Assignment o Introduction to strategy.

OB
Introduction to strategy
Students name
9/30/2019

Introduction to strategy 1
Contents
Introduction......................................................................................................................................2
Company Overview.........................................................................................................................2
External environment analysis.........................................................................................................2
Five force model..............................................................................................................................4
Ansoff strategy analysis...................................................................................................................6
Employment framework / VRIO analysis the strength and the resource position examination......6
Analysis of the critical strategic issues............................................................................................7
Recommendations............................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Introduction to strategy 2
Introduction
Company Overview
The company which we are highlights in this task is Alibaba, which is one of the well-known
company as it is world largest online company in China. It is further sub divided into the three
major firms named as, Tmall and Alibaba. This particular company mainly comprises of millions
of merchants who carries the transaction forward. Furthermore, it is seen that it is one of the
most popular company for the online shopping for the people of china. This company yearly
generates money of around $ 248 billion, which is the 4 times bigger in an count of the earrings
of amazon and EBay which are the famous e commerce company of United states (Anwar,
2017).
Therefore, this particular report carries information of Alibaba who is thinking of expanding its
market it United States. For this, what all kinds of strategies they need to adopts will be
mentioned under recommendation parts and what all strength and weaknesses will they face
while relocating is fetched through market analysis under Pestle and porters five force model.
Moreover, this report also carries information about the resource and the capabilities through the
VRIO analysis of Alibaba china while getting into US market.
External environment analysis
When we talk about the external analysis, it highlights an information about the other countries
or the industry analysis which mainly carries an Information about the technical, political;, legal,
environmental, social and lastly technological which determines the company capability while
grabbing information about the market. Furthermore, it helps in understanding and helps in
determining the opportunities and the threats in an industry for which the company needs to
work upon to earn or drive profitability, growth, and volatility.
PESTLE Analysis, carries information about the United States, where pollution is around 318
million and it is considered as one of the largest economies in the world. Recent when we talk

Introduction to strategy 3
about the United States progress, it has moved forward in terms of investments, customers’
expenditure, and there is an decrement in unemployment and literacy concern.
Firstly, when we talk about the political aspect of United States, it is a full controlled democratic
country, which follows the set rules and regulation assigned by the government. In term of
Alibaba, it is harder for them to effectively applies its operation in US market as they will feel
difficult to cope up with its massive political and economic effects over the national and
international policies which are set by the US market and hence, It will negatively affects the
operation of Alibaba in US. Other than this, United States also faces certain issues in regarding
to war and terror and in case of china; they paly save in case of business operations (Cadle, Paul,
& Turner, 2014).
In terms of Economic factor, United States carries the Highest GDP its of around $16.760
Trillion due to this, US is considered as one of the largest economies of the world. Therefore, it
highlights that US is one of the finest country with its finest GDP. In this case, Alibaba can go an
make investment in US market as this will further leads to an increment in the success of the
Alibaba at the largest scale. This is all because US GDP is at highest score. In earlier times, US
faced recession but after that, the economy boomed with the growth of 4% in 2014. Thus, such
aspects make the US country the most efficient yet most profitable country in terms of its
operations (Nandonde, 2019).
In technical terms, United Sates is less updated technology as compared to china as china in
this case win over the united states. This is because china is the techno savvy country where
every adoption of technology generates the higher returns. However, in terms of United States,
Less of technology upgradition is there which further generates the higher risk and competition
in the market. Therefore, in this case also China Alibaba can win over US market as they
applies fully equipped technology which further helps in generation of success for them.
Nevertheless, in United States concern, a country majorly lacks technical aspects and faces the
intense competition from the countries like China and India (Kolios, & Read, 2013).
When we consider the legal aspect, generally it highlights about the laws, employment or labor
laws of the country, information about the intellectual property rights. Other than this, when a
companies enter into a newer country it is important to have knowledge about the other countries

