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ALI BABA
Presented By:
Tayyaba Latif
INTRODUCTION
 Alibaba was founded in 1998 by Ma with a
group of friends -18 in member
 Based in Hangzhou, it offers a host of
services promoting online trade in China
CONT.
 The group provided online
marketplaces through
 Alibaba.com:
 an international B2B marketplace that help
match China’s small business with foreign
trade partners
 Alibaba.com.cn,
 the group’s domestic B2B marketplace
CONT.
 Taobao,
 China’s largest online shopping website providing
platform for both retailers and individuals to sell
virtually anything to Chinese consumers.
CONT.
 The Alibaba Group also offered online payment services
through
 Alipay ,
 internet based business Management solutions through
 Alisoft,
 an online advertisement exchange in
 Alimama,
 and an entertainment portal in
 China Yahoo
ALIBABA GROUP HAD SIX SUBSTANTIAL BUSINESS
UNITS THERE WERE ORGANIZED AS INDEPENDENT
SUBSIDIARY .
CONT.
 During the rapid evolution of China’s E-
commerce business, Ma lunched a variety of
highly autonomous business
 to help Alibaba Group establish a leadership
position and grew revenues to $636 million
for the twelve-month period ended June 30,
2009.
OPENING OF CHINA AND EMERGENCE
OF SMALL BUSINESS
 Alibaba came into being in the wake of a two
decade of reform both political and
economical led by the Paramount leader,
Deng Xiaoping who passed away in 1997.
 The reform made it possible for China’s
Gross Domestic Product to grow at 9.5%
annual rate and its economy became the
world’s third largest when adjusted for
purchasing power.
CONT.
 Per capita income more than quadrupled,
 Foreign direct investment boomed and
 Trade increased from 10% to 45% of GDP,
making China the world’s seven largest
exporter.
CONT.
 China’s growth since late 1970s lifted
100,000,0000s of people out of poverty
 In fact china alone accounted 75% of world’s
poverty reduction.
 Ideological barriers fell and business flourished
following the reform and a series of Party’s
congress were held;
 one in 1992 and the other 1997.
CONT.
 At the 1992 Party congress, the idea of
socialist market economy was raised and
agreed, thus recognising the crucial role that
private companies can play in national
economic development.
 In 1997, it was openly acknowledge that the
private sector was an important component
of the economy
CONT.
 In 2000, Jiang called for an expansion of
party’s membership to incorporate “new
elements of the society” including private
entrepreneur
 By the mid-2000, two third of Chinese
economy was said to be in the private hands
as claimed by the Economist Magazine.
PORTFOLIO OF COMPANIES
 By 2009, Alibaba employed about 17,000
people, approximately
 70% of whom worked in Alibaba’s B2B business
 Ma was an English teacher and had first seen
the power of internet in mid-1990s
 when he travelled to US as an interpreter for a
Chinese delegation.
CONT.
 His attempt to search China in an internet
which proved futile inspired him to leave the
delegation and create a china page,
 an online directory of Chinese companies looking
to expand business in abroad.
 Ma’s passion increased, he moved to a
company established under China’s ministry
of foreign trade and economic cooperation
 its mandate is to help Chinese companies take up
“electronic commerce”
CONT.
 However, Ma continued to get excited about
Chinese online business opportunities for the
following reasons;
 there were more than 40, 000,000 small
business in China,
 many of them operate in fragmented markets,
 with limited access to communication channels
and information sources that would help them
market and promote their products
CONT.
 Small business have the difficulty in evaluating
the trustworthiness of their trading partners.
 Consequently Ma left his government work to
develop Alibaba in 1999
 A simple online platform designed to help
connect small Chinese manufacturers with
buyers, such as
 retailers, trading companies and downstream
manufacturers
CONT.
 Alibaba Group was formalised by its 18
founders led by Ma. By providing free basic
services to registered users
 By 2008, the company had migrated about
1% of its users to the value added
international Group supplier and China trust
pass membership program
CONT.
