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Retail is one of the biggest industries in the world. Dating back as far as we can track human existence, humans were always willing and able to trade to benefit each other in society. With the technological breakthrough in the late 20th century, it was only a matter of time before the retail industry evolved to make buying and selling goods more efficient for everybody.
America seemed to be the first country to take advantage of the new opportunities, with Amazon and Ebay both founded in 1994 and 1995. “Jack Ma visited US in 1995, for a Government undertaking project related to the building of highways. It was then that Jack Ma was first introduced to the Internet and Computers” (Srikanth). After seeing the widespread internet success from America and other countries, he was determined to grow China’s presence on the internet. Jack Ma, aided by 17 other investors/founders, founded Alibaba Group from his apartment in Hangzhou, China, on April 14th, 1999. His goal was to reshape the retail experience from in person to online.
Alibaba accomplished this goal successfully, and put their country on the map, becoming the first company in Asia to exceed a $400 billion valuation (an achievement previously only attained by American companies). Today, Alibaba is worth more than Facebook and has more sales than Ebay and Amazon combined. They have operations in over 200 countries worldwide. They also set the record for the biggest IPO in history at the New York Stock Exchange in 2014. Their success is contributed to them constantly analyzing and evolving with their competition in the retail industry (mainly Amazon and Ebay). However, Alibaba Group didn’t merely copy their strategies, they did it their own way. They accomplished their achievements without owning any piece of their supply chain, with the main goal of empowering others through internet technologies.
Planning
By making tools available through the internet, Alibaba became the hero of small businesses. Alibaba was created to grant businesses the ability “to leverage the power of new technology to engage with their users and customers and operate in a more efficient way” (Company Overview). Its core mission is to eliminate impossible to get through barriers of entry so that business can be more conducted everywhere. A strategy of making easily accessible tools that drive online business growth available is what birthed the foundation of being “the future infrastructure of commerce” (Company Overview).
Online businesses experience growth with the help of online tools. Not every business is capable of reaching its potential audience and so these businesses turn to Alibaba. Alibaba brings together buyers and seller throughout the world to create easier and more fluid transactions through their e-commerce. Providing a platform to do business, Alibaba experiences 636 million shoppers but the real customers of Alibaba will be the online business. To ensure that their customers are satisfied with the service, Alibaba provides assistance in all corners of the industry; with finances, marketing, operations, and newer markets such as internet influencers (HBR). Companies range from large US corporations needing accessibility to the Chinese markets or local Chinese businesses that lack the resources to get their products in front of customers. With this model, Alibaba will keep attracting new clients because the internet is ever growing with more business being trafficked through the internet.
There are many companies resembling Alibaba in structure and fundamentals goals. Companies such as Amazon, eBay, and Etsy exist in the United States. These companies may be seen as competitors but with their primary markets in other continents, Alibaba holds sixty percent of the Chinese e-commerce market. Located in China, Tencent may be seen as a competitor but what separates Tencent from Alibaba is that Tencent conducts more business to customer transactions while Alibaba conducts more business to business. This type of strategy has to be implemented through thorough and knowledgeable planning. The Strategy Chief at Alibaba is Ming Zeng who has been at the company since 2006.
Organizing
Alibaba’s organizational structure consists of their Core Commerce such as the retail commerce in China, Wholesale commerce in China, and international and Cross-Border commerce. But Alibaba is also invested in other innovation initiative organizations, Mobile and Media Entertainment, Cloud computing, and other organizations such as Alipay which provides financial services. As Alibaba grew, they knew they would have to implement new forms of decision-making processes to keep up with not just competitors, but with a new generation of people. Through machine learnings technology used to leverage data in real time, they are able to understand customer preferences. A good example of this would be Ant Financial Services, which Alibaba launched in 2012. Before Ant, the average loan amount given to small businesses by large Chinese banks was around $1 million; an unnecessary amount for a business of that size. With Ant, loans smaller than $100 can be processed within minutes. When the potential borrower allows for their data to be used, Ant uses the data, and through algorithms can determine a business’ position, profit margins, it’s competition, their partner's credit ratings, etc. This allows for Ant to determine how much to lend, who to lend to and at what interest rate to lend at. This type of smart technology is not only helpful for Alibaba to cater to their customers, but it is also helpful in monitoring changes in the markets. Since Alibaba is now invested in multiple markets, it would be difficult for one person or even a group of people to monitor changes and report on them. But with technology Alibaba could notice potential changes moments before, or as soon as they are happening and act on them. This is the type of technology that gives industry leaders a competitive advantage because they are able to make that decision must faster than their competitors.
Alibaba could be considered both a Mechanistic and an Organic organization. When they first began it was very organic as it was a small group of 18 led by Jack Ma. But as the Alibaba group grew and expanded into several markets, they had to begin to take a mechanistic approach in the way they operated, but the environment for employees and the way employees are considered in decision making is organic.
