Globalization and Emerging Market Companies

This assignment examines the impact of globalization on emerging market companies, specifically using Alibaba.com as a case study. It explores the challenges and opportunities faced by Chinese businesses venturing into the global market, including issues related to overseas staffing practices, local codes of conduct, and religious influences. The analysis highlights the need for extensive training and skilled personnel to navigate the complexities of international business.

Running head: INTERNATIONAL BUSINESS
International Business: Alibaba.com
Name of Student:
Student ID:
Name of University:
Author’s Note:

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Table of Contents
Introduction:....................................................................................................................................3
Company Profile:.............................................................................................................................3
Industry Analysis:............................................................................................................................5
Porter’s Five Forces:....................................................................................................................5
Barriers to Entry:.....................................................................................................................5
Buyer bargaining Power:.........................................................................................................5
Supplier Bargaining Power:.....................................................................................................6
Availability of Substitutes:......................................................................................................6
Competition:............................................................................................................................6
Environmental Analysis:.................................................................................................................7
PESTEL Analysis: China............................................................................................................7
Political Factors:......................................................................................................................7
Economic Factors:...................................................................................................................7
Social Factor:...........................................................................................................................8
Technological Factor:..............................................................................................................8
Environmental Factor:.............................................................................................................9

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Legal factor:.............................................................................................................................9
PESTEL Analysis: Australia.......................................................................................................9
Political:...................................................................................................................................9
Economical:.............................................................................................................................9
Social:....................................................................................................................................10
Technology:...........................................................................................................................10
Environmental:......................................................................................................................10
Home versus Host Country effect on HRM:.................................................................................11
Conclusion:....................................................................................................................................12
Reference:......................................................................................................................................13

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Introduction:
This report would take into account the opportunities along with threats that is being
generated by globalization. This design would be ably supported with the help of a MNC from
the markets of emerging nature. This report would be focusing on Alibaba.com which has its
base in China and has been productively establishing itself in the global market through the
process of innovation and strategic plans of marketing. The report would be highlighting the fact
the ways Alibaba.com have been able to recognize the opportunities and threats existing in the
global market of Australia for spreading its wings in that market. Moreover, the report would be
contrasting the dissimilarity between setting up of the market within the home country and host
country. Porter’s Five forces along with PESTLE analysis would be sued in evaluating the
external and developed factors of both China and Australia.
Company Profile:
Alibaba Holding Limited, an e-commerce company is based in China that is in the
business of facilitating the transaction of services between two units. This e-commerce
organization has been offering consumer to consumer services, business to business and business
to consumer services of sales through its global website. Another service that is being provided
by the organization takes in the search engine shopping, services of electronic payments and data
services of cloud computing. It was in the year 1999 that Alibaba started its journey through the
initiation of the website alibab.com that gathered proceeds of $170 billion in the year of 2012
(Brewster, Mayrhofer and Smale 2016). Alibaba has become the biggest retailer on global basis
having its operations in more than 190 countries. The e-commerce business has become the

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governing online retailer internationally through attaining of sales revenue outside the world’s
most admired organizations taking in eBay and Amazon.
The strategy that has been deployed by the organization is to act as the catalyst between
the buyers and suppliers through attaining of trust among them (Bremmer 2014). Alibaba has
been acquiring consumers trust through the pioneering and dependable online policy. The
organization mainly works on the following core values:
a. Customer First: Alibaba has been developing services that are mainly customer-centric along
with pleasing all their requirements. Alibaba has been developing an inventive online platform
through the customers can buy goods from anywhere across the globe. The web gateway also
allows payments in the course of online through the system of electronics payment. Thus,
purchasers can buy goods along with materials by production of the services through
Alibaba.com.
b. Teamwork: Alibaba has been developing its services and function that are aligned with the
newest trend. Alibaba has been effectively integrating the digital technology in the web portal.
c. Integrity: Alibaba is a company that has been carrying massive online transactions on global
basis for which it needs to preserve its integrity. The company has been able to incorporate an
efficient process of verification for its client that tales the details of the company for building up
mutual trust between the client and the company.
d. Commitment: Alibaba has been fully committed in serving its business clientele and has been
consistently working in enhancing the operations of its business for better serving them.

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e. Passion: Alibaba has been passionate in bringing the digital alteration globally through its
retail online and payment services.
Industry Analysis:
Porter’s Five Forces:
Porter’s Five Forces develops an analytical view of the company’s chances and prospects while
entering into the new market. The company needs to focus on the following factors so that they
get an overview of the current market trend.
Barriers to Entry:
The industry is having higher returns owing to which abundant firms have been making
efforts in imitating the model of business for Alibaba.com. The segment of business to business
has augmented over the period of past few years which has been able to motivate the new players
for entering into the market (Cooper and Ezzamel 2013). To enter into the e-commerce market, a
company first requires in identifying the target market for the detailed industry. There has been
existence of other firms like finechemical.com and textilehome.com for the compound and
textile industries respectively. These e-commerce organizations have been targeting only the
smaller share of Alibaba.com and have no intent in targeting the broader segment of the market.
Buyer bargaining Power:
The strength of the customer to compel the firm through their power and authority is
stated to be the bargaining power of buyers. Alibaba.com boasts of medium and small enterprises
as their customers not having their own websites. Alibaba has been setting its own standards that
have been governing the medium and small sized firms, therefore these firms enjoy freedom in
setting their own conditions and terms (Smith and Zheng 2016). Therefore these firms do not

