Alibaba’s strategy involves global expansion and the provision of cheap Chinese products to customers worldwide. This type of strategy provides direct connection between the buyer and the seller.
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The main environmental opportunities and threats for Alibaba are the situation in the global labor market, the relationship with the Chinese government, and the activities of global competitors.
One of the greatest weaknesses of Alibaba is its waiting times, which could exceed 20-30 days. In addition, Alibaba is more prone to fraud. Cheapness and relative quality of goods remain the platform’s strongest points. “Customers first, employees second, investors third.” – is the motto of Alibaba.
The main cultural factors involve the widespread corruption in the Chinese society, the Chinese labor force, and the national loyalty of the Chinese customers. The company can retain its domestic market.
Business units within the same company should compete without affecting the company’s output in a negative way. They should force one another to evolve, in order to achieve the best result possible.
Alibaba’s structure allows for almost any company to compete using the site’s platform. Nevertheless, the businesses to be included in a portfolio should have a good reputation.
In order to compete successfully, Alibaba should reach out for large foreign markets. The EU and the US present an opportunity for international competition.
Alibaba has not been innovating appropriately. Despite existing in the domestic market for a long while, the company did not invest in a private delivery system, unlike JD.
Establishing one’s own brand in a foreign market from scratch is a lengthy and risky process. Alibaba should seek to purchase domestic brands in foreign countries.
Strategy in Action
As it stands, the strategies used by Alibaba have led to subsequent losses, caused by the rising competition, the decrease in the Chinese domestic market growth, and the rise of other competitors, both domestically and abroad. Strategies need to be changed.
The process of strategy-making is a complex issue. Alibaba should utilize the available tools, such as SWOT, Porter’s Five Forces, PESTLE, and other systems to determine the direction of their strategy.
The main organizational structures and systems to facilitate change in the company strategy are the directorial board, the analytics team, the HR department, and all other departments likely to undergo changes to make them more competitive.
The management of changes should be prepared and performed by the HR department, which could use transformational and transitional leadership to do so.
According to the caustic HR strategy model, the company should determine the overall strategy, the HR department is supposed to facilitate changes, and the managers in places should help reform their respective departments to fit the new model.
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Strategy’s Three Main Branches
The industry of internet retail is geographically divided, as the deliveries are large affected by distances. Alibaba, based in China, as an effective grasp over the markets in Asia, India, and Russia. Amazon and EBay, two large e-commerce platforms, are dominating over Europe and the USA respectively. Culturally, the areas of influence are different, as Europe and the US enjoy high-quality goods and free markets, whereas government regulation and cheap products dominate the Chinese market. Based on resources, Alibaba is in a good position, as China is a production giant.
Some of the strategic options presented to Alibaba include focusing on the domestic market versus expanding abroad. The first approach includes defeating JD as its primary competitor in China, whereas the internationalization involves reaching out to the US and Europe in force. The newly-appointed manager of the company favors the second approach.
Realizing the expansion plan requires serious strategic planning on the part of business analytics, logistics, and the HR department. The company would need to choose and change, in order to deliver the results required at a faster rate than it currently can. As a part of strategy-as-practice approach, the company should establish its own supply channels to deliver the goods as fast as Amazon.