Innovation Report on Alibaba Group, Challenges and Strategies

This report provides an in-depth analysis of Alibaba Group, a leading multinational technology company specializing in e-commerce, retail, and technology. The report begins with an introduction to Alibaba, highlighting its evolution from a startup to a global leader. It examines the business case for innovation within Alibaba, emphasizing the importance of innovation for economic growth and competitive advantage. The report then delves into the leadership challenges faced by Alibaba, including changes in leadership and the need for broader perspectives. It also discusses the company's innovation challenges, such as the focus on the Chinese market and employee participation. The report proposes a framework for innovation, recommending inward ecosystem interaction and thorough integration of acquisitions. The report concludes by emphasizing the need for Alibaba to adapt to the changing business environment and maintain its focus on leadership and innovation to sustain its position in the e-commerce industry.

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INNOVATION REPORT ON ALIBABA
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Introduction
Alibaba Group Holding Limited also known as Alibaba Group and Alibaba is a Chinese
multinational technology company that specializes in e-commerce, retail and information and
technology. It was founded in April 4 in 1999 in Hangzhou, Zhejiang, China. Its headquarters are
in Yuhang District, Hangzhou (Rui, 2018). It has been 20 years since it was founded and it has
grown largely from a start company to serving people worldwide. It provides services through
web portals, electronic payment, search engines for shopping as well as cloud computing
services on three levels: consumer-to-consumer (C2C), business-to-consumer (B2C) and
business-to-business (B2B) (Maria, 2017). The online profit and the sales that the company made
had exceeded all the US retailers like Amazon and Walmart in the year 2015. It has been
expanding since and the revenues have been rising for the organisation by triple percentage
points year after year. The present report focuses on analyzing the leadership practices and
innovation practices. It also analyses the challenges faced by them. The report also provides the
recommendations that the organisation can make use of in order to tackle these organisational
challenges.
The business case for innovation
Any business organisation can thrive only when the leaders of the company are invested
in the progress of the company through acknowledging the importance of innovation. Innovation
is incredibly necessary in today’s world especially in the way an organisation works. In the 21st
century, the world has become heavily dependent upon technology and the use of internet in
almost every activity that people engage in. Innovation practices can increase the economic
growth that can provide both the organisation as well as the nation the competitive advantage

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over other companies and help maintain its sustainability (Yang, 2018). Alibaba is a group of
company that has always recognized the importance of innovation in taking the company ahead.
It has been recognized as the most innovative company as it has established itself as the global
innovator by blending the real world with the digital world in shopping experiences and makes
the best of both the worlds.
Alibaba’ mission of “making it easy to do business everywhere” is the result of the
company’s emphasis on increasing its potential in learning and enhancing its industry knowledge
as well as technical capabilities through open innovation. The company has recorded a high
market performance due to its investment in new products (Haar & Ernst, 2016). Innovation is
introducing of new ideas or products in the company that can help the organisation progress and
make a mark in the market that will eventually strengthen its position. The organisations can
bring innovation through replacing the business processes to improve the productivity, develop
new products and services to meet the demands of the consumers that keeps on changing rapidly.
If the businesses fail in bringing innovative practices to the table then the company risks losing
the market share to the competitors, losing profits and efficiency, and the worst of all, going out
of business (Lewinn, Kenney & Murmann, 2016).
However, Alibaba has been able to create the world’s biggest online shopping site by
using automation, algorithms and networks in order to serve the customers in a better way. Ming
Zeng who is the chief strategy officer of Alibaba highlights that the companies in the future
would use artificial intelligence and cloud computing services to further their business in the
market. Alibaba invests in innovations for internet technology and new business model
innovations (Jia et al., 2018). Alipay is a payment platform that has modernized the way the
Chinese customers spend. Alibaba also has a cloud initiative called AliCloud that manages the

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data as well as the cloud computation that is used along with the artificial intelligence in order to
manage the huge orders in retail. Alibaba’s innovative ecosystem integrates the e-commerce,
logistics and finance, the “iron triangle” that takes the company from and export-based economy
to a consumer-based economy (Hidalgo Naranjo, 2018). Alibaba is recognized as one of the
leading companies in technological innovation and it is because of these innovations that helps
the business organisation stay ahead in the period of technological competition and
environmental changes.
Leadership challenges in Alibaba
Leadership in any business is necessary, as without it, all other elements of business lie
dormant. The presence of resilient leaders in any organisation maximizes the productivity, attain
business goals whereas a weak leadership can hurt the productivity of the business, and risk its
hold and position in the market (Ter, Tan & Pan, 2016). Leaders who are inclined towards
making the business a successful organisation and increase its effectiveness, make use of the
resources and make the best possible decisions that are needed for the benefit of the company.
Every organisation irrespective of the size of the business has to have an effective style of
leadership to take over the challenges of the company. Alibaba though an extremely successful
company faces certain leadership challenges that has to be addressed in order to maintain its
position as the global leader in innovation.
The first major problem in the leadership of the company seems to be the change in the
leadership that arose when the Chairman of the company decided to step down and hand over the
reins of the organisation to Zhang. There was a huge responsibility on the successor of the
company to steer $460 juggernaut when the market for e-commerce had been slowing down
rapidly (Wang & Li, 2017). One of the major challenges that Zhang would have to face is to find