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have the capability in putting enough pressure on Alibaba.com. On the other hand, the firms who
are having their own websites are in the best position for exerting pressure on Alibaba.com for
the factor of prices along with certain other terms and conditions. Thus, they consult with
Alibaba for having some of the factors within their support.
Supplier Bargaining Power:
For a firm, the suppliers can be labors, raw materials supplier and mechanism that could
apply pressure over the company (Brewster, Mayrhofer and Smale 2016). The suppliers could
augment the raw materials price for the exclusive sources within the firm. Alibaba is not a
company that has suppliers because it is one of those e-commerce organizations that have been
relying on the advertising and marketing factor for its business. The company is in the habit of
advertising itself through the help of websites, magazines along with newspapers that can only
demand the prices of the market from the company (Hirst, Thompson and Bromley 2015). Thus,
Alibaba’s suppliers have a limited bargaining power.
Availability of Substitutes:
Customers are in the habit of finding the substitutable products within the range of lower
prices; they generally tend towards switching over to them. Alibaba’s product substitutes are
those company websites that have the ability in attracting the customers, especially those who
directly want to trade with the production company without any form of intermediary (Edwards
et al. 2016).
Competition:
The determinants of the industrial factors are the competitive firms within any industry.
The rival firms contend with the firm through the help of the exclusive campaigns of marketing

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for attracting the consumers. Alibaba faces stiff competition from search engines of free nature
like Baidu.com and Google. The customers generally prefer using these sort of websites rather
than Alibaba for which Alibaba could be recurring certain amount of losses.
Environmental Analysis:
PESTEL Analysis: China
PESTEL analysis would be assisting in understanding the issues encountered by Alibaba
in the market of China through assessing the political, economical, social, technological,
environmental and legal features.
Political Factors:
Political factors take into account the policy structure of the government within the
country. China is one of the emerging economies and initiated the policy of insurgency and
aperture for providing an opportunity to the private players within the country. The country
boasts of a communal form of government for which the private players have been facing issues
related to facilities of credit for the factor of business growth. The private players have been
contributing a considerable part of the revenue towards the country’s economic growth in the
past few years for which the government intended for the private players. The government has
done enough in supporting the establishment of the private players like that of Alibaba.com.
There has been a forecast that Alibaba would be expanding at a faster rate in the Chinese market
which is deemed to be one of the world’s largest markets.
Economic Factors:
China’s economy has been expanding over the period of past thirty years with enough
consistency, making China the second largest economic globally. In the year 2013, the value of

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GDP of the country was $9.2 trillion (Zhu, Zhu and De Cieri 2014). The rate of growth of the
GDP is around 9 per cent having lower rate of inflation. China’s growing economy has been the
factor for the expansion of Alibaba.com, receiving full help in entering new markets. Companies
along with the brands are being boosted due to the fact of cheaper labor cost.
Social Factor:
The demographics of the growth of population along with the variation in the distribution
of age are altered and they can play significant role on the country’s social and cultural aspects.
They do have great prospective in changing the social and cultural trends of a country. China is
one of the countries where internet is being used widely in most of its rural areas and cities.
People have started using the latest technologies for doing online shopping with several websites
like Alibaba.com and Taobao featuring there for people to go along with their online shopping
(Smith and Zheng 2016). E-commerce has changed the way local people do their shopping under
present circumstances.
Technological Factor:
There are certain technological factors that are implicated in the development of fresh
products, buying of new mechanisms along with new production technology like the internet.
China has issues as it does not comprise of a safer online system of payment for which the
Chinese buyers have to encounter higher level of ambiguity along with experiencing the
orientation of longer term. Companies like Alibaba.com need to focus on their online payment
gateway so that people feel safe while doing online transactions. Moreover, as per Sheldon and
Sanders 2016, the market in China experiences lower credit card infiltration within China which
is being widely used across the globe as one of the most effective means of first payment.