 In 2008, Alibaba increased its operating profit by
48% to 1.2 billion (about $172 million), booked a
revenue of 3 billion ($432 million), 10.5 million
registered and 1.7 million storefront
 At the end of 2008, Alibaba’s international
marketplace had 7.9 million registered users
and 970,000 storefronts while its larger
domestic marketplace had 30.2 million users
and 3.6 million storefronts
TAOBAO
 In 2003, Alibaba Group launched Taobao, an
online shopping platform for retailers and
individuals to sell goods to Chinese
consumers i.e. consumer to consumer
(C2C).
 The motivation according to Ma were:
 At the time there were only two companies in
China that understood online marketplaces.
They are eBay and Alibaba.
CONT.
 Ma was concern that eBay's power seller
might grow their business to compete in the
B2B space.
 He said he needed to stop eBay in order to
protect Alibaba.
CONT.
 At the time of the Taobao’s founding, eBay held
approximately 85% of the Chinese market,
thanks to its acquisition of the market leader
each Net.
 However, by 2007, Taobao had taken 82% of
the Chinese market, leaving eBay with 7%,
 Bao Shao, the founder of eBay , believed that
eBay stumbled partly because it migrated its
technology platform from China to USA.More
time was needed to process information as fast
reaction is crucial .
CONT.
 In 2008, Taobao introduced a new service called
Zhi Tong Che .This service let sellers bid for
keywords in exchange for preferential ad
ranking .
 In 2008, Taobao achieved gross merchandise
volume of over $14 billion through its online
marketplace and became China’s second
largest website, based on number of page view.
It represents 2% of all china’s retail volume.
ALI PAY.
 Alipay is a third-party mobile and online
payment platform, established in Hangzhou,
China.
 Alipay was launched in 2004 for supporting
Taobao.
 Alipay was critical to Taobao’s development.
• Alipay quickly became an integral part of Alibaba’s
different business
ALIPAY-ENGENDERING TRUST
 Creating Trust between vendors and customers was a
challenge in China.
 Affect (from the heart), and
 Cognition-based trust (trust from the head)
Were intertwined, even in the business.
 Through, its escrow services, Alipay held payments on behalf of
consumers until purchased goods were delivered
 Done to reduce risk
 Encourage online commerce.
CONT.
 It gained critical mass and found an increasing
number of opportunities beyond Taobao.
 IN 2005, Ma decided to separated Alipay from
Taobao and made an independent business unit.
 Reporting directly to him
 In 2008, Alipay announced that the payment it
handled reached a peak of $66 million per day
 (annualized $24 billion)
CONT.
 It’s users accounts had exceeded 100 million
 By the end of the year, Alipay had
approximately 50% of all online payments in
China
 It also executed over 4 million transaction per
day
 It became leading China’s online payment
business
 With PayPal being a global online payment
market leader
SELECTED OTHER BUSINESS
 In 2005, Alibaba bought China Yahoo, from Yahoo!
Inc
 This is one of the leading Chinese-language portal
offering search
 Email & entertainment content
• China Yahoo’s competitors were
 Baidu- share of the search market of 62%
 Google- share of the search market of 29%
• While yahoo had only 6%where as earlier it was 21%
largely because of 3721 function in which you have to
search in URL address box .The trend was shifted to
search in a search box of the website e.g. www.Baidu
.com.
ALISOFT
 2006, began incubating a new business
called Alisoft
 The intention is to provide small
business with internet-based enterprise
management software in areas such as;
 Customer relationship management
 Inventory management
 Financial management
CONT.
 The justification for Alisoft was that;
 China had over 40 million small business but
 Only 5% use enterprise management software
 While 60% of penetration rate in western world
 By January, 2007, Alisoft team sales team
started recruiting over 500,000 active users
through beta trials
CONT.
 Because of it market viability, Ma decided to
get Alisoft from incubation and established it
as a business unit, reporting directly to him
 By 2009, held 40% of Chinese enterprise
management software market and employed
approximately 500 professionals
ALIMAMA
 In 2007, Alibaba lunched Alimama
 An online advertising exchange connecting
websites and advertisers
 The rationale for coming up with this portfolio
was the desire to pioneer a “light “ model for
the online advertising market
 By 2008 employed 400 professionals and its
network had served over 3 billion advertisement
 On daily basis, Alimama connected with over 80
consumers
OWNERSHIP-IPO OF PARTIAL STAKE IN
ALIBABA’S B2B BUSINESS
 In 2006, Alibaba decided to IPO the
B2B business because it reached a
threshold of maturity
 It listed 19.25% of its B2B business on
Hong Kong stock exchange in 2007
 The IPO raised 1.7 billion
CONT.
