Alibaba Group plan 2022-2030

By

José Luis Sanchez

Juan Felipe Villamil

Farid Orozco

Miguel Martinez

International business

EICEA

Juan Sebastian Bentancourt

May-18-2022

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Summary

Our research project for the class of international business is about to take a recognize company

and located in a country that does not have too much presence or simply has not yet arrived and

them apply all the themes we have been seen during the semester such as the culture, FDI apply

some variables we have seen in class, the market research and development and so other themes.

For this case, our group did the research project for the Chinese company Alibaba. That is why,

during the document you will know a little bit from the company of Alibaba how the idea for its

creation made about and more of the company background.

Then you will find the analysis of at least 5 countries we consider that Alibaba can enter and have

success, from the countries we choose we have Mexico, Brazil, Chile, Senegal, and South Africa.

For each country, we must make an extensive research analysis that consist on identify which

variables fits better to our company and then apply those variables to the countries we’ve chosen,

then we have to make a PEST analysis to be more secure which country are well positioned to

enter. After all this analysis we decided to choose Chile because we consider it is the best option

to deliver our product to that certain customers. For this, we wanted to make an alliance with a

Chilean Company that help us to succeed in the country and help us to enlarge to other countries

in the region.

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 Company background

Alibaba started on the trip that Jack Ma (The creator of Alibaba) made to the US, more

specifically to Seattle, in 1995 to make a business delegation and act as an interpreter.

Meanwhile, on this visit, Jack Ma had the opportunity to interact with the Internet and was

fascinated by the seemingly endless possibilities that the Internet can offer. But the problem was

that he saw that the search engines did not seem to return any results related to China. So, Jack

came up with the idea of setting up an online Chinese index business called China Pages when he

returned to China, but this venture did not grow and quickly failed.

Still, Jack does not give up because he starts to see the growth of the e-commerce market, so

he decides to make another attempt and create an online business in 1999. That year, he founded

Alibaba with a group of 18 partners, which was created as a communication tool designed to

connect businesses around the world. Over time, Alibaba evolved into a full-fledged online

marketplace that connects businesses with consumers.

In the beginning, Ma and his group put all their efforts into making Alibaba successful. For

example, to maintain financial stability, they had to make use of different membership programs,

and in return receive special benefits. However, although membership helped Alibaba, it also

generates a limited revenue stream that was not enough to sustain the website. As a result,

Alibaba found itself on the edge of the abyss, but with another series of good decisions such as

creating a new membership called China Trust Pass, Alibaba found success that made the

company have a positive balance sheet for the first time earning different profits in that year.

Thanks to the great opportunity that the global connection gave Alibaba to grow as one of the

biggest merchants in the digital world, it saw a great potential it had to start developing its own
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technological infrastructure with Alibaba cloud or Ali cloud, which was developed as a

subsidiary of this giant.

Alibaba cloud was founded in 2009 by the Alibaba group, offering digital services to

companies around the world, from cloud storage, software development, cyber security and so

on. Since 2019 Ali cloud has established itself as the leading provider of computing services in

China according to the International Data Corporation 2019 (IDC), the leading company to offer

cloud services in the Asia Pacific region with 19.6% market share according to Gartner 2020, and

3rd worldwide especially in those emerging markets according to Garnet 2020.

The services that Ali cloud can offer to its customers are segmented by the needs they want to

satisfy, in a macro way Alibaba cloud offers services for digital transformation, in matters of web

content creation, SMS and emails, cloud business, enterprise cyber security, focused services for

startups, and corporate services, in this way the Alibaba Cloud can offer more than 100

possibilities for its customers to find a solution to their digital problems.

Only with its cloud service Alibaba Cloud has more than 3 million customers from more than

200 countries around the world, which have trusted the company to store their data, data that by

2019 represented about 970 Peta bits in information. It is because of the above that Alibaba

Cloud has a large data center infrastructure spread all over the world as can be seen in Annex 1.

These data centers are strategically located to support the main regions in which the Alibaba

Cloud operates, in order to provide a decongestion to the internet networks so that users can have

the information they request at the time they need it without causing delays in the process, in

addition to providing reliable technical support at hand for its millions of customers.

One of them service combo for the Startups

One of the categories that Ali Cloud has for use digital services is aimed at the world of

startups, these services revolve around the creation of web content, data storage in the cloud,
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security, and training programs for the understanding of these, thanks to this the ultimate goal

that Alibaba sells to its consumers is, in other words, the guidance and support to operate in the

digital world thus reducing the control to companies to reduce the risk to make it a controllable

aspect.

