PRESTIGE INSTITUTE OF MANAGEMENT AND

RESEARCH, INDORE
(An Autonomous Institute Established in 1994, Accredited Twice Consecutively with Grade ‘A’ NAAC (UGC))
(Affiliated to Devi Ahilya University & Programs are approved by AICTE and State Government)

Session: 2019-21
CASE STUDY
ON
ALIBABA

GUIDED BY: SUBMITTED BY:

NAME: DR. SUYESH JHAWAR NAME: AGAMJOT SINGH

DESHNA KOCHAR

MRANALI JAIN
 INTRODUCTION
Alibaba is the world's biggest e-commerce platform. Over 420 million people scooped up $485
billion worth of stuff last fiscal year on Alibaba's sites. The company went public in 2014,
raising $25 billion -- more than Facebook -- in the largest offering in the history of the New
York Stock Exchange. Here are key things to know:

WHAT IS ALIBABA?
Alibaba's e-commerce platforms cater to both Chinese and global consumers, though the
majority of its transactions are generated domestically. At its heart is Taobao, a Chinese
consumer-to-consumer website much like eBay. Tmall offers merchants official storefronts to
consumers in China. Alibaba and Ali Express connect businesses in China with buyers around
the world.

WHAT ELSE DOES ALIBABA DO?

Alibaba has a financial affiliate that also runs a leading online payment platform called Alipay.
Alibaba has stakes in Sina Weibo, China's version of Twitter, as well as Youku Tudou, a video
platform akin to YouTube, China's dominant ride-hailing app and an investor in Uber rival Lyft
in the U.S. It has made investments worth hundreds of millions of dollars each into various
sectors including Singapore's postal service, the photo- and video-sharing app Snapchat,
newspaper publisher South China Morning Post group and upstart Chinese smartphone maker
Meizu. It's building up a cloud computing and internet infrastructure business, setting up data
centers in the U.S. and elsewhere in the world.
Alibaba Group is the largest online and mobile commerce company in the world in terms of
gross merchandise volume (GMV) in 2013, according to the IDC GMV Report.

They operate their ecosystem as a platform for third parties, and they do not engage in direct
sales, compete with their merchants or hold inventory.
Alibaba Group owns the largest online shopping platform Taobao.com on both PC and mobile.
Tmall is a more premium version of Taobao mainly for (international and domestic) brands and
retail platforms.

One B2B side, Alibaba runs 1688.com, local wholesale marketplace, and alibaba.com, China’s
largest global online wholesale marketplace.

Ali Express is Alibaba’s cross border e-commerce website enabling consumers worldwide to
buy direct from Chinese exporters.
Alibaba Group Companies and Affiliated Entities:

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 Alibaba.com

Founded in Hangzhou in eastern China, Alibaba.com has four marketplaces. The company’s
English language international marketplace (www.alibaba.com) serves to bring together
importers and exporters from more than 240 countries and regions. The China marketplace
(www.1688.com) is developed for domestic business-to-business trade in China. It also has a
Japanese marketplace (www.alibaba.co.jp), which is focused on facilitating trade to and from
Japan through an associated company. In addition, Alibaba.com offers a transaction-based
wholesale platform, Ali Express (www.aliexpress.com), which allows smaller buyers to buy
small quantities of goods at wholesale prices.

Taobao Marketplace

Taobao Marketplace (www.taobao.com), previously known as Taobao, is the biggest C2C

online shopping platform in China. Founded in 2003, it provides a wide variety of product
offerings. The company claims that it served more than 370 million registered users as of the
end of 2010.

Taobao Mall

Taobao Mall (www.tmall.com) was introduced in April 2008 as a dedicated B2C platform to
complement Taobao’s C2C marketplace and became an independent business in June 2011. It
is now a major online shopping destination for quality, brand name goods in China.

eTao

eTao was beta-launched by Taobao in October 2010 as an independent search engine and
became an independent business in June 2011. It is the most comprehensive shopping search
engine in China, covering product results from all major Chinese online shopping platforms.
Alipay

Launched in 2004, Alipay (www.alipay.com) is a third-party online payment platform.

