International Business Essay: Alibaba's Globalization in Australia

This essay delves into the realm of international business, focusing on Alibaba Group Holding Limited, a prominent e-commerce organization based in China, and its expansion into the Australian market. It begins by defining a Multinational Corporation (MNC) and the concept of globalization, setting the stage for an analysis of the opportunities and threats that Alibaba faces. The essay highlights the potential for increased sales, revenue, and competitive advantage. It also acknowledges the threats posed by competitors, political factors, social considerations, and legal complexities. Moreover, the essay examines the lessons that international business managers can learn from the interplay between home and host country dynamics, emphasizing the importance of cultural understanding, effective staffing strategies, and addressing ethical and social responsibility issues. The essay concludes by underscoring the significance of proactive management in navigating the challenges and capitalizing on the opportunities presented by globalization.

Running Head: INTERNATIONAL BUSINESS 1
Globalization: Opportunities and Threats

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Introduction
A Multinational Corporation (MNC) is an organization, which has its head office in one that is
known as home country and runs its business in some other countries, which are known as host
countries. As the term indicates that multinational corporation is a business entity, which
operates its business in more than one country. When an organization expands its business
globally, then it may have some opportunities and threats from this globalization. The main
objective of this essay is to discuss the opportunities and threats, which are developed by
globalization. The discussion will be done by looking at an MNC from developing market. The
organization, which is taken into consideration here, is Alibaba.com that is China based company
and expanded its business globally. This essay will highlight the opportunities and threats for
Alibaba.com in international market of Australia. It will analyze the differences between
developing the market in home nation or host nation. The threats to the company will be
analyzed by looking at some external and internal factors of home and host country, i.e. China
and Australia.
Company Description
Alibaba Group Holding Limited is an e-commerce organization, which is based in China.
Alibaba.com facilitates the service transactions between two different organizations. It offers
business to consumer, consumer to consumer and business to business services via its website.
Other services, which it provides, are online payment services, search engine for shopping and
cloud computing services. Allibaba Holding established its operations in the year 1999 and it
was found by Jack Ma. In the year 2017, the revenues of the company are ¥158 billion. With this
revenue, the company has become the biggest retailer in the area of e-commerce and operating
its business operations in over 200 nations (Lashinsky, 2007). This e-commerce organization has
turned into the most leading e-retailer in the world by attaining revenues and sales afar to major
competitors, like; Amazon, eBay, Wal-Mart etc.
Globalization

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Globalization is the process of growing the business and economic interdependence among
several countries. Generally, globalization is categorized into two parts, like; globalization of
production and globalization of markets. Globalization has a major impact on the business
environment with offering development to the Multinational Corporation. But the organizations,
which have been successful in other foreign countries, do not always get success in the
developing market. For an organization to be successful in emerging market, the companies
require understanding the local environment by giving time and resources (Baylis, Owens and
Smith, 2017). The organizations may have various opportunities and threats in foreign market.
Opportunities of Globalization
Globalizing the business can have a huge impact on the decision makers and process of decision
making process for developing interconnected decisions for expansion. The decision makers
have to make the decisions regarding whether the organization should expand in respective
country. This can be determined by looking at different aspects, which are mentioned below.
These are the major opportunities, which may generate in expanding the business globally.
There is a direct relationship between globalization and performance of an MNC. When an
organization expands its business in international market, it is expected that the organizations
will perform in better way in terms of decreased costs, increased sales and revenues and
enhanced competitive advantage over the competitors in new market (Beamish, 2013). In this
scenario, Alibaba.com is expanding its business in Australia country, so it also may have some
opportunities, which will be beneficial for its business operations. The company is developing its
business in the Australian regions with the vision to build a whole infrastructure that is required
to make the local businesses able to expand business internationally.
As Alibaba.com is operating its business in e-commerce industry, so it is very easy to expand its
business in other countries through its international website. Thus, the internet can be seen as an
opportunity of globalization for its business. Via internet, Alibaba is able to go across the borders
and reach its potential customers with its products and services. In addition, the decision makers
may discover the opportunities to use the human resources in international market as they work
towards the goals of profitability, which are set by the organizational top management (Bryan,
2015).

