Strategy Making Process for Innovation within Alibaba Organization
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This essay discusses the strategy making process for innovation within Alibaba Corporation.
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Running head: STRATEGY MAKING PROCESS FOR INNOVATION1 Strategy making process for innovation within Alibaba Organization Student Tutor Institutional Affiliations Date
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STRATEGY MAKING PROCESS FOR INNOVATION2 Strategy making process for innovation within Alibaba Organization Strategic innovation is mainly focused on creating a sustainable superior performance. A robust strategy is extremely important in every organization to achieve a competitive advantage. Due to the limited resources, organizations make strategic decisions to achieve and sustain a competitive advantage. As pointed out byLee & Olson (2016), innovation strategy making is set to commit a corporate to specific technologies, resources, products and markets over a long period of time. It enables an organization to match its existing resources with opportunity as well as risk in outside environment. In order for an organization to make a well-articulated strategy, the corporate must its mission, external factors, strength and weakness as well as threats in the dynamic and challenging market. In this essay, we discuss the strategy making process for innovation within Alibaba Corporation. Alibaba Inc. is an e-commerce organization which was formulated by Jack Ma back in the year 1999. The business is based in Hangzhou, China. The corporate has a business to business online platform which serve the needs of its suppliers and buyers. The business has a wholesale platform for small scale buyers who seek to ship small amounts of goods from global site(Choi,2017).Alibabaalsoprovidesinternetinfrastructureservicesandbusiness management software which targets its business across China. Alibaba’s group mission is to make it easy to do business from anywhere. As such, the business is armed with core commerce, cloud computing, digital media and entertainment as well as innovation initiatives to help it achieve its mission. The organization generates a bulk of its revenue from its online platforms including, alibaba.com, tmall.com and taobao.cm. Along with the stated sources of funds that operates Alibaba, a considerable amount of funds also come from Alibaba cloud computing, an
STRATEGY MAKING PROCESS FOR INNOVATION3 online pay system like Paypal known as Alipay, and laiwang messaging application to mention a few. In summary of the organization’s SWOT analysis, the key strength of Alibaba is its scale of operation and the market where it majorly operates. China is the country with the highest population in the world and to have stronghold in such kind of market besides being the leader in the market is not a mean feat (Kantar, 2019). Another noteworthy strength of the business is its market share. According to Long (2019), 60% of China’s market share is dominated by three organizations including Alibaba, Baidu and Tencent of which Alibaba accounts for 32% of the market share. Alongside the organization’s strength, its major weakness is that it ways massive sellers. The organization does not put any qualification for its sellers, as such, it has a large number of online sellers competing in the market. In Alibaba’sopportunities,thekeyopportunityoftheorganizationisthecurrent innovation. The advanced technology has come with various opportunities including cloud computing, Artificial intelligence and machine learning to mention a few that the organization can exploit to achieve its mission to make it easy to do business anywhere (Kim & Chen, 2016). Along with that, other opportunities Alibaba have is its rise in investment and trust by people. The organization’s major threat, however, is the Flipkart and Amazon in India. As such, if Alibaba wants to expand its business in other countries especially in India, the organization’s biggest threat is the establishment of Flipkart and Amazon in the country. There is a number of resources that determines the value of the organization’s innovation. The adoption of cloud computing by the organization infer Alibaba’s innovation efforts. As stated by Ma, “Largescale computingand dataare the father and mother of Artificial intelligence AI.” The company has heavily increased its focus on cloud computing (Leavy,
STRATEGY MAKING PROCESS FOR INNOVATION4 2019). In fact, Alibaba’s ICT sector has developed an OS known as Apsara which can process over 175000 transactions in one second. Moreover,therevenueoftheorganizationfrominternetinfrastructureandcloud computing are growing at a very high rate. In addition to cloud computing, Alibaba Big Data is another handy resource that suggest the corporate’s efforts to innovation. The corporation integrates a comprehensive big data covering almost all aspects of their customer’s daily lives by cooperating with software organizations. These data are used by the organization’s marketers to choose the best advertising channels. The organization secure has its innovation options in various ways ranging from its human resource to technology department. Alibaba has a tech savvy department. It could take the organization’s engineering department several days or months to launch a new product in the past. Now Alibaba literally launch products and new features on a daily basis. The organization has not limit itself to e-commerce sector (Yang, Sun & Lee, 2016; Bai & Yu, 2016). Alongside e-business, Alibaba is on technology in order to enable Internet of Things IoT such as smart products that are networked and are able to respond to voice command a sector known as distributed voice recognition and the organization seek to apply this technology in manufacturing sector. Various factors including technology, and size may affect an organization’s decision making (Tan, Pan, Lu & Huang, 2015). This section presents how the size of Alibaba affects its decision making. Alibaba is a large organization which operates from various countries. As such, the organization is decentralized and this would impact decision making within the corporate. The larger the size of an organization the higher the chances of decentralization this is very significant from the organization’s innovation strategy perspective.
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STRATEGY MAKING PROCESS FOR INNOVATION5 Collaboration across trust, products, and functions must take place in order to enable Alibaba to flourish by combining capabilities across various organizations. Innovation only take place when an organization join other corporates’ know how with its users’ needs (Zhang & Wang, 2018). According to cyclical innovation model, the innovation involves a continuous process of interaction between changes and developments in markets, technology, products and services as well as science. The choice of technology of the organization can be explained as a trade-off between its variable and fixed costs, Alibaba needs to spend on flexible costs.
STRATEGY MAKING PROCESS FOR INNOVATION6 References Bai, X. J., & Yu, Z. (2016, August). Research on Haier Gooday Logistic Service Innovation. In2016 International Conference on Management Science and Management Innovation. Atlantis Press. Choi, B. (2017). Corporate Strategy of Baidu, Alibaba, Tencent for Electric Vehicle (EV) Business.중중중중중중, (31), 219-250. Kantar C. (2019, May).“China FMCG marketing overview Q1 2019”. Retrieved on 14thmay 2019 from: <https://www.chinainternetwatch.com/29293/fmcg-ecommerce-mar-2019/> Kim, Y. C., & Chen, P. C. (2016). Alibaba's strategic drift. Leavy, B. (2019). Alibaba strategist Ming Zeng:“Smart business” in the era of business ecosystems.Strategy & Leadership. Lee, S. M., & Olson, D. L. (2016).Convergenomics: strategic innovation in the convergence era. Routledge. Long D. (2019, April). “Alibaba, Baidu and Tencent remain China’s dominant ad players with 60% market share.”Retrieved on 14thMay 2019 from: < https://www.thedrum.com/news/2019/04/04/alibaba-baidu-and-tencent-remain-chinas- dominant-ad-players-with-60-market-share>
STRATEGY MAKING PROCESS FOR INNOVATION7 Tan, B., Pan, S. L., Lu, X., & Huang, L. (2015). The role of IS capabilities in the development of multi-sided platforms: the digital ecosystem strategy of Alibaba. com.Journal of the Association for Information Systems,16(4), 2. Yang, X., Sun, S. L., & Lee, R. P. (2016). Micro-innovation strategy: the case of WeChat.Asian Case Research Journal,20(02), 401-427. Zhang, Q., & Wang, Y. (2018). Struggling towards virtuous coevolution: institutional and strategic works of Alibaba in building the Taobao e-commerce ecosystem.Asian Business & Management,17(3), 208-242.