Team Project.

1. Team 7
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy1

2. Vision
We aim to be pioneers in the revolution of global
trade. We envision that our unique team will
build the future infrastructure of commerce,
which will serve our clients in parts of three
different centuries.
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy2

3. Mission
Alibaba’s Mission is to make it easy to do
commerce anywhere:
We operate leading online and mobile marketplaces
in retail and wholesale trade. We provide
technology, logistics, payment platforms and
fulfilment to enable consumers and merchants to
conduct commerce in the most convenient and
reliable way possible.
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy3

4. Strategy
Connect suppliers and buyers globally to become
the worlds largest online marketplace in terms
of turnover in the next five years. Through an
innovative, integrated and reliable platform we
will create consumer trust.
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy4

5. Core Values
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy5

6. Superior Performance Cycle
Core
Competencies
• Culture
• Deliver on
Promises
Firm Activities
• Marketing
• Supliers &
customers
• Technology
• R&D
Competetive
Advantage
• Network Size
• Econ of Scale
• Econ of
Scope
Superior Firm
Performance
• International
Presence
• Largest
e-marketplace
Resources
• Network
• Products
• Scope/Costs
Capabilities
• Easy Pay
• Easy Delivery
• Low Price
Rethink, Reinvest, Hone, Upgrade
Rethink, Reinvest, Hone, Upgrade

7. SWOT Analysis
STRENGTHS:
• Leading position as the largest internet
market
• Brand popularity & investor trust
increasing internationally
• Good relations with Chinese Government
• Expanding network orchestrator –
increases customer traffic and value
• Connected with own payment system
(ALIPAY)
WEAKNESSES:
• Easy to imitate business model
• Counterfeits
• Influenced by Chinese Government
• Chinese culture is not innovative enough
• Disorderly business platform
• Slow delivery time
OPPORTUNITIES:
• Government Support / Regulations
• Growing internet penetration
• Increasing delivery efficiency
• SMEs moving away from own web shops
towards online marketplaces
• Strong economic & Industrial background
THREATS:
• Government Regulations / Nationalization
• E-commerce competition
• Possible M&A of other players
• Global Economic Crisis
• Growth of M-commerce
• Disruptive new Technology (e.g.: A.I.)
• Lawsuits from brand holders
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy7

8. PESTEL: CN e-Commerce
STRATEGIC GROUP
INDUSTRY
ECONOMIC
• Growth Rate
• Levels of employment
• Interest Rates
• Inflation
• Currency exchange rate
SOCIAL/CULTURAL
• Demographics
• Education
• Immigration
• Emigration
TECHNOLOGICAL
• Online payment
• 3D printing
• Internet penetration
ECOLOGICAL
• Low Impact
LEGAL
• Chinese vs. US
government
• IP rights protections
• IP taxes
• Privacy
• Consumer rights
POLITICAL
• Strong Relationship with Government
• Pros – access and strength in CN
• Cons – Limits to other countries

9. Porter’s Five Forces
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy9
Rivalry
(HIGH)
Threat of Substitute
(HIGH)
Threat of New Entry
(LOW)
Power of Suppliers
(LOW)
Power of Buyers
(HIGH)
- Many small suppliers
- Margin matters
- Need many customers
- Capital Facilities
- Government
- Scale / Volume
- Many buyers
- Price matters
- Commission from seller
- Offline Retail
- Disruptive technologies
- Social Commerce
- M-Commerce
- Logistics
- Trust
- Price

10. ERRC Strategy Canvas
00
01
02
03
04
05
OfflineInfrastructure(Shops,
Warehouses)
ProductDescripon/Quality
CustomerSupport&OtherServices
InnovaveMarkeng/Promoons
LoyaltyProgram/RetenonRate
Convenience/CheckoutProcess
Fast&ReliableDelivery
Brandawareness
Personalizaon/BigDataAnalycs
Price(Lowest–5,Highest–1)
Assortment/Quantyof
Products&Sellers
ProductOfferingEvaluaon(0—5)
Compe ng Factors
Offline Malls
(Raffle City,…)
Chinese
Online Malls
(Tmall, JD…)
Interna onal
Online Malls
(Amazon,…)
Alibaba

