Even large companies face impressive challenges in the global economy, which can be clearly seen when studying the example of the Alibaba group. Despite having gained much attention in the global economy, the company still requires the support of its numerous partners. Thus, considering cooperative alliances and joint ventures as a likely solution to the issue of risk management is quite important to keep the company’s growth constant.
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In this paper, the joint venture known as AliExpress Russia, as well as American Marriott (Gupta, 2019; Brennan, 2019). The specified jot ventures have a critical importance for Alibaba since they have provided the organization with an opportunity to penetrate a foreign market and immediately leave a mark in tit by partnering with large business conglomerates. The specified joint ventures created the premises for the company to expand actively into the new markets without the necessity to establish itself in it first, which is critical for gaining traction in the target economic environment immediately.
Both of the cooperative strategies that Alibaba has recently decided to follow can be described as joint ventures. The decision to select the specified type of partnership in a new market was dictated by the fact that the company had to reduce the extent of risks that it would face in its new economic environments (Burton et al., 2016). Indeed, without the assistance that Marriott and AliExpress Russia gave it, Alibaba would have not been able to develop the marketing approach and the financial resilience needed to sustain its influence in the specified markets. Moreover, the opportunity to share the related financial risks and expenses has made a joint venture a particularly important decision in Alibaba’s joint venture policy for Marriott an AliExpress Russia.
Moreover, the creation of a joint venture with Marriott and AliExpress Russia has given Alibaba quite a competitive advantage that would not have been developed otherwise. Specifically, the drop in the range of expenses that Alibaba had to suffer when establishing its services in the respective countries has made it to gain an advantage in the target market. With new spare financial resources, the company could develop a stunning campaign that would allow it to create an entirely new product or a memorable brand, therefore, focusing on research and development.
In addition, Alibaba may spend its newly acquired financial assets on investing in talent management as the main tool for gaining relevance in the target market (Burton, Yamin, & Young, 2016). By creating a team of diverse and talented experts, who are willing to gain new skills regularly, the company will be able to adjust to rather harsh economic settings that it would have not survived without the cooperative agreements.
However, the joint ventures with Marriott and AliExpress Russia have also exposed Alibaba to several risks that the firm will have to face respectively. The company will need to address inconsistencies between its leadership style and those of Marriott and AliExpress Russia as one of the main points of conflicts. Due to cultural differences, as well as differences in perspective, the companies use the leadership styles that are drastically different from that one of Alibaba (Bruner, 2016). Therefore, the company will have to compromise by selecting a situational leadership approach to provide each of its staff members greater flexibility in its new environment.
While the risk described above can be addressed comparatively easily and without many conflicts involved, the problem of the lack of commitment will be much more difficult to address. Once a joint venture is established, the staff members representing the other company are unlikely to become immediately invested in the needs and performance of the firm with which their organization has formed an alliance.
The lack of insight into the corporate philosophy of the new organization and its goals will reduce the extent of staff’s commitment. The specified issue can be managed by introducing incentives and extra opportunities for professional growth (Said & Korby, 2017). Given AliExpress’ focus on talent management, offering employees from Marriott and AliExpress Russia extra options for learning new skills will be a rather easy and effective step.
The analysis of the strategic alliances that Alibaba has made over the past few years has provided several important lessons to learn. First, the importance of joint ventures for entering new markets has been recognized. Partnerships with organizations that have an established presence in a specific economic setting is quite important for a company that is new to its selected market. In addition, the issue of culture clashes that will occur during the first several months of the joint venture’s functioning needs to be acknowledged and addressed to encourage further progress (Burton et al., 2016). The specified lessons have proven to be the most important takeaways form the case under analysis.
By having recently created joint ventures with AliExpress Russia and Marriott, Alibaba has managed to receive an impetus for exploring the Russian and American markets immediately and not having to build a presence that would have helped the firm to develop an entirely new customer base from scratch. Instead, the organization gained the support that it required to grow within the target market and explore new financial and economic opportunities.
Therefore, the joint ventures in question can be considered as an important step in Alibaba’s exploration of the global market. The support of two corporate giants that have built quite a reputation for themselves in their corresponding markets is currently critical for Alibaba since it will offer the firm a chance to experiment in a new economic setting without facing tremendous risks.
Brennan, T. (2019). AliExpress Russia JV deal closes. Web.
Bruner, R. F. (2016). Applied mergers and acquisitions. New York, NY: John Wiley & Sons.
Burton, F., Yamin, M., & Young, S. (2016). International business and Europe in transition. New York, NY: Springer.
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Gupta, N. (2019). Alibaba’s Russia joint venture takes shape. Web.
Said, K., & Korby, F. B. (2017). Asymmetric alliances and information systems: Issues and prospects. New York, NY: John Wiley & Sons.