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Environmental Factor:
The environmental factor has a deeper impact as people have consciousness about the
protection of the environment. The stipulation of the products online can assist in increasing the
usage of the e-commerce websites like Alibaba.com and do the shopping online through placing
of the orders instead of visiting the shops.
Legal factor:
The e-commerce has been flourishing over the period of past few years with the
government working on the formulation of the e-commerce legal structure. China has been
working on the drafting of the legislation of e-commerce on several aspects like the logical
property rights protection and tax. The efficient legislation is much required for the development
of the e-commerce and preventing online theft and cheating.
PESTEL Analysis: Australia
Political:
The political situation of Australia is certainly challenging as the country boasts of
several bureaucracy levels. The Australia government is relatively open for the entry of private
companies like Alibaba but without compromising on the quality of the products or the services
desired by the Australian people. Therefore, Alibaba requires settling all the formalities with the
governments and illustrating the advantages of the Australian market.
Economical:
The Australian economic condition is of favorable nature with the economy growing at a
decent velocity. Apart from the macro factors, certain micro economic factors like the supply-
demand and employment is also augmenting, thus the disposable income of the Australians is on

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the rise. The booming economic condition has been attracting the global companies from every
corner of the planet aiming to expand their business within the market.
Social:
Lifestyle and alterations in the consumer have left Australia post services pursuing the
developments in the e-commerce market and careworn in staying pertinent in present day
evolving consumer and retail market (Chiang, Lemański and Birtch, 2017). Australia post is
realigning its organizational policy in becoming a partner for the e-commerce in Australian
market. New alliances forming with the powerhouses emerging within the Australian market like
shaping trade associations with the Chinese wholesaler giant Alibaba for augmenting the foreign
market of retail export within Australia.
Technology:
The people of Australia are inclined towards the use of new technology. Thus the people
take great interest in being attracted towards the versions that are technologically advanced of the
e-commerce (Zhu, Zhu and De Cieri 2014). As more technology is being used by the e-
commerce organizations for the people to have a unique experience of online shopping, the more
would be the registration of the online shoppers.
Environmental:
The concerns about the environment are not that major in the sector of e-commerce as per
the standards of the government. Positive image of the brand of the foreign companies like
Alibaba would be having affection of the people and thus would be attracting majority of the
new customers.

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Home versus Host Country effect on HRM:
The notion of global competition has been able to force business in altering the ways they
have been dealing with themselves within their home territory and abroad. Advancement in
technology accompanied with high speed of communication plays a significant role in the
changes (Minbaeva et al. 2014). The global manager does play the role of a local manager, but
he requires more adjustments to the variables and environment.
Global managers require addressing broader range of activities than their local
equivalent. These take into account the procedure of international taxation, collaborating with the
exchange rate and foreign rates, global rescheduling along with the orientation program at global
basis for all the employees who are being posted overseas. The HR managers who have been
working in the backdrop of global scenario have been encountering certain issues with HR and
the employees who have been fitting into more than one single nationality (Cuervo-Cazurra and
Ramamurti 2014). The HR managers within the domestic scenario have been administering the
HR programs from one single nationality. The HR manager of Alibaba working in Beijing would
be catering to one set of HR policies to that working in Shanghai. However, a HR manager
working in China would be catering to a varied HRM system than someone in Australia.
For the international business managers they require greater involvement in the personal
lives of the employees. The HR manager of Alibaba.com working in China needs to guarantee
that the executive who is being positioned in Australia understands all the traits of the
compensation package provided in the global project like cost of living and tax factor. It is up to
the HR manager for reviewing the enthusiasm of the family of employees in relocating,
providing support to the family in modifying themselves with the global culture through the
training in cross-culture. The international business managers need to tackle with more external

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than their domestic complements. For example, the overseas staffing practices, local codes of
conduct and impact of the religious groups. If Alibaba.com has been planning to do business in
Germany and they have been sanctioned license for the same, the Chinese company would be
legally obliged in offering employment to the people of Germany.
Conclusion:
Globalization does impact companies that are coming out of the emerging economies like
Alibaba from China. The global market does present with opportunities and other
diversifications, however certain issues does exist for it to deal with for the purpose of its
survival. Managers require extensive training for being able to sustain the pressure of global
market. MNC’s from the emerging economies need to have skilled people along with latest
technologies in making large internationally.

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Reference:
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Brewster, C., Mayrhofer, W. and Smale, A., 2016. Crossing the streams: HRM in multinational
enterprises and comparative HRM. Human Resource Management Review, 26(4), pp.285-297.
Chiang, F.F., Lemański, M.K. and Birtch, T.A., 2017. The transfer and diffusion of HRM
practices within MNCs: lessons learned and future research directions. The International Journal
of Human Resource Management, 28(1), pp.234-258.
Cooper, D.J. and Ezzamel, M., 2013. Globalization discourses and performance measurement
systems in a multinational firm. Accounting, Organizations and Society, 38(4), pp.288-313.
Cuervo-Cazurra, A. and Ramamurti, R. eds., 2014. Understanding multinationals from emerging
markets. Cambridge University Press.
Edwards, T., Sánchez-Mangas, R., Jalette, P., Lavelle, J. and Minbaeva, D., 2016. Global
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Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Minbaeva, D., Pedersen, T., Björkman, I., Fey, C.F. and Park, H.J., 2014. MNC knowledge
transfer, subsidiary absorptive capacity and HRM. Journal of International Business
Studies, 45(1), pp.38-51.

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Sheldon, P. and Sanders, K., 2016. Contextualizing HRM in China: differences within the
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Smith, C. and Zheng, Y., 2016. Chinese MNCs’ globalization, work and employment. Flexible
workforces and low profit margins: electronics assembly between Europe and China, p.67.
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Challanges of Globalization. Routledge.
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