Alibaba's Business Model and Innovation

This assignment delves into the intricacies of Alibaba's business model, examining its key elements, strategies for innovation, and the profound impact it has had on the global marketplace. It explores various aspects such as Alibaba's diverse ecosystem of platforms, its approach to e-commerce, fintech, and logistics, and the role of technology in driving its growth. The assignment also analyzes Alibaba's leadership in shaping the digital economy and its influence on social inclusion through initiatives like Rural Taobao.

Running head: Information System and Marketing
Information System and Marketing

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Table of Contents
Introduction.................................................................................................................................................1
Current Marketing Situation........................................................................................................................1
SWOT ANALYSIS.....................................................................................................................................3
Strength...................................................................................................................................................3
Strong position in the market...............................................................................................................3
Presence across the E-commerce value chain......................................................................................4
Market share........................................................................................................................................4
Visionary leader...................................................................................................................................4
Weaknesses.............................................................................................................................................4
Many Sellers........................................................................................................................................4
Very high discounts.............................................................................................................................4
Opportunities...........................................................................................................................................5
Rising investments and demand of E-commerce portals......................................................................5
Aggregator based model......................................................................................................................5
Threats.....................................................................................................................................................5
Competition level................................................................................................................................5
Stability of economy............................................................................................................................5
Profitability..........................................................................................................................................5
Objectives for the first and second years of market entry............................................................................5
Marketing Strategies....................................................................................................................................6
Product strategies....................................................................................................................................6
Pricing strategies.....................................................................................................................................6
Promotion strategies................................................................................................................................6
Distribution Strategies.............................................................................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................7

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Introduction
Alibaba Group is the Chinese e-commerce company that offers a wide array of online and
mobile services. Alibaba was founded by Jack Ma in Hangzhou in 1999 as an online place for
business to purchase products from the Chinese producers. There are more than 26,000
employees who are working in the organization and enhanced their services globally. Alibaba is
the largest China e-commerce company with many sites having more than one hundred million
customers or users. It is evaluated that in 2014 the company conducted more activities through
online. The company also released a public offering on the new stock exchange on September
19; 2014.The Company is the leader in business to business e-commerce transactions.
Alibaba offers three online B2B marketplaces to connect with the buyers and sellers
globally. The business model of Alibaba is simple and also the services are offered 24/7 to
suppliers and buyers globally. The company also diversified with the e-commerce sites like
Alipay, alisoft, and taobao.com. These services that are offered by the company expanded the
business portfolio to involve services like retail websites. The distribution channel of the
company is also good that gives direct impact on enhancing the satisfaction level of the
employees (Ding et al., 2017).
Current Marketing Situation
The current marketing situation of the company is that Alibaba has attained a large
market share not only in domestic market but also in the international market. Yahoo China was
also taken over by Alibaba that has given a positive impact on the development of the company.
Alibaba has established itself as one of the largest IPO in the US history. The two main
shareholders of the company are Softbank Corporation and yahoo.inc. The company has also
opened Taiwan office in Switzerland. With a growth in the economic reforms has given various
opportunities to the SME'S so that they can enrich themselves. In 2014 the company sold more
goods than Amazon and eBay.

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Alibaba also offers communication services for the customers like forums, blogs, and
groups. The access to communication tools is provided through alitalk, wangwang taobao and
also yahoo messenger so that proper communication can be maintained between the customers at
the same point of time.
The company has focused on free membership so that customers can be attracted
towards the company. The company also has two sources of profit; one is Alibaba advertising
costs and the second source is from customers with value-added services. The company also
takes into consideration competitive price for its products to sustain in the competitive market
and to attract more customers towards the company. Alibaba has two markets; one is global
markets in English that gives a target on the international exporters and importers and second is
Chinese market that focuses on suppliers and buyers. The current strategy that is used by the
customers to attract customers is offering gifts and encouraging customers to use its platform to
purchase the products and services (Tung, 2014).

