Digital business assignment : Alibaba

DIGITAL BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
Digital business verses Traditional business...............................................................................3
Digital business models...................................................................................................................4
Digital business activities................................................................................................................5
Mode of operation.......................................................................................................................6
Digital business environment......................................................................................................6
Market place................................................................................................................................6
Market Growth ................................................................................................................................7
Competition matrix.....................................................................................................................7
Market Segmentation.......................................................................................................................8
Segmentation...............................................................................................................................8
Targeting.....................................................................................................................................8
Positioning...................................................................................................................................8
Key Growth factors for digital business..........................................................................................8
Unique selling proposition..........................................................................................................8
External forces and impact of business............................................................................................9
PESTEL Analysis........................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Digital business is a main aspect of today's competitive world to reach at large consumer
base through digital mode of transactions. Digital business avails technology for create and
enhance values by business model, customer experiences and by supporting internal capabilities
for core operations. The taken firm in this report is Alibaba which is a Chinese multinational
firm providing services of e-commerce, retail, Internet and technology. This firm was founded in
1999 by Jack Ma and Peng Lei. The firm is employing more than 66,421 employees through
their branches in all over the world. This report covers the issues or concerns of digital business
along with the different modes of business (Berman, 2012). This report will further discuss the
Difference between digital and traditional business models along with the factors that facilitates
in digital business in the recent years. It covers factors that enables growth for digital business
and external factors that affect business and their proceedings. At last, it covers opinion of an
individual that helps in gain profitability with sustainability in digital business in context of key
issues.
MAIN BODY
Business name
This report is based on Alibaba group which is a Chinese multinational conglomerate that
specialise in e commerce sector, retail and internet with technology. Its headquarter is in
Hangzhou, zhejiang and its founder is Jack Ma and it serve in whole world and deals in e
commerce, online auction with hosting, money transfer with mobile commerce. In 2018, the firm
is employing 66,421 full time employees which are comparatively more than 2017 i.e. 50,092 in.
There mostly employees are from china. The official website is generally used by the company
for communicating with the customers in proper manner for grabbing the enlarge business
opportunities. There website is (https://www.alibabagroup.com/en/global/home) that prove
useful to share new trends and developments to connect with people. To reach the large
consumer base, organisation create its own website in best manner that attract lots of consumers
towards it. Alibaba is not only the best digital platform for goods and services rather they are a
traditional business which is giving tough competitive threat to their fierce competitors. Alibaba
is successful business in the digital business as the founders had foreseen the business
opportunities in the digital businesses before launching the company. Seeing these opportunities,
Jack and Peng had launched the business in order to grab these opportunities. The firms started

to sell the products and services on their website even before the digital technology was popular.
The company focused on the growth of the retail sector and launched their websites providing
wide range of products in bulk orders to the shopkeepers and customers.
Digital business verses Traditional business.
Traditional business: Traditional business is concerned with transformation of goods and
services with help of brick and mortar or physical stores. In that, organisation covers those
consumers which are near from their stores and does not prefers the online shopping.
Digital business: Digital business refers to use advance technology to best serve their
consumers base and give core functions and attributes to give delighted experience to consumers
base. In case of Alibaba, it operates and provides products to their consumers by digital mode
and provide information to deliver right product and services to grab large market share.
Basis Traditional business Digital business
Similarity The main objective of
transitional business is to
satisfy the needs of the
customers by maintaining long
term relations with them in
order to enlarge business
opportunities.
The digital business also
desires to fulfil the needs of
customers by making proper
relations with them through the
use of digital technology so
that the firms can sustain in the
market.
Difference The traditional business are
capable of determining the
needs and interest of their
consumer due to which they
could not met the needs and
demands of customers in
proper manner.
The digital business uses
different analytical tools and
methods for determining the
needs and demand of their
customers which will assist the
firms in effectively satisfying
their customers by using their
products.