 Alibaba public listing provided a lot of
benefits
 The recognition and publicity was valuable to
Alibaba’s B2B customers looking to attract
their own customers
 It also attracted management talent and
allow Ma to use equity based incentives to
pay managers in Alibaba.com
ORGANISATION
 Alibaba's mission statement was broad
and visionary
 To make it easy to do business
anywhere
COMPETITION OR COOPERATION
 By his own admission, Ma was a fan of Jack
Welch
 No wonder that his organisation resemble that
of GE
 Ma, like Jack Welch also believes in
decentralisation
 That is each subsidiary sets its own strategy
 His governance inspired its subsidiaries to be
leaders of their industries
 Business unit presidents must have the freedom to
do what is right for their business.
CONT.
 To encourage competition, Ma assigned
each of the Alibaba’s subsidiaries its own
board of directors and executive team
 Including a president
 A CFO and
 Operating Manager
ORGANISATIONAL EVOLUTION
OF C-SUITE
 According to Ma, our biggest challenge is
was growing from 18 to 10,000 employees
 He intimated that there is no model to imitate
 One way that he coordinated Alibaba’s
growth was;
 by adjusting the span of control
 Or the number of executive reporting directly to
him
 The head of a new subsidiary would also report
to him directly
CONT.
 As per Welch’s belief that people were GE’s
key assets, ma elevated the importance of
the human resource functions in the group
early in the group’s history
 By creating the Chief People Officer (CPO)
and having it
 Report directly to him
CULTURE AND INCENTIVES
 Despite the internal competition, Ma fostered
a certain degree of cooperation
 Ex. The C-suite and the senior managements of
its subsidiaries engaged in community building
exercises;
 Such as annual retreats with their families
 The group organisation also participated in
management training sessions
 Such as the two day session titled “what leadership
mean”
CONT.
 Ma and his senior team also came together at
Alibaba’s annual strategy review sessions
 They used these sessions to discuss and set
Alibaba’s long term strategy
 They consider complimentary organisational
changes through a bottom-up process which
had three broad steps;
 Mid term strategy review in spring
 In Fall, subsidiary presidents submitted detailed
strategic plans to Alibaba’s corporate centre
CONT.
 Alibaba’s senior management team debated
and revised these strategic plans, thus finally
agreeing to group operating plan and budget
by year end
 Alibaba’s group provided employees with
powerful incentives in form of stock option
 This helped link compensation to the
performance of the business unit.
SOME FUTURE OPPORTUNITIES
 Ma was always searching for business
opportunities
 Opportunities are generated through;
 Top-down effort- led by senior Management team
 Informal bottom-up initiatives
CONT.
 As alibaba learned more about its small
business clients,
 Ma became increasingly aware of the unmet
demand from small Chinese businesses for
loans in sizes well below the traditional
banks are interested in lending
 Ma gets market feedback from Alibaba’s sale
and technology teams
CONT.
 If Alibaba wanted to enter potentially
lucrative businesses, it faced some
significant operating hurdles like;
 Obtaining bank licence
 Establishing a specialized banking
operation group
 Raising money to meet regulatory capital
requirements
MOBILE PLATFORM
 The growth of Smartphone in in 2008, provided
millions of Chinese with affordable mobile access to
internet.
 Ma believed that these popular Smartphone would
drive online trade to new levels
 Create opportunities both for Alibaba’s members and
business units
 Ex. He envisioned Alibaba. Com’s buyers using their smart
phones
 to search for products
 Contact sellers
 Close deals anytime, from virtually anywhere in the world.
CONT.
 Similarly, sellers could post new products
online
 Search for buyers
 Communicate with buyers
 Execute transactions from their mobile
devices
INCOME STATEMENT AND BALANCE
SHEET
CONCLUSION
 There is a strong and growing consumer base
in China, and Ma hopes to tap into a part of
that growth opportunity as well Alibaba.com as
the B2B component.
 Jack Ma's success is based on hard work, a
strong consumer focus, and a sophisticated
knowledge of market needs.
