Alibaba- Corporate Advantage and Competiton Essay

1804 Words Oct 29th, 2014 8 Pages
How does Alibaba group create corporate advantage? (Why are the businesses under one roof?) Is this corporate advantage sustainable?

Is the current degree of competition amongst the business units appropriate? Do you think Jack Ma should encourage more cooperation? If so how?

The Alibaba group has thrived in the Chinese e-commerce sector from its inception in 1998. They currently account for over 70% of online shopping in China and delivered annual revenues of $636 million in the 12month period ending June 2009 (case p1-2). Alibaba’s successes are due to multiple factors that have allowed them to create corporate advantage, and thus establish market leadership in China (Case p1). The configuration and coordination of Alibaba’s
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These results combined with aggressive expansion plans demonstrate how Alibaba’s structure provides corporate advantage to the firm through individual business unit strategy and reactiveness.
Alibaba’s customer focussed culture creates corporate advantage by constantly seeking to solve consumer’s problems. ‘Customer First’ is a shared value (exhibit 11 case) of Alibaba group and this theme is constant throughout its subsidiaries. Alibaba’s B2B business is an online platform designed to connect small Chinese manufacturers with buyers. By first providing free services to registered users the business was able to gain the confidence of consumers and reach critical mass. This focus on the demands of the customer allowed for rapid growth of users, by 2008 they had added 10.5 million registered users (case p.3). Therefore when revenue streams such as the ‘gold supplier’ and ‘China Trustpass’ programs were introduced, Alibaba had already gained a significant amount of customers making the business highly profitable. Ma executed a similar strategy with the launch of Taobao in 2003, providing a free service whilst gaining consumer insight. By 2007 Taobao had 82% of the Chinese market (case p.4). Alibaba’s culture and shared values have allowed its subsidiaries to create corporate advantage by firstly focussing on the needs of the consumer.
The sustainability of Alibaba’s corporate advantage is dependant not only on the management of their…

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