ALIBABA GROUP  

ALIBABA GROUP&nbsp 10

ALIBABAGROUP&nbsp&nbsp

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June19, 2014.

AlibabaGroup is a leading international firm that has successfully enhancese-commerce for business to business interactions through its largestonline marketing platform for domestic and international firms. Itsmain focus is facilitating the exchange of products and servicesbetween and among businesses through its distribution channels. It isa business ‘matchmaker’ among potential sellers and buyers.Alibaba group has had a successful business operation strategy inattracting and maintaining their customers through the application ofexcellent marketing strategies. A major significant aspect of thegroup is its ability to reorganize and change its strategies inaccordance to the organization structure. Importantly, the groupapproach on product /service has been its main selling method. Thefirm provides its customers a wide range of online services such asonline payments, listing solutions, authentication, instantmessaging, protection, after sales services and promoting memberreputation. Pricing approaches another key strategy that haspropelled the group to successful business such as penetrationpricing, product line pricing and discount offers to clients.

Ina market laden with stiff competition, the Albaba group devised astrategic promotion approach where it utilizes internet promotion,media advertising and sponsoring events. In addition, the group hasperfected its marketing strategy by using distribution channelsthrough other intermediary websites. Furthermore, the group has cutits niche in the market by enhancing its strength through itsconsumer focus approach through C2C and B2B approach, engenderingtrust between consumers and vendors and its excellent marketsegmentation approach. Other approaches that have been employed bythe business include giving clients’ quality value and shoppingexperience, strong brand, achieving economies of scale andfacilitating massive sales volume. Alibaba group faces operationchallenges just like any other business. However, the group hasemployed various strategies through its online marketing, valuecreation, brand, market segment, pricing strategy and promotion hasenhanced the group strength, opportunities and minimizing threats andrisks (Wulf, 2010).

StrategicAnalysis of Alibaba Group

Poter`sfive forces, value chain

Alibabagroup has effectively employed an unmatched business strategy thathas enhanced its overall attractiveness and profitability in theindustry. Through its constant strategic organization changes, thegroup has been able to develop a microenvironment that enables itserve the customers efficiently and profitably. The group overallstrategy has been influential in creating a competitive and dominantforce in the global market. The firm has employed core competencesand business model that is unmatched to that of its competitors.Despite the presence of many other online marketing firms globallythe group business model, strategy used has created its bargainingpower that is dear to customers and the vendors alike. The overallperformance of the group could be well explained through Portersfive-point of strategic and value chain model (Werner,1984).

Threatof New Entrants

Businessorganizations exist to make profits in the marketplace by looking fornew avenues to exploit this leads to new entrants in a particularindustry thereby threatening and reducing the profits made by otherfirms in that industry. Alibaba group has been able to effectivelymaintain its dominance in the marketdespite the entry of new players in the industry. The group hasestablished its own client base through subsidiaries of the firm andas well as partnering with other firms to maintain its dominance. Forinstance, the group does business with clients of its competitorssuch as Joyo Com, which is a subsidiary firm to Amazon Group. Inaddition, the firm has enhanced its competitiveness and warding off competitors by establishing a strong g brand name, access todistribution of products and services and creating customer loyaltythrough its marketing, pricing and promotion strategies (Werner,1984).

Threatof substitute products or services

Althoughthere are many firms offering same products and services like AlibabaGroup, the firm has managed to ward off such threats through itspromotion, pricing, distribution and marketing strategies. The firmhas an efficient place distribution strategy that targets allmarkets. Alibaba Group uses various channel intermediaries to coverrange of clients in the market. In addition, the firm has severalonline market places for the B2B and C2C products and services whichhave enabled the company to attract potential suppliers and buyersacross the globe(Porter, 2008).

TheGroup uses a competitive media advertising and promotion strategiesthat lock down competitor’s products and services. In theseadvertising and promotion strategies is a tagline that encouragespotential customers to consider the Groups products and services(Porter,2008).In addition, the value added service and pricing strategy used by thegroup has been effective in reducing the threat of substituteproducts and services form the competitors for instance, the Groupoffers a variety of similar quality products at different prices fordifferent customers. Overall, the pricing strategy used by the Groupis effective in warding off similar substitute products and servicesfrom competitors (Wulf, 2010).

TheGroup Bargaining Power to Customers and Buyers

Themost eminent bargaining power of Alibaba group has been itsapplication of effective marketing, pricing and promotion strategies.The firm’s business model has built a solid base by employingmarket mix of four ‘Ps’ products and services, pricing,promotion, place and distribution. The Group products offered in themarket satisfy the needs and wants of various clients across theglobe. Alibaba group offers services that promote deep trust and safeperceptions among the different clients across the group. Fordecades, people have been wary of online transactions such asE-commerce for fear of scams. However, the ability of the AlibabaGroup to create trust and endear the safety of online transactionshave raised the bargaining power of the firm among its clients (Wulf,2010).

TheGroup provides authentication, protection, instant messaging, andonline payment and after sale warranty services which have raised theGroup trust among its clients especially since most transactions arevirtual. The firm offers safety and account protection training toenable clients identify genuine suppliers and buyers. Pricingstrategy is another approach that raises the firm’s credibilityamong its clients. Determining the best price to offer for productsin a competitive market is a critical aspect. As a bargainingstrategy, the firm adopted a number of various strategies in order tomaintain and attract more clients the firm (Porter,2008).