Digital business models
SWOT analysis helps in identification of factors that helps in enhancement of digital
business to perform in well manner that are as follows:
Strength:
Alibaba is one of leading organisation and have various positive attributes that helps to
achieve large market share that is it has high level of consumers that are satisfied with their
services (Christensen, 2015). The company is using their customer relationship department for
determining the needs of their customers as well as to deliver the products and services
accordingly. They successfully get expertise in Go to market strategies for their products and
services.
Weaknesses:
Weaknesses of Alibaba are those areas in which company need improvements. Weakness
of Alibab is that they are spending less amount of money on R&D activities and innovation in
comparison to fastest growing players of that field. Company is not able to integrate with
different work and culture and not comfortable to cope up with these changes.
Opportunities:
The company has opportunities to expand in the emerging countries such as India and
Asian countries. Also the company has opportunities to expand the products range for satisfying
the increasing population in Africa and Europe (Daidj, ed., 2014).
Threats:
The major threats for Alibaba is from the competitors such as Amazon as they are
innovative and spending heavily on R&D activities. Also the company lacks skilled employees
which is a threat as the company can perform low in the market.
Digital business activities
Digital business activity concerned with establishing digital or online business activities
that focus on generalisation of profit or revenue by using various digital channels or modes.
Firms that execute their functions by using digital mode of transformation avail various
marketing tools and techniques in which includes social media, email marketing and SEO, SEM
are important tools that helps in enhance marketplace. The digital business activities of Alibaba
includes that they are truly creating an eco system in which they can easily interact with each

other and their business environment. They simply build environment that link buyers with their
sellers to purchase goods and services. In that sector they use technological advance companies
and most advance business functions in marketing, logistics and finance etc. so that they can
enlarge business opportunities(Daidj, 2018).
Mode of operation
Alibaba is a global company having a wide range of operations. The company is being
operated from its headquarter in China. Company is providing their products to the customers
from their website based on their needs and demands. Company is using various latest
technologies to sustain in the market for longer period of time. Alibaba is using the Colocation
technology for managing and handling the workload of their employees. The company is using
its own engine which is known as Da- Ling through which the company assigns the resources to
the business operations and employees in an appropriate and sequential manner. The company is
also using the technology such as Patrol robot, Alibaba cloud, etc. for privacy of their data as
well as to increase the sale. Company is following the hierarchical organisational structure in
their business through which the lower level employees can convey their suggestions and issues
to medium level management and then the medium level management conveys these to higher
level authorities.
Digital business environment
Business environment is the internal and external factors which affects the working of the
business. These can include the use of latest technologies for the conduction of various business
activities. The various types of digital business environment are discussed below-
Micro environment- This type of business environment generally include the customer,
suppliers and competitors. All these factors directly affects the plans and operations of the
business on regular basis. Alibaba is currently facing the change in the bargaining power of
supplier which is directly resulting in decrease in company's profit and revenue. So to overcome
this problem organisation can decrease their remuneration( Dobbs, 2014).
Macro environment- The effect of this type of environment is very adverse. The
company must plan its business in the coordinated manner because political conditions is
affecting the growth and business of the organisation. The macro digital business environment
contains several factors such as political, environmental ,technological and social etc. These
factors are related with the laws and regulations of the government as well as with the trends of

customers and market. These factors are dynamic in nature as laws and regulations changes with
government whereas consumers and market trends also changes with the time.
MESO environment- This type of environment helps in setting down the difference
between the opportunities of macro and micro environment. In context to Alibaba, specific
designs can be used to overcome the problems faced by macro and micro environment. The
competition level for Alibaba is continuously increasing so keeping this in mind company needs
to plan its internal and external analysis.
Market place
MESO- It is the setting between the various internal and external factors which shapes
the framework of a company or organisation. MESO environment is related with the threats and
opportunities available in the market for Alibaba. The factors which are affecting the MESO
environment of Alibaba are its distribution channel, degree of competition and changing
strategies of competitors, some industrial factors.
Porters five force model- This model includes the external factors which affects
working of digital business. Points for this model is discussed below-
Competitive rivalry- Alibaba is running its business in various parts of the world. Due
to this they are facing tough competition from its competitors. Customers of Alibaba are shifting
from one brand to another because company is not able to provide goods and services according
to the needs and demand of its potential customers (Kreutzer, Neugebauer and Pattloch, 2017).
Bargaining power of buyer- Bargaining power of customers or buyer is very high
because there are many other e- commerce websites available for the buyers. So to solve this
problem Alibaba needs to make continuous innovations in their products and services.
Bargaining power of Supplier- In this case, the bargaining power of supplier is less
because company is operating its business worldwide. So there are large number of suppliers
available in the market. This means suppliers do not have the option to bargain on the price.
Threat of substitute- The threat is very high because of large number of competition
available in the market. Alibaba can overcome this by adopting good penetration strategy to
expand the business.
Threat of new entrants- With the rapid change in customer's demand and technology
various new organisations are entering into the market. So threat from the entrants is very high.
Alibaba must take appropriate decisions to face the challenges from new entrants.

