The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms
A nascent women's apparel online store on Tmall, China's largest business-to-consumer retail platform operated by Alibaba Group, was just beginning to establish itself on the online market utilizing the tools and services provided by Tmall to develop and operate its business. Within four months after the business was launched, Tmall unexpectedly released a new policy which significantly increased the annual service fee and cash deposit for individual stores. This new policy, which was to come into effect in less than three months following the announcement, could render the business of small- and medium-sized e-commerce stores, such as the new women's apparel start-up, on Tmall unprofitable. The management team of the fledgling clothing business had to reconsider whether to renew their contract with Tmall or transfer their store to one of the alternative online platforms, such as Alibaba Group's Taobao Marketplace, Tencent Group's Shop.QQ or Amazon.com's Amazon.cn.
Authors :: Ning Su, Yulin Fang, Haibin Yang, Yukun Yang
Swot Analysis of "The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms" written by Ning Su, Yulin Fang, Haibin Yang, Yukun Yang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tmall Alibaba facing as an external strategic factors. Some of the topics covered in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms case study are - Strategic Management Strategies, International business, IT and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms casestudy better are - – wage bills are increasing, central banks are concerned over increasing inflation, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion,
increasing household debt because of falling income levels, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tmall Alibaba, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tmall Alibaba 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms can be done for the following purposes –
1. Strategic planning using facts provided in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms case study
2. Improving business portfolio management of Tmall Alibaba
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 Tmall Alibaba
Strengths The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tmall Alibaba in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms Harvard Business Review case study are -
Highly skilled collaborators
– Tmall Alibaba 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Tmall Alibaba has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tmall Alibaba to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Tmall Alibaba is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Tmall Alibaba is present in almost all the verticals within the industry. This has provided firm in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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.
Ability to recruit top talent
– Tmall Alibaba is one of the leading recruiters in the industry. Managers in the The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Tmall Alibaba has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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.
Successful track record of launching new products
– Tmall Alibaba has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tmall Alibaba 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.
Operational resilience
– The operational resilience strategy in the The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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.
Learning organization
- Tmall Alibaba 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 Tmall Alibaba is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Tmall Alibaba 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.
Innovation driven organization
– Tmall Alibaba is one of the most innovative firm in sector. Manager in The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Tmall Alibaba 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, Yulin Fang, Haibin Yang, Yukun Yang 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.
Weaknesses The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms are -
Increasing silos among functional specialists
– The organizational structure of Tmall Alibaba is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Tmall Alibaba needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tmall Alibaba 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, Yulin Fang, Haibin Yang, Yukun Yang suggests that, Tmall Alibaba 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms, in the dynamic environment Tmall Alibaba has struggled to respond to the nimble upstart competition. Tmall Alibaba has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Tmall Alibaba supply chain. Even after few cautionary changes mentioned in the HBR case study - The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tmall Alibaba vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms HBR case study mentions - Tmall Alibaba 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.
No frontier risks strategy
– After analyzing the HBR case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms, is just above the industry average. Tmall Alibaba 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms, it seems that the employees of Tmall Alibaba 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 cash cycle compare to competitors
Tmall Alibaba 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.
Lack of clear differentiation of Tmall Alibaba products
– To increase the profitability and margins on the products, Tmall Alibaba needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Tmall Alibaba, firm in the HBR case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms | 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tmall Alibaba 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, The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tmall Alibaba can use these opportunities to build new business models that can help the communities that Tmall Alibaba operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tmall Alibaba 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
– Tmall Alibaba can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Buying journey improvements
– Tmall Alibaba can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tmall Alibaba 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.
Developing new processes and practices
– Tmall Alibaba can develop new processes and procedures in Innovation & Entrepreneurship 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.
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. Tmall Alibaba 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. Tmall Alibaba 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.
Leveraging digital technologies
– Tmall Alibaba 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.
Building a culture of innovation
– managers at Tmall Alibaba 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tmall Alibaba is facing challenges because of the dominance of functional experts in the organization. The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tmall Alibaba 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.
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 Tmall Alibaba 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.
Threats The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms are -
Consumer confidence and its impact on Tmall Alibaba 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tmall Alibaba 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.
High dependence on third party suppliers
– Tmall Alibaba 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
– Tmall Alibaba 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.
Shortening product life cycle
– it is one of the major threat that Tmall Alibaba is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Tmall Alibaba.
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. Tmall Alibaba needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Regulatory challenges
– Tmall Alibaba 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.
Increasing wage structure of Tmall Alibaba
– 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 Tmall Alibaba.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tmall Alibaba 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms .
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. Tmall Alibaba 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tmall Alibaba with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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 Tmall Alibaba needs to make to build a sustainable competitive advantage.