Question

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Alibaba Group

The following questions are based on key symptoms (both favorable and unfavorable) of Alibaba Group and underlying causes that affect key symptoms as they are observed in the case. In addition, there is a general question on solutions that also addresses the causes. Each multiple choice and short answer question number under Key Symptoms corresponds to the same question number under Underlying Causes (e.g., Question 3 under Key Symptoms 1 corresponds to Question 3 under Underlying Causes 1).

Before beginning this exercise, you will need to read the Alibaba Group case.

This activity is important because, as a manager concerned with making strategic choices, you have to be able to properly assess the internal and external environment impacting the business. The first step is to identify the underlying causes that are driving business results, and then identify the major symptoms that should be considered. The ultimate objective is to make an actionable and reasoned recommendation that the company should pursue to meet their established business objectives.

The goal of this exercise is to determine that you have adequately analyzed the case and determined the underlying causes critical to making a reasoned recommendation about future action.

Read and analyze the case and answer the following questions related to Alibaba Group

Key Symptoms 1

1. Increasing revenue and maintaining the tremendous growth trajectory of the company is complicated by two kinds of competitors squeezing the growth opportunities. Who are the competitors?

• internationally, Amazon and eBay, and domestically, JD.com and Baidu

• Amazon and eBay in the Chinese domestic market

• JD.com and Baidu in the International market

• Amazon in North America and JD.com in Europe and Asia

2. Alibaba Group’s revenue is generated through a range of diverse fees. For instance, merchant fees are charged to users based on number of units sold in retail centers. Strategically, the diverse fees

• enable growth in the domestic digital market because of excessive regulation and diverse business help work around regulations.

• force domestic competitors to invest in diverse and complex businesses to match their reach and scope with consumers.

• help Alibaba determine where to commit resources for future growth.

• add complexity and create havoc for established brands growing rapidly in the domestic market.

3. The structure of the company is complex and growing globally with many divergent e-commerce trading relationships. The complexity is strategically necessary because

• adaptation to local markets demands ancillary services (i.e., online to offline relationships).

• matching the market strategy of competitors varies from market to market.

• developing a global digital ecosystem demands a company offer a range of related products and services.

• All of the answers are correct.

4. Alibaba has a labyrinth-like internal structure that is complex when compared to most business models. The structure allows the company to grow rapidly integrating product offerings while preserving management flexibility. This structure is designed to counter

• both domestic competition and international competition.

• domestic competition.

• international competition.

• None of the answers are correct.

5. To dominate the global e-commerce market, Alibaba must be trustworthy because competition is fierce domestically and internationally. Alibaba should be centrally concerned with their reputation because

• Alibaba does not have the free cashflow to fight the Chinese government in international courts.

• Alibaba drives Chinese e-commerce so significantly that setbacks could lead to setbacks of the Chinese economy.

• Alibaba does not have the free cashflow to fight the Chinese government in domestic courts.

• China’s State Administration for Industry and Commerce (SAIC) would provide greater access to the domestic market to international competitors deemed more trustworthy.

This activity is important because, as a manager concerned with making strategic choices, you have to be able to properly assess the internal and external environment impacting the business. The first step is to identify the underlying causes that are driving business results, and then identify the major symptoms that should be considered. The ultimate objective is to make an actionable and reasoned recommendation that the company should pursue to meet their established business objectives.

The goal of this exercise is to determine that you have adequately analyzed the case and determined the underlying causes critical to making a reasoned recommendation about future action.

Read and analyze the case and answer the following questions related to Alibaba Group

Underlying Causes 1

1. Increasing revenue and the tremendous growth trajectory of the company provided promising evidence that they would not have problems competing in the North American Market in 2014. What changed in 2018 to indicate the company would have to confront challenges?

• Revenue decreased but the marginal cost of revenue was decreasing.

• Revenue decreased but the marginal cost of revenue was increasing.

• Revenue increased but the marginal cost of revenue was decreasing.

• Revenue increased but the marginal cost of revenue was increasing.

2. Alibaba Group’s revenue is generated through a range of diverse fees. For instance, merchant fees are charged to users based on number of units sold in retail centers. More than 50 percent of revenue is earned through

• account maintenance service fees.

• variable fees from merchant fees.

• online advertising efforts.

• fixed fees from wholesaler centers.

3. The structure of the company is complex and growing globally with many divergent e-commerce trading relationships. Is the complexity a strategic asset or a liability that will impede the realization of strategy?

• Expansion and complexity are liabilities that will limit the expansion of functionality and the potential user base.

• Expansion and complexity are assets necessary to expand functionality and the potential user base.

• Expansion and complexity are necessary to satisfy the Chinese government’s demands.

• Expansion and complexity are necessary to keep employees highly engaged because of low wages the company pays.

4. A key factor enabling Alibaba to grow rapidly is the labyrinth-like internal structure that is complex when compared to most business models. What is the key to harmonizing the various businesses into a cohesive company?

• developing businesses that focus on competing directly with Amazon in the North American market

• developing businesses with a focus on speed, accepting that some businesses will fail

• developing businesses that focus on adjacent markets and sharing capabilities across the business group

• developing businesses in consultation with the Chinese government that help manage the complex structure

5. To dominate the global e-commerce market, Alibaba has an absolute demographic advantage because

• the Indian market is not expected to grow in a meaningful way.

• the location in Asia gives Alibaba easy access to the greatest number of consumers.

• Chinese open borders policy gives Alibaba access to the largest market.

• Chinese digital market is expected to remain the world’s largest.

Answer 1

1. Increasing revenue and maintaining the tremendous growth trajectory of the company is complicated by two kinds of competitors squeezing the growth opportunities. Who are the competitors?

Amazon in North America and JD.com in Europe and Asia as Amazon is the biggest entity in North Americas where as in europe JD.com is the biggest threat.Both brands are competitive and very difficult to conquer.

2. Alibaba Group’s revenue is generated through a range of diverse fees. For instance, merchant fees are charged to users based on number of units sold in retail centers. Strategically, the diverse fees

• enable growth in the domestic digital market because of excessive regulation and diverse business help work around regulations.Ultimately leading to trust building as well as competitive.

3. The structure of the company is complex and growing globally with many divergent e-commerce trading relationships. Is the complexity a strategic asset or a liability that will impede the realization of strategy?

Expansion and complexity are assets necessary to expand functionality and the potential user base.To reach global expansion and complexity are the key assets for the growth.

4. A key factor enabling Alibaba to grow rapidly is the labyrinth-like internal structure that is complex when compared to most business models. What is the key to harmonizing the various businesses into a cohesive company?

developing businesses that focus on adjacent markets and sharing capabilities across the business group as the focus on adjacent markets is must for growth and leading from the front.

5. To dominate the global e-commerce market, Alibaba has an absolute demographic advantage because

the location in Asia gives Alibaba easy access to the greatest number of consumers and it provides Alibaba to becom marketplace of the world.