Alibaba's Effective Internationalization Strategy

The assignment examines Alibaba Group's internationalization strategies and their effectiveness. It explores various aspects of Alibaba's global expansion, including its business models, target markets, and challenges faced. The analysis demonstrates how Alibaba has successfully leveraged different market entry methods to achieve growth in international markets. Furthermore, the assignment highlights the benefits of Alibaba's internationalization strategy, such as increased revenue streams, access to new talent pools, and brand recognition on a global scale.

Running Head: Business Management 1
Business Management

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Executive Summary:
This report discusses the major aspects of international business environment and how
multinational corporations survive in this environment. For this purpose, focus is stated on
Alibaba group, and state how this group deals with the environment of the international business
which directly influence the success and failure of the company. Research question for this
report is “Whether Alibaba’s internationalization approach is working or not”? The main aim
of this report is to identify the important aspects related to the international business environment
which mainly influence the strategic issues exists in context of Alibaba group. For this purpose,
we evaluate the strategies of the company for dealing with the opportunities and threats arising
from the international business environment.
Alibaba Group Holding Limited is a Chinese multinational organization which
established in 1999. This group mainly provides consumer-to-consumer, business-to-consumer
and business-to-business sales services with the help of web portal, electronic payment services,
shopping search engines and data centric cloud computing services. This company operates its
business in different markets across the globe and listed as one of the world's most admired
companies by Fortune.

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Contents
Introduction:...............................................................................................................................................4
Strategic issue presentation:.......................................................................................................................4
Strategic issue and its IB- Relevance:.......................................................................................................5
Strategic issue analysis:...............................................................................................................................6
Key aspects of internationalization:.........................................................................................................6
Key factors of internationalization in international business environment:............................................7
Strategies of Alibaba group:....................................................................................................................7
Evaluation of strategy:.............................................................................................................................8
Recommendations:..................................................................................................................................8
Theories acquired:...................................................................................................................................9
Discussion:...................................................................................................................................................9
Key points:...............................................................................................................................................9
Recommendation for future development:...........................................................................................10
Conclusion:................................................................................................................................................10
References:................................................................................................................................................10

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Introduction:
Last two decades witnessed the rapid and sustainable growth of the international
business, and it is considered as one of the most dramatic and important trends of the world.
There are number of markets across the globe which becomes flexible for maximum goods,
services, and especially for financial instruments of all types. Product trade in the world has
expanded by more than 6% from the period of 1950, and this growth is considered as 50% faster
growth of output because of the most dramatic increase in the globalization occurred in financial
markets. This report answers the question “Whether Alibaba’s internationalization approach is
working or not”?
Internationalization is the approach in which every business shows interest. However,
this term does not have any definition, but in context of economics approach it is referred as a
process in which business take actions and get involved in the international markets (Hill, 2012).
Strategy for internationalization mainly covers three areas that are global, multinational and
international strategies. These three areas are considered by the organization while making
strategies for international expansion (Pondiuni, n.d.; Techtarget, n.d.).
Research question of this report includes the discussion related to the internationalization
strategy of the Alibaba group and it also evaluates the effectiveness of this strategy. Lastly,
report is concluded with brief conclusion which includes summary of key points of the report.
Strategic issue presentation:
Alibaba group holding limited is a Chinese company, and the mission of this organization
is to simplify the conduct of the business at anywhere. This group mainly aims to enable the

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business to transform in such a way as it becomes easy to market, sell and operate. Alibaba
provides the fundamental technology infrastructure and access to marketing for the purpose of
helping the merchants, brands and other business organizations to influence the internet power
for the purpose of engaging with their users and customers. Business conducted by the
organization includes core commerce, cloud computing, digital media and entertainment,
innovation initiatives and others. Alibab group also participates in the logistics and local services
sectors through their subsidiaries that are Cainiao Network and investee affiliate Koubei.
Additionally, organization also has profit sharing interest in Ant Financial Services, the financial
services group that operates mainly through alipay, the leading third-party online payment
platform in China (Gala, n.d.).
Alibaba group conduct different businesses and also provide support to the bionetwork
from the activities of their main and other related organizations. Our major business and the
businesses of related companies include Taobao.com, aliexpress, alibaba.com, alimama, etc
(Alibaba group, 2018).
Strategic issue and its IB- Relevance:
Internationalization includes various things and it is not only considered as growth of the
business from its domestic market to the international markets. Decision of the firm to
internationalize the business is considered as strategic and importance decision which directly
affects the firm and also operations conducted by the firm internally or externally. It also affects
the management of the company. Recently, rates on which organizations are operated in
international markets have increased. Some reasons because of which internalization is opted by
the organizations are stated below (Gillespie & Hennessey, 2010):

