COVER PAGE

Table of Contents
1.0. Introduction.....................................................................................................................2
2.0. Evaluation of growth and expansion strategy.................................................................2

2.1. Product Development..................................................................................................3

2.2. Market Development...................................................................................................4

3.0. Suitability, Feasibility, and Acceptability of market development strategy...................5

3.1. Suitability....................................................................................................................5
3.2. Acceptability................................................................................................................6
3.3. Feasibility....................................................................................................................7

4.0. Conclusion.......................................................................................................................7
5.0. References.......................................................................................................................8
1.0. Introduction

Alibaba is China’s-and by some measures, the globe’s largest online business to business
(B2B) entity. Its major websites-Taobao and Alibaba.com-have millions of users and hosts
millions of businesses and merchants (Glowik, 2017). Additionally, the firm provides internet
infrastructure and business management software that targets business across the globe. It
also offers educational services which nurture e-commerce and enterprise management
professionals. The company handles so much business when compared to other e-commerce
companies in the world. According to the Wall Street Journal (2018), the company’s online
transaction amounted to $248 billion as of 2017, more than those of Amazon and eBay
combined.

2.0. Evaluation of growth and expansion strategy

Alibaba has positioned itself as one of the world’s biggest e-commerce company. The entity
has been able to offer opportunities for small businesses which could benefit from the
advantage to stand out both internationally and nationally. For a business to grow or expand,
there are four different opportunities that an entity can adopt. The four opportunities include
market penetration, product development, market development and diversification-summarily
known as the Ansoff’s matrix (Figure 1).

Figure 1: Ansoff
Matrix (Hussain,
Khattak, Rizwan
& Latif, 2013)

The matrix allows

an entity to
determine to market
and product growth
strategies (Bocken,
Fil & Prabhu, 2016). Market penetration takes place when an organisation penetrates a
market with its existing products. Notably, the strategy starts with the already existing
customers. The approach is used in increasing sales without deviating from the initial
product-market strategies. Development of new products takes place when the firm creates
new products that cater to the needs of the same market (Gurcaylilar-Yenidogan & Aksoy,
2018).

It is important to note that product development implies the major new product developments
and not just minor alteration to existing products. The main reason that justifies the approach
entails: an exploration of new technology, safeguard the general market share, use excess
production capacity and countering of competitive entry. Usually, such a strategy elevates the
company to markets and towards customers who are currently not attended to.

When a business adopts the market development approach, it goes beyond the immediate
customers toward the attraction of new customers for the firm’s current products (Chiang,
Chen & Ho, 2016). The approach involves the sale of current products in new geographical
areas. Finally, the diversification strategy relates to the entering of new markets with new
products which as completely or partly related to the firm’s current offering.

The diversification strategy may be classified into vertical diversification, conglomerate

diversification or horizontal/concentric diversification. Vertical diversification can be
described as moving backwards or forwards in the value chain by controlling activities which
were outsourced to third parties like distributors and suppliers. Conglomerate diversification
relates to entering new markets with new products which are unrelated to a firm’s current
offerings. Finally, horizontal diversification relates to entering new markets with new
products which are somewhat related to a firm’s current product offering. Alibaba has
adopted all product development and market development strategies.

2.1. Product Development

The company has different services and products in its marketing mix. The company has
Alibaba.com, which is the globe’s biggest B2B online platform. AliExpress is also another
product which serves as an online retail store where customers can buy products that are
exported to different countries by Chinese firms. Also, the company boasts of AutoNavi,
which offers maps. It is the number one navigation service provider in China. Taobao, which
offers commission-free transactions, is one of the biggest C2C (consumer to consumer)
online shopping platform. Other products include Alipay, Alibaba Pictures, Ali health and
AliSports. The different products have enabled Alibaba to survive in their already existing
products.

2.2. Market Development

Alibaba has employed the market development strategy through the adoption of several
approaches that include:
 New geographical markets;
 New product dimensions;
 Distribution channels and
 Different prices to create new market segments

The four market development strategies have enabled Alibaba to push their existing products
to new markets.

Ansoff’s matrix is an important framework for structuring alternatives that a company has for
it to grow (Gurcaylilar-Yenidogan & Aksoy, 2018). Penetration of markets appears to the less
risky option of all the four strategies and the most popular in the firm’s daily activities. On
the other hand, diversification appears to be the riskiest because a firm has to enter a new
market with unfamiliar products.