Introduction to strategy 4
legal aspects which mainly includes, information about the customers aspect, customer
protection, copyrights, and data protection. Therefore, for Alibaba, US market in this case has
full legal protection and the labour rights to which they need to follow. AS in China, the
employment laws does not matter for than, Alibaba while relocating will face major issue.
In terms of environmental aspect, it mainly carries an information about the countries
environmental aspect,. In this while relocating Alibaba need to take care of the environmental
aspect as US market in this concern takes much care of the environment by fully considering the
laws and the regulation in concern to environment, recycling aspect, attitude towards the
renewable energy are taken into consideration. Therefore, for Alibaba which ids china based
needs to follow all the environmental aspect while relocating themselves in US.
Lastly, in Socio- cultural aspect, it highlights about culture of China and us they are opposite.
When we consider Hofstede cultural, there are major differences such as China is collectivist
economy whereas US is individualist. Furthermore, it is seen that in US there is a loss of labour
as population of aging population is higher in US. Therefore, such aspect generates labor loss for
Alibaba in US and thus this will majorly affect the overall performance of the company.
Moreover, the majority of the population has a liberal mindset, but in us, the increase in illegal
immigration is a real concern. Currently, around, 11.7 million people are living illegally and are
generating future risk for the country in terms of racial discrimination (Sommerfeldt, & Yang,
2017).
Five force model
Porter five force model mainly highlights about the 5 major aspects, named as bargaining
power of the suppliers, buyers, threat of new entrant, and lastly rivalry in the industry. In this
aspect, Alibaba needs to generate information about the entire market in terms of rivalry,
competition, customers, suppliers and the substitute’s offerings of the company. Such factors
help in gaining the insight for the external market so that the company can relocate itself in the
US.
Threat of new entrant, aspect kin concern to United States is high because they came
ecommerce a company with the same business style prevails in United States. As there are many

Introduction to strategy 5
companies such as Amazon and eBay who deals in the similar aspects just as Alibaba. Therefore
the risk factor increase for the company while entering into the United States. With time it was
also diagnosed that there was an increment in the technology aspect within United States which
helped amazon and eBay to increase its offerings and thus such aspects helps them in growing
and generating success at the larger scale. Therefore, this shows that, Alibaba while entering into
the US will face the major threat of new entrant as the other companies are already in the gaining
position over there (Luo, Sun, & Wang, 2011).
In a concept of bargaining power of the supplier the effect of the same id low to medium in US
as US carries the large diversity aspect, and due to this company exercise its vast supplier’s
aspects, which generate benefits for the company at large. So in order to stay Alibaba need to
work over their effective supply chain with its multiple suppliers.
The concept of bargaining power of the buyers highlights that there is high bargaining power
as company over their majorly focuses on the needs and preferences of the customers at large
which therefore make the company works harder to gain advantage. Moreover, in terms of US
switching cost is also low with time, there are numerous companies who are dealing in the
ecommerce businesses, which face the similar issues, and similarly, in US there are two
companies who deal in the same offerings (Parnell, 2011).
Threat of substitute factor highlights the offering which the other companies are offering are
same or not and at the similarly price. As, if when Amazon relocates itself will have similar price
in US will generates the threat in minds of Alibaba to enter into the US market. Along with this,
the company will also experience the strong force of the substitutes because of its high
availability. As such, aspects make a tough situation for Alibaba while entering the United States
(Gurcaylilar-Yenidogan, & Aksoy, 2018).
Lastly, the threat of competition or rivalry, in which for Alibaba it is at greatest. Because in US
there are two more famous companies who are dealing in the same ecommerce business named
as Amazon and EBay who are worldly known as the world d best brand in ecommerce retailing
business aspect. Along with this, the company wills also know-how the strong force of the
alternates because of its high obtainability. As such, aspects make a threatening condition for

Introduction to strategy 6
Alibaba while arriving at the newer country with the older aspects, which the already country
has. (Huggins, & Izushi, 2011).
Hence by considering the above porters five force model analysis, Alibaba has to face major
issues while entering into US market, this is all because of the high competition, high in
substitution of products offerings, low switching cost are the major factors due to which Alibaba
will face difficulty while entering into the newer country or relocating themselves in US.
Therefore, for this, they need to adopt various strategies so that they can target the large
customers’ base and can win over their competitors (Dobbs, 2014).
Ansoff strategy analysis
When we talk about the competitors of Alibaba, this majorly highlights information about the
amazon and EBay well-known companies of US dealing in same ecommerce business.
Moreover, when we talk about the strategies which their competitors apply mainly highlights
about that EBay applies the market penetration strategy in order to increase the market share by
using their current offerings within the existing market. Furthermore, it was also seen that
company majorly focuses on improving its offerings, quality of the product in order to improve
their reputation in an market. Other than this company is also now focusing for the technological
enhancement and in its service delivery, which further help the company to improve the
customers visit, their enhancement in quality of delivery and more importantly they also have the
full security and safety aspect of their online customers. All these strategies makes ebay different
from its competitors (Carrère, et al, 2015).
Employment framework / VRIO analysis the strength and the resource
position examination
VRIO analysis mainly highlights about the resource and the capabilities of the company, which
are mainly named as valuable, rare, Imitable and exploited. In which the company main factors
which are considered as brand image or brand equity, customer’s base, global presence,
customers loyalty, technology and lastly product range.

