Introduction to strategy.

The report must include: Executive Summary Table of Content Introduction Background (Company information) External Analysis • PESTLE • Porter 5 SWOT/TOWS Internal Analysis • VRIO/Dynamic Capabilities Recommendation (First Person) • Implications Conclusion References Appendix Word count do not include in Executive Summary, References and Appendices. Text book references is the Fundamental of Strategy 4th Edition. Attached to the file.

Management
Introduction to strategy
Student’s name
9/28/2019

Introduction to strategy 1
Executive summary
This particular report mainly throws light on the strategic issues, which are mainly faced by the
company that thinks of relocating themselves in the newer market, newer environment, and the
new country. Furthermore, this report will highlight the challenges, which Alibaba faced while
entering into the newer market and the newer country, United States. It will also reflect on the
competitiveness of the United States and the external environment in which the e-commerce
companies operate. Alibaba while entering into the US faced issues related to the cultural aspect,
political aspect as every country has its own rules, regulation and cultural ways for doing
business. Moreover, certain recommendations are made such as Alibaba while entering the need
to grasp full knowledge of the entire culture of the US, their companies who deal in the e-
commerce business, their strategies to win over their competitors. This company can easily enter
into the new market and easily generate success in the long term.

Introduction to strategy 2
Contents
Introduction......................................................................................................................................3
Company overview..........................................................................................................................3
External analysis..............................................................................................................................4
Pestle analysis..............................................................................................................................4
Porter five-force model................................................................................................................5
SWOT analysis............................................................................................................................8
Internal Analysis..............................................................................................................................9
VRIO/ Dynamic capabilities........................................................................................................9
Recommendations-........................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
Appendix........................................................................................................................................14

Introduction to strategy 3
Introduction
In general terms, strategic issues are considered as the heart of the strategic planning process, as
recalling the strategic issue is one of the fundamental yet challenging aspects which majorly
affect the organization mandates, mission, vision, values, product, services, cost, financing and
the entire organization at large (Perrott, 2011). Hence the strategic issues which an organization
faces is all due to the uncertain future, regulation and the future compliance, changing
technology and lastly, finances are the main reason due to which the issue arises and thus,
majorly affects the workings and the entire performance of the firm at large (Sommerfeldt, &
Yang, 2017).
Company overview
Alibaba is one of the well-known company which is considered as the world largest or biggest
online commerce company. This company mainly works in three main sites named as, Taobao,
Tmall and Alibaba. These particular users are in millions and host millions of merchants and
businesses. Moreover, Alibaba handles more than three industries than any other E-commerce
company does (Barczyk, Falk, Feldman, & Rarick, 2011). Hence, it is considered the most well-
known destination for online spending, which is the world's largest and fastest-spreading e-
commerce market. Dealings on its operational websites mainly are of around $248 billion in last
year, when we compare it with other e-commerce business such as Amazon or eBay it is 4 times
of them (Jung, Ugboma, & Liow, 2015).
However, when we talk about its further expansion of Alibaba in the United States, the
organization must be facing major strategic issues before and after successful relocation in the
new market (Anwar, 2017). For that, this particular report will discuss the market analysis of the
United States through considering external analysis, by using pestle analysis, porters five-force
model, SWOT analyses which helps Alibaba to know more about the US market more openly.
Other than this, this report also carries information about the internal analysis, by understanding
the particular framework named VRIO, which mainly highlights the strength and the resource
position of Alibaba so that in another country they can mount a successful competitive fight in
order to establish the fine position.

Introduction to strategy 4
External analysis
The external analysis helps in knowing about the countries or industry environment of the
company, which can be tested through as pestle analyses, which mainly comprise of economic,
political, legal, technological, social, environmental aspects. This 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. Other than this, potters
five force model and SWOT analysis, which help in a similar analysis and accordingly the
company, set further strategies to win over their competitors.
Pestle analysis
When we talk about the host country, we are highlighting information about the United States,
which carries a populace of over around 318 million, which is culturally assorted and has the
largest economy in the world. In recent times, the economy is moving on a steady course forward
this, is all because of the investment, customer expenditure and substantial decrease in
unemployment (Cadle, Paul, & Turner, 2014).
The political aspect of the United States highlights its strong democratic setup and rules of law,
which are quite transparent and fair in nature. It will be difficult for Alibaba is the US enjoys its
huge political and economic effect over both countrywide and global policymaking and it is
known or renowned as the foremost superpower in the world. Other than this, it is also seen that
the country also faces international criticism concerning to the conflict of terror, which mainly
sources foreign relations, and these aspects increase the threat of terrorism.
The economic aspect of the United States highlights $16.760 trillion as GDP, which is
considered as the largest economy in the world. Thus, such an aspect highlights that the United
States economic system is well developed in terms of the service and manufacturing industry.
Earlier due to the recession, the economy has faced major downfall in their economy, leads to
unemployment rates but later they rebounded back with a development of around 4% in the third
quarter of 2014. However, such aspect helps the country and enhances economic prosperity in
the long run (Kolios, & Read 2013).
The socio-cultural aspect mainly highlights the society and it is cultural, as the US in this
aspect is facing major issues in an aging population, which generates the serious loss to labor,