Influencing/Leading
Just like most major companies or organizations, Alibaba has a board of directors for the job. For example, Vice Chairman, Director, Director and President, Director and Chief Executive Officer, etc. They also have the Executive Chairman which has operational responsibilities and is the highest position in the company. Usually, one of the main responsibilities for them is directing and coaching the CEO. They may also partake in staff meetings or other operations meetings and have the power to willingly hire or fire someone whilst the CEO cannot. Paternalistic leadership and its exceptional characters, advantages, and disservices can be simpler comprehended through the instances of real leaders. The precedents demonstrate the framework of various layers and show how the leadership can prompt extraordinary outcomes, yet additionally once in a while cause issues in maintainability. Jack Ma, one of the most extravagant men on the planet, he has utilized the paternalistic style to make one of the world's greatest organizations, Alibaba. He is also the leadership role model in Alibaba. In spite of the fact that Ma has consolidated his paternalistic style with a pinch of charming and participative leadership, the possibility of him as the 'father figure' stays solid inside the organization. He has encircled himself with a group that confides in him and would do a lot to please him. All Alibaba employees, paying little respect to their positions, can focus on dangerous products on the organization's inward communications platform "Aliway," while the product development group may safeguard themselves. Employees can likewise debate unsuitable work assessment results on Aliway by requesting mainstream input, a measure that managers usually resort to. Basically, even someone with the lowest position in Alibaba can still give his/her own input and managers will listen if they are fond of the idea. Alibaba also has virtual credits called “sesame seeds” that rewards credits to employees if they make a smart comment for the company. It also deducts credits from employees for making unpopular comments.
Controlling
Alibaba is one of China’s largest online shopping outlets because of their ability to get small businesses to sell their products through their website and the number of countries they are in. Considering this, their financial and operational controls must be kept in order to keep up with their competitors such as Amazon and eBay. Alibaba makes a majority of their money through the compensation they receive from sellers on their websites and the advertising they do for other companies through their website as well. They have tons of customer traffic coming through their website but sales wise they are not bringing in as much revenue as companies like Amazon mainly because of how strong Amazon’s brand is around the world. Although they are not on Amazon’s level when it comes to revenue, they are still competing and improving year after year. Based off of their financials, they had a revenue of 83,028 (in millions) in 2017 and 117,278 (in millions) in 2018 which goes to show how they are doing better and making more money as the years go on. They knew what they wanted to do early on when it came to how things were going to operate in their company. They wanted to create a platform that connects buyers and sellers from all around the globe whether it was business to consumer or business to business. They knew how hard it is for a new business owner to get their products out into the public and build connections with customers so this allowed these business owners to put their products out there with ease. Of course, Alibaba needs to benefit from this but it is a small price to pay for the opportunity they are being given. This was running smoothly like planned and as time went on they were able to expand and do more with their company such as advertising. Unlike Amazon, Alibaba does not own the products being sold on their website so they do not need to worry about having warehouses to store items or shipping out items. All they have to worry about is having a system in place that manages and stores all the information that is needed. Aliyun is a company they have that is in charge of creating all the systems that have to do with cloud computing which is having things like your database, data storage, and servers all saved on cloud-based storage. This allows for things to automatically run on their own without having a lot of employees doing these things. Alipay is also something they use to handle all types of payments that go through Alibaba. Although I feel that companies should always be trying to improve when it comes to anything technological or computerized, Alibaba does a good job in making sure that most jobs are being done automatically to ensure not having to pay someone.
Conclusion
To summarize, the Alibaba Group is essentially the most prominent e-commerce enterprise in the entire world. Despite beginning operations and functioning primarily in the Chinese market, “Alibaba Group’s mission is to make it easy to do business anywhere” (Company Overview). Basically, Alibaba’s websites and services act as a platform for online trade and retail at all levels ranging from basic business to consumer interaction to significant transactions between multinational corporations. Such as many profitable businesses, much of the company’s success has derived from their planning and organizational strategies. As indicated previously, Alibaba’s heavy implementation of technology and online display has created an extremely efficient and effective method for both buyers and sellers that avoids many barriers and limitations found in other modes of exchange. Additionally, the company’s organizational goals and strategies revolve around the satisfaction of the user as they have continuously expanded upon the limits and capabilities of their services as well as actively updating these e-commerce platforms to ensure their customers are receiving optimal service at all times.
As to be expected, Alibaba Group’s managerial overhead and executives adequately impact the company’s flow of operations as well as advantageously regulating corporate resources and functional practices. By leadership motivating their employees while continuously keeping the company objective in mind, Alibaba has been able to experience immense success and steadily grow. And, by being able to financially allocate funds effectively and being able to eliminate expenses that some of their competitors can not avoid, Alibaba has been able to dominate their respective market and generate a grand sum of revenue throughout the course of their operations. Conclusively, since the Alibaba Group has experienced stable growth in both market presence and capital gain, I would implore this company to continue following their current business model and remaining consistent with their organizational and managerial goals.
Works Cited:
“Company Overview.” Alibaba Group, www.alibabagroup.com/en/about/overview .
Smith, Craig. “120 Amazing Alibaba Statistics.” DMR, 3 Apr. 2019, expandedramblings.com/index.php/alibaba-statistics/.
Zeng, Ming. “Everything Alibaba Does Differently - and Better.” Harvard Business Review, 21 Aug. 2018, hbr.org/2018/09/alibaba-and-the-future-of-business.
Blystone, Dan. “Understanding Alibaba's Business Model (BABA).” Investopedia, Investopedia, 12 Mar. 2019, www.investopedia.com/articles/investing/062315/understanding-alibabas-business-model.asp .
Journal, Wall Street. "What is Alibaba?" The Wall Street Journal. 2017. Dow Jones & Company. 16 Apr. 2019 <https://graphics.wsj.com/alibaba/>.
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Shao, Heng. “A Peek Inside Alibaba's Corporate Culture.” Forbes, Forbes Magazine, 16 May 2014, www.forbes.com/sites/hengshao/2014/05/13/a-peek-inside-alibabas-corporate-culture/#4d3fef914efc.