Interesting opportunity

Graphic 1.1

The is an INDXX that summarizes the digital cloud accessibility information that has

been developed in the world, this index measures each company in terms of how much of the

total market it has in its possession within the storage of data since 2013.

It is very important to be able to see the increase that the use of virtual storage has had in

recent years, especially in the 2020 period, since this date marked a before and after to the use of

the network since the events occurred in this period achieved that more people access to the

understanding of the use of data within the web.

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SWOT ANALYSIS of Ali cloud

Strengths

Alibaba can provide many features with its clouds to guarantee broad data security to the

consumers.

The services that Alibaba Cloud offers to its consumers are API access points with HTTPS

encryption enabled, this allows the customers to use access keys to call the Alibaba Cloud

Service API in a secure way. Alibaba also permits the encryption of a few products of its own

storage and database such as Cloud Disk, OSS, and RDS.

Alibaba put all its effort into offering good service management and business manager developer

that focus on following up the costs and dealing with some billing inquiries.

For SME customers, Alibaba provides an online blinding center to help check their costs and

invoices.

All these features that Alibaba offers are designed to help their customers to optimize the

implementation of the cloud and provide help in some issues like updates and reconstruction to

guarantee to obtain an optimal value of any inversion on Alibaba Cloud.

Weaknesses

The onboarding capabilities of Alibaba usually require some additional cost to stablish a leased

line that speeds up the migration, something that the competitors don’t charge for. In addition,

Alibaba doesn’t have its own offboarding facilities, instead of the trusts a clod supplier to prove

onboarding capabilities. Alibaba needs to focus all its efforts to make the onboarding and

offboarding processes more cost-effective and seamless for its customers.

Opportunities
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One of the biggest opportunities that we as a group saw that Alibaba Cloud can take advantage,

of is that Alibaba can grow its market share outside China and Asia because Alibaba is one of

those companies that are well positioned to enhance a major global player and rival with the

principal suppliers that are leading the cloud service in the world. However, to achieve this,

Alibaba must be sure that they offer the same products in each geography that they play to

enlarge its market share outside the base of Southeast Asia. Alibaba can take advantage to

enlarge its service in emerging regions where is not common to use Cloud services such as in

Latin America which is a region that in recent years has been considering adopting some cloud

models, especially in countries like Mexico or Brazil.

Threats

A possible threat that Alibaba must deal with could be encountering reluctance of some

companies, because by being a global company headquartered in China, Alibaba may encounter

some level of distrust to take up its services. Alibaba must work harder to prove to other

companies be sure that its data center, continue to be expanding outside southeastern Asia, and

becoming less associated with this region will help to achieve this. (Illsley, 2020)

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 Countries background

In the part of the background of the countries, we want to observe the different aspects

based on how technological each country is and other variables that can impact to observe which

is the most suitable country to carry out our project. We will observe five different variables, The

Doing business index, Market potential Index, Internet speed, Global Innovation Index, Inclusive

Internet

Brazil

Brazil is a market to watch, Brazil shines as a bright spot for investment within Latin

America. Relative civil stability, combined with its high level of digital commerce purchases

compared to other markets in the region, makes it a promising market to watch. Brazil's digital

purchase landscape is fairly diversified across industries, but e-commerce sales of physical

products present a particularly positive outlook. In 2020, physical products accounted for the

largest share of digital purchases in Brazil, Growing options for secure digital payments and

investment in omnichannel operations will continue to power sales over the next five years

Digital wallets, such as Mercado Pago and Pic Pay, continue to gain popularity, giving

consumers more confidence and convenience in their digital transactions. Omnichannel strategies

from leading retailers, including Magazine Luiza, Via Varejo, and Los Americana’s, offering

services such as click and collect and ship from store, have also combined to drive sales of a wide

range of products but particularly durable goods through the internet. Brazilian consumers have

high levels of social media engagement as well, making Brazil a market to watch for early growth

in shopping through social media platforms.

As we can see Brazil has a score of 59.1 out of 100 according to the World Bank and is

ranked 124th in the world according to Doing Business. This means that Brazil is not a very

comfortable country to create a company and in general, its procedures are slow and tend to take
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a long time, so it can be a negative aspect even if in the future it represents the largest economy in

Latin America.

