SN: 10072078
Email: huimin.1003@gmail.com
Class-code: L42 – 2014/15
Submitted on: 07/10/2014
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Alibaba Business model
Alibaba was founded in 1999 by Jack Ma, when the Internet as a concept was still new to many Chinese business even though the dot-com bubble was taking the U.S. by storm. Mr. Ma and 17 other founding members launched Alibaba.com, a trading website that connects Chinese manufacturers with overseas clients.
1. Business Value Proposition: “To make it easy to do business anywhere” (Alibaba's Mission)
e-Business OVP: Focus on helping people buy a vast variety of products at low prices without stepping into a store. It operates an “open marketplace” that connects buyers with sellers. It has created an e-commerce platform that helps small businesses as well as branded manufacturers reach consumers. It does not sell anything directly and does not own any warehouses.
2. Revenue, Pricing & Cost Policy: Revenue generated by Marketing and promotion as member companies need to pay a sum of fees in order to publish the advertisements on the Taobao.com Revenue is then share with third-party service providers. Offer premium members services at a fee. Launched Taobao in 2003, Alibaba's biggest website, is like a gigantic Chinese bazaar with about 760 million product listings from 7 million sellers. Merchants don't pay to sell products on Taobao--and that fee-free model is a big part of its appeal in China. Instead, they pay Alibaba for advertising and other services to allow them to stand out from the crowd. The advertisements from merchants appear with Taobao's product-search results and other websites like online video provider, Youku Tudou; before the video start to play it will play a 15-60 seconds of TMALL advertistment.
3. Market Opportunity: With the China population of 1,140 million in 1990. The potential pool of customers and retailers are promising. Alibaba has a deep understanding of Chinese consumers and the correct tone, approach, and product variety. The company has mastered the intricacies of Chinese regulations and how to work with state and national governments. Alibaba allows a business in the USA to find a manufacturer in China and have a range of goods produced and shipped over to USA.
4. Competitive environment: Alibaba will find it very difficult to compete with Amazon’s strong brand and well-honed supply chain and logistics skills in Western markets.
5. Competitive advantage: Alibaba has 2 distinct e-commerca sites; Taobao and Tmall. Taobao is mostly for small merchants, Tmall is designed for bigger merchants, after establish brand name some well-known brands such as Nike, Gap and Apple Inc. also joined the Tmall, which has about 70,000 merchants, charges each seller a deposit, annual fee and a commission fee on each transaction. Strength of search technoloy,and detailed product information. It also has a large stake in Sina Weibo, China's version of Twitter, and the online video provider, Youku Tudou The company has also emerged as a huge player in China's creaky financial system. To solve the problem of buyers trusting the merchants on the site, Alibaba created Alipay, which is a payment system that protects buyers if sellers don't deliver. Alipay has become so ingrained in China, that when the company launched a money-market fund, it grew to be one of the world's largest in just eight months.
6. Market strategy. Alibaba has always acted as a middleman, connecting buyers and sellers and facilitating transactions between them. While it isn't an auction company, its middleman role is similar to the one played by eBay .Alibaba’s vast e-commerce empire encompasses wholesale, retail, group buying, and payments. Alibaba now does micro lending and is taking part in the Chinese government's program to set up five private banks on a trial basis in some big cities. Run by an affiliate of Alibaba, the payment system has allowed the company to accumulate a vast amount of information on Chinese small businesses, consumers and their online transactions
7. Organization development: structured around six key themes – Customer first; The interests of our community of buyers and sellers must be our first priority. Teamwork; We believe teamwork enables ordinary people to achieve extraordinary things. Embrace Change; In this fast-changing world, we must be flexible, innovative and ready to adapt to new business conditions in order to survive. Integrity; We expect our people to uphold the highest standards of honesty and to deliver on their commitments. Passion; We expect our people to approach everything with fire in their belly and never give up on doing what they believe is right. Commitment;Employees who demonstrate perseverance and excellence are richly rewarded. Nothing should be taken lightly as we encourage our people to “work happily, and live seriously.
8. Key Management team; Joseph Tsai the Executive Vice Chairman, a member of the Alibaba founding team and has served as our executive vice chairman since May 2013. He previously served as our chief financial officer and has been a member of our board of directors since our formation. He has background in investment, management and practice law in the State of New York.
Jonathan Lu the Director and Chief Executive Officer has at different points served as the top executive officer of almost all of our key business units. In September 2004, he led a dedicated team to establish Alipay and became Alipay's first president. From 2000 to 2004, Jonathan held several leadership roles at Alibaba.com and managed its South China sales region.
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