What Competitive Advantages can ALIBABA Develop in the USA - Case Study Example

What Competitive Advantages can ALIBABA Develop in USA? Introduction Alibaba Group Holdings Limited is a public sector e-commerce based organization,which has its headquarters located in China. The key service, which the organization provides to the worldwide customers, is online shopping. Notably, the organization performs its respective operational functions in the form of considering transactions from “business to other business enterprise” (B2B), “business enterprise to consumers” (B2C) and “consumers to consumers” (C2C). Although, the organization has marked its presence in most of the countries of the world, still it lacked in expanding business in the business markets of the US (Alibaba, 2014). With this concern, the prime intent of the research paper is to determine and analyze the varied competitive advantages that Alibaba can develop while expanding its business in the US business markets. Clarification of the Problem After acquiring a brief idea about the background of Alibaba, it can be ascertained that the company has been facing certain problems or issues while enlarging its business in the US business markets. One of such issues in this regard can be inferred as the prevalence of extreme business market competition in the US e-commerce market. This is prominently because of the presence of most of the giant competitors operating in the market that include Amazon and eBay. It is strongly believed that these competitors of Alibaba have penetrated into the US business markets effectively by implementing several strategies. Moreover, Alibaba also bears the threat from the new entrants in the market, as the e-commerce industry in the respective nation is booming by a considerable extent (Manzoor, 2010). Market Situation The e-commerce industry has grown extensively in the preceding few years. Considering the extensive growth of the sector in future, it can be found that several new entrants are attempting to enter into this segment, raising business e market competition at large. Moreover, there also lay the presence of certain already existing giant companies that have extensively grasped the market share in the US through the application of appropriate strategies. It is worth mentioning that the prime reasons behind the boom in the e-commerce industry in the US are the convenience level and increased role of internet. It can be apparently in this regard that a majority of the consumers in the US prefer purchasing retail products through the use of e-commerce. It is also important to note that the US is not only growing in the B2C e-commerce segment, but also in B2B as well as in C2C sector. It is expected that by the year 2018, there would be extensive growth in the e-commerce market in the US. This certainly encourages the foreign investors to invest in the said market. One of such is Alibaba, which has been primarily focused in China (Statista, 2014). However, considering the tremendous growth opportunity in the US, the organization needs to apply certain strategies for expanding its business in the US. It is also important to note that the giant e-commerce companies in the US like Amazon and eBay have successfully enlarged their respective businesses in the respective business markets of the US through the application of several effective marketing strategies. One of such strategies in relation to Amazon can be ascertained as the acquisition of several companies. These companies include the IMDB, Exchange. Com, Bibliofind. Com, Junglee. Com, Musicfile. Com and Planetall. Com among others. The acquisition of these companies has certainly led Amazon to compete effectively with its competitors like eBay and Google (Statista, 2014). By considering the above stated aspects, the below graphical illustration portrays the expected growth of e-commerce market in the US. Source: (Statista, 2014) SWOT Analysis Strengths There are several strengths of Alibaba that encouraged the organization to invest and expand in the US business markets. One of such strengths is recognized as the profile of the company. Justifiably, Alibaba is regarded as one of the biggest e-commerce companies with possessing exceptional brand image in China and other parts of the world wherein it operates. Besides China, the organization is extremely popular in Britain and Japan along with other developed nations of the world. This significantly assists the company to develop its brand image in front of the customers globally. Moreover, the organization is also being highly effective in segmenting the products in accordance with the needs as well as the preferences of the customers. This has been one of the major strengths of the organization. Furthermore, the use of advanced technologies and facilitating the customers to find their respective required information at an ease are also duly considered to be the other prime strengths of Alibaba (Sinha, 2014). Weaknesses Although Alibaba has been highly effective in applying varied strategies that led the organization to become one of the top e-commerce companies in this modern era, still there lay certain weaknesses, which are restricting it to be the foremost global market leader in the respective industry. One of such weaknesses can be measured as the replication of the business model of the organization by the competitors. Moreover, the increasing level of complexities in a few of the operational procedures is also held liable for affecting the overall performance of Alibaba by a certain extent (Sinha, 2014). Opportunities Considering the elevated growth of e-commerce industry in the US, it will be a great opportunity for the organization i.e. Alibaba to invest and expand in this growing market. Considering the factors that the US is regarded as the wealthiest and