Alibaba - Building a Social Sustainability Ecosystem for E-commerce SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Alibaba - Building a Social Sustainability Ecosystem for E-commerce
The case narrates the evolution of the Alibaba Group, starting with Alibaba.com in 1999, in four different phases, with the last phase beginning after its IPO in 2014. The evolution is described from a social sustainability perspective, highlighting Alibaba's initial efforts to help small businesses in China access the world markets and later, its focus on facilitating e-commerce led entrepreneurship in rural parts of China. Not surprisingly, Alibaba Group's evolution coincided with China's economic growth, as the e-commerce platforms have significantly contributed to the growth of businesses and consumerism in China. Specifically, the development of e-commerce ecosystem by Alibaba Group, created a platform where not only retail businesses, but also allied third party service providers could emerge and grow. After its IPO in 2014, Jack Ma, Alibaba Group's chairman, explicitly defined "E-commerce in rural areas" as one of the three strategic directions going forward. The case discusses in detail the two rural initiatives "Taobao Villages" and "Rural Taobao" that the Alibaba group pursued as part of its rural strategy. It is estimated that the e-commerce of Taobao villages created more than 840,000 direct job opportunities and rural Taobao reached 202 counties in 22 provinces and established 9,278 village-level service stations by August 2016. The case also provides a brief overview of the ecommerce industry in India and ends with the questions: if there is a way for e-commerce players to provide socially sustainable business opportunities for the Indian rural population and how Alibaba should plan its entry and growth in the Indian market.
Swot Analysis of "Alibaba - Building a Social Sustainability Ecosystem for E-commerce" written by Haritha Saranga, Yanghua Huang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Alibaba Taobao facing as an external strategic factors. Some of the topics covered in Alibaba - Building a Social Sustainability Ecosystem for E-commerce case study are - Strategic Management Strategies, Strategy, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Alibaba - Building a Social Sustainability Ecosystem for E-commerce casestudy better are - – increasing transportation and logistics costs, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion,
technology disruption, there is backlash against globalization, etc
Introduction to SWOT Analysis of Alibaba - Building a Social Sustainability Ecosystem for E-commerce
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Alibaba - Building a Social Sustainability Ecosystem for E-commerce case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Alibaba Taobao, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Alibaba Taobao operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Alibaba - Building a Social Sustainability Ecosystem for E-commerce can be done for the following purposes –
1. Strategic planning using facts provided in Alibaba - Building a Social Sustainability Ecosystem for E-commerce case study
2. Improving business portfolio management of Alibaba Taobao
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Alibaba Taobao
Strengths Alibaba - Building a Social Sustainability Ecosystem for E-commerce | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Alibaba Taobao in Alibaba - Building a Social Sustainability Ecosystem for E-commerce Harvard Business Review case study are -
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Alibaba Taobao digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Alibaba Taobao has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Alibaba Taobao is present in almost all the verticals within the industry. This has provided firm in Alibaba - Building a Social Sustainability Ecosystem for E-commerce case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Alibaba Taobao is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Alibaba Taobao is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Alibaba - Building a Social Sustainability Ecosystem for E-commerce Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Alibaba Taobao has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Alibaba - Building a Social Sustainability Ecosystem for E-commerce HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Alibaba Taobao is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Alibaba Taobao has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Alibaba Taobao to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Alibaba Taobao in the sector have low bargaining power. Alibaba - Building a Social Sustainability Ecosystem for E-commerce has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Alibaba Taobao to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Alibaba Taobao
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Alibaba Taobao does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Alibaba Taobao has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Alibaba Taobao has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Alibaba Taobao has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Alibaba Taobao is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Haritha Saranga, Yanghua Huang can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Effective Research and Development (R&D)
– Alibaba Taobao has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Alibaba - Building a Social Sustainability Ecosystem for E-commerce | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Alibaba - Building a Social Sustainability Ecosystem for E-commerce are -
Lack of clear differentiation of Alibaba Taobao products
– To increase the profitability and margins on the products, Alibaba Taobao needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce, it seems that the employees of Alibaba Taobao don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Alibaba Taobao has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce, in the dynamic environment Alibaba Taobao has struggled to respond to the nimble upstart competition. Alibaba Taobao has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Alibaba Taobao is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Alibaba Taobao needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Alibaba Taobao to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Alibaba Taobao has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Alibaba Taobao has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Alibaba - Building a Social Sustainability Ecosystem for E-commerce HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Alibaba Taobao has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Alibaba Taobao 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Alibaba Taobao is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Alibaba Taobao, firm in the HBR case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Alibaba - Building a Social Sustainability Ecosystem for E-commerce | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Alibaba Taobao can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Alibaba - Building a Social Sustainability Ecosystem for E-commerce, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Alibaba Taobao can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Alibaba Taobao in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Alibaba Taobao can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Alibaba Taobao can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Alibaba Taobao is facing challenges because of the dominance of functional experts in the organization. Alibaba - Building a Social Sustainability Ecosystem for E-commerce case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Alibaba Taobao can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Alibaba Taobao can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Alibaba Taobao can use these opportunities to build new business models that can help the communities that Alibaba Taobao operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Alibaba Taobao can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Alibaba Taobao can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Alibaba Taobao to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Alibaba Taobao to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Alibaba Taobao to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Alibaba Taobao can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Alibaba - Building a Social Sustainability Ecosystem for E-commerce External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce are -
Stagnating economy with rate increase
– Alibaba Taobao can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Alibaba Taobao high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Alibaba Taobao needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Alibaba Taobao can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Alibaba Taobao in the Strategy & Execution sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Alibaba Taobao has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Alibaba Taobao needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Alibaba Taobao will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Alibaba Taobao business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Alibaba Taobao is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Alibaba Taobao can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Alibaba Taobao in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Alibaba Taobao with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Alibaba - Building a Social Sustainability Ecosystem for E-commerce Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Alibaba - Building a Social Sustainability Ecosystem for E-commerce is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Alibaba Taobao needs to make to build a sustainable competitive advantage.