Introduction to strategy 5
which means there is labor shortage and rising taxes in the future. As in China, there is no less
labor, rather the availability of the labor is cheap and in the US, it is vice versa. Moreover, the
mainstream of the populace has a generous attitude, but in us, the upsurge in unlawful migration
is a real concern. Currently, around, 11.7 million people are living unlawfully and are generating
future risk for the country in terms of racial discrimination.
In terms of technological aspect, the US in less in technology upgrading when we compare it
with china, as china is technological aspect is more upgraded and adaptive and applying various
and newer technology which further helps in faster production and increasing productivity of the
firm as well as a country. However, in terms of the US, the country is facing strong rivalry from
the increasing frugalities for which they are expecting to continue to recollect its technology
supremacy over its rivals. Although they are working over their technical aspect there are still
facing powerful rivalry from countries like China and India (Rothaermel, 2013).
The environmental aspect highlights the ecological and environmental issue, which carries
information about the international and the national aspect. Other than this, the company while
entering into other countries, their will major face the challenges in concern to environmental
aspect such as a change in weather, climate change, laws and regulation change in terms of
environment, recycling aspect, attitude towards and support the renewable energy are taken into
consideration. As such, aspects are majorly considered when a company is shifting in the US for
its opening.
The legal aspect majorly highlights information about the legal framework, which is majorly
needed to defend the intellectual possessions moralities of the society. As when the firm is,
entering into a newer country needs to consider all the legal aspect, which mainly comprises of
copyrights, employment law, customers protection and e-commerce, data protection and lastly
health and safety law in concern to employees. These aspects help the firm to evaluate the
market, which can lead, or help the firm to generate a competitive edge in the long run
(Nandonde, 2019).

Introduction to strategy 6
Porter five-force model
Porters five force model mainly highlights the five major aspects which comprise of the
bargaining power of the supplier, consumers, threat of new entrant, the threat of auxiliary
products and lastly, competition in the industry. As Alibaba, in this concern needs to know more
about the suppliers, their competitors, their customers, and their substitutes so that there they
know about the relocation issues and can work over it so that they can successful relocate
themselves in the US.
Bargaining power of the suppliers in United stated is low to medium in e-commerce aspect, as
the effect of the supplier on the online retail business surroundings is in a extensive range due to
the variety of the commercial and the business exercises a vast negotiating power in relation to
the mainstream of its dealers. So in order to stay Alibaba need to work over their effective supply
chain with its multiple suppliers (Luo, Sun, & Wang, 2011).
Competitive rivalry mainly highlights the strong competitors of the company. So in the case of
Alibaba when they are trying to enter into the US they will face the intense competition for the
other e-commerce brands such as Amazon and eBay as they are well-known along with the
highest earning and the most successful companies of united states. Along with this, the
company will also experience the robust strength of the alternates because of its greater
obtainability. As such, aspects make a tough situation for Alibaba while entering the United
States.
The negotiating control of the buyers highlights the influence of the clienteles in a firm and
industry environment. In this, if the company is majorly focusing on the customers' satisfaction
and its product quality it is mainly affecting the powers of the buyers at large. As it is seen that
the switching cost is low as the number of e-commerce companies are increasing over the years.
As in this, every customer has sufficient information when they search for particular products
online and make choices as they have choices on the available information. That is why it is seen
that customers’ retention is so important to focus on areas for e retailers (Huggins, & Izushi,
2011).
The threat of substitutes in term of Alibaba when relocating themselves in the US is higher as
there is numerous other brands who have entered in the online retail business, other than this,

