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Introduction of the Six Forces on Alibaba

UVI-Online Course-Business Management

BUSS1120
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Introduction

Alibaba Group was established in 1999 by 18 people led by Jack Ma, a former English teacher from
Hangzhou, China. From the outset, the company’s founders shared a belief that the Internet would level
the playing field by enabling small enterprises to leverage innovation and technology to grow and
compete more effectively in the domestic and global economies. Since launching its first website helping
small Chinese exporters, manufacturers and entrepreneurs to sell internationally, Alibaba Group has
grown into a global leader in online and mobile commerce. Today the company and its related companies
operate leading wholesale and retail online marketplaces as well as businesses in cloud computing, digital
media and entertainment, innovation initiatives and others. In this paper I will enlighten on how Alibaba
contributes to the six forces of Economic, Socio-cultural, Political, Competitive Legal and Regulatory and
Technological Forces.
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Table of Contents

Economic Forces…………………………………………………………………………….….4

Socio-Cultural Force………………………………………………………………………….....5

Political Force……………………………………………………………………………..…….6

Competitive Force………………………………………………………………………………7

Legal and regulatory force………………………………………………………………………8

Technological Force…………………………………………………………………………….9

Conclusion………………………………………………………………………………………10

References……………………………………………………………………………………….11
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Economic Forces on Alibaba

Economic forces are the factors that help to determine the competitiveness of the environment in which

the firm operates. These factors include: Unemployment level. Inflation rate. Fiscal policies. Moreover,

Alibaba has been dealing with economic forces on a business level where it helps to create jobs for

persons who are unemployed helping them to earn a lawful income. Alibaba has created over 40 million

jobs in 2018 therefore reducing the unemployment rate all over the world. Sadly during the corona virus

in 2020, there was a drop in some jobs for person working for Alibaba in china. China’s official urban

unemployment rate rose to 6.0% in April with that from 5.9% in March, according to figures released by

the National Bureau of Statistics.

Each Employee is responsible for knowing and understanding the policies and guidelines slated with

Alibaba. Employees with questions are encouraged to ask them; Employees with ethical concerns are

encouraged to raise them. Employee questions and provides guidance on how to comply with this Code,

related to Alibaba Group Policies and Guidelines and Alibaba Group's other standards of business

conduct and how to report any suspected misconduct. An Alibaba Group spokesperson said that was an

issue, saying that a rapid upgrade in the quality of goods sold online was difficult to control for in the

index. Alibaba spokesperson also said that different seasonal patterns of spending online, as well as

promotions and sales, accounted for some of the fluctuation of the firm's Index. The economic forces

have raised concerns to Alibaba that there will be challenges ahead for their business. These economic

forces can also affect the competitive strength and profitability of the company.
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Socio-Cultural Force

Socio-cultural forces are the larger scale forces within cultures and societies that affect the thoughts,

feelings and behaviors. Such factors include: Attitudes, Child rearing practices, Cultural deprivation.

The type of business Alibaba ventures in can have an impact on the socio cultural impact force on the

company. There are persons of different cultures projecting business with Alibaba and some of their

attitude may deprive the business down fall. This is so when a product is being market and not what a

customer requires. Business reviews can fall from the attitude of the customers when they are not

satisfied. Views from other customers could deter other customers to not purchase products.

The way some person were raised and how successful they would impact Alibaba as a company draws to

the child rearing practices for the socio-cultural force on Alibaba.. Some Customers are very skeptical to

who they purchase their goods from online with Alibaba, this is an act of cultural deprivation. Some

persons will have inferior norms, values, skills and knowledge about people on a whole when doing

business or trusting them with their money as a sense of loyalty. Cultural deprivation has its

disadvantages on cultural capital for Alibaba which results in primary socialization. Cultural deprivation

will also define how culturally deprevied Alibaba would be for their business.

 
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Political Force

Political forces speak to forces in the marketing environment that are shaped by elected (and sometimes

appointed) officials that impact the decisions made by a business organization. Government officials can

enact laws that could cause serious harm to specific business sectors such as Alibaba.

Political factors have acquired a significant role in the 21st century with Alibaba Company. Around the

world, the political forces on Alibaba Company are playing a very important role in the context of

business. Governments are now playing a more active role in terms of oversight and control of

businesses.