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SWOT ANALYSIS
Strength
Strong position in the market
Alibaba has a good image in the market. The organization is one of the largest e-
commerce companies in China. The business portfolio of the company is strong and the
marketplace has more than 800 million products listed and 500 million registered users with the
company. Alibaba Taobao marketplace is one of the world's largest 20 most visited websites. It
is estimated that Taobao Marketplace is famous for conducting consumer to consumer online
marketplace in China. Tmall.com is also one of the most visited areas in China. The market
share of the company is large with more than 700 million registered accounts. The Alipay of the
company is used by the third party payment solution in China. The strong position in the market
indicates that the services of the company are enjoyed by the customers (Bai, 2012).

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Presence across the E-commerce value chain
Alibaba is one the leading company in consumer e-commerce, online payment, business
to business marketplaces and cloud computing. Alibaba also offers products and has the ability
to reach a wide audience. China is the famous country in the world and the largest leading
economies to have a stronghold in a market. By this, the company can easily enhance the sales
of the company (Lambert et al., 2017).
Market share
Alibaba has a large market share of 58 percent in China. One of the strengths of the
company is that the products are also served in China. China has the large share dominance of
the good manufacturers who are capable of manufacturing the products at large level and also
supplying the products globally (Bock and George, 2017.).
Visionary leader
The major strength of the company is the presence of a visionary leader like Jack Ma. It
is essential to have a visionary leader who can give proper directions to the employees so that the
activities can be conducted smoothly. Jack Ma gives proper direction to the employees and helps
to encourage the workers so that the activities can be conducted effectively (Lei et al., 2013).
Weaknesses
Many Sellers
Alibaba does not take into consideration number of sellers who register to establish a
partnership with the company. This has given impact on the number of sellers who are giving
competition in the online marketplace. The company is not able to attain success just due to the
high level of competition and many sellers in the market. When the company came into
existence, there were more than 8.5 million sellers and the number is increasing (Hacklin et al.,
2017).
Very high discounts
The company is not able to allow the sellers to sell at fair and profitable prices are one of
the weaknesses of the company. The revenue is made by selling advertising spaces for the
sellers. The seller does not have the opportunity to sell the products at profitable rates (Tsui et
al., 2017).

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Opportunities
Rising investments and demand of E-commerce portals
It is important to maintain trust with the customers so that the sales can be enhanced.
There are very fewer commerce portals that attain trust and one of the companies is Alibaba. It is
seen that when Alibaba expands to a new country it is important to have trust in the brand. It is
important to maintain trust so that the company can expand its operations in a new country. Due
to this tough competition is given to the local e-commerce players.
Aggregator based model
The aggregator based model helps to minimize the costs and keep its activities lean. This
also helps to present an opportunity so that model can be replicated to the other markets.
Threats
Competition level
It is evaluated that entities like Tencent and JD.com are the competitors to Alibaba in
China while Amazon and eBay are the global threats. Due to the rise in the competition level the
company has to face a tough competition to enhance its operations in various areas (Shen, 2016).
Stability of economy
To decide the success of the organization it is seen that economy plays a great role. But
it is seen that almost all the operations of the business are conducted from China and the global
market will have an impact due to the change in the economy (Micklethwait and Dimond, 2017).
Profitability
With the increase in demand, the level of services from e-commerce portals is also
enhanced. It is seen that the overall profits of the companies are also reduced which is one of the
major threat to the Alibaba. Also, there are many companies that offer similar services and
products so that impact is seen on the profitability.
Objectives for the first and second years of market entry
a.) To enhance the market share
b.) To give proper knowledge of the products and services offered to the customers