Introduction to strategy 7
customers can also buy from the physical stores or physical retailers. For example, when we talk
about Amazon its competitive advantage is its excellent customer services part from its brand
name, so in this people can switch easily from one brand to another in this concern.
Lastly, the threat of new entrants, aspect has moderate to high effect as this is all because of
the proliferation of digital technology, which has brought many changes to the retail industry. AS
it is seen that there are numerous brands who have entered into the retailing business, other than
this, it is all seen that due to the increment in the technology aspect as technological
advancement has reduced the barrier to entry and many companies like Amazon and eBay are
earning as similar as Alibaba. Therefore, the risk for the new entrant is moderate to high in the
coming time for Alibaba if they are thinking to relocate in the United States (Dobbs, 2014).
Moreover, when seeing analysis the main competitors of Alibaba in the United States mainly
highlighted the amazon company, which is also one of the well-known companies of the United
States, which similarly deals in Retail ecommerce aspects just like Alibaba. However, when we
talk about the strategies which amazon applies for its successful aspect is described under the
Ansoff matrix,-
As amazon uses e-market penetration strategy aggressively, by majorly targeting its customers at
large by improving the quality of the products or convincing current customers to use more of
the company’s product by making more use of marketing communication tools such as
advertising techniques and promotional tools. Moreover, product development also started its
product offerings on an online basis, along with this, it is also seen that amazon initially was
dealing in physical books but now they also deal in clothing, shoes, home and kitchen
appliances, electronic devices and much more. Furthermore, in the market development aspect,
Amazon is currently working in 13 countries and targeting more by finding new markets for
existing products. Lastly, in the diversification aspect, amazon in diverse aspects has started
working in media, hardware, advertising and another business segment (Gurcaylilar-Yenidogan,
& Aksoy, 2018).
SWOT analysis
Strength- the United States of America is a federal nation, which mainly includes fifty states and
one federal region, which is located in central northern America. Like this country, a major

Introduction to strategy 8
strength is its financial and technical growth in almost every segment. This also highlights that it
is one of the largest markets with the world's biggest GDP and its customers regarding the
service sector mostly determine the economy of the states. Other than this, the strength of the
United States highlights that this particular country has a high-valued asset in the research and
expansion aspect along with the education. About 2/3 of the manufacture is driven by individual
consumption. Moreover, it is also seen that the service segment has a main part and it mainly
makes up to almost 78% of the Gross Domestic Product. This country also has strong decision-
making power pertaining to initiatives for the development and constancy of the country. Lastly,
it also comprehends the use of the source of money, tax rates, and credit regulator in order to
adjust accordingly to financial requirements (Ghazinoory, Abdi, & Azadegan-Mehr, 2011).
Weaknesses- In terms of flaws, the nation has noticed a record of the low domestic saving rate.
Moreover, it is seen that there is a large fiscal deficit, which is increasing; external debt was
around $19.6 trillion, which made the country the biggest debtor country. Other than this, it is
also seen that the situation remains a major distress due to the considerable amount of people
missing wellbeing assurance. Moreover, it is also seen that the United States is called a free
market economy, but the administration controls in a various sector particularly in the dynamism
sector intensely. The country also has two-tier marketplace employment, which means many
people out of their lack of learning and qualified skills, which are regarded as the top location
organizations. Hence, due to this, labor fails to gain the pay raise, health insurance, and other
benefits. Lastly, it is also seen that the exchanges rate is also being affected, credit markets are
also weak and lacking a sustainable amount supply of money to stabilize the economic
conditions (Parnell, 2011).
Opportunities- In this aspect, United States can upkeep diverse modifications by solid
nationwide reserves that would evade the affliction of falling on both asset and development. It is
also seen that the increased fund in a sector such as housing will generate a radical effect in times
of emergency. Moreover, expenses from the sides of the customers will also help in initiating
superior constancy and development in the economy. Other than this, it is also seen that if the
country consumers will be able to encourage themselves financially, this will further help in
steadying the economic condition of the country. Moreover, the role of the Federal Reserve also
helps in deducting rates the interest in order to encourage investment and it also introduced the

Introduction to strategy 9
measures that would help in generating opportunities to push liquidity to various financial
markets. Furthermore, it also helps in generating more incomes online by ingoing into a
partnership with other websites and the introduction of groundbreaking structures, which grab
attention with less criticism. Lastly, TARP, which highlights about troubled asset relief program,
which shows the favorable outcomes it helps in buckle up the economic condition, is hard times
as practice of encouragements (Gürel, & Tat, 2017).
Threats- this particular aspect highlights the rising markets in Europe and recent growth in Asia,
which are growing economies internationally, particularly China that is predicted to surpass the
US marketplace in bulk in 30 years. Moreover, it is seen that customers are paying more
attention more for necessities such as food, fuel, college fees, and medical care. Moreover, it is
also seen that the deficit of the country has been coined as the unsustainable according to the
international monetary fund, which would definitely generate an undesirable effect on the
interest rates and capital market globally. Other than this, it is also seen that the customers are
also majorly dependent on the debt to re-mortgaging the properties to attain higher loans. In
threat, aspect is also highlighted that there are many barriers faced to an international market due
to the high competition in the market or the rivals. Lastly, the rate of unemployment is also rising
with time and the flat wage rates of employees (Johnson, 2012).
Internal Analysis
VRIO/ Dynamic capabilities
The VRIO analysis of Alibaba, a company who has a broader variety analysis which provides the
company with opportunities to acquire a viable competitive benefit against its competitors in the
retail aspect-
Valuable- the resources applied by the Alibaba business are very much valuable in nature for the
business, a resource such as finances, human resources, management of operations and
specialists in marketing, which helps the company to grow at the border level.
Rare- In a rare aspect, the valuable resources used by Alibaba are even unusual or costly. Are
there resources are commonly found that it would be easier for the competitor and the new rivals
in the industry to effortlessly move in the competition (Watson, et al, 2015).

