Alibaba Group is the largest and most famous e-commercial platform in China. Suppliers are mainly from China, but there are also exporters from Taiwan, India, Korea, Japan, and some other countries. Apart from the largest marketplace, Aliexpress, the company also includes the websites Taobao.com, Tmall.com, and Juhuasuan.com, which account for about 82 percent of the company’s revenue (Wu & Gereffi, 2018). Having the largest turnover in the world, Alibaba is a global leader in sales. This paper aims to identify the existence of internal and external strengths, weaknesses, threats, and opportunities for the Alibaba Group.
A well-known brand is the main strength of the Alibaba Group. Fast growth, huge investments, and asset acquisitions stimulate the interest of the outside world in the company and its brand. Another advantage is that the company has a wide network of sellers and buyers, the growth of which is promoted by active promotion and advertising (Clark, 2018). Alibaba has a rather big customer base and a well-developed procedure of the information exchange. The largest Chinese forum Yishanghuiyou creates a great opportunity for global business exchanges, which improves the popularity of the website (Wu & Gereffi, 2018). Information on the website is becoming more differentiated, comprehensive, targeted, and effective.
Aside from its obvious advantages, Alibaba Group has several weaknesses such as the abundance of sellers. When Alibaba first appeared, there were more than 8 million vendors, and this number is growing rapidly (Qin, 2017). Alibaba does not have a limit of vendors who register to sell their products on the Chinese e-commerce market. This has led to a huge number of dealers competing in the online commercial platform. This is a big challenge for many sellers which makes them withdraw the agreement. Moreover, the majority of vendors are deprived of the opportunity to sell at beneficial prices.
Alibaba Group has several threats that include the strengthening of state regulation and the growth of competitors. Increasing competition is the main risk. Although Alibaba is a market leader, the company is under pressure from a growing number of competitors, especially in the B2C segment. For example, JD.com shows rapid growth by offering lower prices and faster delivery (Wu & Gereffi, 2018). As for state regulation, most platform sellers are often non-residents of China, which allows them to avoid local taxation. There are currently no regulatory standards for small enterprises, but this omission may be eliminated in the future.
Despite some threats, Alibaba has huge opportunities for further growth because of its well-developed base in the Chinese market and a good knowledge of e-commerce. The fast-growing cloud business is one of the main expectations for the future. Recently, there was significant growth in its income from cloud services. The total revenue of Alibaba Group increased almost twice in just one year (Qin, 2017). Taking into account this enormous rise and the increasing investments in research and design, Alibaba can successfully develop its cloud business in the future.
It can be concluded that Alibaba has an almost exclusive monopoly in Chinese e-commerce. Alibaba creates products in fast-growing markets trying to take a leading position. The choice of the right strategy helps the company to continue its rapid growth, which will entail an increase in stock prices, profits, and trading turnover in the future. Despite the weaknesses and threats in the form of competition and state regulation, the growth potential of the company has not yet been exhausted.
References
Clark, D. (2018). Alibaba: The house that Jack Ma built. Harper Collins.
Qin, P. (2017). Integration in Chinese e-commerce and public policy concerns: An analysis of Alibaba Group. Thammasat Review of Economic and Social Policy, 3(1), 68.
Wu, X., & Gereffi, G. (2018). Amazon and Alibaba: Internet governance, business models, and internationalization strategies. International Business in the Information and Digital Age, 327-356.