Brazil, the region's largest economy, is ranked 66th in the world this year. Among the most

outstanding variables are an investment in R&D and international companies investing heavily in

this area, as well as the quality of scientific publications and universities. It is also the only

country in the region with science and technology poles among the top 100 in the world.

Senegal

Doing business: this variant measures the different steps in order to create a new business for

people in each country and how difficult or easy it can be.

The score starts as 0 meaning creating a business is difficult and hard to a 100 that makes it

easier for people to have business in their countries.

Senegal improved the score from 89,9 in 2020 to a 91,2 in 2021.

Global innovation index: this annual ranking shows the capacity and improvements of a

country over time in innovation capabilities.

This score goes from 0 to 100

Senegal’s score is at 23,3 in 2021.

Internet speed index: this ranking is based on the median download speed of every country

internet; it calculates how fast internet goes in all the countries ranked and compares to each

other.

These scores are updated to 2022

Senegal’s download score is 21,44

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 South Africa

Doing business: South Africa started at 81,2 in 2020 and it didn’t improve to an 81,2 in 2021

This means that for Senegal it got easier to create a business but in South Africa, it stayed the

same for people.

Global innovation index: South Africa’s score is at 32,7 in 2021

The two countries are behind most countries in innovation capabilities.

Internet speed index: South Africa’s download score is 33,62

For download speed, both countries are under the median globally meaning the internet is

slow.

Chile

When asked about investment priorities, the areas where hiring will increase are

Technology and Information Technology (39.7%), Operations (34.1%), and Sales Services

(15.7%), where Chilean companies will focus on acquiring state-of-the-art technology.

Chile ranks 43rd/44th in innovation and technological capacity among 148 countries. As a

reference, it ranks 38th in higher education.

According to these data, Chile has a leadership level in Latin America in relative

scientific-technological productivity but is lower than Asian and European countries of medium

development.

Chile maintains its position in terms of institutional variables and registers an

improvement in variables related to education, in addition to better results in the area of patents,

utility models, and the creation of applications for cell phones.

México

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 Mexico overview. With a population of almost 130 million, a rich cultural history and

diversity, and abundant natural resources, Mexico is among the 15 largest economies in the world

and the second-largest economy in Latin America.

The authorities have implemented a sequenced and targeted policy response to mitigate the

impact of the crisis and support economic recovery. Aside from the health response, the

authorities have launched a set of monetary, financial, fiscal, economic and social measures to

mitigate the impact of the crisis.

On the monetary-financial sector side, the response was geared to enable liquidity in the

financial system and support to SMEs. The Central Bank had a quick response with a number of

instruments that included lowering the policy rate, establishing a swap-line with the U.S. Federal

Reserve, and enabling more liquidity in the system through lower reserve requirements and lower

rates to access its liquidity facility; and more recently through the establishment of a number

additional credit facilities. In order to support MSMEs and individuals who face difficulties in

paying their existing loans during the COVID-19 crisis, the Mexican Government (through the

banking regulator), implemented a temporary and time-bound measure to defer loan principle and

interest payments for up to 6 months. The temporary special accounting criteria applies to

consumer, corporate and mortgage loans that were current in their payments as of February 28th,

2020. Financial institutions will continue to classify the loans as current for up to six months

even without payment and will not report the payment deferral as late payment to the credit

reporting systems.

Mexico The Human Capital Index (HCI) database provides data at the country level for each

of the components of the Human Capital Index as well as for the overall index, disaggregated by

gender.

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 Solid forecasts rise in internet use: The percentage of the population using the internet is

expected to increase from 75.8% in 2021 to 86.5% in 2026. This will enable technology players

to make further inroads into the Mexican market, particularly by capitalizing on rising social

media use in the country.

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Variable description

General variable

1. . Doing Business

Doing Business is an indicator that provides quantitative measures such as the regulations of

the opening of a new company, an employee of workers, construction permits, property

registration, or contract enforcement, among others. In other words, the index tries to organize

the economies in the world in order of the facilities that a country presents in terms of their

regulatory environment to start and operate a business. This indicator was developed annually

and measures the faculties or facilities for doing business in about 190 countries. (The World

Bank, 2022)

2. Market potential Index

The market potential index focuses on the market potential of the largest economies. It should

be clarified that this index, firstly is very useful for the U.S companies that are planning to

expand their markets internationally, that’s one of the reasons why the United States does not

appear in this index. This index has eight dimensions that represent the market potential of any

country on a scale that goes from 1 to 100. Also, the dimensions are measured using various

indicators.

