Response to Classmates Discussions
kingstonman41
BUS638Week3-DiscussionForum2.docxBUS 638 Week 3 - Discussion Forum 2
Michelle Buckley
Alibaba is the largest e-commerce firm in the world which was founded by Jack Ma in 1999 in China. The company pioneered an online payment system to address the low-trust society that existed in China. Ma started out by focusing on being the best in his domestic market and became famous for it. Realizing Alibaba couldn’t compete with established e-commerce markets like eBay and Amazon, Ma found a niche for China and other underbanked emerging markets (Peng, 2017). This led to its popularity and growth. Alibaba’s initial public offering (IPO) was “the largest IPO of all time opened on the New York Stock Exchange” (NYSE, 2014, para. 1). This is quite a feat for any company, especially a privately started company from China. It deserves to be one of the most valuable companies because of the groundbreaking strategies it employed to be so successful.
Over the past several years, Ma has stepped back from leadership and now has plans to retire at the age of 54 to focus more on philanthropy and education (Yuan, 2018). From my research, he is a man of his word, donating “hundreds of thousands of coronavirus testing kits and N95 face masks to countries around the world” (Stone & Rogers, 2020, para. 1). The company that he started and is still invested in is doing well financially, with its stock price increasing year-to-date despite the world-wide pandemic (MarketWatch, 2020). I think it is in a position to compete with other online giants, in its own, unique way.
References
MarketWatch. (2020). Alibaba Group Holding Ltd. Retrieved from https://www.marketwatch.com/investing/stock/baba (Links to an external site.)
NYSE. (2014). Intercontinental exchange. NYSE. Retrieved from https://www.nyse.com/network/article/Alibaba-Lists-on-the-NYSE (Links to an external site.)
Peng, M. W. (2017). Global business (4th ed.). Retrieved from https://redshelf.com/ (Links to an external site.)
Stone, M. & Rogers, T. N. (2020, May 18). Jack Ma is resigning from SoftBank’s board. Business Insider. Retrieved from https://www.businessinsider.com/inspiring-life-story-of-alibaba-founder-jack-ma-2017-2
Yuan, L. (2018, September 7). Alibaba’s Jack Ma, China’s richest man, to retire from company he co-founded. The New York Times. Retrieved from https://www.nytimes.com/2018/09/07/technology/alibaba-jack-ma-retiring.html
David Harris
What are the characteristics of Alibaba’s growth, innovation, and financing strategies typical of successful entrepreneurial firms? What is unusual about Alibaba?
Alibaba is considered the world’s largest e-commerce site. It seems hundreds of millions of users and has more merchants and sellers than any other company. In terms of their growth Alibaba keep growing. They grew 144% from 2017-2019 to $56 billion with expectations to increase 78% to $100 billion by 2021. “Alibaba has established itself as a global innovator in what it has dubbed "new retail," the blending of digital into real-world shopping experiences with the goal of creating the best of both worlds” (fastcompany, 2020). What makes Alibaba unique is its focuses in mainly on small enterprises and individuals giving them a bigger platform to provide their services on.
Why has Alibaba become globally famous by focusing on its domestic market?
With recognition comes success. Understanding your client base and the trends that take place give Alibaba the advantage and global fame. “Alibaba is well positioned to benefit from the structural trends taking place in China: a growing middle class and the country’s shift from an investment- and export-led economy to one that is driven by domestic consumption” (Weinswig, 2017).
Sometimes the initial public offering (IPO) of widely successful firms flops (Facebook’s disappointing IPO comes to mind). Does Alibaba deserve to be one of the world’s most valuable companies?
Alibaba’s stock right now is currently selling at $297.59. Alibaba is considered an undervalued company and in comparison to Amazon, should be worth more. Amazon has 20% more free cash flow then Alibaba, which essentially shows its stock is undervalued. It should easily be doubled then what is currently at. “So, Alibaba has a 225% higher FCF margin than Amazon. Therefore, it deserves to have a much higher than double its present stock price given its higher margins” (Hake, 2020).
References:
https://www.fastcompany.com/company/alibaba (Links to an external site.)