prosperous nation of the world and the purchasing power of the people of the nation is extremely high, the opportunity of Alibaba in raising higher profitability in terms of market share is also deemed to be quite higher. Furthermore, it is also important to note that the US is one of the most populous nations in the world hence; it will provide significant opportunity to the organization in investing in the region in an extensive manner. Apart from the above stated facts, it can be ascertained that the US is one of such nations in the world, wherein most of the people use internet and possess greater knowledge of the same. With this concern, though Alibaba primarily deals with e-commerce or online business wherein internet plays an imperative part, this might bring immense prospect for the company to reap several significant benefits. Finally, it will be vital to mention that the growth as well as the development of Alibaba in a developed nation like the US will also create the opportunity of enhancing its brand image. It is being estimated that the success in the US would create the opportunity for Alibaba towards becoming a global market leader in the respective industry wherein it operates (Sinha, 2014). Threats Although Alibaba have higher growth opportunities in the US, still there lay certain threats rising from the similar market that cannot be denied from the perspective of the organization. One of such threats is the prevalence of extreme business market competition due to the presence of giant e-commerce based organizations including Amazon and eBay among others. Thus, it can be inferred in this similar concern that the threat from the giant organizations is the major cause of barrier for Alibaba in entering in the market, resulting in restricting it sustainable growth at large (Sinha, 2014). Strategy to be Developed Based on SWOT Analysis For ensuring greater sustainability and growth in the US business markets, it is quite essential that Alibaba must undertake certain strategies based on SWOT analysis conducted above (Bhardwaj, 2012). These strategies have been elaborately discussed in the following: Price The pricing strategy will be quite important from the perspective of Alibaba in order to expand its business in the US business markets. In this regard, it is essential that the organization must charge the prices for its products and/or services, which are affordable for the customers and bring higher returns to the organization. Moreover, considering Amazon to be the market leader and eBay to have significant market share in the US, it is essential that the organization must introduce a fair price for the products and/or services served to the customers (Bhardwaj, 2012). Product The modification of products is also essential from the perspective of the organization i.e. Alibaba in order to gain superior competitive position. In this regard, it is essential that the organization should segment the product according to the needs and demands of the customers belonging to the US. While analyzing the strengths of Alibaba, it can be found that the organization is highly effective in segmenting the products by taking into concern varied demographic factors. Thus, the organization can apply this segmentation and modification procedure of products based upon the segmented market of the US for attaining its predetermined business targets (Bhardwaj, 2012). Place In order to ensure long-term sustainable development in the US, Alibaba is also required to implement certain strategies that would lead towards overall development. In this regard, it is essential that the organization must target the customers in the most remote locations besides targeting the urban regions of the US. This might be owing to the reason that the people of the rural and remote areas of the US are still not being extensively influenced by the competitors of Alibaba. Thus, it is an opportunity for the organization to penetrate this segment of market and hence ensure wider sustainable development. Moreover, considering place to be an important factor, the organization should also develop its websites effectively based upon the market of the US. It is also important to note that the organization has been effective in establishing sophisticated websites and is capable to repeat the same in future (Bhardwaj, 2012). Promotion Promoting products effectively can be duly considered as a vital strategy considering the high threat prevalent in the competitive business markets of the US. It will be vital to mention in this similar concern that it is essential for Alibaba to promote its products effectively by considering the above scenario. One of the promotional tools, which proved to be highly effective, is the use of online media. The organization i.e. Alibaba can use this tool for promotion, as this will certainly aid in attracting the customers by a considerable extent. Besides these, the organization can also use several other promotional tools like television, newspaper, magazine, banner and hoarding (Bhardwaj, 2012). Budget Base on the Developed Strategies The following budget has been prepared for Alibaba based on the developed strategies elaborated in the above discussion. In order to penetrate into the business markets of the US, it has been already mentioned that Alibaba needs to undertake certain effective strategies and ensure proper execution of the same in global context. In this regard, in terms of strategies, the organization needs to encounter certain costs. The understanding of the expenses of the organization regarding the expansion in the US market and hence, preparing an affordable as well as sustainable budget would lead towards sustainable development of the organization in the new market. Budget planning is also essential in determining the feasibility of a project considering the