3. Internet Speed Index

As the name suggests, this index allows us to see different aspects of the internet, especially

data about mid performance, it also compares the internet speed data around the world monthly,

and it is important to say that this index collects their information from test taken by thousands of

people that are using the speed test every month. (SPEEDTEST, 2022)

For our case, Alibaba by being a company focus mainly on the digital world, this index can

help us to see how efficiency the internet is on the countries selected previously, this will clarify
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to us which country selected can fits better and have much better success because of the quality

of the performance of the internet in that specific country.

specific Variables

4. Global Innovation Index (GII)

Ali cloud is very committed to offering companies the connection with the digital world trying

to be a tool that facilitates and collaborates with this process, focusing on a business market that

today is trying to be a digital native in the world, in other words, the company has been able to

see the potential that is arising at the enterprise level on the digital transformation for all types of

businesses. It is for this reason that a factor to be considered by the company is the development

of its potential customers in terms of innovation because most of the offer that Ali cloud currently

offers is for those companies that are in a stage of technological innovation and creation of

content in this new technological world.

The Global Innovation Index (GII) focuses mainly on the recent tendencies in terms of global

innovation. The index classifies the performance of economic innovation in the whole world.

Also, the index highlights the strengths and weaknesses of innovation and the deficiencies in

innovation metrics. The GII has 80 indicators that help to see measures such as the level of

education, infrastructure, political environment, or even the knowledge creation of each

economy. and its classification ranges from 0 to 100, with percentages close to 0 being low

performance, and percentages close to 100 being better performance. (WIPO, 2021)

5. Inclusive internet

Access to try is of great importance for the Alibaba Group since all its activities happen

within the digital world, this access is essential not only for the operation of the group's business

activities, but it is also to create a real connection you have with customers. Ali cloud part of the

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Alibaba Group is a purely digital native company, as its cloud storage services require access to

an internet source by the company and its customers.

For this reason, The Economist's global internet inclusion index is of great importance, since it

analyzes 120 countries in categories such as availability, analyzing and examining the extent of

the network infrastructure required to access the internet and its levels of use, affordability, which

collects information on the cost of internet access, relevance, which focuses on examining the

existence and content of local language within the network, and finally, readiness, which

evaluates the level of each culture's use of the network. (The Economist, n.d)

Table 1,2

Countries performance comparison

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 PEST analysis

 Brazil

Political:

The Federative Republic of Brazil is currently governed by President Jair Bolsonaro, who is

currently serving the 2019-2022 presidential term which has been implementing in the Latin

American nation a free-market program, resulting in the country having progress in terms of

improvement in categories such as labor freedom, economic freedom, and judicial efficiency.

However, corrosion problems affecting the country, and the current 2022 presidential elections

make the country's stability a bit shaky, according to Passport 2022 Brazil currently has one of

the unsustainable public debts in the region being 90.3% of the average of 69.8%.

Economical:

In economic terms, Brazil (Pasport,2022) has managed to increase its exports by 34.2%

thanks to the increase in the country's natural resource extraction, which has generated an

increase of 1.5% of its gross domestic product (GDP) for the Latin American nation; however,

this does not put it on a par with its regional rivals, since the average for the region has been

2.3%. In addition to this, Brazil, like other countries globally, is currently going through a period

of high inflation, due to the issues raised in previous years and the current polarized election year,

which has risen by 8.3% compared to the period of 2021, which was 3.2%.

In addition to the above, it is worth noting that FDI in Brazil has suffered a sharp drop of

3.5% with respect to the previous year due to the remnants left by the Covid-19 crisis, most of the

industries in Brazil such as automotive, transportation, financial services, and hydrocarbons.

Social:

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 At present Brazil has the largest consumer market in Latin America, this represents a

future demographic growth of 2,7%, making the country the biggest market in America with a

population of 200 million. This represents an opportunity for businesses to start operations in the

country or expand their presence in the consumer market.

Despite the population growth in the country, it is also expected that the social class E

(the most disadvantaged social class) will remain to be dominant. As a result, it is expected that

the massive poverty rate will continue to be high in rural zones. Finally, it's important to know

that Brazil has the fifth-highest GINI index in the world, this suggests that the inequality in the

country will continue.