Competitionpricing is one strategy adopted by the firm in which prices are incomparison to their competitors the firm gives low prices forhigh-quality product to attract the targeted market. Product pricingtactic is used to price different products to allow buyers have awide range of choice this is an important bargaining strategy. Inaddition, the firm has a penetration price tactics (low prices) thatis used to cover new markets or when introducing new products in themarket(Porter, 2008).

Otherpricing strategies that have greatly enhanced the success of the firmare the discounts and value services that enable the firm remain theleading global leader in e-commerce. The company also employs anumber of promotion tactics through its numerous online channels andmedia advertising. These promotion strategies have enhanced continuedawareness and creating a strong brand in the market. Furthermore, thefirm has several channels of distribution that allows the firmefficiently distributes its services and products to clientsglobally. Consequently, this has enhanced the firm achieve its marketobjective and more bargaining power in the market (Wulf, 2010).

Intensityof competitive rivalry

AlibabaGroup model is indicative of how the firm continues to manage itscompetitiveness in the industry. Assessing the firm’s approach, oneis quick to note that, indeed the firm has been able to focus itsforces on maintain its competitive advantage through its innovationpractices, enhancing its competitiveness through offline and onlinetactics, creating customer loyalty, trust and transparency. Theseaspects are not common in many organizations. Only very feworganizations can perfect the art of strategic competitiveness likeit is been practiced by Alibaba Group. Indeed, the strategies adoptedin the promotion marketing, distribution, pricing and management areunmatched (Porter,2008).The firm has a unique tactic of working with its main competitors andtheir clients this has made the firm weaken the competitors’strategies as well as winning over their clients(Werner, 1984).

OverallSWOT analysis of Alibaba Group

TheGroup Strength

Thefirm has an excellent large base of competitive employees coveringthe diverse markets of the firm. The market segment of Alibaba Groupcut across large and diverse societies across that globe. Throughits diverse strategies, the firm focuses on its consumer’s troughquality products and services like the C2C and B2B offered throughvarious online channels. This makes the firm have an overridingadvantage in covering a wide range of market across the globe. Theonline marketing websites and other subsidiary channels have beentranslated in various languages to cover different societies.

Thecompany has created trust among clients through online paymentservices such as the Alipay this aspect has enabled the firm expandand rival other major online payment service companies like Paypal.Strength of the firm is creating public ownership of the firm bylisting it (Wulf, 2010). The management of the firm puts the interestof the employees before that of the stakeholders this has enhanced amotivated and innovative workforce which has contributed to thesuccess of the firm. In addition, the firm ability to support othersmall businesses has enhanced its own capacity. Interestingly, thefirm approach to its competitors has been intriguing the firmadvocate for competition and cooperation among the competitors. Thishas made the firm work with its rivals and their clients,subsequently conquering their market (Wulf, 2010).

Threatsand Challenges

Themajor challenge the firm has faced is internal competition betweenthe different group companies. This scenario almost affected thecompany overall management. However, the management has been able toquell this challenge by engaging the managers and the leadership ofthe subsidiary organization in forming internal group cooperation.Another challenge has been managing the workforce in relation tocompensation benefits. In the same line, the company faced achallenged in finding the best model of expanding their workforce andadjusting the mode of control. However, this challenge was addressedby developing a structure in which the vast number of employees wouldbe managed across functional business teams were created. The groupsalso engaged in employee management training to ensure smooth-coordination at the firm. Lastly, listing the firm in the publicstock exchange was another major challenge that saw external forceshaving interference in the business operations the firm was underclose check by government. Changing stock prices have also had animpact on the employees (Wulf, 2010).

Futureopportunities and Recommendation

Thefirm has an excellent opportunity to increase future sales andprofits through markets that have not yet been exploited. The companyneeds more domestic competitiveness before establishing moreinternational competitiveness domestic competitiveness enhances morestable strategies that could be used to penetrate internationalmarkets. The company has a potential in venturing in internationalmarket shares to enhance its international market presence. The firmcould lower cost per unit and enhance more sales at internationallevel this is only possible through increased production output. Inaddition, the firm financing of small business is a greatopportunity small business forms the vast client base. The growth ofsmart phones is another opportunity for Alibaba Group e-commercebusiness. Many people across the globe are users of smart phoneswhich are used for business Alibaba could capitalize on thisopportunity. The firm needs to seek foreign information in order toreduce the time used in analyzing new markets as well as an effectivestrategy of improving their marketing strategy. The firm could alsouse other means like corporate social responsibility and publicrelation to boost their brand image(Werner, 1984).

Conclusion

TheGroup overall strategy has been an effective mechanism in enhancingthe success of the firm. The four ‘Ps’ market mix strategiesadopted by the firm are essential in creating the companies brandimage, market share and profitability. In addition, the firmstrategic management and organization structure has been importantelements in propelling the firm to success. Indeed, Allibaba Group isa leading global internet firm with astute business strategies thatare unmatched.

References

Porter.Michael E. 2008. The Five Competitive Forces that Shape Strategy.HarvardBusiness Review,p.86-10

WernerFelt, B. (1984), A resource-based view of the firm. StrategicManagement Journal,Vol. 5, (April–June): pp. 171-180

WulfJulie, 2010, Alibaba Group. Research Associate Scott Waggoner.HarvardBusiness School Publishing,Boston MA.