financial strength of the organizations. This is highly applicable to Alibaba in determining its financial feasibility during the expansion process in the US markets. From the budget allocation depicted above, it can be apparently observed that the organization has the probable chance of incurring maximum costs in relation to the factor of cost of goods sold. The reason behind this can be the organization being acting as an intermediary in selling goods produced by different manufacturers of the world. It is also observed that the organization needs to spend extensive amounts relating to the conduct of promotional activities. The prime reason behind this can be ascertained as the extensive competitive market in the US. Moreover, the organization being in the introductory phase is also important to promote the products accordingly (Bloom, 2014). Implementation of Strategy The proper implementation of strategies frames an important aspect for any organization when expanding its respective business into a new country. This is also applicable to Alibaba, which holds the vision of growing in the US e-commerce market. In this regard, the organization needs to consider the three Cs of implementing strategy. These include clarification, communication and cascade that have been elaborately discussed hereunder (Sinha, 2014). Clarification of the Strategy In this implementation process, the organization i.e. Alibaba needs to clarify the strategies undertaken to all of its stakeholders especially the internal stakeholders like the employees. This would certainly lead towards the generation of clear vision of the stakeholders in parallel to the vision of the organization regarding expansion in the US. Moreover, the employees through the clarification of the strategy would be able to discover specific job roles and objectives (Sinha, 2014). Communication of the Strategy Communicating effectively is regarded as a decisive factor, which might lead towards appropriate implementation of the strategies by Alibaba. In this regard, the organization is advisable to conduct several meetings in order to implement the strategies appropriately and adequately in the desired process. Besides conducting meetings, the organization can also use blogs, message boards, emails and other mediums to communicate effectively for implementing the strategies undertaken in an associated manner. Effective communication is quite a decisive factor in making the organizations like Alibaba to move in a specific direction towards the attainment of predetermined business targets (Sinha, 2014). Cascading the Strategy Cascading all the steps in implementing the strategies of Alibaba is highly significant for attaining desired goals of the organization. The cascading of the strategies provides a realistic approach in implementing the strategies undertaken. Moreover, cascading the strategies leads to overall development of a specific direction to the organization as well as its employees. Specially mentioning, it leads to the advancement of individual objectives while implementing the strategies of the organization. Further, it leads to the reduction of confusions among the employees of the organization (Sinha, 2014). The strategy implementation process of Alibaba has been depicted in the following in the form of the following diagrammatical representation: Source: (Auctus Consulting Group Inc., 2014) There are certain barriers to an organization that might restrict in implement strategies effectively. These barriers are equally applicable to Alibaba while expanding in the US market. The underneath diagram depicts the possible barriers for the organization while implementing its strategies effectively. Source: (Bay Street Group LLC, 2014) Conclusion From the above analysis and discussion concerning the determination of what competitive advantages might develop by Alibaba in the US business markets, it can be asserted that in order to gain competitive advantage and ensure sustainable development, the organization need to undertake certain strategies and execute the same in a proper manner. From the case of Alibaba, it can also be inferred that the preparation of a feasible budget plan is extremely important for determining the feasibility of business operations. The study revealed that the giant competitors of Alibaba, being the market leaders in the US business markets, are quite efficient in performing their respective operational functions efficiently that poses a crucial threat to the organization at large. Specially mentioning, the proper implementation of effective strategies would certainly lead Alibaba towards attaining superior competitive position for which the organization needs to consider the threats and possess greater understanding of the respective market. Thus, in conclusion, it can be affirmed that the organizations requires considering the factor of maintaining financial feasibility by following the varied process of strategy implementation. References Alibaba. (2014). Categories. Retrieved from http://www.alibaba.com/ Auctus Consulting Group Inc. (2014). Implementation. Retrieved from http://auctusconsultinggroup.com/products-and-services/consulting/implementation/ Bay Street Group LLC. (2014). Strategy execution: What’s standing in your way? Retrieved from http://cpatrendlines.com/2010/11/20/the-four-big-barriers-to-strategy-execution/ Bhardwaj, H. (2012). 4 p of web marketing. India: Hersh Bhardwaj. Bloom, D. (2014). Budget planning book. The United States: Karan Kerry. Manzoor, A. (2010). E-commerce. India: Amir Manzoor. Sinha, S. (2014). Making big data work for your business. India: Packt Publishing Ltd. Statista. (2014). U.S. retail e-commerce sales from 2010 to 2018 (in billion U.S. dollars). Retrieved from http://www.statista.com/statistics/272391/us-retail-e-commerce-sales-forecast/ Read More