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 Increased productivity and profitability in the organization.
 Help in expanding the business in different markets across the globe.
 Helps n dealing with the insufficiency of domestic demand.
Effective strategy for the internationalization is very important and organization must
consider all relevant factors before taking the decision to enter in the international market.
Strategy related to the international business includes the plan of the organization to operate its
business in international market and to position positively from its rivals. The main purpose of
this strategy is to provide help to the managers in framing an international vision, distribute
resources, participate in major international markets, be competitive, etc. therefore, for
conducting all these functions effectively and accurate internationalization strategy is required
(Shaikh, n.d.).
Strategic issue analysis:
Key aspects of internationalization:
Internationalization is considered as strategy of the organization which is used by
maximum executives for the purpose of reducing the operations cost in the organization.
Business organization with above costs can have the advantage of extra reduction of costs in
those countries that have relatively emptied currencies as well as low cost of living. Those
companies which are interested in expand their business internationally must reflect those
arcades that have low cost of living because it makes cheaper for the organizations to hire
employees. Some organization chooses option of internationalization in their financial crises.
Company’s executive experiencing financial crises in the domestic market will decide their
budget for entering into international market.

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Some reasons of popularity of internationalization in the present organizations include
opening up of trade borders, elimination of trade barriers, etc. Now, companies does not feel safe
to stay only in domestic market and because of this maximum company choose for
internationalization. It must be noted that, communication and technology makes the
internationalization much easier. Some organization chooses high aggressive approach which
includes acquisition of firms, business alliances, joint venture or establishment of subsidiary.
Key factors of internationalization in international business environment:
Some of the key factors of internationalization are stated below:
 Economic environment: it includes the nature of the economic system and also the
institutions in particular country or region, and it also consider the nature of human and
natural resources.
 Political environment: it is closely related to the economic environment but it also
includes some wide factors such as local and international conflicts, role of state, etc.
 Legal environment: it includes he legal framework and other restrictions imposed by law
of particular country or region.
 Social structure: it includes behavior and values of society (Johnson, 2017).
Strategies of Alibaba group:
Alibaba group ensures the global trade by providing a trusted system for the purpose of
market globalization. Company use transnational strategy for internationalization. In this strategy
organization possess the characteristics of both the global and multi-domestic firm. The main
aim of this strategy is to maximize the response at local level but also to gain benefits from
global integration. For this purpose, Alibaba use e-commerce to connect and facilitate the
engagement of B2B and B2C transactions (Wang, 2017).

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From last few years, jack Ma flying to number of countries for the purpose of meeting
their business leaders and other heads of the state for expanding his business. There are number
of small business organizations across the globe which is trading freely and securely on the
platform of Alibaba. Goals of company’s chairman are ambitious and ma wants that organization
it $1 trillion in gross merchandise value by 2020 and by 2036 Ma wants to serve two billion
customers and be effectively becoming the world’s 5th largest economy (Ramos, 2017).
Evaluation of strategy:
Alibaba group recently defeated eBay in its domestic market in China but after some time
this company internationally listed itself on the New York Stock Exchange in September 2014,
and becomes the largest initial public offering (IPO) in world history.
Strategy used by Alibaba group is the clear example of use of technology in such way as
it enhances the trading on internet platform at international level, and it also helps the
organization to provide more fast and convenient services to customers. Key aspects of strategy
which resulted in success include implementation of different structure and the will of the
organization to adapt to current trends (Featherlight, 2015; Alibaba Group, 2016).
Recommendations:
Alibaba group can also use other strategies for internationalization such as licensing
under which international licensing firms can give out their patent rights, copyrights, trademark
rights, or even know-how on processes and products to the licensee. I this licensee manufactured
the products of the licensor products or conduct marketing on behalf of licensor. In the licensor
can charge fees and royal in lieu of payment. This strategy is effective in nature and used by
various multinational organizations for entering into the different markets of the world. One

