Alibaba group has been growing by leaps and bounds because of its unique business strategy. It has managed to spread its activities in more than 100 countries. There are a few strategic tools that can help save the company from counterfeit products.
PEST Analysis
PEST is an acronym for Political, Economic, Social, and Technological (Rao, Rao & Sivaramakrishna, 2008). It is a framework for macro-environmental factors that Alibaba can use for environmental scanning. It is useful in conducting an external analysis for businesses.
Economic
Alibaba Group is a Chinese e-commerce giant that has specialized in online trade (Buchwald & Neckes, 2014). The manufacturing companies are losing sales in the process. Gucci and Yves Saint Laurent are also about to complicate the matter if they decide to sue Alibaba group.
The legal tussle may cost the company a lot of money. When customers start complaining about the services, Alibaba may end up losing their trust. When they start buying from the competitors, the company would be greatly at a loss (Evans, 2013). The company has to take responsibility and stop the counterfeit products since customers get them through its supply chain.
Political
The company would not have perfect reception in the places it has been operating (Gould, 2012). Some countries would also consider increasing penalties or entirely disallowing their operations. The company should develop a marketing campaign in all the countries discrediting counterfeit goods. It should come up with authenticity stickers and digital confirmation numbers for proof of its products.
Social
It would hamper the workers’ future career advancement. Some could consider leaving the company. It would also have a poor relationship with its customers and suppliers. The leadership should start promotional activities for customer awareness. It should also have staff motivational programs.
Technological
Alibaba’s pride in technological advancement would just seem baseless for the moment. The government agencies would start applying stringent regulatory measures (Evans, 2013). The well established online trade would not be sufficient for the business if the company does not make sales. Alibaba should use the same technology to pass definite information about its products.
EFE and IFE Model
The External Factors Evaluation and the Internal Factors Evaluation models would be very helpful in establishing a solution. EFE would examine the external weights and ratings and come up with the correctly weighted score (Rao, Rao & Sivaramakrishna, 2008). Some of the challenges the company would have to deal with include competition, lawsuit, counterfeits, and distribution channels. The IFE would indicate Alibaba’s resources that would be available for the response. It would also evaluate the significance of counterfeit products (David, 2005).
Alibaba’s EFE and IFE Strategy Analysis Sample Tables
The above EFE results show that the total weighted score is 2.46. It indicates that the business has slightly less than average ability to respond to external factors.
The above IFE results show that the total weighted score is 3. It indicates that the business has strength in its response to the problem.
EFE and IFE results are necessary for the strategic analysis action. Alibaba needs to take steps that would enhance its internal progress. The leadership and staff need to cooperate more for the growth of the company. The company also needs to monitor its distribution channels keenly.
Competitive Profile Matrix
The Competitive Profile Matrix compares a business with its competitors to find opportunities and threats available (Gould, 2012). The method uses the critical success factors to compare company brands against those of the rivals.
Alibaba’s critical success factors are brand recognition and customer loyalty. It has qualified customer service and the best advertising channels (Buchwald & Neckes, 2014). The primary concern is about counterfeit goods. It has to overcome this challenge. Competitors should not use this as a competitive advantage against Alibaba (David, 2005).
Competitive Benchmarking
It is the continuous practice of comparing a company’s best practices with that of its most successful competitors (Raa, 2009). Benchmarking would help Alibaba to achieve its goal. It would help the leaders to improve customer service. Alibaba would have to benchmark its service offering to find out if it needs a significant shift. It would also benchmark its response time to customer complaints. It seems that these two components are the ones that the company needs to benchmark and make notable changes.
The leaders would have to accept that the problem would significantly affect the business. Strategic tools would help the leaders to make a decision that would quickly lead to adequate solutions. Alibaba group would be capable of finding the best option to become the preferred destination for all customers.
References
Buchwald, B., & Neckes, J. (2014). Op-Ed | Alibaba’s Catch-22. The Business of Fashion. Web.
David, F. (2005). Strategic management. Upper Saddle River, N.J.: Pearson Prentice Hall. Web.
Evans, V. (2013). Key strategy tools. Harlow, UK: Pearson. Web.
Gould, R. (2012). Creating a strategy. London, UK: Kogan Page. Web.
Raa, T. (2009). The economics of benchmarking. Hampshire, UK: Palgrave Macmillan. Web.
Rao, C., Rao, B., & Sivaramakrishna, K. (2008). Strategic management and business policy. New Delhi, India: Excel. Web.