According to analyst research report, Alipay has the biggest market share in China. The
company claims it had more than 550 million registered users as of the end of 2010. In China,
Alipay partners with more than 65 financial institutions including Visa and MasterCard to
provide payment solutions for Taobao as well as more than 500,000 Chinese businesses.
Internationally, Alipay helps more than 300 merchants and sellers worldwide sell directly to

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 consumers in China.

Alibaba Cloud Computing

Alibaba Cloud Computing aims to build an advanced data-centric cloud computing service
platform, including e-commerce data mining, high-speed massive e-commerce data
processing, and as well as data customization. It was established in September 2009 in
conjunction with the 10th anniversary of Alibaba Group.

China Yahoo!

In October 2005, Alibaba Group formed a strategic partnership with Yahoo! Inc. and
acquired China Yahoo! (www.yahoo.com.cn), which is a Chinese portal with a focus on
essential Internet services including news, email and search.

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Development History:

 In December 1998, Jack Ma and other 17 founders released their first online
marketplace named "Alibaba Online".
 From 1999 to 2000, Alibaba Group raised a total of US$25 million from Soft Bank,
Goldman Sachs, Fidelity and some other institutions.
 In December 2001, Alibaba.com achieved profitability.

 In May 2003, Taobao was founded as a consumer e-commerce platform.

 In December 2004, Alipay became an independent business.
 In October 2005, Alibaba Group took over the operation of China Yahoo! as part of
its strategic partnership with Yahoo! Inc.
 In November, 2007, Alibaba.com successfully listed on the Hong Kong Stock
Exchange.
 In April 2008, Taobao established Taobao Mall, a dedicated B2C platform, to
complement its C2C marketplace.
 In September 2008, Alibaba Group R&D Institute was established.
 In September 2009, Alibaba Group established Alibaba Cloud Computing in
conjunction with its 10-year anniversary.
 In May 2010, Alibaba Group announced a plan to earmark 0.3% of its annual
revenues to fund environmental protection initiatives.
 In October 2010, Taobao beta-launched eTao as an independent shopping search
engine.
 In June 2011, Alibaba Group reorganized Taobao into three separate companies:
Taobao Marketplace, Taobao Mall and eTao.
 In 2013 to open traditional brick and mortar retail outlets in partnership with Chinese
real estate company Wanda Group.
 In January 2017, Alibaba and the International Olympic Committee jointly
announced an $800 million deal that would last until 2028 in where the company
would sponsor the Olympic Games.
 In May 2019, Bloomberg cited sources familiar with the matter as saying that Alibaba
was considering raising $20 billion through a second listing in Hong Kong.

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Alibaba Group’s
Mission
Alibaba Group’s mission is to make it easy to do business anywhere. Alibaba Group operate
leading online and mobile marketplaces in retail and wholesale trade, as well as cloud computing
and other services. Alibaba provide technology and services to enable consumers, merchants, and
other participants to conduct commerce in our ecosystem.
The Alibaba culture is about championing small businesses. They operate an ecosystem where all
participants – consumers, merchants, third-party service providers and others – have an
opportunity to prosper.

Alibaba Group's Values

Six values are:

Customer comes first Customers are everything

Teamwork and Cooperation Team interests are always ahead of individual interests
Embrace changes Go beyond yourself and welcome changes
Integrity Honest and upright, honoring commitments
Passion Never give up and stay optimistic
Honoring your job Perform the extraordinary with a professional attitude and
an ordinary mind

Competitors Analysis:
Global Sources
Global Sources is a Hong-Kong based business-to-business (B2B) Media Company that
facilitates trade between Greater China and the world. It provides sourcing information to
volume buyers and integrated marketing services to suppliers. A wide range of media is used
to connect suppliers and buyers worldwide – online portals, magazines, research reports, and
trade fairs.
Global Sources advantage-
The promotion of more channels and market research reports and organize their own
event.

Promote experienced Global Sources has been done for 38 years, is the old platform
to promote and experience.

