Case Study Description of Alibaba Group: Technology, Strategy, and Sustainability
Alibaba Group (Alibaba) had grown from its founding in 1999, in an effort to help Chinese manufacturers and exporters reach global markets, to become a global leader in e-commerce, big data, and cloud technology. The company's 2014 initial public offering on the New York Stock Exchange had been the largest to date. The company's founder and chairman, Jack Ma, had used the funds to globally expand Alibaba's operations and its hold on diverse markets. Ma's aim was to have Alibaba exist in three centuries and to not only generate profits but also improve lives and societies in China and beyond. How could Ma ensure long-term success for shareholders and prosperity for China and the world?
Swot Analysis of "Alibaba Group: Technology, Strategy, and Sustainability" written by Ning Su, Pratima Bansal, Pam Laughland includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Alibaba Ma facing as an external strategic factors. Some of the topics covered in Alibaba Group: Technology, Strategy, and Sustainability case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the Alibaba Group: Technology, Strategy, and Sustainability casestudy better are - – there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, talent flight as more people leaving formal jobs, wage bills are increasing,
challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Alibaba Group: Technology, Strategy, and Sustainability
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Alibaba Group: Technology, Strategy, and Sustainability case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Alibaba Ma, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Alibaba Ma 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 Group: Technology, Strategy, and Sustainability can be done for the following purposes –
1. Strategic planning using facts provided in Alibaba Group: Technology, Strategy, and Sustainability case study
2. Improving business portfolio management of Alibaba Ma
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Alibaba Ma
Strengths Alibaba Group: Technology, Strategy, and Sustainability | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Alibaba Ma in Alibaba Group: Technology, Strategy, and Sustainability Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Alibaba Ma are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Alibaba Group: Technology, Strategy, and Sustainability 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.
Low bargaining power of suppliers
– Suppliers of Alibaba Ma in the sector have low bargaining power. Alibaba Group: Technology, Strategy, and Sustainability has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Alibaba Ma to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Global Business field
– Alibaba Ma 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 Ma in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Alibaba Ma in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Alibaba Ma is one of the most innovative firm in sector. Manager in Alibaba Group: Technology, Strategy, and Sustainability Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Alibaba Ma is one of the leading recruiters in the industry. Managers in the Alibaba Group: Technology, Strategy, and Sustainability are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Alibaba Ma 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 Group: Technology, Strategy, and Sustainability - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Alibaba Ma 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 Ning Su, Pratima Bansal, Pam Laughland 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.
Highly skilled collaborators
– Alibaba Ma 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 Group: Technology, Strategy, and Sustainability HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Alibaba Ma 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.
Organizational Resilience of Alibaba Ma
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Alibaba Ma does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Alibaba Group: Technology, Strategy, and Sustainability | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Alibaba Group: Technology, Strategy, and Sustainability are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Alibaba Ma is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Alibaba Group: Technology, Strategy, and Sustainability can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Alibaba Group: Technology, Strategy, and Sustainability HBR case study mentions - Alibaba Ma takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Interest costs
– Compare to the competition, Alibaba Ma 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.
Need for greater diversity
– Alibaba Ma 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Alibaba Group: Technology, Strategy, and Sustainability, in the dynamic environment Alibaba Ma has struggled to respond to the nimble upstart competition. Alibaba Ma has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Alibaba Ma, firm in the HBR case study Alibaba Group: Technology, Strategy, and Sustainability needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Alibaba Group: Technology, Strategy, and Sustainability, it seems that the employees of Alibaba Ma 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ning Su, Pratima Bansal, Pam Laughland suggests that, Alibaba Ma 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.
Capital Spending Reduction
– Even during the low interest decade, Alibaba Ma 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Alibaba Group: Technology, Strategy, and Sustainability 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 Ma 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Alibaba Ma 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.
Opportunities Alibaba Group: Technology, Strategy, and Sustainability | 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 Group: Technology, Strategy, and Sustainability are -
Learning at scale
– Online learning technologies has now opened space for Alibaba Ma 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.
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 Ma can use these opportunities to build new business models that can help the communities that Alibaba Ma operates in. Secondly it can use opportunities from government spending in Global Business sector.
Building a culture of innovation
– managers at Alibaba Ma can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Alibaba Ma in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Alibaba Ma to increase its market reach. Alibaba Ma will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Alibaba Ma can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Alibaba Group: Technology, Strategy, and Sustainability 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.
Creating value in data economy
– The success of analytics program of Alibaba Ma has opened avenues for new revenue streams for the organization in the industry. This can help Alibaba Ma to build a more holistic ecosystem as suggested in the Alibaba Group: Technology, Strategy, and Sustainability case study. Alibaba Ma can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Ma 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 Ma 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 Ma to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Alibaba Ma 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 Group: Technology, Strategy, and Sustainability, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Alibaba Ma 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.
Using analytics as competitive advantage
– Alibaba Ma 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 Group: Technology, Strategy, and Sustainability - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Alibaba Ma to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Ma in the consumer business. Now Alibaba Ma can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Alibaba Group: Technology, Strategy, and Sustainability External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Alibaba Group: Technology, Strategy, and Sustainability are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Alibaba Ma in the Global Business industry. The Global Business 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.
High dependence on third party suppliers
– Alibaba Ma 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 Ma 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 Ma can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
Stagnating economy with rate increase
– Alibaba Ma 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Alibaba Ma 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 Group: Technology, Strategy, and Sustainability .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Alibaba Ma needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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 Ma business can come under increasing regulations regarding data privacy, data security, etc.
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 Ma 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.
Shortening product life cycle
– it is one of the major threat that Alibaba Ma is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Alibaba Ma has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Alibaba Ma needs to keep up with the evolution of technology in the Global Business 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.
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 Ma in the Global Business sector and impact the bottomline of the organization.
Consumer confidence and its impact on Alibaba Ma 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.
Weighted SWOT Analysis of Alibaba Group: Technology, Strategy, and Sustainability 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 Group: Technology, Strategy, and Sustainability 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 Group: Technology, Strategy, and Sustainability 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 Group: Technology, Strategy, and Sustainability 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 Group: Technology, Strategy, and Sustainability 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 Ma needs to make to build a sustainable competitive advantage.