Technological:

Brazil wants to improve its technological advancements to increase its digital inclusion

because Brazilian people are highly interested in going online to do things such as have

entertainment in a streaming way, place food service orders, shop online, and order multiple

kinds of services. But, like Brazil has a high inequality, this interest in technology only can be

appreciated in urban areas because of the underserved high-speed internet in many parts of the

country. However, the rise of technology in the country makes Brazil a tourist destination.

(Analysis & Environment Brazil, 2022)

 Mexico

Political:

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 Some of the few advantages that Mexico has, in terms of politics is that the country has

relatively solid government finance, this means that the government spending the country is one

of Mexico’s best-performing pillars in terms of the index of economic freedom in the recent year.

Although Mexico also has some important disadvantages in terms of politics, one of those

is property rights, even though the property rights are protected, it is true that registering property

is a complex procedure. Another issue is corruption, that in recent years Mexico remained

relatively stable, but is in 124th out of 180th countries. This means that corruption remains a

significant problem in the country, and the government has done little to combat graft and key

principle cases of corruption that in some cases involve persons near the government.

Economical:

In terms of the economy, Mexico is recovering strongly in the best way from the recession

caused by COVID 19, causing the annual real GDP of Mexico to increase a 5% in 2021, also

during the year, the economic performance of Mexico was supported by the enhancement of the

domestic demand.

On the other hand, it is said that Mexico has relatively low FDI intensity, even so, Mexico

is one of the principal recipients of FDI in the world, because they have many attractions for

investors, such as the proximity between the United States, the labor force and a diversified

economic base. But it is said that the FDI intensity is lower than the regional average located at

2.8% of GDP.

Social:

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 Mexico was one of the biggest Latin American consumer markets in US dollar terms in

the recent year. Additionally, it is expected that Mexico continues to be one of the biggest

countries in Latin America, the thing a good omen for its consumer market.

Like many countries in Latin, America Mexico has a high-income inequality exacerbating

poverty, this is because the inequality of income based on the GINI Index in Mexico is extremely

high and it will not change in the short-term, despite the improvements in the government's social

policy.

Technological:

In terms of technology, in recent years Mexico have a solid increase in the percentage of

the population using the internet by 70% and it is expected that the population increased by

approximately 10% in the next. This is an advantage that allows technology to do more

incursions into the Mexican market, taking advantage of the increasing use of social media in the

country. Also, another advantage is the introduction of 5G with 18 cities having the opportunity

to access 5G. (Analysis & Environment Mexico, 2022)

 Chile

Political:

An opportunity in terms of the policy is that Chile has the best economic and business

freedom rankings in Latin America, such as Doing business, index economic freedom, or global

competitiveness index. Also, aside from Covid-19 the positive progression that Chile had with

the GDP, is a good signal of the economic freedom that the country enjoys and consequently adds

a favorable business environment.

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 On the other hand, an important challenge that Chile faced in recent years is the protests

that had happened, these protests apparently occurred because of the economic inequality

witnessed, caused difficulties in the political environment of the country, and affect negatively

the commercial operations.

Economical:

In terms of the economy, Chile’s FDI remains to be solid even before when the

government introduces measures to contain the spread of the virus, the FDI entries reached new

highs. The increase was due to the improved confidence of the investors, with a strong financial

market and good economic growth.

Social:

An advantage that Chile has, is a well-educated skilled workforce thanks that the country

was ranked second in the CGI, offering a well-educated workforce with approximately 15 years

of higher education Chile is located among the highest in the region, making that find qualificator

employees be easier.

Even though, that Chile ranked in the middle third in the CGI, it also demonstrated a lack

of flexibility. The high redundancy cost and low intern mobility labor were the principal pillar

force obstacles in the labor market. This is likely to have negative effects on the benefits of a

company, breaking investments, because funds are channeled to labor costs.

Technological:

One the near future, Chile is expected to increase its mobile subscribers. For this reason,

Chile is forecast to rise approximately 30% more or less, this will provide more opportunities not

only for hander makers like Samsung or Apple, it also be an opportunity for companies engaged

in selling their products or services as in the case of Alibaba. The increase in mobile users also

represents a rise in governance initiatives.