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 Has its own fixed base of buyers, manufacturers

Global Sources disadvantage-

Less well-known domestic brands than
Alibaba. Less number of suppliers than Alibaba
groups.
Publicity and advertising no better than Alibaba channels.
If the three channels at the same time promoting the relatively high cost.
Alibaba positioned to service small and medium-sized, Global Sources in the large
enterprises (SMEs are more).
Apart from the "world managers" journal, other magazine subscription needs to
reduce the number of the issue. With the rise of e-commerce, CD-ROM and paid
magazines will be gradually out the stage of history.

Made-in-China.com
China manufacturer directory and China products catalog, providing trade leads among China
factory, manufacturers, suppliers, and global buyers
Made-in-China.com advantage-
It is under the Focus Technology Co. ltd, has financial strength.
English name is made-in-china, a good Web site optimization, to some extent the
search engine to facilitate search.
The prices are cheaper.
The use of agent systems. Rapid accumulation of short-term source of funds to
expand the business scale.
Made-in-China.com disadvantage-
Less well-known domestic brands than
Alibaba. Less number of suppliers than Alibaba
groups.
Publicity and advertising no better than Alibaba channels.

Agents management uneven, and sometimes have a negative impact on Made-in

China.com services.

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 Competition
For most industries, this is the major determinant of the competitiveness of the industry.
Sometimes rivals compete aggressively and sometimes rivals compete in non-price
dimensions such as innovation, marketing, etc. The most competitive firms of Alibaba.com
are the search-websites such as Baidu.com and Google.com. The potential customers may
search the results just through these free and simpler websites but not through the B2B e-
platform, which will lead Alibaba.com to lose lots of profit.

Business Model:

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Business Model:

Business Model describes details of planned activities in business that involve with purpose,
offerings, strategies, infrastructure, organization structures, trading practices, operational
processes, and policies designed to result in profits in a marketplace.

Business model is very important because business model is a main component of business
plan and every good business must have a business model. More than that, for independent
study and most of case study, student has to be able to identify the components of business
model.

Business Plan:

Business plan is a formal statement that describes objectives of a company and how the
company will achieve those objectives. And business plan also describes the company’s
business model.

E-commerce business model:

E-commerce business model aims to use and leverage unique qualities of Internet and Web.

Key elements of business model:

Business model composes of different parts of activities that organizations use to earn
revenues and there are 8 key elements of business model as following: (for most of the case
study, students need to identify the following key elements)

Before you start any business you should take in consideration to a few pointers to kick start
your business properly and make it a successful one.

8 Key elements of a business model that you need to pay:

1) Value Proposition
Define how a company’s product or service fulfils the need of customers.
Examples of successful value propositions
Personalization/ Customization
Reduction of product search, price discovery costs
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 Facilitation of transactions by managing product delivery
2) Revenue Model
Define how the firm will earn revenue generates profits and produce a superior return on
invested capital

Major types:
 Advertising revenue models: CNN.com
 Subscription revenue models: MATCH.com
 Transaction fee revenue model: eBay, E-Trade, Hotwire
 Sales revenue model: Amazon, LLbean, Gap.com
 Affiliate revenue model: E-pinions, Banner Exchange, Edmunds à sends traffic to
another website

 Example:

 What would be the revenue model for Google?

AdWords and AdSense

 What would be the revenue model for HP?

Sales of products (PC) and service

 What would be the revenue model for Microsoft?

Software and service

3) Market Opportunity
Refers to a company’s intended market space and the overall potential financial
opportunities available to the firm in that market space.
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4) Competitive Environment
Refers to the other competition selling similar products and operating in the same
market space
-Influenced by
 How many competitors are active
 How large operations are
 The market share for each competitor
5) Competitive Advantage
Achieved when a firm can produce a superior product and/or bring a product to market,
at a lower price than most, or all, of their competitors.
-Types of competitive advantage:
 First mover advantage
 Unfair competitive advantage
6) Market Strategy
Plan that details how a company intends to enter a new market and attract strategy
7) Organizational Development

Describes how the company will organize the work that needs to be accomplished
8) Management Team
 Employees of the company responsible for making the business model work
 Strong management team gives instant credibility to outside investors
 There are many types of e-commerce business models let’s take a look at all of them
and what are the difference.