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more strategy is also there which is similar to licensing and that strategy is franchising
(Schroeder, 2011).
Theories acquired:
Internationalization is the strategy which is used by the firms of different sizes in
worldwide and this strategy is facilitated by multiple factors and some of these factors include
elimination of trade barriers among other trading countries. There are some other advantages also
that can be taken from internationalization of business such as organization can access less
saturated markets. Alibaba group is also using effective internationalization strategy which
provides various benefits to the organization.
Discussion:
Key points:
This report highlights various important aspects of internationalization process in context of
Alibaba group and it also sates the importance and effective of international business
environment. Some key points of this report are stated in brief:
 Internationalization is the approach in which every business shows interest. Strategy for
internationalization mainly covers three areas that are global, multinational and
international strategies.
 Internationalization strategy in the organization is used by management for the purpose of
reducing the operations cost in the organization. it mainly includes the plan of the
organization to operate its business in international market
 Alibaba group ensures the global trade by providing a trusted system for the purpose of
market globalization. Company use transnational strategy for internationalization. In this

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strategy organization possess the characteristics of both the global and multi-domestic
firm. For this purpose, Alibaba use e-commerce to connect and facilitate the engagement
of B2B and B2C transactions.
Recommendation for future development:
Alibaba can use other approaches for future development such as organization can
expand its business in emerging markets. These markets provide environment to the competitive
companies in the world for doing the business in simple manner. These markets are mainly
developed in such countries which have lower economic development. These type of markets are
also found in those countries which have transitional economy and in which domestic society is
promoted. In this government make efforts to create such environment which increase trade
options for both internal and external investors. Alibaba can expand its business in these types of
economies as it helps the organization to touch new heights (Fabling & Sanderson 2013).
Conclusion:
After considering the above facts, it can be said that e-commerce and other globalization
strategy used by the Alibaba group is effective in nature as it helps the organization to get
success in its internationalization process. Alibaba also get some other advantages also from
internationalization of business such as organization can access less saturated markets.
Therefore, it is proved that Alibaba group is using effective internationalization strategy which
provides various benefits to the organization.

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References:
Alibaba group, (2018). Company Overview. Retrieved on 30th January 2018 from:
http://www.alibabagroup.com/en/about/overview.
Alibaba group, (2018). Our Businesses. Retrieved on 30th January 2018 from:
http://www.alibabagroup.com/en/about/businesses.
Alibaba Group, (2016). Alibaba Group Holding Limited. Retrieved on 30th January 2018 from:
http://www.alibabagroup.com/en/ir/pdf/agm160524_ar.pdf.
Featherlight, (2015). Alibaba. Retrieved on 30th January 2018 from:
http://featherlight.net/focus/alibaba.
Gala. What is Internationalization?. Retrieved on 30th January 2018 from: https://www.gala-
global.org/language-industry/intro-language-industry/what-internationalization.
Gillespie K. & Hennessey HD. (2010). Global marketing. Cengage Learning.
Hill CWL, (2012) International Business: Competing in the Global Market Place. (9thedn),
McGraw-Hill Higher Education.
Johnson, W. (2017). Environmental Factors of International Business. Retrieved on 30th January
2018 from: https://bizfluent.com/about-5626186-environmental-factors-international-
business.html.
Pondiuni. International Business – An Overview. Retrieved on 30th January 2018 from:
http://www.pondiuni.edu.in/storage/dde/downloads/ibiii_ibe.pdf.
Ramos, A. (2017). Expand Globally, Using Alibaba’s Ecommerce Ecosystem Strategy.
Retrieved on 30th January 2018 from: https://business.ebanx.com/en/blog/expand-
globally-using-alibabas-ecommerce-ecosystem-strategy.
Schroeder A. (2011). Entry strategy for Carrefour for entry into the UK market.
Shaikh, S. Importance of International Business. Retrieved on 30th January 2018 from:
http://www.economicsdiscussion.net/business/importance-of-international-business/
13945.
Techtarget. internationalization (I18N). Retrieved on 30th January 2018 from:
http://whatis.techtarget.com/definition/internationalization-I18N.
Wang, J. (2017). Can Alibaba Realize Its Global Ambitions?. Retrieved on 30th January 2018
from: https://www.forbes.com/sites/ywang/2017/07/02/can-alibaba-realize-its-global-
ambition/#78f4339762dc.
Fabling R. & Sanderson L. (2013). Exporting and firm performance: Market entry, investment
and expansion. Journal of International Economics 89: 422-431.