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 - – talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models,
challanges to central banks by blockchain based private currencies, technology disruption, 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 -
Training and development
– Alibaba Ma has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Alibaba Group: Technology, Strategy, and Sustainability 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 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.
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.
Sustainable margins compare to other players in Global Business industry
– Alibaba Group: Technology, Strategy, and Sustainability firm has clearly differentiated products in the market place. This has enabled Alibaba Ma to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Alibaba Ma to invest into research and development (R&D) and innovation.
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.
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.
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.
Strong track record of project management
– Alibaba Ma is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
High brand equity
– Alibaba Ma has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Alibaba Ma to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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 -
Lack of clear differentiation of Alibaba Ma products
– To increase the profitability and margins on the products, Alibaba Ma needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Alibaba Ma is dominated by functional specialists. It is not different from other players in the Global Business segment. Alibaba Ma needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Alibaba Ma to focus more on services rather than just following the product oriented approach.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Alibaba Group: Technology, Strategy, and Sustainability, is just above the industry average. Alibaba Ma 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Alibaba Group: Technology, Strategy, and Sustainability 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 Ma has relatively successful track record of launching new products.
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.
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.
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.
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.
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 -
Loyalty marketing
– Alibaba Ma has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
Developing new processes and practices
– Alibaba Ma can develop new processes and procedures in Global Business 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Alibaba Ma can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Alibaba Ma can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
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.
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.
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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Alibaba Ma 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.
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 -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Alibaba Group: Technology, Strategy, and Sustainability, Alibaba Ma may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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.
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 Ma.
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.
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.
Regulatory challenges
– Alibaba Ma 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 Global Business industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Alibaba Ma with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Alibaba Ma can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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 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.
Increasing wage structure of Alibaba Ma
– 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 Ma.
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.