Business to Business Models (B2B):

E-distributor
 Supplies products and services directly to individual businesses
 Owned by one company seeking to serve many customers
E-procurement
 Creates and sells access to digital electronic markets
 B2B services providers is one type
 Application service providers: a subset of B2B service providers
Exchanges
 Electronic digital marketplace where suppliers and commercial purchases can conduct
transactions

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  Usually owned by independent firms whose business is making a market
Industry Consortia
 Industry-owned vertical market place that serve specific industries
 Horizontal market place, in contrast, sell specific products and services to a whole
range of industries
Private industrial networks
 Digital networks designed to co-ordinate the flow of communications among firms
engaged in business together
 Lobbying: influence the government as a group à Public policy access
Business models in emerging E-Commerce Areas
 Consumer to consumer: Provides a way for consumers to sell to each other, with the
help of online market maker (EBay)
 Peer to peer (P2P): Link users, enabling them to share files and common resources
without a common server (Kazaa, Cloud mark)

 M-Commerce: E-commerce business models that use wireless technologies (EBay

Mobile)—To date, m-commerce is a disappointment in the united states however,
technology platform continues to evolve.

Ad Server Market Structure:

Given below is a list of top ad server vendors in 2008 with figures in millions of viewers
published in an Attributor survey. Since 2008 Google controls estimated 69% of the online
advertising market.

Vendor Ad Viewers (Millions)

Alibaba 1,118

Double Click (Alibaba) 1,079

Yahoo! 362

MSN (Microsoft) 309

AOL 156

Adbrite 73

Total 3,087

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.

Market Strategy:

Market strategy is a detailed plan that describes a process of how a company intends
to enter a new market and attract customers, and concentrate on how its limited resources can
increase sales and achieve a sustainable competitive advantage by fulfilling the customers’
satisfactions. Best business concepts will fail if not properly marketed to potential customers.

Market Strategy is related to:

How do you plan to promote your products?

How do you target your customers?

Organizational Development

Organizational Development can be described as a plan from top-down that relates to how a
company organizes beliefs, attitudes, values, and structure of people and the company itself
for the positive changing or to accomplish the work. In order to have a good organizational
development, the company has to understand the nature of its structure and culture of the
company first, and then the company will know what aspects of the organization need to be
improved to get the work done and to achieve the success.

B2B Electronic Exchanges:

Public e-marketplaces (public exchanges): Trading venues open to all interested

parties (sellers and buyers) and usually run by third parties

Exchange: A many-to-many e-marketplace. Also known as e-marketplaces, e-

markets, and trading exchanges

Market maker: The third-party that operates an exchange (and in many cases, also
owns the exchange)

Systematic sourcing: Purchasing done in long-term supplier–buyer relationships

Spot sourcing: Unplanned purchases made as the need arises

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 Vertical exchange: An exchange whose members are in one industry or industry
segment

Horizontal exchanges: Exchanges that handle materials used by companies in

different industries

Dynamic pricing: A rapid movement of prices over time, and possibly across
customers, as a result of supply and demand

Process that results in dynamic pricing in most exchanges includes

a company posts a bid to buy a product or an offer to sell one

Buyers and sellers interact with bids and offers in real time
A deal is struck when there is an exact match between a buyer and a seller on
price, volume, and other variables such as location or quality

The deal is consummated, and payment and delivery are arranged

Problems with private exchanges

Transaction fees—required to pay transaction fees with existing
customers sharing information—do not want to share business data with
competitors Cost savings—not great enough to attract buyers

Recruiting suppliers—lose direct contact with customers

too many exchanges

Supply chain improvers

Companies want to streamline their internal supply chains, which requires
integration with internal operations instead of “plugging in” to an exchange’s
infrastructure

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Impacts of Electronic Business

The Internet has changed the way we conduct business and the way we see the world and
ourselves in it. It has rewritten the rules of business and transformed many industries (i.e.,
book, travel, music, accommodation, internet phone, real estate, among many other

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ALI BABA: - CASE STUDY