Introduction
The need to improve customer service and meet the desired client demands has forced all organizations to develop strategies that align with organizational success. One company that has considered these aspects is Alibaba Group. It is a Chinese multinational technology organization specializing in retail, e-commerce, technology, and internet to its customers worldwide. Since its development in 1999, the company has taken pride in offering business-to-business, consumer-to-consumer, and business-to-consumer sales services.
More specifically, Alibaba Group uses shopping search engines, electronic payment services, and cloud computing to guarantee effectiveness. Over the years, Alibaba Group has diversified across Europe, owning and operating a wide-ranging portfolio of companies in several business sectors. Due to this, an analysis of Alibaba Group’s history, structure, and governance presents crucial intuitions concerning its business process.
The Effectiveness of the Firm Management
Alibaba Group is among the leading organizations in terms of proactive management. The company has realized this strategy by enabling an unorthodox approach to self-governance and the right leadership structures, including a transformational leadership style. Adopting the exemplary leadership led by its founder, Jack Ma, Alibaba Group is able to act as a partnership in several ways, thus allowing growth and increased customer satisfaction (Li, 2019). The concept of how well the company is run can be viewed in how well it uses the Alibaba Partnership, which includes thirty individuals from the company and related companies. The arrangement plays an essential role in enabling all executives to emphasize long-term goals and improve collaboration.
Another essential concept that points out that the firm is run well is that it has reasonable alternatives to dual-class share structures that other tech giants like Amazon have adopted (Li, 2019). The ability of Alibaba Group to use suitable leadership styles and engage all employees is a good indication that the firm is run well. The firm also considers corporate social responsibility by participating in donations and sponsorships and striving to minimize its carbon footprint. This shows that the company is run well to enhance its general efficiency.
The Governance Issues and Ways to Improve Them
A significant problem with the firm’s governance lies in the organization’s control. In Alibaba Group, control is locked to some insiders known as the Alibaba Partnership. These individuals are comprised of managers in the company and other related companies across Europe. Luo et al. (2021) posit that the partnership is presented with the exclusive right to manage most elements of the company, including nominating candidates for most of the board seats.
This is a problem in the firm’s governance because it interferes with the investors. In this case, the investors will have a small stake in the individuals controlling Alibaba Partnership. Besides this, if the partnership cannot get the necessary shareholder approval, it will be mandated to appoint directors unilaterally. Therefore, it raises the concern that the partnership selects directors with the most board seats.
Alibaba Group can adopt specific strategies to improve its governance, such as recognizing that good governance extends compliance and utilizing partnerships. In this case, the company should aim to balance conformance with performance elements in the board’s work, such as adopting strategy formulation to improve performance. As part of the process, the company’s board must elaborate its position to enable the company to understand its primary functions instead of the management’s.
Understanding the board’s role instead of focusing on partnership will maintain productive relationships between the leaders, employees, and customers. Additionally, Alibaba Group’s governance can be improved by consistently monitoring organizational performance. It will ensure that all corporate decisions are consistent with the company’s initial strategies and the expectations of the leaders.
The Diversity of the Board
Alibaba Group acknowledges the importance of board members and their respective positions to ensure general effectiveness. The board is comprised of twelve members, led by Daniel Yong Zhang, who is the chairman and executive officer. All the board members are of Chinese descent, presenting the idea that it is not diverse enough when considered from this perspective, emphasizing shareholder activism to increase productivity. However, both male and female members are included on the board. This provides the idea of gender inclusivity, which is critical in improving the board’s effectiveness.
The primary benefit of involving both genders is that it ensures a more collaborative decision-making process. Yun et al. (2020) support this idea and further postulate that the company is forced to utilize more competitive communication styles when female directors are not integrated into an organization. Alibaba Group recognizes this concern and diversifies its board to ensure more collaboration. Besides this, there is a proactive board culture that sets the standard for how the directors act and think over time.
The Independence of the Board Directors
The organization has seven independent directors as a move to improve its cooperate governance. The strategy to have the majority of the board members as independent is made to alter the secondary listing in Hong Kong to primary status. The plan will ensure that the organization is able to attract additional investors from China. The board made the decision to authorize the management to use a dual-primary listing on china’s stock exchange. Seven independent directors out of twelve indicate that Alibaba Group has enough independent directors who recognize the importance of shareholder rights.
The Efficiency of the Board Operations
Alibaba Group’s board of directors functions well in all its roles. All the members exhibit good emotional intelligence in taking part in all their functions, including policymaking, compliance, executive supervision, and strategy-making. The members ensure that they have the capacity to monitor other people’s emotions, including their own. The knowledge allows the board members to effectively discriminate between diverse emotions and label them while using emotional information to guide behavior and general thinking. In this case, the ability to exhibit emotional intelligence ensures success for the board members since it places them in an advanced position to handle different stressful situations. This idea demonstrates that the board of directors functions well.