Introduction to strategy 7
In terms of Valuable aspect, Alibaba in this case, for them the resources such as human resource,
management of operations as through tis they capture the large customers base all from china in
which they helps in creating the high level of trust based on the quality of the products offerings
and services which they sell.
Rare aspect highlights about that Alibaba in comparative to their competitors is having an
unusual or costly. As the offerings which Alibaba applies the same is not be applied by the other
competitors this is all because of the technology which they use, the resources which they apply
while making their products makes them different from their competitors (Nylund, et al, 2018).
In imitation aspect, the replica process is costly for the competitors of the Alibaba business. It
can be done in two different methods, product duplications that produced and manufactured by
Alibaba and will generate or introduce the alternatives of the items with the changing cost.
Therefore, this aspect increases the dangers of disturbance to the recent structure of the industry.
Therefore, such aspect affects the workings of the Alibaba at large (Jiyuan Wu, 2016).
Lastly, organization factor of VRIO analysis majorly focuses on the information, which is related
to compatibility of the company, which are to be placed in the new market. Therefore in this case
the company do ensure about its resources, its important factors that leads to the competitive
edge to the company. Likewise, advancement in technology, changing in the pricing strategy,
changes in the techniques of offerings the products and services in the market an lastly, the
company also works over its execution system in order to work effective and efficiently in the
further aspects. Therefore, such aspect mainly helps the company to development, diversify it
and win over their competitors while adopting such techniques (Barczyk, Falk, Feldman, &
Rarick, 2011).
Analysis of the critical strategic issues
Right from the beginning when we critically analysis the issues there are numerous issues due to
which Alibaba will face difficultly while settling into the newer market of United States- such as
firstly, while exploring pestle analysis, when we see the political aspect, it will be difficulty for
the Alibaba to adjust because, US follow strict norms, rules and regulations. Moreover, there is

Introduction to strategy 8
also full controlled democratic country, which follows the set rules and regulation assigned by
the government.
Secondly, in technical or technological terms, US lacks behind and china in these terms is fast
forward. However, in terms of United States, Less of technology upgradition is there which
further generates the higher risk and competition in the market. Therefore, in this case also
China Alibaba can win over US market as they applies fully equipped technology which further
helps in generation of success for them. Nevertheless, in United States concern, a country
majorly lacks technical aspects and faces the intense competition (Perrott, 2011).
Furthermore, in socio-cultural aspect in US there is a loss of labour as population of aging
population is higher in US. Therefore, such aspect generates labor loss for Alibaba in US and
thus this will majorly influence the overall performance of the company. Moreover, the majority
of the population has a liberal mindset, but in us, the increase in illegal immigration is a real
concern.
Moreover, the major drawback for the company is also that there are the major competitors.
Because in US there are two more famous companies who are dealing in the same ecommerce
business named as Amazon and EBay who are worldly known as the world d best brand in
ecommerce retailing business aspect (Watson et al, 2015).
Lastly, EBay applies the market penetration strategy in order to increase the market share by
using their current offerings within the existing market. Furthermore, it was also seen that
company majorly focuses on improving its offerings, quality of the product in order to improve
their reputation in an market. This creates or generates the problems within the relocation of
Alibaba in US (Bubel, et al, 2015).
Recommendations
From the above report, we can make recommendation such as-
Alibaba in this context needs to follow or adopts the different strategy such as differentiation
strategy in which the company should develop more product offerings while entering into US at
the low prices with more innovation which helps them the targeting the customers at large.

Introduction to strategy 9
Therefore, innovative product at the low price helps the company in attracting customers and
through this company can set a competitive advantage, which will further help the company to
gain profits.
As it was noticed that in US the labor is less which can work better at the low wages however
company needs to develops the need for the employees by making effective recruit and retain the
employees by developing effective rewards and recognition that motivates the employees and
make them more committed towards the organization goals.
Other than this, the company should also focus on applying their upgraded technology for the
remaining of their products and offerings and should develop the various kinds for schemes and
ways to target the large base of customers such as offering innovative service offerings. Such
aspects helps the company at large top settle their base the mind of the customers and further the
generation of the success in long term in the other market (Rothaermel, 2013).
Lastly, It is examined that the customers in the United States desire more to enjoy their lives and
upgrade their social position. However, this makes variations in the favorites and the outlooks of
the clienteles. It established the need that Alibaba must examine the socio-cultural characteristics
and must grow the merchandises that allow the clienteles to uphold their position quo and
distribute their extreme gratification. This will upsurge the effectiveness of the business and will
help in making resilient brand positioning in the new marketplace (Kaul, 2019).
Conclusion

Introduction to strategy 10
References
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Introduction to strategy 11
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