Market Growth
Competition matrix
It used to make comparison of one organisation with its competitors on the basis of
strength and weakness of the organisations. This is done by giving ratings to the organisations
working in the same industry. The comparison can be done on the basis of products and services
delivered by the Alibaba and its competitors(Nachtigal,2011). This is done to make the long term
plans and polices for the business and its operations. Competition matrix of Alibaba with its
competitor Ebay is discussed below-
Factor Alibaba Ebay
Low price 4 5
Quality 5 4
Unique features 4 5
Rapid delivery 4 3
From the table it can be drawn that company needs to improve its performance by adding
new and innovative ideas to attract its customers. The price of the product needs to be decreased
in some areas. Alibaba is providing high quality products as compared to its competitors.
Market Segmentation
Segmentation
Company is dividing the market on the basis of various segments and targeting its
customer's to increase the business and to get better results from business operations. Alibaba has
segmented its market on behavioural and demographic basis. This is done to achieve the mission
of the organisation in the best possible manner (Veit, D and et. al., 2014). The target customers
of the Alibaba is mainly the shopkeepers who prefers to purchase the products in bulk order.
Also the target customers are the employees of an organisation or any other company.

Key Growth factors for digital business
Unique selling proposition
USP refers to the process of introducing a strategy in the business which make it
different from its competitors. USP of Alibaba is its wide range of products and services
available to its customers. Company offer various variety and options of products to the
customers as electronic products are available at much lower price. The company has removed
the intermediate fees for the members which allows sellers to register for free. Through this,
Alibaba was capable of cultivating the online transaction habit among their customers which was
the main factopr for the success of this business. Also the company is following conventional
and unique business model for the business functions which also allows the firm to grow.
Impact of USP on business operations
USP of the Alibaba is its wide range products which are provided to their customers or
other business firms. This is positively impacting the firm as company provides a variety of
products on their website which assist the customers in purchasing the things they desires. Also
China is the largest internet market in the world having more than 560 million users. This is
positively impacting the sales of the firm which is also increasing the profit of the firm. Also
sellers are taking leverage of removed intermediate fees which facilitate them in registering for
free. This has also positively impacted the firm as more sellers are joining with the firm allowing
the firm to increase their products range.
External forces and impact of business
PESTEL Analysis
PESTLE analysis is a analytical tool which is used by the organisations for determining
the impact of external environmental factors on the business operations of the firm. This contains
six factors which are discussed below:
Political factor- Alibaba is operating its business in various countries so due to this
company is facing problem of import and export tariff from the government of various
countries. This factor is directly affecting the business of Alibaba as there are various
implications imposed on the company for transporting its products from one country to another.
Economic factor- This type of factor include interest and exchange rate due to which
company's business is directly affecting. This factor plays a very important role in increasing the

business. In some countries, company is earning good profit because of the stable economic
conditions. While in some countries the situation is opposite. Macro economic factors are
affecting the growth and performance of the business to a great extent. But irrespective of these
factors, company is able to provide employment to many people as the business of the
organisation is at the growth stage(Nicoletti,2017).
Social Factor- This includes the attitude, belief and values of the society in which the
business is running. Company is focusing on growing its business in that area where the
population is at the growth stage. This is because, in those areas company is having wide range
of opportunities to satisfy its customers. Alibaba is also involved in various CSR activities so
that social factor does not affect the business.
Technological Factor- These are the new and innovative ways in which activities of
business can be performed. Alibaba is continuously using latest technology to compete with its
competitors. Also they are using latest AI technology in their operations for providing better
experience to its users.
Environmental factor- These include the ways in which business can be done in the
ethical manner. This factor focuses on saving the environment and natural resources. Most of the
strategies of Alibaba are helping in saving the environment as company has reduced the use of
plastic and other harmful products from their business operations in order to protect the
environment. The major objective behind this is to achieve sustainability in business and to
increase the sale by using resources in best possible and optimum manner(Sammut‐Bonnici and
Galea, 2015).
Legal Factor- These include the various laws and regulation which needs to be kept in
mind by business organisations before planning or formulating any strategy. Alibaba is following
rules and laws in the effective manner. By doing this, company is able to maintain good working
environment. Due to this employees of Alibaba are satisfied and are motivated to work in
desirable and coordinated manner. Company is following laws and regulations which is resulting
in good brand image of organisation in market and also in the mind of customer's (Schmarzo,
2013).
CONCLUSION
From the above given report it can be concluded that digital business is very much
important for the growth and performance of the business. If organisations wants to compete and