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One of the major opportunities for Alibaba is the transfer of technological knowledge and
advancement in globalization. This can lead the organization towards growth in innovative and
best techniques for e-commerce business. The organization may have the opportunities to tie up
with the national and international chains of different retail stores for introducing their products
and services to a wide customer base (Deresky, 2017).
Expansion in Australian regions will enable the company to establish better relations with the
merchants of Alibaba in the region and it will increase its emphasis on business strategy outside
China. This globalization will boost cross-border e-commerce market of China. The MNC is
investing in Australia, which demonstrates its commitment to serve the increasing number of
foreign retailers and its intention to launch more global offices in the coming future (Heshmati &
Lovic, 2012).
The online buyer penetration in Australia is the second highest in overall Asia Pacific region.
Due to low population in Australia, number of digital buyers is low in the country. The company
has its presence in the country but does not have a considerable market share (Dunning, 2014). In
the year 2014, Aliexpress of Alibaba had market share less than 1% in e-commerce industry,
while eBay had approximately 20% market share. Now, e-commerce in this country is growing
with the rapid pace and surpassing the growth of physical stores (Hill, 2008).
Thus, globalization is critical for the overall growth and development of Alibaba.com. Australia
can contribute to its growth and organization’s enhanced focus on this specific region can lead
this to comparatively higher growth. The organizational strategy for globalization will offer the
organization an opportunity to establish its image and presence outside China. By looking at
these aspects, the decision makers can the effective decisions regarding the globalization
(Jorgenson and Givens, 2014). The decision makers made decision that they will make
partnership with Woolworth organization in Australia.
Threats from Globalization
When the globalization may be considered as an opportunity for decision makers and businesses,
it can also be discussed to be a threat to all the large and small organizations. In expanding the
business in Australia, the decision makers at Alibaba.com may face some threats in making
decisions regarding globalization. One of the major threats is competition from competitors in

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the host country, i.e. Australia. The company may face the competition from Google.com,
Baidu.com, Australia Post and eBay, which is already well-established in the country and having
a significant market share. This can affect the revenues of Alibaba in foreign country (Lovvorn,
2011).
As discussed above, the population of Australia is lower than other countries, so there will fewer
users of the internet operations and online shopping. For making them aware, the organization
needs to invest in promotional and advertising activities, so that they can actively be engaged in
the online processes. Moreover, changes in the customer preferences and life style have left
Australia services chasing development of e-commerce industry and making efforts to stay with
the developing retailer markets (Pearl, 2017).
As Alibaba.com is an e-commerce business and it follows an e-business model in the industry.
Generally, the e-commerce business does not influenced by political factors, but working as an e-
commerce player, the organization need to know about the tariff laws, taxes and other political
aspects. In Australia, the online offerings of the Alibaba.com can be influenced by trade laws and
regulations of the country. If the company violates some political laws and regulations of
country, then products may not be shown on the website of the organization (Meyer and Peng,
2016). It poses a major threat on the company’s presence in the new market.
There may be some social factors, which can pose threat to Alibaba.com and its decision makers.
Alibaba is operating its business in more than 200 countries. So, the differences in culture may
impact, what the goods and services Alibaba shows to the customers. For understanding this,
there will be need of marketing research and study about the preferences, demands and tastes of
customers. There may be differences in the country tastes. So, the decision makers should
consider that there will be differences in the deal offered for Australian buyers from deals for
Chinese buyers.
Organization may face some of the ethical and social responsibility issues in globalization. In
addition, legal factors may also cause challenges for the organization. In this business expansion,
the company has to follow the laws of both the countries, i.e. China and Australia. In the e-
commerce business, some of the legal considerations include policies for use of coupon, terms of
use, cancellations policies and other information regarding buying the products at Alibaba.com.

