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 - – increasing household debt because of falling income levels, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, geopolitical disruptions, technology disruption, increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, there is backlash against globalization, 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 -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms firm has clearly differentiated products in the market place. This has enabled Tmall Alibaba to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Tmall Alibaba to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Tmall Alibaba 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms - 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
– 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Tmall Alibaba digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tmall Alibaba 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.
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.
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.
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.
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.
Superior customer experience
– The customer experience strategy of Tmall Alibaba in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Organizational Resilience of Tmall Alibaba
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tmall Alibaba does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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 -
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.
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.
Aligning sales with marketing
– It come across in the case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms 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 The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms can leverage the sales team experience to cultivate customer relationships as Tmall Alibaba is planning to shift buying processes online.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Tmall Alibaba 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tmall Alibaba is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Tmall Alibaba 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Tmall Alibaba needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Tmall Alibaba 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.
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.
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 -
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.
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. Tmall Alibaba can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Tmall Alibaba has opened avenues for new revenue streams for the organization in the industry. This can help Tmall Alibaba to build a more holistic ecosystem as suggested in the The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms case study. Tmall Alibaba can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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.
Learning at scale
– Online learning technologies has now opened space for Tmall Alibaba 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.
Better consumer reach
– The expansion of the 5G network will help Tmall Alibaba to increase its market reach. Tmall Alibaba 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 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.
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.
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. Tmall Alibaba can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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 -
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Entrepreneur's Dilemma: Alibaba, Tencent and Amazon as e-Commerce Platforms, Tmall Alibaba may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
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.
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.
Environmental challenges
– Tmall Alibaba 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. Tmall Alibaba can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Tmall Alibaba has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Tmall Alibaba 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.
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 Tmall Alibaba business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