 Alibaba need to adopt to the different business
and cultural constraints found in the rest of the
world.
Alibaba Group's Rapid Rise to Become China's Largest E-Commerce Company

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Alibaba Group's Rapid Rise to Become China's Largest E-Commerce Company

  • 2. INTRODUCTION  Alibaba was founded in 1998 by Ma with a group of friends -18 in member  Based in Hangzhou, it offers a host of services promoting online trade in China
  • 3. CONT.  The group provided online marketplaces through  Alibaba.com:  an international B2B marketplace that help match China’s small business with foreign trade partners  Alibaba.com.cn,  the group’s domestic B2B marketplace
  • 4. CONT.  Taobao,  China’s largest online shopping website providing platform for both retailers and individuals to sell virtually anything to Chinese consumers.
  • 5. CONT.  The Alibaba Group also offered online payment services through  Alipay ,  internet based business Management solutions through  Alisoft,  an online advertisement exchange in  Alimama,  and an entertainment portal in  China Yahoo
  • 6. ALIBABA GROUP HAD SIX SUBSTANTIAL BUSINESS UNITS THERE WERE ORGANIZED AS INDEPENDENT SUBSIDIARY .
  • 7. CONT.  During the rapid evolution of China’s E- commerce business, Ma lunched a variety of highly autonomous business  to help Alibaba Group establish a leadership position and grew revenues to $636 million for the twelve-month period ended June 30, 2009.
  • 8. OPENING OF CHINA AND EMERGENCE OF SMALL BUSINESS  Alibaba came into being in the wake of a two decade of reform both political and economical led by the Paramount leader, Deng Xiaoping who passed away in 1997.  The reform made it possible for China’s Gross Domestic Product to grow at 9.5% annual rate and its economy became the world’s third largest when adjusted for purchasing power.
  • 9. CONT.  Per capita income more than quadrupled,  Foreign direct investment boomed and  Trade increased from 10% to 45% of GDP, making China the world’s seven largest exporter.
  • 10. CONT.  China’s growth since late 1970s lifted 100,000,0000s of people out of poverty  In fact china alone accounted 75% of world’s poverty reduction.  Ideological barriers fell and business flourished following the reform and a series of Party’s congress were held;  one in 1992 and the other 1997.
  • 11. CONT.  At the 1992 Party congress, the idea of socialist market economy was raised and agreed, thus recognising the crucial role that private companies can play in national economic development.  In 1997, it was openly acknowledge that the private sector was an important component of the economy
  • 12. CONT.  In 2000, Jiang called for an expansion of party’s membership to incorporate “new elements of the society” including private entrepreneur  By the mid-2000, two third of Chinese economy was said to be in the private hands as claimed by the Economist Magazine.
  • 13. PORTFOLIO OF COMPANIES  By 2009, Alibaba employed about 17,000 people, approximately  70% of whom worked in Alibaba’s B2B business  Ma was an English teacher and had first seen the power of internet in mid-1990s  when he travelled to US as an interpreter for a Chinese delegation.
  • 14. CONT.  His attempt to search China in an internet which proved futile inspired him to leave the delegation and create a china page,  an online directory of Chinese companies looking to expand business in abroad.  Ma’s passion increased, he moved to a company established under China’s ministry of foreign trade and economic cooperation  its mandate is to help Chinese companies take up “electronic commerce”
  • 15. CONT.  However, Ma continued to get excited about Chinese online business opportunities for the following reasons;  there were more than 40, 000,000 small business in China,  many of them operate in fragmented markets,  with limited access to communication channels and information sources that would help them market and promote their products
  • 16. CONT.  Small business have the difficulty in evaluating the trustworthiness of their trading partners.  Consequently Ma left his government work to develop Alibaba in 1999  A simple online platform designed to help connect small Chinese manufacturers with buyers, such as  retailers, trading companies and downstream manufacturers
  • 17. CONT.  Alibaba Group was formalised by its 18 founders led by Ma. By providing free basic services to registered users  By 2008, the company had migrated about 1% of its users to the value added international Group supplier and China trust pass membership program
  • 18. CONT.  In 2008, Alibaba increased its operating profit by 48% to 1.2 billion (about $172 million), booked a revenue of 3 billion ($432 million), 10.5 million registered and 1.7 million storefront  At the end of 2008, Alibaba’s international marketplace had 7.9 million registered users and 970,000 storefronts while its larger domestic marketplace had 30.2 million users and 3.6 million storefronts
  • 19. TAOBAO  In 2003, Alibaba Group launched Taobao, an online shopping platform for retailers and individuals to sell goods to Chinese consumers i.e. consumer to consumer (C2C).  The motivation according to Ma were:  At the time there were only two companies in China that understood online marketplaces. They are eBay and Alibaba.