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There may be differences in the laws and policies of both the countries, so it may work as a
threat for decisions makers. The organization needs to consider the costs of the competitors
(Pieterse, 2015). There may be chances that competitors sell the products on cheaper prices. So,
managers at Alibaba.com need to consider these aspects before expanding business in Australia.
Lessons for International Business Managers
In the entire process of globalization, the international managers may learn so many lessons
about the interplay between home and host country differences for attaining the success. The
managers have to consider some specific aspects of globalization, which can impact the growth
and presence of company in new and emerging market (Stahl and Tung, 2015).
In the home country, the managers may gain the experience in domestic markets and may have
greater understanding about the business strategies in the home country. While, operating
business in host country, the managers need to create new strategies according to the conditions
in new country market. In home country, they may work as morale builder for the employees in
home country. At Alibaba China, the employees may feel it difficult to adapt the foreign
environment, so the managers require learning about enhancing morale and motivation in the
employees, so that they can work in Australian e-commerce market effectively (Savrul, Incekara
& Sener, 2014).
In host country, the managers need to develop effective staffing strategies, so that they can
eliminate the barriers related to languages and culture. First, the managers should have better
knowledge and understanding about the laws and rules of Australia, so they can help their
subordinates to work complying the laws and regulations of foreign country.
In expanding business globally, the managers of Alibaba.com need to learn about the differences
in culture and language between host and home country. There are so many differences between
the cultural values and language of China and Australia. So, managers should conduct the
training program, so that the people can learn about the culture of foreign country (Wild, Wild
and Han, 2014).
Furthermore, the managers can learn that operating business at globalization levels, the
organization may face many social responsibility and ethical issues, which affect the business of

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an organization. A Chinese organization may have different traditions and culture, which affect
the working style in Australia. These differences between traditions and values in host country
can create the issue of developing trust for organization (Stahl and Tung, 2015). Way of working
in home and host countries may cause social responsibility issues for the organization.
So, the managers of Alibaba.com should learn about eliminating these issues in order to expand
business in Australia. The organization should offer training programs to both the staff and its
management team as well. This training will be about the traditions and cultural values of host
country. It will motivate the management team and employees to develop corporate social
responsibilities in an effective way. For achieving success, the international business managers
should make rules and regulations for preventing social responsibility and ethical issues at
globalization level.
The interplay between home and host country makes it difficult to manage the business in host
country. By looking at the differences in home and host countries, the international business
managers need to strengthen their leadership and administration styles to deal with the
employees in Australia. The globalization may allow the managers to run the business in
uncertain conditions and environments, so they need to implement effective strategies to attain
the objectives of globalization and create new strategies to look at the emerging opportunities in
new markets (Totonchi & Kakamanshadi, 2011).
The globalization experience of international business managers can allow the Alibaba.com
managers to deal with the future encounters and open new business ventures. In expanding the
business, there will be diverse customer base in home and host countries, i.e. China and
Australia. For Aliababa.com, there may be differences in the taste and preferences of the
customers of both the countries. So, managers need to conduct market research before expansion
and understand the needs and expectations of customers in new foreign market. The best thing,
which the manager can learn, is open-mindedness. They should be willing to observe the
customers in Australian market and develop goods and services, specifically personalized for the
foreign customers.
By looking at all the opportunities and threats in the Australian market, the international business
managers need to learn about the making effective decisions. In the globalized scenario, the

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managers will get new perspectives and walk between effectiveness and emphasis on Australian
market. International business managers have a significant role in the process of globalization.
They need to consider and learn so many things from both home and host countries as well. In
addition, they need to learn about all the external factors of Australia, which can impact the
growth of Alibaba.com in Australia. These factors are political regulations, legal factors, social
factors and economic factors (Wild, Wild and Han, 2014). Thus, in the foreign market, the
working environment must be better equipped to carry out the international perspective to the
business operations of Alibaba.com. These lessons of managers will be effective for attaining
competitive advantage and success in new market.
Conclusion
It is hereby concluded the globalization has developed the business conditions have significant
impact in all the countries. Over the decades, the e-commerce business has shifted to the
developed countries, like; Australia. For an organization, the process of globalization may be
very difficult and threatening, but the business may have some opportunities from globalization.
In the above scenario, a Chinese organization, i.e. Alibaba.com is expanding business to
Australia. In this globalization process, the company may have some opportunities and threats in
foreign market. As it is an e-commerce giant, so there are limited threats for organization.
External factors may have large impact on the business in international markets. The
organizations need to transform their rules and policies according to the new country market.
Thus, it is true that conducting business globally presents major challenges to the domestic
activities. The difficulty in operating business at international level offers the organizations
different opportunities and choices, which can be adopted by the MNCs. At the end, it is
recommended that Alibaba.com should conduct an environmental, strategic analysis and have
strong culture understanding about foreign country for taking advantage of international
opportunities.

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