Technology Management at Taobao - Case Study Example

Technology Management at Taobao al Affiliation Contents Contents 2 Introduction 3 Technology Management at Taobao 4 Technology management principles in Taobao 5 Technology Forecasting 5 Technology Road mapping 6 Innovation Management 6 Business development: Partnerships and acquisition 7 Exploration and assessment of ideas 8 Refining and assessing the ideas 9 Making the decision 9 Preparing and implementing a business plan 10 Operating the business 10 Conclusion 10 Jeffery, L. 2009, Keep an eye on Taobao: Chinas massive online market, IFTF, Available from [Accessed 9 December 2014]. 13 Karim, S. 2012. Innovation, and imitation, in China. Starting Up China. Available from [9 December 2014]. 13 Laliberte, G. 2011, General Management of High Tech Companies. Odotech Inc, New York. 13 Satell, G. 2009, How to Manage Innovation, Forbes. Available from [9 December 2014]. 14 Tamara J. E et al. 2008, “Managing technology as a business strategy”. MIT Sloan Management Review, Vol. 54, pp.56. 14 Technology management Introduction Taobao is a Chinese company which was established in the year 2003. This company has since grown to become China’s largest online shopping platform. Towards achieving the fete, Taobao has had to face off with other online shopping platforms such as eBay (Kropsu-Vehkapera, Haapasalo & Rusanen, 2009). It has however performed exceptionally well to become the e-retailer with the largest market share in China. By the year 2008, Taobao had attained a user base of 62 million people. In the process it created about 99 billion Yuan worth of transaction volumes (Oliveira et al., 2012). Majority of the buyers and sellers are the Chinese people who view it as an indigenous company and therefore prefer it over other online shopping platforms that are already operational in China. Taobao is operated as a subsidiary of the larger Alibaba Group Holdings. According to Xinxing & Yanlong (2011), in the year 2008, Taobao had witnessed a transaction volume of about 99 billion Yuan. This was 135 percent increase from what had been transacted in the year 2007. In the year 2011, the transaction volumes had reached about 400 billion Yuan. This made it among the biggest online shopping avenues in the whole world. One of the major aspects that have allowed Taobao to grow and become one of the largest online shopping platforms is the company’s technology management (Garcia & Bray, 2007). At Taobao, technology is the key aspect of the business. The business relies on technology in order to display the products that it sells, to carry out the online transactions, to validate the transactions and to ensure that there is authenticity. This is the major reason why the company has employed very vast and well-designed technology management platforms that are intended to help the business continue with the growth that it has been experiencing over the few years it has been operational. This report looks at technology management methodologies and techniques that have been used by Taobao in order to streamline its operations and to get the best out of the available technology while also coming up with inventive technologies. Technology Management at Taobao Taobao, just like all other major online shopping platforms recognizes management of technology as an integral part of its operations. Technology management at Taobao is taken to be a set of management disciplines which are intended to allow this giant online shopping platform to be able to manage its fundamental aspects of technology well. The reason why the company engages in this is so that it can be able to get competitive edge over the other businesses in the market. According to Phaal, Farrukh & Probert (2001), the Chinese online market is the largest virtual or online market in the world. This is due to the fact that the Chinese population has the largest internet users in the world. As such they prefer carrying out their transactions online since it is viewed to be cheaper and more convenient. Due to the very huge potential of the Chinese market, several other industry players have invaded the market (Laube & Abele, 2005). US firms like eBay and Amazon have come into the China market to tap into it. However, Taobao has always relied on its set of management disciplines that allows it to manage its fundamental technologies to be able to stay ahead of the park. At Taobao, technology management is based on three main concepts. These include the technology forecasting, technology road mapping and invention management. All these methodologies are combined in order to allow the company to continue being ahead in the China’s online market (Rene, 2011). Taobao carries out technology management since it understands the true value of technology to the operations, profitability and growth. Taobao has recognized the continuous development of technology as something that is valuable (Rene, 2010). Technology is always changing and owing to the nature of the market and the portfolio that it operates in, there is always the need to ensure that technology development is continuous (Bodelle & Jablon, 2003). The technology management function at Taobao dictates when the company invests in a certain kind of technology and when the company is to withdraw from such investment. This is a clear indicator the technology management has be a vital part of its everyday operations and has played a very huge