  • 20. CONT.  Ma was concern that eBay's power seller might grow their business to compete in the B2B space.  He said he needed to stop eBay in order to protect Alibaba.
  • 21. CONT.  At the time of the Taobao’s founding, eBay held approximately 85% of the Chinese market, thanks to its acquisition of the market leader each Net.  However, by 2007, Taobao had taken 82% of the Chinese market, leaving eBay with 7%,  Bao Shao, the founder of eBay , believed that eBay stumbled partly because it migrated its technology platform from China to USA.More time was needed to process information as fast reaction is crucial .
  • 22. CONT.  In 2008, Taobao introduced a new service called Zhi Tong Che .This service let sellers bid for keywords in exchange for preferential ad ranking .  In 2008, Taobao achieved gross merchandise volume of over $14 billion through its online marketplace and became China’s second largest website, based on number of page view. It represents 2% of all china’s retail volume.
  • 23. ALI PAY.  Alipay is a third-party mobile and online payment platform, established in Hangzhou, China.  Alipay was launched in 2004 for supporting Taobao.  Alipay was critical to Taobao’s development. • Alipay quickly became an integral part of Alibaba’s different business
  • 24. ALIPAY-ENGENDERING TRUST  Creating Trust between vendors and customers was a challenge in China.  Affect (from the heart), and  Cognition-based trust (trust from the head) Were intertwined, even in the business.  Through, its escrow services, Alipay held payments on behalf of consumers until purchased goods were delivered  Done to reduce risk  Encourage online commerce.
  • 25. CONT.  It gained critical mass and found an increasing number of opportunities beyond Taobao.  IN 2005, Ma decided to separated Alipay from Taobao and made an independent business unit.  Reporting directly to him  In 2008, Alipay announced that the payment it handled reached a peak of $66 million per day  (annualized $24 billion)
  • 26. CONT.  It’s users accounts had exceeded 100 million  By the end of the year, Alipay had approximately 50% of all online payments in China  It also executed over 4 million transaction per day  It became leading China’s online payment business  With PayPal being a global online payment market leader
  • 27. SELECTED OTHER BUSINESS  In 2005, Alibaba bought China Yahoo, from Yahoo! Inc  This is one of the leading Chinese-language portal offering search  Email & entertainment content • China Yahoo’s competitors were  Baidu- share of the search market of 62%  Google- share of the search market of 29% • While yahoo had only 6%where as earlier it was 21% largely because of 3721 function in which you have to search in URL address box .The trend was shifted to search in a search box of the website e.g. www.Baidu .com.
  • 28. ALISOFT  2006, began incubating a new business called Alisoft  The intention is to provide small business with internet-based enterprise management software in areas such as;  Customer relationship management  Inventory management  Financial management
  • 29. CONT.  The justification for Alisoft was that;  China had over 40 million small business but  Only 5% use enterprise management software  While 60% of penetration rate in western world  By January, 2007, Alisoft team sales team started recruiting over 500,000 active users through beta trials
  • 30. CONT.  Because of it market viability, Ma decided to get Alisoft from incubation and established it as a business unit, reporting directly to him  By 2009, held 40% of Chinese enterprise management software market and employed approximately 500 professionals
  • 31. ALIMAMA  In 2007, Alibaba lunched Alimama  An online advertising exchange connecting websites and advertisers  The rationale for coming up with this portfolio was the desire to pioneer a “light “ model for the online advertising market  By 2008 employed 400 professionals and its network had served over 3 billion advertisement  On daily basis, Alimama connected with over 80 consumers
  • 32. OWNERSHIP-IPO OF PARTIAL STAKE IN ALIBABA’S B2B BUSINESS  In 2006, Alibaba decided to IPO the B2B business because it reached a threshold of maturity  It listed 19.25% of its B2B business on Hong Kong stock exchange in 2007  The IPO raised 1.7 billion
  • 33. CONT.  Alibaba public listing provided a lot of benefits  The recognition and publicity was valuable to Alibaba’s B2B customers looking to attract their own customers  It also attracted management talent and allow Ma to use equity based incentives to pay managers in Alibaba.com
  • 34. ORGANISATION  Alibaba's mission statement was broad and visionary  To make it easy to do business anywhere
  • 35. COMPETITION OR COOPERATION  By his own admission, Ma was a fan of Jack Welch  No wonder that his organisation resemble that of GE  Ma, like Jack Welch also believes in decentralisation  That is each subsidiary sets its own strategy  His governance inspired its subsidiaries to be leaders of their industries  Business unit presidents must have the freedom to do what is right for their business.
