Alibaba was founded in 1999 by Jack Ma to connect Chinese manufacturers with international buyers through its B2B marketplace, Alibaba.com. It later launched Taobao in 2003 as a C2C marketplace and Alipay in 2004 to facilitate online payments. By providing these services and marketplaces, Alibaba helped small Chinese businesses connect to domestic and international markets. It has since expanded to include other services like cloud computing, digital media, and logistics. Alibaba continues to adapt to new technologies and market opportunities like mobile to further support the growth of Chinese businesses.

1. ALI BABA
Presented By:
Tayyaba Latif

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

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.