role in the exponential growth that it has witnessed. Technology management principles in Taobao Technology Forecasting Technology Forecasting is one of the integral aspects of the technology management at Taobao. Online retailing heavily relies on the internet and other online platforms to carry out the operations (Wolff, 2002). The selling of items at Taobao is done via the company’s online platform and this has always required constant updating to ensure that the company is using the best available technology. Technology forecast at Taobao relies on the understanding of the various characteristics of the online retailing technology. Some of the most vital characteristics of technology that the company focuses on include the technological performance of a given technology, the reliability of the technology, the accuracy and security levels (Holsapple & Sena, 2005). In carrying out the technology forecast, Taobao predicts how such characteristics will change in the future (Luftman & Brier, 2009). When doing the technology forecast, Taobao management team does not lay much emphasis on how these characteristics of technology will be achieved but rather on the effects that it has on the business and its operations. Technology Road mapping Technology roadmap is a plan that is put in place for the sole purpose of matching Taoboa’s long term and short term goals with specific technologies being put in place to help achieve these goals and objectives (Shim et al. 2002). Taobao has always put down clear plans and roadmaps that are intended to serve three major functions. The first reason why the company engages in technology mapping it to be able reach consensus on Taoboa’s needs and the kind of technologies that are required to meet these needs. The second reason why this is carried out is so that the company is able to come up with mechanisms that are needed to help in technology forecasting and development. Technology mapping is also done by Taobao to initiate and develop the needed framework that is used in planning and coordinating technological development in the company (Nayak & Ketteringham, 2006). Innovation Management During its initial years of operation, people took Taobao to be a Chinese version of Amazon or eBay. This was justified since Taobao had several similarities with these American sites. Taobao also learnt from these American sites which later became its rival in the Chinese market. Despite this being the case, Taobao has identified innovation to be a key part of its technology management. This has been witnessed by the various innovative ways that it has come up with and integrated in its operations to respond to the specific needs of the Chinese buyers. It is through these innovative ways that Taobao has been successful in the China market (Satell, 2009). Taobao views innovation to be about creating value to the customers and users of its online shopping platform (Oberholzer & Wulf, 2009). Business development: Partnerships and acquisition A partnership or an acquisition is a credible way of business diversification. The case in point is the acquisition of Tianmao by Taobao. This is a process that saw the expansion of Taobao to start offering new products and services. The expansion, which brings together a new business to consumer way of doing things, is bound to increase the revenues of Taobao to great heights. A technology partnership, which also involves the participation of suppliers involve the involvement of partners in forming collaborations that will assist them handle technology issues together. Such an arrangement is vested on whether the involved firms gain from the partnership in a productive manner (Jeffery, 2009). On looking at the current trends in Taobao, it is essential that a new business development process is put in place. A successful process will follow accepted standards of conceptualizing business ideas. A set procedure of standards allows a person to decide whether to proceed with the business or not. Such a relationship will be essential to Taobao as it will bring about focus on timely delivery, diversity and competitive costs. This will help mitigate potential uncertainty problems that are related to technology. In online marketing, there are potential problems that can result from late deliveries, making the clients lose interest in transacting with the firm. When the involved parties are involved, Taobao will be able to alleviate this problem (Hamid, Chew and Halim, 2013). In this report, the five steps to be followed are; Exploration and assessment of ideas Refining and assessing the ideas Making the decision Preparing and implementing a business plan Operating the business Exploration and assessment of ideas Taobao is mainly involved with online sales and marketing. This means that it is involved with a number of sellers and clients, and is in competition from a number of online firms as well. In this regard, it is essential for Taobao to explore the existing management strategies in place and the manner that these strategies are applied. The mode of doing business in the organization is then looked at in general and thereby coming up with new technology management methods that will ensure changes in the business models. Initiation of the new idea can be done in a number of ways. This report suggests technology partnership as the new technology management principle to be put in place by Taobao. The acquisition that has been