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 A challenge in terms of technology Chile must deal with is the lower adoption of ICT

development relative to developed peers. Chile was ranked at 56th position out of 141 countries,

this represents a competitive disadvantage among developed countries. Inside this pillar, things

such as broadband internet subscriptions ranked relatively poorly, this has an important impact on

digitalization of the companies that continues to be subdued. (Analysis & Environment Chile,

2021)

Entry strategy- Hello Chile

Why Chile

Chile is one of the nations with the best indicators in the Latin American region, thanks to this it

has shown to be on the way to digital renewal, it has even shown to compete with European

powers in terms of connectivity, and it has even shown to be one of the nations with the best

investment reception even after what happened with the COVID 19.

Opportunity in regional integration in Chile

Chile is a member of the Pacific Alliance, which has brought together the efforts of Chile,

Mexico, Colombia, and Peru since 2011, making a regional economic integration, with a view to

being able in the future to form an area where sustainable development is promoted,

technological integration and future free movement of goods, capital, people and services, in

addition to being able to be that regional integration of America with which the Pacific

economies can interact.

The framework of the digital route that this alliance has been proposing for regional growth

has been established in a 10-year plan, which covers the loss between 2020 and 2030, where the

nations belonging to this group have committed to abide by it in order to generate greater

progress in terms of digital integration, in other words for the creation of a digital framework,
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which will be in three important areas which are found in the roadmap for the regional digital

market 2020, The first is improving access to connectivity, where the objective of this pillar is to

improve access to digital services and products, the second is to create an enabling environment

for the promotion of the exchange of digital goods and services in order to promote consumer

confidence in the online market, and the last is the development of a digital economy that

promotes growth, productivity, and employment.

It is important to highlight the great opportunity that Ali Cloud has to not only contribute to

the regional growth of the region but to be able to have a presence in more countries in the

Pacific region since it would not only be able to be in Chile because this group allows the

company to also have a presence in 3 more countries in the region, which like Chile are

experiencing a period of growth in the digital world so new groups of interest for the company

are created.

If we can see it from the perspective of each of these three areas with which the Alliance tries

to create and promote its legal framework, it can be observed that the services offered by Ali

cloud are aligned with these.

Taking as a first example we have in the first place that these countries are committing to

improving connectivity in order to promote the greater deployment of high-speed networks, and

deal with the problem of roaming, resulting in each region can be with more interconnected

information, in other words, these nations of the alliance are creating the routes where people

want to store their valuable information, the route where all potential customers Ali cloud

communicate to acquire the services of the company.

In addition, within this framework that the alliance is building is also the creation of a

digital space where goods and services can be exchanged in a fast, simple and secure way, so

each of these countries has begun to focus on the protection of data by promoting cybersecurity.
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The mission that Ali cloud offers is aligned with the growing needs of the region, especially can

be emphasized at this point, since another of the main functions that can be offered by the

company is to provide a hand in terms of cyber security.

Finally, the economic integration that the Pacific Alliance proposes is with the purpose of

creating new job opportunities for the region, making that through digital adoption the regional

economies can live a positive change in their lifestyle because they try to reach the promise of

greater generation of employability, objectives that for the positioning of the company is

fundamental because with this purpose it generates great opportunities to take advantage of a

workforce, which can collaborate with the insertion of Ali Cloud in the region.

How?

In order to enter Chile and use it as a bridge to have a presence in Latin America, it is of great

importance to understand the behavior of its citizens, as well as the behaviors they have with

companies, in order to really generate a lasting bond with the country and subsequently with the

region.

It is of utmost importance to emphasize that Ali cloud does not intend to be a company that

destroys the regional effort to move forward, and for this reason, if we do not want to affect the

development of the regions and want to help the growth of emerging economies, the most

effective way we can choose is to make a Joint Venture, but it is important to mention the

characteristics to be taken into account in order to select a regional partner.

As mentioned above, it is important that our partner can be seen as a symbol of the country's

progress, as it is of utmost importance to provide a pleasant impression to end consumers, it must

also provide the service of connection to the network (at this point it is worth mentioning that Ali

cloud in a digital cloud which gives the user a guide into the digital world, but the work of

connection must be performed by another entity)

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Entel Chile

Entel was created in 1964 in response to the Chilean government's need for a company that

would improve the quality of telecommunications in the country and builds an interurban

network to replace the previous one, which had been severely damaged by an earthquake. The

company decided to privatize in 1986 and was terminated in 1992. This company belongs to

three different economic groups in Chile: Matte Group, Hurtado Vicuña Group, and Fernández

León Group. The company participates in long-distance, mobile telephony, Internet and data

transmission, and fixed telephone businesses. It also participates in the long-distance business in

the United States and Central America through its America Tel subsidiaries, providing services to

both individuals and companies.