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c.) To enhance the customer base
d.) Increase in the revenue
e.) To enhance brand image
Marketing Strategies
Product strategies
The company should focus on introducing the products by analyzing the needs and wants
of the customers. If needs and wants of the consumers are analyzed then it can help to grow in
the market effectively. To increase the overall demand and to attract customers it is important to
make available proper products on the websites so that the customers can easily purchase it (Kim
et al., 2016).
Pricing strategies
The company should introduce the products with the low prices as compared to other
websites. By offering low price products the company can easily attract more customers towards
the company. If nominal prices are kept of the products then it can easy for the company to
enhance the operations. The company should also offer free membership to attract customers.
Alibaba should also consider the proper discounts so that the sales can be enhanced and also the
customers can be retained (Tan, 2015).
Promotion strategies
Alibaba should promote the products and services through freebies. It will help to induce
customers to use the products and services of the company as an online marketing platform. The
company should also promote the products by taking into consideration promotion strategies like
public relation and direct marketing at the time of special days like festivals. The products should
also be offered by sponsoring of events so that the customers can be aware of the products and
services.
Distribution Strategies
The company should focus on diversification of the products so that customers can feel
good and comfortable to purchase the products. Channel of distribution also plays a great role to
increase the growth of the company. Distribution channel of the company should also be proper

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so that the products can be reached to the customers on time. If the products are reached in time
to the customers, then it will give positive impact to enhance the satisfaction level of the
customers (Liu, 2015).
Conclusion
So, by analyzing the report it is concluded that Alibaba group is one of the Chinese e-
commerce companies that offer a wide array of online and mobile services. To survive in the
competitive environment it is essential to focus on the pricing and distribution strategies so that
the customer's satisfaction can be enhanced. The buyer's protection level should also be
improved to identify unreliable suppliers. Also, the focus should be given on providing free
membership to the employees so that more and more customers can be attracted towards the
products and services of the company.
References

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Bai, O., 2012, November. Governance of innovation network in services: The case of Alibaba.
In Management of Technology (ISMOT), 2012 International Symposium on (pp. 81-86). IEEE.
Bock, A.J. and George, G., 2017. The Business Model Book: Design, build and adapt business
ideas that drive business growth. Pearson UK.
Ding, D., Chong, G., Chuen, D.L.K. and Cheng, T.L., 2017. From Ant Financial to Alibaba's
Rural Taobao Strategy–How Fintech Is Transforming Social Inclusion. In Handbook of
Blockchain, Digital Finance, and Inclusion, Volume 1 (pp. 19-35).
Hacklin, F., Björkdahl, J. and Wallin, M.W., 2017. Strategies for business model innovation:
How firms reel in migrating value. Long Range Planning.
Kim, S., Zhang, X.A. and Zhang, B.W., 2016. Self-mocking crisis strategy on social media:
Focusing on Alibaba chairman Jack Ma in China. Public Relations Review, 42(5), pp.903-912.
Lambert, S., Bassell, M. and Friedman, H.H., 2017. Leadership in a Knowledge Economy:
Building an Innovative Marketing and Branding Organization (pp. 256-265).
Lei, G., Jun, M. and Zhumin, C., 2013. Trust strength aware social recommendation
method. Journal of Computer Research and Development, 50(9), pp.1805-1813.
Liu, S., 2015. The shallows: Development of Alibaba in Chinese domestic logistics system: A
Case Study Based Analysis.
Micklethwait, A. and Dimond, P., 2017. Alibaba: Largest Etailer on the Globe a Mere 15 Years
On. In Driven to the Brink (pp. 181-200). Palgrave Macmillan UK.
Shen, X., 2016. Alibaba: the company that made eBay a dwarf. The Business & Management
Collection.
Tan, B., 2015. Alibaba. com. In Managing Organizational Complexities with Digital Enablement
in China: A Casebook(pp. 1-12). World Scientific.

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Tan, B., Pan, S.L., Lu, X. and 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), p.248.
Tsui, A.S., Zhang, Y. and Chen, X.P., 2017. Its Corporate Cultural Value System Is the Lifeline
of Alibaba. In Leadership of Chinese Private Enterprises (pp. 201-222). Palgrave Macmillan
UK.
Tung, R.L., 2014. Distinguished scholar invited essay requisites to and ways of developing a
global mind-set: Implications for research on leadership and organizations. Journal of
Leadership & Organizational Studies, 21(4), pp.329-337.