Alibaba Group: Organizational Design and Entry Strategies

This article discusses the organizational design structure of Alibaba Group, which is controlled by its founders and insider executives. It also explores the entry strategies used by the company to expand globally, including acquisitions and opening offices across the globe. The acquisition of Lazada gave Alibaba instant access to markets of six countries.

International Business
Alibaba Group
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1. Existing organizational design structure and control issues
The organizational design structure of Alibaba group revolves around its team members where
they are encouraged in moving forward to achieve organization’s goals. Internally, the company
is controlled by a group of people who are controlled by its founders. They are the insider
executives who appoint directors to the boards of its subsidiaries (Lin & Mahaffy, 2016).The
company’s external strategy is structures in subsidiary form that deals with other responsibilities
like online payments, insurance, etc. (Zhu, 2013).These holdings have a dual class structure,
where the retail shareholders are entitled to the cash revenue generating from the business
activity of the company , while the underlying business and the decisions remains with the two
founders , who have control over its executives. This model of ownership has been viewed with
doubt in the international markets, when the company was denied listing in the Hong Kong Stock
market (Shu, 2013). The authorities were concerned about the founder’s control over its entire
business despite being minority shareholders.
2. Entry strategies used to enter other regions/countries
The leadership at Alibaba views the global market through the prism of e-commerce, their
approach is to adjust according to the needs of the local businesses and consumers and tap their
potential. For example, the company acquired a controlling stake in Lazada, e leading e-
commerce player Indonesia, Singapore, Thailand, Philippines, Vietnam and Malaysia (Ramos,
2017). The approach was to be involved with local people and get to know their work culture.
Alibaba would not have penetrated these markets so easily by itself if it had started on its own.
Acquiring Lazada gave it instant access to markets of six countries .Apart from acquisitions, the
company has opened offices across the globe to try to bring clients on its main platform in China.

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This way they can identify potential markets and figure out ways to expand by gaining expertise
over local business culture.

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References
Lin, Y.-H. & Mahaffy, T., 2016. Open Sesame: The Myth of Alibaba. Brooklyn Journal of
Corporate, Financial & Commercial Law, 10(2), pp. 438-441.
Ramos, A. A., 2017. Expand Globally, Using Alibaba’s Ecommerce Ecosystem Strategy.
[Online]
Available at: https://labs.ebanx.com/en/expand-globally-using-alibabas-ecommerce-ecosystem-
strategy
[Accessed 22 May 2018].
Shu, C., 2013. Tech Crunch. [Online]
Available at: https://techcrunch.com/2013/01/10/alibaba-group-ceo-jack-ma-announces-major-
restructuring-in-company-email/
[Accessed 22 May 2018].
Zhu, J. Q., 2013. Alibaba Group’s Changing Organizational Structure. [Online]
Available at: http://observerintelligence.com/alibaba-groups-changing-organization-structure/
[Accessed 22 May 2018].