The technology industry specifically is facing higher control. The Chinese government encourages

regional businesses which have proved beneficial for businesses like Alibaba which have seen very fast

growth. Political forces are affecting international businesses in other ways too. Trade relationships

between countries also affect international trade. The trade relationships between America and China

have reached the point of being the worst. This is not beneficial for Chinese businesses operating in

America. Moreover, it can be a hurdle to expansion of Alibaba in the European countries.

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Competitive Forces

Competitive forces are the factors and variables that threaten a company's profitability and prevent its

growth. Every Business always have a sever amount of competition, when venting in the same business.

Moreover; Alibaba has a number of companies that it competes with on a day to day basis. For eg

Amazon, Walmart, eBay and much more both companies seem to be doing the same online retail business

to please customers all over the world. Alibaba however; seems to have a higher number of customers

patronizing their online stores because of the larger quantities they have to offer with their products.

There are five competitive forces that seem to strike Alibaba as an online retail business with lots of

competition. Some of these forces include: Threat of potential entrants, bargaining power of buyers,

bargaining power suppliers, threat of goods and services and power of complimentary goods and services.

All these five forces speak volume for intensity industrial rivalry. This act weighs for a number of factors

such as brand loyalty, production capacity and much more. Alibaba will have to pay attention to when

their customers have a low brand loyalty which will not cause the company any risk. The more

competitors the more intense the rivalry, companies are selling very similar products are like to be more

competitive. When there is excess production capacity available in Alibaba, there is a higher chance of

increased rivalry.
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Legal and Regulatory forces

Law and legal factors have also acquired a larger role in the context of business. Especially, for the large

and international businesses the challenge is bigger. Compliance is essential since world ver legal

agencies have grown the level of oversight of businesses so that they adopt responsible practices and are

held accountable for everything they do. Non-compliance can result in heavy fines and the fines can be a

major share of a company’s net revenue. Apart from product quality and environment, there are other

laws related to labor and other things which also affect businesses in their domestic markets as well as

internationally. While Alibaba has not had any significant legal issues in the past, it always pays to be

careful.

The political, legal, and regulatory forces of Alibaba business environment are closely interrelated. …

Federal, state, and local regulatory agencies usually have power to enforce specific laws and some

discretion in establishing operating rules and drawing up regulations to guide certain types of industry

practices for their business.

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Technological Forces

Technological forces influence Alibaba organizations in several ways. A technological innovation can

have a sudden and dramatic effect on the environment of a firm. Firstly, technological developments can

significantly alter the demand for Alibaba organizations or industry's products and services. Moreover

changes in a technology can affect the business of Alibaba operations as well as its products and services.

These changes therefore might affect processing methods for their online retail store, raw materials and

service delivery for customers and the business on whole. The rate of technology can offer major

opportunities for Alibaba to improve goal achievements or even threaten the existence of their business.

Alibaba as an online business allows its suppliers to have access to a computer where customers would

purchase from them online. Technology has progress for the speed of the company and their fast online

sale option.

The effect of technology can run through competition in this business industry and also deals with other

chapters. Technological Forecasting can help protect and improve the profitability and overall growth of

the business in continuing to boast successfully

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Conclusion

Alibaba group is a leading Chinese ecommerce brand, and these six forces constantly contribute to the

over growth of the business. They have made a signignificant improvement to what the business

processes and how their fiscal financial profits will intern mark general improvement for their business.

The company is in the strong financial position and its sales and revenues have grown faster within the

past couple years. Being tackled by these forces Alibaba works its way around where their business will

still be at a stand point, making it a number online retail store that offers quality products in large bulks.

This is a competitive advantage for them that no other business platform provides. Finally the rates

offered by Alibaba are less than their competitors a major drawback that adds to the intervention for the

implementation for these six forces.

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References

 Sources:
 Alibaba Annual reports 2018 & 2019
 https://www.alibabagroup.com/en/ir/AlibabaGroup_ESG_Report_2018.pdf
 https://statstic.com/category/alibaba-group/
 Aguilar, F J (1967). Scanning the Business Environment. Macmillan.
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