Alibaba's Online Business Marketing Strategies (pdf)

Running head: ANALYSIS RELATED TO FDI ACTIVITIES OF ALIBABA
ANALYSIS RELATED TO FDI ACTIVITIES OF ALIBABA
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ANALYSIS RELATED TO FDI ACTIVITIES OF ALIBABA
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Introduction
Alibaba Group enables the business organizations to transform the ways by which
they market and sell their products. The basic infrastructure related to technology is provided
by the Alibaba Group to the other business organizations. The Alibaba Group helps their
merchant business organizations to make proper usage of the power of internet and further
engage their activities with the customers and the users. The various components of the
business of Alibaba Group are cloud computing, core commerce, entertainment, digital media
and innovation related initiatives (Alibabagroup.com 2018). The company participates in the
sectors of local services and logistics with the help of their subsidiary Cainiao Network. The
Alibaba Group has a strategic relationship with Ant Financial Services which operates
through Alipay. The vision of the organization is to develop the future infrastructure related
to commerce. The organization envisions that the customers will be meet and work in
Alibaba and the company will operate in the industry for a long time. The essay will be based
on the analysis of the FDI related activities of Alibaba Group (Agarwal and Wu 2015).
Critical analysis
The analysis of Alibaba Group will be performed with the help of the Dunning’s
eclectic paradigm related to OLI framework. The OLI framework mainly relates to a theory
in economics which is used to analyse the advantages of organization related to ownership,
location and internationalization. The ways by which these advantages of the organization
can help the engagement of the company in foreign direct investment will be analysed in the
essay. As discussed by, Ayden, Demirbag and Tatoglu (2018), the OLI framework will help
in analysing the Alibaba Group and effect of foreign direct investment on the costs of the
company. The advantages related to ownership deals with the competitive advantage of the
organizations which are thinking of engagement in foreign direct investment. The high

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competitive advantage of the firms is related to the higher chances of getting engaged in
foreign direct investment.
The location related attractions deal with the different regions or countries where the
organization can engage in business activities for adding value to the multinational
enterprises. The ability of the firm to use the natural resources along with their competitive
advantage helps in their operations in a foreign location. The internationalization advantages
are related to ways which enable the companies to create and exploit the core competencies.
The increase in the net benefits related to the internationalization activities of the
organization, the companies are more likely to engage in foreign direct investment
(Beveridge, Kadura and Stratemeyer 2017). The effect of these three advantages on the
foreign direct investment related activities of Alibaba will be analysed further in the essay.
Ownership
Alibaba Group Holding Limited is a multinational organization which operates in the
field of retail and ecommerce related services provided to other business organizations. The
Alibaba Group is a multinational ecommerce company which provides its services in many
countries all over the world. The organization however has the brick and mortar stores in
China which was built by collaborating with Intime Retail which is a Hong Kong based
company. The establishment of physical stores in the other countries of the world will
however lead to competition with the local players of those countries. The country where
Alibaba can further expand their business is India. The extra costs which will be incurred by
the organization in India related to factors like, cultural, institutional, legal and differences in
the language of the two countries (Brouthers, Brouthers and Werner 2015).
The company will have to face issues regarding the operations at a distance from the
country where its originates. An organization like Alibaba needs to have specific advantage

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which can overcome the costs related to the operations in a foreign country. The firm needs
to gain higher revenues for similar costs or the same revenues need to be gained for lower
costs. The foreign organizations in India need to incur extra costs for operations and this will
increase the production related costs of the company. The business organization needs to
have some qualities which are not common with the other organizations in the same industry.
The Alibaba Group can gain competitive advantage in the foreign market with the help of the
unique factor in their business. The Alibaba Group has a major advantage related to powerful
networking capabilities of the company. This will enable the organization in creating
relationships in the new area of operations and increase their revenues. This advantage of the
firm can be referred to as firm specific advantage or the core competencies of the company
(Cantwell 2015).
The ownership related advantage of the organization helps in creating a profitable
position in the new area where expansion is taking place. The advantages can be related to
the location where the new establishment is set up or the non-location advantages can also be
related in this case. The ownership or O factor of the company therefore affects its operations
in the foreign location. The advantages can be related to the firm or needs to be transferable
within the organization and between the countries as well. The ownership and firm specific
advantages of the Alibaba Group can be helpful for the company to assist them in the foreign
direct investment related decisions (Chen 2015).
Location
The advantages of the firm related to the factors of the country where it is expanding
its operations is important for making decisions of foreign direct investment. The location
selected for expansion of the operations of a firm provides specific advantages. The
attractiveness of the different locations can go through changes and the host country of the