considered for the discussion is purchase of Tianmao. In partnering with the sellers, for example, Taobao should open up communication platforms between them and the buyers, in such a way that it acts as a monitor over the transaction. This passes the responsibility of negotiating and quality to the two end partners. Taobao will not lose business as enough legal guidelines will be put in place to ensure that business takes place at Taobao (Yang & Liu, 2009). A major step in this process will be looking at the needs of Taobao that are unmet and therefore will be met through incorporation of the proposed principle. Such a decision will also require research on the acceptability levels of the product to the customers. An idea maybe novel but not required by the clients. A good example of a partnership may be with other established companies like eBay that will provide a diversification of goods given the big client base offered by the company. Refining and assessing the ideas Refining the business model will involve conducting a feasibility study, analyzing it and further refining the model proposed. In the feasibility study, Taobao will require a detailed market analysis for the product. A feasibility study will also incorporate a detailed market assessment of the economic viability of the idea. An analysis of the study will help Taobao check on the accuracy of the feasibility by comparing it with their business. This should act to determine whether the proposed technology principle to be incorporate addresses the issues noted while exploring it. Based on the conclusions of the study, Taobao should conduct a further refinement that tries to incorporate whatever is missing from the original idea. Additions may be required at this step. Taobao will require conducting this study to ensure it is aware of the advantages and disadvantages of the business. The viability of the business will be ensured through improving the legal agreement that binds the seller and the buyer. A model for enacting the legal procedure should be bestowed to the right legal consultants. Making the decision At this point, a final decision on whether to impose the changes or the additions is done. All factors that are to be encountered have been looked at in the feasibility study, thus main decisions are made here. Given that all things are positive, the new technology is put in place, otherwise the idea is absconded. The main steps involved in this phase are approval of the idea, a requirement for more research or abandonment of the idea (Tamara et al. 2008). With the legally binding document in place and Taobao having identified potential ways of opening up communication and at the same time protecting business, a decision on out rolling the plan is put in place. On assumption that existing conditions are right, Taobao considers major upgrades to the system to incorporate the new principle and business process. A good example of a monitored communication system is the aliwangwang instant messaging, a product owned by the Alibaba group. At this point, a decision to acquire a brand that will bring additional services and products is made, the purchase of Tainmao. Tianmao features thousands of brands, merchants and buyers and occupies over half of Chinese B2C marketing. The incorporation of this product into taobao thus perfectly serves the required customer base (Laliberte, 2011). Preparing and implementing a business plan Assuming the technology management principle is to be adopted, a business plan is then prepared. This is a blueprint that outlines how the business will be created. A proper plan, after creation should be aptly implemented to ensure success in the businesss (Lecture Week 6. 2014b). Operating the business This is the last and continuous process of normal business operations with the new principle already adopted in the market. The final phase of operating the business is the process of incorporating and engaging and brand awareness. Being an online business, Taobao will engage in online marketing through their various procedures and techniques (Lecture Week 6. 2014a). Conclusion Taobao has grown from a company that was viewed to be an imitation of American online selling platforms like eBay to the largest online retailer in China. This has been facilitated by technology management owing to the fact online selling relies on technology that is ever changing. Taobao recognizes that its operations, growth and profitability are very much influenced by technology. Through technology forecasting, technology mapping and innovation management, it continues to grow stake and size and this has given it an advantage over the other players in the online selling business. Technology forecasting has allowed Taobao to been able to anticipate the future characteristics of technology and thus be able to anticipate future technological requirements. Through technology mapping the company has been able to link its business requirements and the right technology. Innovation has been encouraged in the company through investing on research and development. Reference List Bodelle, J. & Jablon, C. 2003, "Science and technology scouting at Elf Aquitaine". Research Technology Management, Vol.36, pp. 24–28. Garcia, M. & Bray, O. 2007, "Fundamentals of Technology Road mapping". Strategic Business Development Department. Available from [accessed 9 December 2014]. 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