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new areas of growth in China’s e-commerce sector. Alibaba has been extremely successful under
the leadership of Jack Ma however, it is necessary for the organisation to include and bring in
more broad perspective in the team so that the company moves ahead and avoids being
incompetent. Even Ma’s step down as the CEO, he has much control over the organisation (Kim,
Zhang & Zhang, 2016). According to the Alibaba Partnership, the shareholders hold the power to
vote for changing the whole procedure of nominating the Board of Directors however, there has
to be a 95% approval of the shareholders. With 11% stake at the hands of Ma and Joseph Tsai,
the cofounder it is impossible for the motion to pass without their approval. Therefore, there rises
a concern of moving away from the centralized leadership of the organisation and include more
diversity. In view of this, a rational decision model can be used where the managers of the
company take decisions rationally and have all the relevant information that are needed to take
those decisions (Lieder, Hsu & Griffiths, 2014). The managers know the alternatives and
outcomes and therefore they can make rational decisions.
The second leadership challenge that the company faces is that the leaders of the
organisation are so focused on the development of the company in its origin country of China
that it has neglected its expansion in the west. Though the company has expanded in the
American and the European markets, it is not adaptive to the western culture. The people in the
west are unaware of the services that Alibaba provides like the application of Alipay, AliCloud
and Taobao, as there are differences in the culture and the language (Kim, 2018). Alibaba can
counter this problem by increasing diversity in its organisation and including more people having
intellect in management in different nations across the globe. Alibaba can build more networks
in the areas where it wants to expand.

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Innovation challenges in Alibaba
Like the leadership challenges, Alibaba also faces many innovation challenges that it
needs to focus upon so that the organisation can reap benefits from it. Alibaba has been known to
adopt various innovative practices to expand its business in the market by introducing
technologies like Alipay and AliCloud (Chen, 2017). It has laid out innovation strategies by
external source integration. For example, both Alibaba and Tencent had had negotiations with
Starbucks in relation to installment of electronic payment in the coffee shop chain. Alibaba won
the battle eventually and developed a partnership with Starbucks with Alipay, Hema a fresh
delivery platform and many more such innovative business strategies. It still faces certain
challenges that need to be addressed. Firstly, Alibaba is invested in making innovations in the
same category. The company is still focused on the Chinese consumers despite its presence in the
international market (Yazdanifard & Li, 2014). Majority of its innovations are focused on them
and this can be due to lack of fresh perspective, resistance to change and immobility in the top
management. Alibaba can thus, explore more and more in the innovative space by improving
their business models and other strategies by diversifying their market (Zhou, Chen & Li, 2018).
They can do this by countering the uncertainty in the organisation while exploring new markets
and integrate the internal and external proficiencies so that they can meet the demands of the
rapidly changing environment.
The second problem in the company related to the innovation problem seems to be the
employee’s unwillingness to contribute to the ideas to innovate (Kwak, Zhang & Yu, 2019). The
company does not have a culture of innovation within the employee. The company should
encourage its employees to take more active participation in providing innovative ideas. This can

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be done by setting up of teams and giving rewards to those employees who come with successful
ways of innovation.
A framework for innovation
In the rapidly changing times of technology, the company needs to be adept in handling
those challenges and come forth as the best so that it can stay in the competition, and consolidate
its position further in the economy. Therefore, certain recommendations can be highlighted in
those areas where the company can improve its strategies. One recommendation is to use more
inward ecosystem interaction. The company can combine internal as well as external
intelligence. As mentioned above, Alibaba lacks the participation of its employees in innovative
strategies. Alibaba should encourage its employees to think like entrepreneurs and should be
given incentives so that they can build better relationship with the customers. This would also
reduce the cost of investing in a team that is specifically kept for strategizing new innovative
ideas. Another recommendation can be to integrate the acquisitions in a more thorough way. The
company can build a horizontal organisation that focuses on sharing of responsibilities rather
than focusing on a hierarchical structure. Employees starting from the bottom level to the top
level can come together and discuss the way in which the company can move ahead. This will
empower the employees; will help in decentralization of the decision-making process and help in
boosting morale and productivity. Another way in which the company can make its mark and be
known globally is by merging with the foreign companies as it did with Starbucks. This will
increase its brand awareness and the consumers across the globe will come to know more about
the company and invest in it.

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Next steps and conclusion
Alibaba, the world’s largest Chinese e-commerce company is undoubtedly a champion in
its management and its operating styles. The philosophy of the company has always been to
serve its customers first and then concentrate on the employees and the shareholders. From the
analysis of the Alibaba’s leadership as well as innovation challenges, it can be said that the
company needs to focus on both these categories in order to stay at the top. There is a need for
the company have set a long-term goal and have a vision to move forward. Though Alibaba is
the leading company in the e-commerce business, the ever-changing business environment
makes it important for the company to keep adapting to the changes and make sustainable
strategies to achieve it. Changes in leadership brings its own challenges however, the company
needs to be more inclusive and not depend only upon its heads to take the important managerial
decisions. Lastly, instead of focusing only on the Chinese customers, the company needs to
include foreign customers so that it can expand its business worldwide and grow its business.

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