Chulalongkorn University

Faculty of Commerce and Accountancy

BBA International Program

2602344 Product Operation Management

Section 51 Tuesday

COMPANY REPORT : ALIBABA GROUP

Adisorn Sribua 6043346026

asribua@gmail.com
Company Overview

Alibaba Group was founded in 1999 by 18 people led by Jack Ma, working out of Jack
Ma’s apartment in Hangzhou. Its first website is English-language Alibaba.com, a global
wholesale marketplace. Jack Ma was a firm believer that the internet and technology will catalyze
innovation and bring growth to technology in order to compete more effectively in domestic and
global economies. Ma saw a need for an internet search engine partner, he then connected with
Yahoo! Inc. co-founder Jerry Yang and established Alibaba’s Taobao Marketplace, which links
individual buyers and sellers, and Tmall.com, which connects retailers and consumers. The
company makes money from commission on sales, advertising and through membership fees and
other services.

Alibaba has a vision “to build the future infrastructure of commerce and envision that the
customers will meet, work and live at Alibaba.” The company enable both commercial and social
interactions among millions of users daily and empower the customers with the basic infrastructure
for commerce and new technology, so that they can build businesses and create value to be shared
with others. Additionally, Alibaba strive to extend the products and services to become an essential
part of the consumers’ daily life. By 2036, the company aim to have served 2 billion global
consumers, empowered 10 million profitable businesses and created 100 million jobs.

Currently, Alibaba enable businesses to transform the way they market, sell and operate
and improve their efficiencies. They provide the technology infrastructure and marketing reach to
help merchants, brands and other businesses to leverage the power of new technology to engage
with their users and customers and operate in a more efficient way. Their businesses are comprised
of core commerce, cloud computing, digital media and entertainment, and innovation initiatives.
In addition, Ant Financial, an unconsolidated related party, provides payment and financial
services to consumers and merchants on our platforms. A digital economy has developed around
our platforms and businesses that consists of consumers, merchants, brands, retailers, third-party
service providers, strategic alliance partners and other businesses.

Operation Strategy
 Alibaba has always been focusing on the dominant wholesale trading market. As
mentioned earlier, Jack Ma foresee the potential that the Internet and technologies could bring to
the economy especially in China, his heavy investment in YAHOO has certainly open the market
and boost popularity. So, we could say that Alibaba’s operation strategy is “Differentiation” due
to its uniqueness via “Innovation.” Through constantly participating in social activities, Alibaba
gradually established the brand awareness. It never stops the innovation of technology to improve
the experience of online shopping, such as communication between sellers and buyers, quality
control, and unique brand promotions. Alibaba also led the revolutions of the delivery system and
payment method which brought people better service that encourage them to shop online.

Operation Activities

Location strategy plays an important part in helping Alibaba to be “unique” from any other
competitors. Initially, Alibaba has been focusing on strengthening the its brand within the domestic
market. Alibaba’s special innovation was that they were truly building an ecosystem: a community
of organisms (businesses and consumers of many types) interacting with one another and the
environment (the online platform and the larger off-line physical elements). Their strategic
imperative was to make sure that the platform provided all the resources, or access to the resources,
that an online business would need to succeed, and hence supported the evolution of the ecosystem.
As technology become more influential in how businesses operate globally, numerous businesses
tend to move online—including established ones, such as advertising, marketing, logistics, and
finance, and emerging ones, such as affiliate marketing, product recommenders, and social media
influencers. Recently, Alibaba is extending its branches to reach into international markets as part
of its aspirations to become a global business. Alibaba has also developed a “broader globalization
strategy” in order to achieve what its main competitor, Amazon has so far been unable to do, which
is to “Create an international e-commerce marketplace” and for this reason, it has made Alibaba
different from their competitors and become the first to bring e-commerce to a more advanced
level through connecting businesses of all sizes together by acting as “a gateway to China.”

The next step of globalization will definitely raise questions concerning the quality of the
products and services. Alibaba is a form of “collective entrepreneurship” between the company
and thousands of merchants that join the network —Alibaba provides the platform, and the
merchants provide the products. This model, which relies on revenue sharing rather than listing
fees, makes it easier for additional merchants to join the network. And the larger the network, the
greater the benefits for each merchant, as it attracts a large volume of customer traffic. Ultimately,
Alibaba can achieve another unique advantage of “low cost and high efficiency,” to compete with
physical stores and further differentiate itself from its competitors.

However, often that once a product is tagged with “Made in China,” consumers’ confidence
would potentially drop substantially. As globalization opens a free flow of merchants to enter and
exit, Alibaba has involved preventive measures to deal with issue through development of a
“Quality Program and Certification,” which involves a utilization of advanced technology and
become a “Smart Business.” This tech-enabled model, in which most operational decisions are
made by machines, allows Alibaba to adapt dynamically and rapidly to changing market conditions
and customer preferences, gaining tremendous competitive advantage over traditional businesses.
To become a smart business, Alibaba must enable as many operating decisions as possible to be
made by machines fueled by live data rather than by humans supported by their own data analysis.
This way, Alibaba can manage and monitor all their merchants more efficiently and constantly
screening out those who are potential threats to the consumers. At the same time, Alibaba also acts
as a validator of legitimate products, which helps to enhance consumers’ trust on the products and
well as preserve the brand of Alibaba into a sustainable growth. Therefore, with technological
advancements, Alibaba is able to bring innovation that helps with the growth of the company and
achieve a cost advantage over their competitor creating a “differentiated standing point” in such a
competitive e-commerce industry.
References

https://hbr.org/2018/09/alibaba-and-the-future-of-business

https://www.forbes.com/sites/panosmourdoukoutas/2014/04/15/alibabas-five-
advantages/#16dd77d70a60

https://hbr.org/2018/09/alibaba-and-the-future-of-business

https://www.alibabagroup.com/en/about/overview

https://www.bloomberg.com/quicktake/alibaba

https://www.alibabagroup.com/en/about/history?year=1999