The board also shows commitment and dedication to the company, thus showing it functions well. Yun et al. (2020) point out that commitment is crucial to all board members. Alibaba Group’s board of directors realizes this importance and puts the necessary efforts into things like strategy and planning to enable the right results. Its ability to function well is evident when the members participate in fundraising events and take the position of ambassadors to develop sustainable results with the donors, management team, and stakeholders. The board also functions well because all events are seamlessly transitioned. Alibaba Group has not had any negative issues in recent years. The board of directors has ensured that everything goes according to plan and executes the right strategies; therefore, it shows that it functions well as expected.
It is essential for Alibaba Group to consider restructuring the board. One way that the company can realize this is by adding more members to strengthen the board. More specifically, adding new members to the company’s board will present a new perspective, diversity, and expertise. This approach will be crucial to Alibaba Group since it plans to expand to new locations. Expanding to new locations will benefit the company if it adds more members with relevant expertise.
Additionally, Alibaba Group could restructure the board by changing its leadership structure. It may involve changing the primary roles and responsibilities of the board members to align with the set objectives. For example, this can be done by either appointing new board members or creating new committees. This strategy will allow the company to align better with the strategic objectives.
The Firm’s Future Performance
Based on the current and recent evaluation of Alibaba Group, it is easy to predict that the company will outperform other organizations in its industry. The company is expected to increase its annual sales to approximately $500 billion in the next three years (Schmuck & Benke, 2020). This increase is mainly advanced by the idea that by 2030 around 90% of all purchases will be done using e-commerce (Schmuck & Benke, 2020).).
An increased shift to e-commerce will play an essential role in ensuring that Alibaba Group has a bright future in terms of organizational success. Since Alibaba Group also has a segment in online stores, it has tapped into its social media presence to obtain more sales than other companies that have failed to explore this strategy. These figures indicate that Alibaba Group will outperform other organizations since it has already implemented practical plans to realize a productive future.
Alibaba Group will perform better than it does currently since it provides essential services in cloud computing and artificial intelligence. These are among the top segments that most individuals and organizations use to carry out their daily tasks. The high probability further determines increased performance by the company, as the industry in which it operates is ever-changing. The trends are transitioning to shape how individuals worldwide purchase and consume products.
The company is currently exploring all the possible options, such as emerging markets. For example, Alibaba Group runs several ads on different social media platforms like TikTok and Instagram to increase shopping features while simultaneously tapping into commerce. With the extension of cloud computing and social commerce, Alibaba Group will obtain significant productivity since live shopping is steadily gaining traction worldwide (Alibaba Group, 2023). A study by Li et al. (2019) shows that in China alone, the live market will grow to approximately $4.90 billion in the next two years. This figure shows that the company has a good chance of performing better in the future.
Conclusion
In conclusion, Alibaba Group is an advanced business organization serving millions of sellers and buyers worldwide. The company emphasizes the importance of providing its citizens with quality goods and services and ensuring customer satisfaction. The company adopts the right leadership strategies that consider the workers and customers, which provides the idea that the firm is run and managed well. While everything is done right, a significant concern with its governance is the use of the Alibaba Partnership, which tends to interfere with the investors.
Nonetheless, governance can be enhanced by balancing conformance with performance elements to address instances of governance issues. A close review of the company has demonstrated that its board is diverse, having both male and female members specifically to improve their performance. The firm is expected to outperform other organizations in its industry because it has adjusted to contemporary trends and ensured that every aspect of performance is considered.
References
Alibaba Group (2023). Alibaba Group Official Website. Web.
Li, F. (2019). Cloud-native database systems at Alibaba: Opportunities and challenges. Proceedings of the VLDB Endowment, 12(12), 2263-2272. Web.
Li, F., Frederick, S., & Gereffi, G. (2019). E-commerce and industrial upgrading in the Chinese apparel value chain. Journal of Contemporary Asia, 49(1), 24-53. Web.
Luo, S., Xu, H., Lu, C., Ye, K., Xu, G., Zhang, L., & Xu, C. (2021). Characterizing microservice dependency and performance: Alibaba trace analysis. In Proceedings of the ACM Symposium on Cloud Computing (pp. 412-426). Web.
Schmuck, R., & Benke, M. (2020). An overview of innovation strategies and the case of Alibaba. Procedia Manufacturing, 51, 1259-1266. Web.
Yun, J. J., Zhao, X., Park, K., & Shi, L. (2020). Sustainability condition of open innovation: Dynamic growth of Alibaba from SME to large enterprise. Sustainability, 12(11), 4379. Web.