Introduction to strategy 10
Imitation- 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 (Nylund, et al,
2018).
Organization- this part of VRIO analysis mainly highlights information about the compatibility
of the company to place them in the market by making efficient usage of its important resources,
which are harder to imitate. Frequently, the advancement of the management is completely
dependent on the firm execution system, their technique and team members and their working
aspect are taken into consideration. Hence, such aspect helps the company to polishes the skills
of the company that are based on the choices of the company for the development of its strategic
capitals (Carrère, et al, 2015)
Recommendations-
In order to manage the instability in the external environment, Alibaba must focus on developing
the appropriate market entry strategy so that the company is able to create positioning in the
United States. It is analyzed that the United States faces the challenge of labor shortage however,
it develops the need for the company to recruit and retain the employees by developing effective
rewards and recognition that motivates the employees and make them more committed towards
the organization goals (Bubel, et al, 2015).
It is analyzed that the main competitors of the brand use differentiation strategies and has
developed strong positioning in the minds of the customers. Therefore, Alibaba must focus on
designing effective promotional strategies and must adopt cost leadership strategies to capture
the market and switch the customers towards its brand. It must analyze the pricing offered by the
competitors and must lower the prices to increase brand awareness and develop a position in the
new market (Jiyuan Wu, 2016).
The company may also face the challenge in the creation of technological upgradations. This, in
turn, develops the need for Alibaba to make the investment in the research and development and
upgrade the technological innovation that will help the company in delivering superior quality

Introduction to strategy 11
and will aid in delivering a unique experience to the customers. It will help in creating a
competitive edge in the competitive market (Gurcaylilar-Yenidogan, & Aksoy, 2018).
It is analyzed that the consumers in the United States prefer more to enjoy their lives and
upgrade their social status. However, this creates fluctuations in the preferences and the
expectations of the customers. It developed the need that Alibaba must scrutinize the socio-
cultural aspects and must develop the products that allow the customers to maintain their status
quo and deliver maximum satisfaction. This will increase the profitability of the company and
will aid in creating strong brand positioning in the new market (Kaul, 2019).
Conclusion
From the above report, we can conclude that Alibaba while entering the US market will face
many issues in terms of political aspect as, every country's rule, regulations and government laws
are different. Therefore, to manage in the US market Alibaba needs to focus on the United States
political aspect. In socio-cultural terms, when we study about the cultural aspects US and China
are very different from one another as china is very rigid in its language, respect, communication
whereas, the US market has a flexible environment that generates the major issue for Alibaba to
enter into the US market. In terms of strategy, companies such as Amazon and eBay apply
market penetration strategy whereas Alibaba will not be successful while following this strategy
as amazon and eBay have already through this strategy has captured the main market of the US.
Therefore, for this, Alibaba need to focus on the cost leadership strategy in which the lower
prices of the products may attract the large base of a customer can this would help in generating
the successful installation of the company in the newer market.

Introduction to strategy 12
References
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China?. Thunderbird International Business Review, 57(6), 505-518.
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conducted in the information economy. Journal of the International Academy for Case
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analysis templates. Competitiveness Review, 24(1), 32-45.
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Michael Porter. Oxford University Press.

Introduction to strategy 13
Luo, Y., Sun, J., & Wang, S. L. 2011 Comparative strategic management: An emergent field in
international management. Journal of international management, 17(3), 190-200.
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Introduction to strategy 14
Jiyuan Wu, J. 2016 Total Resources and Speeds of Internationalization. In Global
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Appendix
The above image mainly highlights about the VRIO analysis of the Alibaba in which the main
sources, which they consider, are the network flexibility, market position, leadership, awareness
of the brand and financial setup in the United States. All these aspects, in Alibaba concern are
valuable in nature. Other than this, in rare aspect, financial aspect is the most valuable one. As
this aspect helps the company to fight with the rivals which is challenging yet helpful for the

Introduction to strategy 15
company to win over their competitors. In organization concern , financial aspect leads to the
sustainable status. This although creates the temporary competitive advantage but still benefits
the company at large if the portion is high in nature and the effective strategies are applied by
the company in the newer market.