want to give tough competition to its competitors than organisations can go for promoting
business digitally. PESTEL and Swot analysis can be done before implementing any strategy.
Internal and external analysis of business is very much necessary for any organisation. Long and
short term plans is made by the management of business organisation after analysing present
and past conditions of market. Porters five force model is used by organisations to analyse nature
and working of the business.
Reflection on digital business sustainability and profitability
The digital businesses such as Alibaba can sustain for a long period of time in the market
if they were successful in determining the trends which are going on in the mindset of the
customers as well as of the market. This is necessary for the firm so that the company can
provide their products and services accordingly to them. Through this, company can ensure the
enhancement in the profitability and sustainability of the firm. Also according to me, digital
businesses also needs to implement updated technology in their business operations for
improving the efficiency and performance of the company in the market. Suitable leadership
style is also necessary for effectively providing the support and guidance to the employees so
that they can work without any problems or challenges.
Challenges to digital business
There are various challenges which are faced by the digital organisations such as Alibaba.
These challenges are discussed below:
 Budget Constraints in implementing new technology and strategies for improving the
market position of the company.
 Overly complex or rigid legacy IT infrastructure which can leads to the failure of
business in the field of digital technology as improper IT infrastructure can leads to the
bad performance of the digital businesses.
 Lack of full visibility across the digital or end user experience which arises due to not
determining the trends and behaviour of the customers in providing them products and
services accordingly.
 Lack of available or appropriately-skilled personnel which can leads to reduced
efficiency and performance of the organisation.

 Lack of buy-in from leadership on prioritizing digital initiatives which can create
problem for the firm in leading their workforce towards achieving the desired
organisational goals.

REFERENCES
Books and journals
Berman, S.J., 2012. Digital transformation: opportunities to create new business models. Strategy
& Leadership. 40(2). pp.16-24.
Bharadwaj, A., and et. al., 2013. Visions and voices on emerging challenges in digital business
strategy. MIS quarterly. 37(2). pp.14-001.
Christensen, J., 2015. Digital Business: in The Digital Age. BoD–Books on Demand.
Daidj, N. ed., 2014. Developing strategic business models and competitive advantage in the
digital sector. IGI Global.
Daidj, N., 2018. The Evolution of Strategic Management Concepts. Handbook of Media
Management and Economics.
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review. 24(1). pp.32-45.
Kreutzer, R.T., Neugebauer, T. and Pattloch, A., 2017. Digital business leadership. In Digitale
Transformation-Geschäftsmodell-Innovation-Agile Organisation-Change Management,
1. Auflage. Springer Gabler.
Nachtigal, S., 2011. E-business: definition and characteristics. In Impact of E-Business
Technologies on Public and Private Organizations: Industry Comparisons and
Perspectives (pp. 233-248). IGI Global.
Nicoletti, B., 2016. Digital Insurance: Business Innovation in the Post-Crisis Era. Springer.
Nicoletti, B., 2017. Agile Procurement: Volume II: Designing and Implementing a Digital
Transformation. Springer.
Sammut‐Bonnici, T. and Galea, D., 2015. SWOT analysis. Wiley Encyclopedia of Management.
pp.1-8.
Schmarzo, B., 2013. Big Data: Understanding how data powers big business. John Wiley &
Sons.
Veit, D., and et. al., 2014. Business models. Business & Information Systems Engineering. 6(1).
pp.45-53.
Online
PESTEL ANALYSIS, 2019. [Online]. Available through:
<https://www.swotandpestle.com/alibaba/>