11. Strategy Map
C2C B2C B2B
Aliexpress
Alibaba
Ebay Amazon
Taobao
DomesticInternational
Made in
CN
1688
Groupon

12. VRIO MODEL
YES YES YES NO
Resource: Database of Sellers & Buyers
• Ownership
• Counterfeits
• Doesn’t control
affiliated
businesses
TEMPORARY
COMPETITIVE
ADVANTAGE
• Unique
Database
• Well
recognized
platform
• Brand
• Relationships
• Data
• Scope of
business

13. AFI Model: 3D Printers
ANALYSIS FORMULATION
IMPLEMENTATION
Future Scenario:
Emerging of 3D printer at home
• Install innovative system
• Increase Marketing (online, newsletter)
• Grow finance services
Strategic Plan:
• System to trade IP
• Build a Bank
New Vision:
• Become Global leader
in 3D/IP trading
Strategic Option:
• Highlight 3D printed
products
• Analyze non-3D market
• Create new AFI
• Push Finance Services
Feedback loop:
Monitoring
Performance
Activate
New Plan
If necessaryDiscard Dominant Plan
If necessary
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy13

14. AFI Model: M&A Amazon & JD.com
ANALYSIS FORMULATION
IMPLEMENTATION
Future Scenario:
Amazon & JD.com M&A
• Strategic international partnerships
• Open foreign headquarters
and sales offices abroad
- International supplier
relationships
- Sustain relationships
in China
- Compete on cost level
- Improve delivery system
Strategic Option:
• M&A with eBay
• Create new AFI
• Push Finance Services
• Vertical Integration
Feedback loop:
Monitoring
Performance
Activate
New Plan
If necessaryDiscard Dominant Plan
If necessary
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy14

15. Recommendations
• Strategic alliances for consumer trust
• Highlight Vision, Mission, and Strategy
• Based on strategy map – clear positioning
• Take control over ecosystem
• Improve delivery speed
• Overall Alibaba is doing well and only minor
adjustments needed
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy15

16. Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy16
Q&A
Alexander Kudasov akudasov2015@student.hult.edu
Chesterphil Tangga-An ctangga-an2015@student.hult.edu
Jon Grecu jgrecu2015@student.hult.edu
Kate Embley kembley2015@student.hult.edu
Lina Olea lolea2015@student.hult.edu

17. Alibaba Group: Zoom Out
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy17

18. Core Competence Market Matrix
Existing Market New Market
NewCompetencies
• Delivery Speed
• International Delivery Reliance
• Alliances/Creating Related
Diversification
• Disruptive Technology
• Forward Integration into
Smartphones
OldCompetencies
• Ease and Speed of Payments
• Lower Prices
• Scale/Product Offerings
• Entering International Markets
• Trading Physical Commodities
ALIBABA.com

19. Organizing Economic Activity:
Firm vs. Market
Firm «Make» Markets «Buy»
Advantages
• Command and Control
o Flat
o Hierarchical Lines of
Authoroty
• Coordination
• Community of Knowledge
• High-Powered Incentives
• Flexibility
Disadvantages
• Low-powered Incentives
• Principal-agent problem
• Administrative Costs
• Search Costs
• Opportunism: Hold-Up
• Incomplete contracting
o Specifying and Measuring
Performance
o Information Assymetrics
• Enforcement of contracts
ALIBABA Marketplace
• High Market Orientation
• Vendors can design
sales as they want
• Buyers can look for
sellers how they want
• Through Internet and
optimization Alibaba
tackles Search Costs
• Not Involved in
Buyer/Seller Contract
• Merely a «Middleman»

20. Alibaba Group: Zoom Out
Alibaba Group Core
- Alibaba.com
(Global Wholesale – B2B)
- 1688 (China Wholesale)
- Aliexpress
(Global Wholesale –
[CN]B2C[World]
Related Diversification
- China Smart Logistics
-Alimama (Marketing Services)
- Juhuasuan (Group Markeplace)
- TMALL (High End Brand Marketplace)
Forward Vertical
Integration
- Aliyun (Cloud Computing)Unrelated Diversification
- Weibo (CN Twitter)
Backward Vertical
Integration
- Alipay (Payment System)
Ant Financial Services Group