It was one of the first Internet access operators in the country to install an Internet traffic

exchange point to connect its users' traffic to other operators and neutral points. As a leading

brand, ENTEL has driven the telecommunications business. Historically, it has successfully

developed new products and services, generating a high level of competition and development in

the category. This is how it has driven the explosive growth of the Multicarrier, Internet, and

Mobile Telephony business, through its products Código 123, ENTEL Internet, and ENTEL PCS.

In each of these categories, ENTEL is today a leader.

ENTEL's leadership has led consumers to spontaneously give the brand all the attributes

associated with the category: leadership, technological innovation, fair price, and credibility in

every way.

Doing the joint venture with Entel can give the company the opportunity to access the Chilean

market in a safe way, because this being a company purely from this country has and is able to

teach the best way to capture the attention of the Chilean public, besides being able to get plans

together, since we see that the services offered by Entel complement the services we can offer.
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 Marketing and R&D Strategy

Product / service:

The product/service of Alibaba we decided to introduce in Chile, is the Ali cloud service. We

want to offer this product focus on companies bringing security data, data storage and other cloud

computing services the cloud can offer.

The added value Ali Cloud can offer to the companies in Chile is the many solutions that this

cloud has depends on the type of customer such as. In this case, for companies Alibaba can offer

the analysis data from devices that provides a high performance to facilitate the control of smart

hardware data in real-time, also provides you detailed analysis that allows the company extract

insights for your business through various algorithms. Another important solution that Alibaba

can bring to their customers is the possibility to use the Iot solutions (Internet of things) that are

going to make easier to formulate solutions to certain kind of problems with fully data-driven and

highly cloud computing solutions.

Price:

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 In local currency: $ 1 dollar = $ 870 Peso Chileno

For pricing, we decided to search on internet the different prices of the different type of

services we wanted to offer in China, and then take the prices and convert them to Chilean pesos.

The problem is that those prices aren’t competitive among competitors, that is why we decided to

take an advantage of the alliance we pretend to make with ENTEL and offer a discount to our

consumers that are going to take the service with ENTEL. We pretend to offer a 90% discount

that allows us to be more competitive with the competitors. But also if the person is not a

customer of ENTEL, we also provide certain discounts for some of our products, This is not only
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to attract ENTEL customers, but also to attract customers who do not use it and thus attract more

customers to gradually become more competitive in the country.

Place:

In the part of place, we as a group instead of having a single place of distribution such as a

wholesaler or a simple store, we decided to select a “macro-place” that offers technological

advantages that we can take advantage in a future, that’s why Santiago de Chile is the best option,

this because by being the capital of Chile it is easier to find a well infrastructure to put the Ali

Cloud servers and procure that they work in the right way to be sure that it will work not only in

Santiago but also in other cities of Chile and in a future arrive to more countries in the region

through the pacific alliance in which is located Peru, Colombia and Mexico countries with good

technological advances on the last years.

Promotion:

On the promotion part, as we are going to make an alliance with ENTEL this permit us to use

the push strategy, this because this strategy permits to emphasize in personal selling, in our case

we pretend to enter to Chile by offering our service to the companies. But in a future if we have

well received by the consumers, we also want to implement the push strategy that emphasizes in

the mass media advertising, this strategy will help us to reach more customers apart from

companies, in this case SMEs or developers that also the cloud helps them to provide different

solutions to their problems.

Other way to implement the communication strategy is by implementing sales promotion to

our customers and the prices we talked about in the price section of the marketing mix is a good

example, because we are trying to persuade many customers not only to try the alliance, we have

with ENTEL, but also try the services like the use of IoT solutions helping companies to insights
27
for their business, or the analysis of the data that provides a high performance to the companies to

facilitate the control of your business and have more efficiency on the production of the

company. All this services we wanted to offer in the country (Chile) even if you aren’t a

consumer of ENTEL.

Finally, as another strategy of promotion is to provide to the customers some courses that

allow them to familiarize with the cloud, and don’t have many issues now of paying and using

the platform.

