Question

Kindly answer Question 1-4 with well structured paragraphs.

Alibaba-China's Ecommerce Giant: Challenging Amazon? TODAY, ALIBABA GROUP is the largest Chinese ecommerce company. In the original Arabic tale of Ali Baba and the Forty Thieves, Ali Baha, the poor woodcutter, opened the cave with hidden treasure by calling out the magic words "Open Sesame." Alibaba's founder selected the name to open up opportunities for small Chinese manufacturers to sell their goods around the world, with the hope of finding treasures for Alibaba's users and shareholders. Today, Alibaba is a family of ecommerce businesses, which The Wall Street Journal described as "comparable to eBay, Amazon, and PayPal all rolled into one, with a stake in Twitter-like Weibo thrown in to boot." The Alibaba Group comprises four primary portals: Taobao, Tmall, Alibaba.com, and Aliyun (now AliCloud). Hundreds of millions of users access the sites, and millions of businesses rely on the portals to connect them with potential buyers. Taobao is Alibaha's flagship online marketplace, a consumer-to-consumer retail platform with 7 million sellers offering more than 800 million items. Just like Ali Baba in the folk tale, Alibaba had humble beginnings. In 1999, a former English teacher named Jack Ma started the company with a team of 18 in his apartment in Hangzhou, a city some 100 miles southwest of Shanghai. His timing couldn't have been better, as the internet was just beginning to take hold in China. Since then, China has experienced explosive growth in internet users (see Exhibit MC20.1). By 2017, China's internet users had grown to more than 720 million. Alibaba rode this wave of exponential growth to major success. In comparison, the United States has some 286 million internet users (less than 40 percent of China's total). EXHIBIT MC20.1 China's Internet Users (millions) and Internet Penetration Rate (in percent), 2000-2018E Internet PopalationInternet Pesetration 800 700 600 60% 50% 40% 500 400 30% 300 200 100 20% 10% 0% 0/Te and 201e are estimates

Answer 1

1. I feel the Chinese didn't like the eBay's global platform. when eBay shutdown "EachNet" a Chinese firm which it acquired to enter in China. Each country has their set of requirements and needs in terms for businesses (User interface of a website when it comes to an online business). People might have felt inconvenient with eBay's global platform also, they might have felt that Global companies dominating the Chinese companies.

Non-Chinese should understand the local culture and should spend sometime to understand the peoples education levels, their likes and dislikes etc in order to be successful in a foreign market. NO single strategy can work for all countries. A business should adopt changes according to the local market needs.

2. Alibaba successfully rode the wave of Internet boom in early 2000. Also, it helped in local businesses selling their products to other through an online medium by which local businesses are able to sell more customers. More business leads to more money which obviously improved the financial status of people. It is the FIRST company which helped others to sell their products to global through ONLINE. Also, the huge Chinese population is one of the reason for more business. Alibaba has always been pioneer in adopting changes rapidly like setting up chat platform or a payment gateway. Being a Chinese company has the advantages of being local and much aware of Local internet and Government laws which helped in avoiding Government bans and securing market share.

3. SWOT

Strengths: Most valuable tech company with huge customer base. Sells almost everything to many countries.

Weakness: Branded as Chinese. Known for cheap alternatives for costly international brands. Not a well known seller in international markets other than China.

Opportunities: Everything is online now. Unlike 10 years ago, people are now ordering products from international markets if they find good value for money with better quality. So Alibaba has huge potential to become a global player.

Threats: Severely tough competition from other market players Amazon which is expanding its business rapidly. Technology companies should always adopt new market trends for its business. The moment it lost it (like slow delivery, fast processing of returning/sold goods) it will be impacted negatively.

4 (a): Alibaba should cope up with US Government laws first and then should understand the purchasing behaviour of US Citizens. It also has to understand that there will always be a preferred brand or product for a market. Alibaba should concentrate on those products first for quick market penetration. It should also spend on advertising to reach more customers and doing surveys to understand peoples perception towards the brand and business.

4 (b) China has different demographics. Unlike other countries Chinese are reluctant to learn other languages and has different needs. US companies must understand this and provide or at least try to provide what Chinese expectations and needs. Also US companies must understand the Chinese laws and purchasing power of people.

US Companies should also think about competitive pricing model. For example, no one would buy a $100 product when there is an alternative it available for $10 specially when it is locally made.