The Rapid and Continuous Growth of Alibaba Group - Book Report/Review Example

The Rapid and Continuous Growth of Alibaba Group The rapid and continuous growth of Alibaba Group, particularly of its subsidiaries in their individual fields, can be largely attributed to the thrust toward growth enforced by its Chief Executive Officer Jack Ma. Starting from the idea to apply internet technology and adapt it to Chinese commerce, a company started by a group of friends in 1998 has grown to dominate the business-2-business (B2B) enterprise and helped in promoting the viability of online shopping including the strengthening of multi-national connections. Focusing mainly on e-commerce, Alibaba Group has grown extensively to venture out into different areas of the industry maintaining to be a pioneer in each area. Aside from its principal venture, Alibaba.com and its foreign counterpart Alibaba.com.cn, the company has branched out to boast of Taobao for online shopping, Alipay for online payment, Alisoft for business management software, and Alimama for online advertising (Wulf 1). Also worth mentioning is Taobao’sZhi Tong Che service which helped Taobao reach $14 billion of the total volume of their gross merchandise in 2008 (Wulf 4). The evident potential of Alibaba group to completely dominate the online trade business reverberates from the nature and strength of each of its subsidiaries. However, the extensive independence of the subsidiariesis simultaneously a weakness that may expose the Achilles’ heel of each company, leading to a domino effect where downfall in at least one could pull all the others with it. Alibaba Group has a number of strong points that helped it in shaping its position in the market as well as sustaining its grasp in the top. CEO Ma has supported and insisted on the independence of each subsidiary. Each company within the group has its own board of director and an executive team complete with at least a president and a CFO. This formula is enforced by Ma to foster competition (Wulf 7). This is advantageous because it encourages every team to be driven not only to topple their competition within the particular niche but also to aim high in order to post the biggest growth for the entire group. The generally good employee relation of Alibaba Group is another commendable aspect of its business. A good sign of this is the establishment of its CEO of the Chief Police Officer (CPO) who directly reports to Ma. The CPO is seen as a guardian and is usually assigned to a trusted member of the business. Wulf (8) observes, “Reminiscent of Welch’s belief that people were GE’s key assets, Ma elevated the importance of the human resources function early in the Group’s history.” A great feature of Alibaba is that it is an innovator. It was a pioneer in China when internet technology was relatively at its budding stage and it dared to venture into an online business project when impersonal shopping is not only uncommon, but rather, goes against the very nature of the country’s direct shopping culture. It was a forerunner in B2B when this had been a new concept in China and today it is reaping the benefits of being the first. The company was able to address the culture issues that come with their perceived clienteles’ hesitancy to maintaining an online interaction, especially in terms of trade. Wulf (4) discusses that when Taobao opened to retailers in 2003, eBay, an already global brand, was its biggest competitor capturing around 85% of the market. However, this was a time when the total shoppers online in China represented only 1% of the entire population. WithTaobao’s direct knowledge of the market and their impulses, coupled by the leeway that was allotted by its mother company, the site ravished eBay by 2007 dominating 82% of the market’s share. Alibaba Group’s reign in China’s online trade industry may seem everlasting. But it does not take a savant to know that business quickly change and markets shift incessantly. This overconfidence is shown by Ma’s remark to stockholders of Alibaba’s public listing, “you don’t have to invest in Alibaba” (Wulf 7). This was in response to the shareholders clamor over the company’s policy of placing customers and workers first. There is nothing wrong in recognizing and ensuring the welfare of the people that form the very foundation of the company. However, it is also another thing to publicly show conceit. A balance must still be maintained to appease all the participants that makeup the company. When the company suffers financial blow, the shareholders will be the first to feel the consequences and it would not be farfetched to think that laying blame would easily fall to the CEO. Jack Ma’s public exposure could very well lead to the future growth or demise of Alibaba Group as it stands. The business decision that is imminent on Ma was delineated my Wulf (11), “Should he maintain the competition among the subsidiaries that had helped the Alibaba Group develop its leadership position in China’s e-commerce markets? Or should he promote more cooperation among the subsidiaries?” Sustaining the strategy of decentralization allows for creativity and goal-oriented executives but this does not foster growth. It is a waste of a good opportunity to converge similarly situated enterprises in a consolidated venture. Nonetheless, this could potentially leadthe subsidiaries to complacency and expose the weak links within the group. The very fact of indecision, at this stage when each subsidiary is already at its peak, reveals that there are some lapses in the executive decision-making process. Perhaps, for fear of making the same failure that is China Yahoo! Bibliography Wulf, J., “Alibaba Group”, Harvard Business School 26 April 2010. www.hbsp.harvard.edu (10 Dec. 2013). Read More