  • 36. CONT.  To encourage competition, Ma assigned each of the Alibaba’s subsidiaries its own board of directors and executive team  Including a president  A CFO and  Operating Manager
  • 37. ORGANISATIONAL EVOLUTION OF C-SUITE  According to Ma, our biggest challenge is was growing from 18 to 10,000 employees  He intimated that there is no model to imitate  One way that he coordinated Alibaba’s growth was;  by adjusting the span of control  Or the number of executive reporting directly to him  The head of a new subsidiary would also report to him directly
  • 38. CONT.  As per Welch’s belief that people were GE’s key assets, ma elevated the importance of the human resource functions in the group early in the group’s history  By creating the Chief People Officer (CPO) and having it  Report directly to him
  • 39. CULTURE AND INCENTIVES  Despite the internal competition, Ma fostered a certain degree of cooperation  Ex. The C-suite and the senior managements of its subsidiaries engaged in community building exercises;  Such as annual retreats with their families  The group organisation also participated in management training sessions  Such as the two day session titled “what leadership mean”
  • 40. CONT.  Ma and his senior team also came together at Alibaba’s annual strategy review sessions  They used these sessions to discuss and set Alibaba’s long term strategy  They consider complimentary organisational changes through a bottom-up process which had three broad steps;  Mid term strategy review in spring  In Fall, subsidiary presidents submitted detailed strategic plans to Alibaba’s corporate centre
  • 41. CONT.  Alibaba’s senior management team debated and revised these strategic plans, thus finally agreeing to group operating plan and budget by year end  Alibaba’s group provided employees with powerful incentives in form of stock option  This helped link compensation to the performance of the business unit.
  • 42. SOME FUTURE OPPORTUNITIES  Ma was always searching for business opportunities  Opportunities are generated through;  Top-down effort- led by senior Management team  Informal bottom-up initiatives
  • 43. CONT.  As alibaba learned more about its small business clients,  Ma became increasingly aware of the unmet demand from small Chinese businesses for loans in sizes well below the traditional banks are interested in lending  Ma gets market feedback from Alibaba’s sale and technology teams
  • 44. CONT.  If Alibaba wanted to enter potentially lucrative businesses, it faced some significant operating hurdles like;  Obtaining bank licence  Establishing a specialized banking operation group  Raising money to meet regulatory capital requirements
  • 45. MOBILE PLATFORM  The growth of Smartphone in in 2008, provided millions of Chinese with affordable mobile access to internet.  Ma believed that these popular Smartphone would drive online trade to new levels  Create opportunities both for Alibaba’s members and business units  Ex. He envisioned Alibaba. Com’s buyers using their smart phones  to search for products  Contact sellers  Close deals anytime, from virtually anywhere in the world.
  • 46. CONT.  Similarly, sellers could post new products online  Search for buyers  Communicate with buyers  Execute transactions from their mobile devices
  • 47. INCOME STATEMENT AND BALANCE SHEET
  • 48.
  • 49.
  • 50. CONCLUSION  There is a strong and growing consumer base in China, and Ma hopes to tap into a part of that growth opportunity as well Alibaba.com as the B2B component.  Jack Ma's success is based on hard work, a strong consumer focus, and a sophisticated knowledge of market needs.  Alibaba need to adopt to the different business and cultural constraints found in the rest of the world.