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 - – there is increasing trade war between United States & China, increasing commodity prices, there is backlash against globalization, increasing transportation and logistics costs, technology disruption, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic ,
wage bills are increasing, increasing government debt because of Covid-19 spendings, 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 -
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.
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.
Operational resilience
– The operational resilience strategy in the Alibaba - Building a Social Sustainability Ecosystem for E-commerce Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to lead change in Strategy & Execution field
– Alibaba Taobao is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Alibaba Taobao in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Alibaba - Building a Social Sustainability Ecosystem for E-commerce firm has clearly differentiated products in the market place. This has enabled Alibaba Taobao to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Alibaba Taobao to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Alibaba Taobao in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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 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.
Training and development
– Alibaba Taobao has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Alibaba - Building a Social Sustainability Ecosystem for E-commerce Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Alibaba Taobao is one of the leading recruiters in the industry. Managers in the Alibaba - Building a Social Sustainability Ecosystem for E-commerce are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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 -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce, is just above the industry average. Alibaba Taobao needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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 existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Alibaba Taobao supply chain. Even after few cautionary changes mentioned in the HBR case study - Alibaba - Building a Social Sustainability Ecosystem for E-commerce, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Alibaba Taobao vulnerable to further global disruptions in South East Asia.
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.
Slow decision making process
– As mentioned earlier in the report, Alibaba Taobao has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Alibaba Taobao even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
Need for greater diversity
– Alibaba Taobao has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Haritha Saranga, Yanghua Huang suggests that, Alibaba Taobao is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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 -
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.
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.
Using analytics as competitive advantage
– Alibaba Taobao has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Alibaba Taobao to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Alibaba Taobao can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Alibaba Taobao has opened avenues for new revenue streams for the organization in the industry. This can help Alibaba Taobao to build a more holistic ecosystem as suggested in the Alibaba - Building a Social Sustainability Ecosystem for E-commerce case study. Alibaba Taobao can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
Buying journey improvements
– Alibaba Taobao can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Alibaba - Building a Social Sustainability Ecosystem for E-commerce suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
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.
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Alibaba Taobao in the consumer business. Now Alibaba Taobao can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 -
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.
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.
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.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Alibaba Taobao.
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.
Consumer confidence and its impact on Alibaba Taobao demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Alibaba Taobao
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Alibaba Taobao.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Alibaba Taobao can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Alibaba - Building a Social Sustainability Ecosystem for E-commerce .
Regulatory challenges
– Alibaba Taobao needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
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.
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.
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.
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.
