creating diverse marketplaces such as Tmall.com, Taobao Marketplace, and Juahuasuan.com. The aim is to reach consumers with a variety of needs and wants. AliExpress is an ideal avenue for foreign buyers and sellers. The diversity is also exemplified by logistics information platforms, cloud computing, mobile applications and online payment solutions. At the functional level, the group seeks to improve the local and transnational commerce opportunities. The building of alliances with other tech firms leads to growth of its brand to gain competitive advantage and capture emerging market opportunities.

The group has a competitive advantage, and this means its dominance in the domestic E-commerce industry will continue unabated because it has diversified its businesses and its high market power (Huang et al., 2015). However, its sustainability is under threat because the market is rapidly shifting to mobile phone platforms. Alibaba group has shifted emphasis into the smartphone market to capture estimated 600 million users that have embraced smartphone and remain competitive. Thus, the company sustainability is possible due to their ability to embrace the emerging technology to drive the competition further (Qing, 2008).

Competitive Advantage and Sustainability

In 2005, the company the Group formed strategic partnerships and eventually merged with a China-based subsidiary Yahoo! The company has also made other alliances and acquisition of shares from companies like Lazada, Youku Tudou, Momo, and others. The impact of this includes expanding enterprise diversity in the market, financial gains, and increased sustainability. According to Solomon, (2014), the group has a host of International level strategies aimed at penetrating international markets like U.S. the short-term objective is to meet the needs and wants of the Chinese market. Besides, Alibaba groups have long terms goals such as developing cross-border opportunities. The company has introduced AliExpress at the beginning of this decade 2010 to target global clients. In 2014, the group ventured into the U.S. market by investing heavily in e-commerce and mobile phone platforms in a bid to sustain its competitiveness in the global market (Liu, 2016). 

Each company has a strategic implementation that Alibaba can achieve by clearly defining the strategic focus. In the process of establishing e-business chain, the group should consider the development strategy in business. In Business-to-business, its focus should be on expanding the scale of business and optimizing its structure. In Business-to-consumer chain, the focus should direct to extending the scope in a bid to enhance profitability. Further, the company strategic implementation has been directed to opening a new market in other countries and forming global alliances and penetrating into the stock exchange. One of the key reasons why companies are successful is because of the right leadership at to levels. The importance of leadership in the enterprise is due to increased competition between companies and among employers and attainment of strategic goals. Leadership is necessary for Alibaba groups because it helps catalyze value creation, identification, and the creation of new markets and implementation of ideas.

The firm’s structure is dominated by the existence of two entities. One is located in China while the other one is located in the United States of America. The China-based company holds the requisite licenses and permits as required by China authority. In the second entity, foreigners are allowed to acquire and offload shares (Liu, 2016). Therefore, the company control rests on company's top executives in China, and thus the foreign company executives have no votes on issues concerning the organization. Qing, (2008) explains that the firm’s corporate governance structure can be understood by analyzing the activities relating to decision making are arrived at. Alibaba group voting power is concentrated on a small number people or insiders who are well connected to management. The stakeholders, on the other hand, have no control of who becomes the director or not. However, only a handful group of outsiders specifically leaders who have influence at the boardroom level. There are weak checks and balances and therefore no stronger internal controls.

Conclusion

Jack Ma and a host of other people founded Alibaba group in 1999 in China. Since its inception, the company has become one of the dominant companies in online and mobile marketplaces in China, and the rest of the world that has made it easy to penetrate into a foreign market like U.S. Its strategy has enabled us to connect manufacturers, small business enterprises and consumers in a single transform. The company has adopted cost focus leadership to become competitive in the market, diversification of online services, alliances, and acquisition of China Yahoo.

References

Alibaba Group. (n.d.-a). Company Overview. Retrieved from https://www.alibabagroup.com/en/about/overview

Costill, A. (2013). The 10 Most Popular Online Payment Solutions. Retrieved from Search EngineJournal https://www.searchenginejournal.com/10-popular-online-payment solutions/80025/

Liu, J. (2016). Chinese Mergers and Acquisitions: Performance and Factors (Doctoral dissertation, Durham University).

Osawa, J. (2014). Alibaba Tackles Amazon, eBay on Home Turf. Wall Street Journal, 11.

Palepu, K., Srinivasan, S., Wang, C. C., & Lane, D. (2014). Alibaba Goes Public (A).

Rogers, K. (2014). As Alibaba soars in debut, Jack Ma acknowledges the little guy. Retrieved fromCNBC: https://www.cnbc.com/id/102001579#

Shiying, L., & Avery, M. (2009). Alibaba: the inside story behind Jack Ma and the creation of the world's biggest online marketplace. Harper Collins.

Solomon, B. (2014). Potential Apple Partnership Drives Alibaba To New $100 High.

Retrieved from Forbes: https://www.forbes.com/sites/briansolomon/2014/10/28/potential-applepartnership-drives-alibaba-to-new-100-high/

Qing, H. (2008). A model for value-added e-market provisioning: Case Study from Alibaba. com. In Future Generation Communication and Networking Symposia, 2008. FGCNS'08. Second International Conference on (Vol. 1, pp. 47-52). IEEE.

Tan, B., Pan, S. L., Lu, X., & Huang, L. (2015). The role of is capabilities in the development of multi-sided platforms: The digital ecosystem strategy of Alibaba. Com. Journal of the Association for Information Systems, 16(4), 248

Wall Street Journal. (2014, August 14). Suit on Alibaba Opens Window on Counterfeiting. RetrievedNovember 9, 2014, from www.wsj.com: https://online.wsj.com/articles/suit-against-alibaba-openswindow-on-counterfeiting-allegations-1407714242