Opportunities and challenges:

Opportunity:

- Generate a new industry in a country where there are very few competitors in this sector:

In this measure we can see that the entire region is trying to take a step toward a digital world,

so the support they will need will be of great help, in the framework of this we can see that within

what is Latin America the monopoly of the Cloud is managed by North American companies,

which are mostly positioned from the United States, or Brazil so it is a market in which direction

the cloud that we are offering to the region would enter to compete.

Furthermore, observing the commitment with which the Pacific Alliance wants to assume the

new digital era and Chile is one of its members, we can be certain that the construction of mutual

growth between the region and the positioning of the company in this given the limitation of

being only in Chile is reduced, so the desire to build a data center that can handle all the

information of the region can take more strength.

- Chile is a country in technological growth, we can take advantage of this to generate more

services or products
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 As we could observe within the framework of the research, the references of Chile in terms of

regional accessibility to the network shields the country from future requests for more services

that Ali Cloud may have on offer, it should be noted that Chile within the region is known as one

of the emerging economies with greater forecasts for the future, so our contribution to the long

term can guarantee the confidence of the population, especially when we try to enter hand in hand

with a regional partner which is aware of everything about the connectivity of the country and

surrounding regions.

Really to a long period and counting on developing good friendships to create strong lasting

bonds with the passage of time both AlCloud and Entel can consider the idea of being able to

take projects outside Chile ahead, something that seeing how the current situation of the company

and its positioning in the neighboring country of Peru after having a success in Chile, this

Andean country could be the next aspiration.

Challenge:

An important challenge we as a group perceive despite the possible strong competence that is

in Chile. Is the possible customer rejection of our services, because Alibaba for being a company

that was founded in China, probably will be a rejection by the customers to the services we offer,

cause in this part of the world people usually think that all the brands, products or services that

are produced on China had low quality or are simple copies of recognized brands such as Apple,

Google or Microsoft. Brands like Huawei sometimes suffer from this rejection, especially from

high social classes that catalog their products as a simple copy of the strongest competitor. That is

why we have the chance to demonstrate to Chilean customers that the products or in this case

services that Alibaba offers have the same or even better quality of the strongest competitors in

Chile, that’s why communication strategies such as pull strategy and sales promotions would help

us to reach more customers and little by little gain their trust.

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 Evaluation and conclusions:

- As a recommendation, we suggest planning a follow-up of the process to identify possible

problems until we are sure that the service is stabilized:

The Latin American region is a new market area to be explored by the company in terms of the

cloud, it is important that in order to develop a viable long-term project we can understand the

behavior of internal and external customers, since we want to generate regional presence and

therefore the development that the people who are in charge in Chile have the ability and

determination to be able to couple the culture of this country and the organizational culture

offered in Ali Cloud to give a sustainable development and a rapprochement of our business

model with the Andean region.

Alibaba must know the main characteristics of the countries to which it is going to offer

its services. Understanding what kind of culture, the country is, its business culture, and what

benefits the country can offer to the company.

- In a conclusion, Alibaba has many opportunities for market share outside China because is

well-positioned to enhance a major global player.

30
 Seeing that in principle the Chinese growth has been very strongly in Southeast

Asia and Chile together with China share an access road between these two nations we

can see that through the company it is possible and viable to generate greater trade links

between these two regions, where the two may have the same objective and thus to

generate a kind of new silk road technology scale, which can generate that Latin America

and the People's Republic of China generate new opportunities.

Along with the above mentioned, we can see that our influence in Chile and its

participation in the Pacific Alliance can open greater opportunities for the Latin region, of

course, referring to having a greater presence and participation. In the digital activities of

these, every day that passes are becoming a greater need on a regional scale

- See if it is possible to build a data center In Chile, to see if it is possible to play that in the

future it is possible to build a data center.

Finally, the desire to establish the company in Chile is to be able to have a data center that can

handle the entire Latin American region, that is to say, to make a high financial investment to

be able to set aside the land, compare the materials, the design of the building and everything

else that it may entail, however, in the first instance we do not see it as viable, However, in the

first instance we do not see it as viable, so we are just positioning ourselves within the region,

so in order to do this it is important to establish indicators with which we can establish a

balance of the feasibility of the project in the long and short term, these indicators will

measure the flow of cyber customers that are achieved, the level of acceptance of the

population with respect to the company, levels of bureaucratic obstacles that may arise and the

regional impact that is being generated. This will be proposed in order to guarantee the final

project of being able to be in the region in the long term and not as an approach without direct

connection.
31
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