3.0. Suitability, Feasibility, and Acceptability of market development strategy

When it narrows down to the formulation of a business strategy, the first step is the decision
on the criteria of assessing the alternatives, and the most useful technique is the consideration
of the suitability, acceptability and feasibility of each of the strategy (Redien-Collot, 2019). A
strategy should satisfy all the three criteria for it to be deemed successful (Angwin, Johnson,
Whittington, Regner & Scholes, 2015). Alibaba possesses the key competencies that enable it
to sustain its growth strategy. For instance, the firm has huge stakes in the film and television
industries. Also, the company has millions of social and commercial interactions among
customers, between merchants and consumers as well as businesses on a daily basis. Further,
the company leads in mobile and online marketplaces in the wholesale and retail services.
The core competencies facilitate the realization of both the market and product development
strategies.

3.1. Suitability

Suitability is an essential factor in the suitability, feasibility and acceptance (SFA) strategy,
model. The factor is often assessed in several diverse criteria, which is particularly essential
to the company or business such as capability suitability or expectation suitability (Popkova,
Abramov, Ermolina & Gandin, 2015). The individual classifications of suitability should then
be further classified to reflect the specific needs of a company. To adequately assess a
strategy’s suitability, the questions that need to answer include: does the business strategy
utilise the strengths of the company effectively?”, “does the strategy circumvent the
challenges that have been identified in the analysis?” and, “does the strategy lie within the
objectives of the firm?”

Alibaba’s market and product development strategies are ideal as they are all internet-based
platforms. The product development strategy maximises the strength of disruptive
technologies. All the company’s products maximise the potential of internet technology. On
the other hand, the market development strategy overcomes the challenges that are exhibited
in the e-commerce industry, such as the presence of competitors (Chereau & Meschi, 2018).
For instance, the company uses diverse distribution channels and charges different prices to
different markets. Additionally, the two strategies (market and product development) are in
line with the company’s objective of making it easy to do business from anywhere as well as
enabling enterprises to change how they operate, sell and market products. The two strategies
adopted by the company are appropriate because of the increase in consumer spending as
well as economic uptick. Product and market development allow the company to stand out in
the industry because new customers can now be captured after years of recessions and a
slowly growing industry. The two strategies will allow the company to increase its market
share.

3.2. Acceptability

The element of the strategy model relates to the evaluation of the returns, risks as well as the
reactions of the stakeholder form a certain strategy. Returns will be assessed based on the
benefits that accrue to a strategy and can be non-financial or financial, depending on the
stakeholder’s decisions. Different tools may perform the calculation of returns. Alibaba’s
strategies are acceptable since they return seen the company rank number one in China, with
a 58.2% share of the retail e-commerce sales (Blazyte, 2018).

Figure 2: Alibaba % share of retail e-commerce sales in China (Blazyte, 2018).

In terms of risks, the likelihood of a strategy to fail and the financial losses, corporate or
brand effects need to be weighed up. The market and product development strategies are
ideal because the new technologies allow the company to practice differentiated pricing
strategies in the new market. This will allow Alibaba to maintain its loyal customer base with
good services and well as lure new customers through value-oriented prepositions.

3.3. Feasibility

The feasibility element of a strategy is of the make or break part of any strategy. Whether or
not a company has the aptitude, resources as well as abilities to implement a strategy is
critical to success, thus the financial feasibility should be evaluated by analyzing and
forecasting cash-flows, undertaking break-even analyses as well as several other financial
tests (Johnson, Whittington, Scholes, Angwin, & Regnér, 2011). Questions which arise from
feasibility are how much equipment, manpower, as well as materials that a firm has and how,
has the organisation been structured to make the strategy work (Ungerer & Cayzer, 2016).
Due to the company’s size as well as position in the e-commerce industry, both in China and
internationally, the company has the potential of attracting competent human resources.
Additionally, the company’s financial resources are adequate to implement market and
product development strategies. From an internal analysis point of view, the company has a
strong free flow of cash, which enables it to acquire resources that help it expand into new
projects.

4.0. Conclusion

The e-commerce marketing strategies employed by Alibaba have made the giant successful in
a short period. Planning to be a corporation like Alibaba is easy. The company is one of the
pioneer e-trade platforms in China, it has created a strong connection between small and
medium enterprises in China and also internationally with a boundless market by offering
quality products and services at affordable prices with diverse promotions and marketing
channels.
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