Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur
Likened in his native China to a rock star of entrepreneurship, Ma had risen from humble beginnings to the pinnacle of modern Chinese business in less than 20 years. How did a former English teacher who had not even been exposed to the internet until the end of the 1990s become iconic among internet multimillionaires? Was there something special about Ma that helped him stand out among an increasingly well educated class of Chinese entrepreneurs?
Swot Analysis of "Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur" written by Ali Farhoomand, Ricky Lai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ma Chinese facing as an external strategic factors. Some of the topics covered in Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur case study are - Strategic Management Strategies, Internet, Leadership, Supply chain and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , there is backlash against globalization, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing commodity prices, technology disruption, etc
Introduction to SWOT Analysis of Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ma Chinese, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ma Chinese 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's Jack Ma: Rise of the New Chinese Entrepreneur can be done for the following purposes –
1. Strategic planning using facts provided in Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur case study
2. Improving business portfolio management of Ma Chinese
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ma Chinese
Strengths Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ma Chinese in Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur Harvard Business Review case study are -
Effective Research and Development (R&D)
– Ma Chinese 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's Jack Ma: Rise of the New Chinese Entrepreneur - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Innovation & Entrepreneurship field
– Ma Chinese 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 Ma Chinese in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Ma Chinese in the sector have low bargaining power. Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ma Chinese to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Ma Chinese is one of the leading recruiters in the industry. Managers in the Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur firm has clearly differentiated products in the market place. This has enabled Ma Chinese to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Ma Chinese to invest into research and development (R&D) and innovation.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Ma Chinese digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ma Chinese 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.
Highly skilled collaborators
– Ma Chinese 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's Jack Ma: Rise of the New Chinese Entrepreneur HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Ma Chinese has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur 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.
Learning organization
- Ma Chinese 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 Ma Chinese is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Ma Chinese has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ma Chinese 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.
Organizational Resilience of Ma Chinese
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Ma Chinese does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur are -
Aligning sales with marketing
– It come across in the case study Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur can leverage the sales team experience to cultivate customer relationships as Ma Chinese is planning to shift buying processes online.
Interest costs
– Compare to the competition, Ma Chinese 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 cash cycle compare to competitors
Ma Chinese has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, firm in the HBR case study Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur 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 Ma Chinese 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Ma Chinese 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur, in the dynamic environment Ma Chinese has struggled to respond to the nimble upstart competition. Ma Chinese 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, Ali Farhoomand, Ricky Lai suggests that, Ma Chinese 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.
Slow to strategic competitive environment developments
– As Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur HBR case study mentions - Ma Chinese 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.
Skills based hiring
– The stress on hiring functional specialists at Ma Chinese 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ma Chinese is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Ma Chinese has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur should strive to include more intangible value offerings along with its core products and services.
Opportunities Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur | 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's Jack Ma: Rise of the New Chinese Entrepreneur are -
Loyalty marketing
– Ma Chinese 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.
Creating value in data economy
– The success of analytics program of Ma Chinese has opened avenues for new revenue streams for the organization in the industry. This can help Ma Chinese to build a more holistic ecosystem as suggested in the Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur case study. Ma Chinese can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Ma Chinese 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ma Chinese in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Ma Chinese to increase its market reach. Ma Chinese 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Ma Chinese to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Ma Chinese 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Ma Chinese can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ma Chinese is facing challenges because of the dominance of functional experts in the organization. Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur 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.
Building a culture of innovation
– managers at Ma Chinese 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 Innovation & Entrepreneurship segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ma Chinese 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. Ma Chinese 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ma Chinese can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ma Chinese can use these opportunities to build new business models that can help the communities that Ma Chinese operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Threats Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur are -
Environmental challenges
– Ma Chinese 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. Ma Chinese can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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 Ma Chinese business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Ma Chinese
– 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 Ma Chinese.
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 Ma Chinese in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
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 Ma Chinese.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ma Chinese with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ma Chinese can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Ma Chinese has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Ma Chinese needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Regulatory challenges
– Ma Chinese 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 Innovation & Entrepreneurship industry regulations.
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. Ma Chinese needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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. Ma Chinese 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ma Chinese in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Weighted SWOT Analysis of Alibaba's Jack Ma: Rise of the New Chinese Entrepreneur 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's Jack Ma: Rise of the New Chinese Entrepreneur 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's Jack Ma: Rise of the New Chinese Entrepreneur 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's Jack Ma: Rise of the New Chinese Entrepreneur 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's Jack Ma: Rise of the New Chinese Entrepreneur 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 Ma Chinese needs to make to build a sustainable competitive advantage.