Alibaba and International Growth

¶ … Alibaba Group operates what it bills as the world's largest online marketplace, based on two main businesses, the B2B site Alibaba and the B2C site Taobao. The company's service is an interface that connects buyers and sellers. It arose out of a need to connect buyers and sellers within China, but the rapid growth of China as a global goods supplier facilitated the growth of Alibaba. Companies anywhere in the world could use the site to get bids from multiple suppliers, creating an efficient marketplace.

The large number of customers allowed Alibaba to expand globally, so that today it is a network of buyers and sellers that operates globally. Alibaba is now floated on the New York Stock Exchange, giving the company greater access to foreign capital and solidifying its position as an international company. The company is forming many strategic partnerships to not only acquire more market share, but to also continue to develop the industries in which it operates.

This analysis will look at some of the partnerships that Alibaba has created and discuss the insights that these examples offer. Alibaba Partnerships One of the most interesting category of partnerships that Alibaba has had to form to support its business strategy is shipping and logistics partnerships. The domestic shipping organizations, such as the Chinese Post, has been vital to the company's success. The company has developed a strategic cooperation with the China Post to develop infrastructure to support ecommerce.

Jack Ma, chairman of Alibaba Group, said at a signing ceremony in Beijing that (Jing, 2014): "China will see the emergence of online platforms that can handle transactions of more than 10 trillion yuan ($1.6 trillion) a year.

We need to make sure that the development of a logistics system in China can support the surging development of e-commerce," he said, adding that third - and fourth-tier cities and rural areas offer "unimaginable growth potential." " Cooperative Linkage 1 In the Chinese market, a successful ecommerce solution must include as much as the country as possible. The cities in China can be thought of in tiers. The largest cities can be thought of a first tier, the second largest group represent the second tier and so on.

The cooperative linkage between Alibaba and the China Post is continually developing to be able to accommodate new types of products. "Alibaba founder and chairman Jack Ma and China Post's general manager Li Guohua inked a framework deal yesterday with an ambition of delivering online purchases to any place in the country within 24 hours.

The two companies will share warehouses, processing centres and delivery resources, aiming to build a smart logistics network providing easier and faster delivery services to online sellers, state-run Xinhua news agency reported (The Economic Times, 2014)." Alibaba has also created many arrangements with international shipping and logistic companies to be able to develop an international network to support growth. Evaluation Much of Alibaba's strategy is dependent upon goods and services being able to be delivered to an expanding geographical market.

The recent move to develop the infrastructure in China to deliver goods within twenty-four hours in any region in China is critical to securing the company's market position. Risks One of the risks that Alibaba will face is that it will be heavily dependent upon its partners to continue to develop its growth trajectory. However, since these two organizations have shared interests, it is likely that these risks can be mitigated. Cooperative Linkage 2 Another cooperative linkage that Alibaba has developed is with the U.S. company Yahoo.

The benefits that Yahoo and Alibaba identified came in a wide range of different interests. For example, Alibaba was able to utilize many of the technological assets that Yahoo has developed and in exchange Yahoo was able to acquire greater access to the Chinese market and invest heavily in this region of the world. Thus the cooperative linkage was again from two firms that were able to identify shared interests in developing a new business model. Evaluation This partnership was largely strategic.

Alibaba was trying to keep market share from EBay and Yahoo could help to in this effort. Yahoo paid $1 billion for a 40% stake in Alibaba in 2005 and is now reaping a huge return; more recently Alibaba is paying $7.1 billion in cash and stock to buy back half of Yahoo's holdings and another $550 million is being paid to Yahoo under a revised technology and patent licensing agreement with Alibaba (Liedtke, 2012).

Thus the deal turned out to be better for Yahoo than Alibaba however it is likely that both sides profited from the partnership. Risks There were many risks that were inherent in this partnership. Both firms faced the threat of competition from industry leaders in the Chinese market. For example, Ebay could have been a dominate player that developed market share first. However, as a domestic company, Alibaba had the advantage and Yahoo's assistance definitely created a valuable partnership to develop the market.

Take-Away 1: Logistics and shipping is a crucial aspect to delivering ecommerce products and services. Alibaba has been proactive in creating partnerships with logistics partners to not only ship its products, but develop the ecommerce infrastructure in general. Take-Away 2: Alibaba is not only growing its market share within the existing market, but it's also growing the size of the market itself. For example, Alibaba has been a.