Porter’s model emphasizes the mutual influence of a company’s performance and the market (Ormanidhi & Stringa, 2008). To define an appropriate strategy, a short description of the market’s structure needs to be presented.
Alibaba Group is a relatively young e-commerce company (founded in 1999) that used to be operating primarily in the Chinese and Japanese markets, where it has become the leader in the industry (Hoover’s, 2016). Nowadays it is successfully entering the world market. Given its current performance the company is in the stage of growth (By the Numbers: 60 Amazing Alibaba Statistics, 2015). Its NYSE debut provides evidence to this fact (Mac, 2014).
The products of Alibaba Group that include modern e-commerce platforms, mobile payments, a TV channel, mobile games, and cloud computing are definitely in the stage of rapid growth: nowadays, the demand for all these products and services is very high, and the level of innovation in them is corresponding (Alibaba Group Holding Ltd (BABA.N), 2016).
To sum up, this company is technically an entrant to the worldwide industry of e-commerce, but back in China and Japan, it is already a very reputable and distinguished firm. It can be said that the strategy of the company in China deals with differentiation: it is a prominent organization with unique (branded) products and services. The question of whether a similar strategy would work for the world market remains open for the time being. Given the competition of Amazon.com and E-bay (that, according to Hoover’s (2016), are the key competitors of Alibaba Group) it may be recommended to attempt the price leadership strategy in the world market.
At the same time, the products of Alibaba Group are quite distinct from what Amazon.com and E-bay are offering (in the terms of e-commerce, it is just a platform without warehousing, for example). Whether this distinction is going to be appreciated worldwide as much as it was in China and Japan is an open question for the time being. In any case, given the differences that these two markets have in relation to Alibaba Group, it appears logical to apply the focus strategy for these different environments.
References
Alibaba Group Holding Ltd (BABA.N). (2016). Web.
By the Numbers: 60 Amazing Alibaba Statistics. (2015). Web.
Hoover’s. (2016). Alibaba Group Holding Limited Company Information. Web.
Mac, R. (2014). Alibaba Claims Title For Largest Global IPO Ever With Extra Share Sales. Forbes. Web.
Ormanidhi, O., & Stringa, O. (2008). Porter’s Model of Generic Competitive Strategies. Business Economics, 43, 55–64.