The Alibaba Group Company's Analysis | Free Essay Example

The Alibaba Group Company’s Analysis

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Topic: Business & Economics
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Introduction

The rapid development of digital technologies and the Internet has made them rather significant in many spheres of business. In that way, e-commerce has become one of the dynamically growing industries. The field of e-commerce known only a few behemoth businesses the largest one of which is based in China; it is known as Alibaba Group. This paper presents an overview of this company including its financial situation, product and service offerings, geographic markets, competitors, and distribution networks. Further, SWOT analysis of Alibaba Group will be made followed by an elaborate discussion of all of its components as applied to the selected company.

Organization Background

Alibaba Group is a relatively young business that has only been operating for two decades; however, it grew quickly and eventually managed to conquer several markets, thus creating a strong network that continues to expand globally. Alibaba Group Holding Limited has many focuses, but the primary one is e-commerce powered by the Internet and mobile services. Based on the territory of China, Alibaba Group caters to a large number of clients located worldwide. Today, its geographic markets are placed all over the globe, and apart from China, the five countries with the highest rates of purchases from Alibaba are the United States, Australia, Singapore, Malaysia, and Canada (Bryan 2015). The ultimate aim of the Alibaba Group was to move the amount of profit gained internationally to 50%. According to Nasdaq (n.d.), the annual net income of Alibaba Group approximates over 2 billion US dollars.

The primary objective of the company is focused on the provision of wholesale and retail marketplaces to the small businesses in China and worldwide (Reuters.com n.d). When it comes to the service and product offering of the company, Alibaba Group operates several marketplaces targeting different kinds of customers; they are, Tmall (that offers Chinese brands and products), Taobao (a website for online shopping), AliExpress (a large global e-commerce platform serving to the consumers from South and North America, Europe, Australia, and Asia), Alimama.com (a marketplace focused on the distribution of mobile devices and personal computers); additionally, Alibaba Group operates two massive wholesale (B2B and B2C) marketplaces (1688.com and Alibaba.com) (Reuters.com) n.d.). Apart from the marketplaces and e-commerce websites, Alibaba Group offers services in logistics and operation (through Cainiao Network), cloud computing and data management (Alibaba Cloud), financial services (Ant Financial Services Group, and Alipay – an online payment system) (Alibaba Group 2017).

Alibaba Group’s major competitors are the other large e-commerce businesses such as eBay Inc. and Amazon.com Inc.; however, neither of these companies has a structure or framework similar to that of Alibaba (Bajpai 2014). Regardless of their common focuses and lookalike models, the three competitors find it difficult to take over one another’s customer bases, and as a result, they compete for side by side fighting for the consumers on the international level (Bajpai 2014). The two competitors of Alibaba Group focus on the Western regions while the former has a very strong presence in the Asian countries with larger populations and growing economies. Also, eBay and Amazon have much stricter policies for the businesses entering their platforms while Alibaba welcomes everyone emphasizing its unconventionally easy entering procedures.

SWOT Analysis

Strengths

The major strength of Alibaba Group when it comes to the future and present development and profitability of the business is the existence of a powerful domestic market with a broad network; to be more precise, the large population of China provides the company with about 280 million buyers, who place over 14 billion orders annually (Alibaba SWOT analysis 2015). An additional strength of Alibaba Group is presented by its leader – Jack Ma, a visionary full of unconventional ideas and innovative approaches that help Alibaba Group maximize its revenue (Bhasin 2016).

Weaknesses

The most prominent and persisting weakness of Alibaba Group and its online wholesale and retail marketplaces is in direct connection with one of the largest problems of China’s businesses – counterfeit and low-quality goods (Chauhan 2015). The company has been actively focusing on battling counterfeit goods that warded some of the world’s renowned businesses off its marketplaces (Della Cava 2017; Wang 2017). However, regardless of all the efforts, the issue persists and threats to become one of the dominant characteristics of Alibaba Group’s platforms.

Opportunities

The primary source of opportunities for Alibaba Group is the steadily growing economy of China that regularly results in the creation of new businesses, the increasing range of products and services the company and its websites can offer, and a rising level of income of the Chinese population leading to a larger number of orders and operations (Alibaba SWOT analysis 2015).

Threats

Finally, the gradual expansion of Alibaba Group’s businesses is associated with a set of threats such as the increase in costs and liabilities and the growing rates of interest. Also, the company is making itself more vulnerable to the global economic crises and the linked changes in prices and purchase intention of the consumers.

Discussion

As can be seen from the SWOT analysis of Alibaba Group, this large and profitable company enjoys a wide range of benefits and also faces a growing number of challenges associated with its conquest of the international markets and customer bases.

In particular, when it comes to the primary strengths of Alibaba Group, it is majorly supported by its domestic markets and consumers. Luckily for the company, they are based in one of the countries with the world’s largest population. In addition to its massive population size, China is also characterized by fast economic development and a growing average income of the population. As a result of these tendencies, most popular businesses in China can rely on a steady flow of income. Alibaba Group has created a broad domestic network filling a multitude of profitable and demanded niches and ensuring steady revenue to support its further expansion.

As a result, its massive net income that majorly comes from China provides the company with a powerful backup in case if the sales drop in some other countries. At the same time, the company’s intention to move its main source of revenue to the international arena can be associated with the emerging vulnerabilities to the changes in prices and purchase intention of the consumers. Also, the latter can be powered by one of the main weaknesses of the company’s marketplaces – the heavy presence of counterfeit and low- quality goods. To tackle these brand image issues, Alibaba Group’s leaders need to demonstrate loyalty to the consumers and fair attitude to the businesses using their marketplaces. However, it is possible that fighting counterfeit goods and dishonest retailers Alibaba Group may facilitate its drop in revenue using scaring away a portion of businesses from their platforms due to a harsher partnership policy and quality monitoring.

Reference List

Alibaba Group 2017, Our businesses, Web.

Alibaba SWOT analysis 2015, Web.

Bajpai, P 2014, Alibaba’s top competitors, Web.

Bhasin, H 2016, SWOT analysis of Alibaba, Web.

Bryan, B 2015, Alibaba just proved it’s more than just some Chinese company, Web.

Chauhan, HS 2015, Alibaba: The short-term weakness might persist, Web.

della Cava, M 2017, $1.7 trillion in fake goods: That’s Alibaba’s uphill battle, Web.

Nasdaq n.d., Alibaba Group Holding Ltd (BABA) IPO, Web.

Reuters.com n.d. Alibaba Group Holding Ltd (BABA.N) full description, Web.

Wang, S 2017, Alibaba sues sellers of fake Swarovski watches in crackdown, Web.