ABOUT JACK MA

• Lead Founder and Chairman of Alibaba.

• Did a low paying teacher’s job.

• Employed by Chinese Government.

• Became partner in an Internet Start-up.

• Started a company and website called China Pages.

TIMELINE OF ALIBABA
• 1999 - Alibaba Group is established by its 18 founders, led by Jack Ma, launched its website in English l
anguage Alibaba.com for international market and 1688.com for domestic wholesale trade.

• 2000 - Alibaba Group raises US$20 million from an investor group led by SoftBank.  

• 2001 - Alibaba Group defines its mission and establishes a corporate value system composed of nine v
alues.

• 2003 - Alibaba Group maintains business operations in-spite of the SARS epidemic.
TIMELINE OF ALIBABA

• 2004 - Alibaba Group raises US$82 million from several first-tier investors in the largest private equity
commitment ever in the Chinese Internet sector.

• 2005 - Alibaba Group took over the operation of China Yahoo.

• 2007 - Alibaba’s monetization platform Ali mama was launched.

MISSION & VISION
Mission: Alibaba Group's mission is to make it easy to do business anywhere.

Vision (1999-2003)
We aim to build the future infrastructure of commerce. We envision that our customers will meet, work, and live
at Alibaba.

Vision (2004-2008)
Alibaba Group's Strategic vision is to serve two billion consumers around the world and support ten million
businesses to operate profitably on our platforms and to be a fortune 500 company by the end of 2008.
PESTLE (1999-2003)

ECONOMIC

• China joined the World Trade Organization (WTO) in 2001

• Increased industrial exports for Chinese goods.

SOCIO-CULTURAL

•Difficult business culture.

•Increase in the number of users.

PESTLE (1999-2003)
TECHNOLOGICAL

• 2001- DOTNET bubble bust.

LEGAL

• In 2000, First set of content restrictions for Internet content providers.

ENIVIROMENTAL

• 2002- SARS pandemic in China affecting their business.

 STRATEGIC OBJECTIVES (1999-2003)

• To increase the size of its marketplace by more than 50% every year.

• To enhance its community experiences by providing more products & services.

• To achieve technological superiority as compared to other ecommerce platforms.

 IMPLEMENTATION
• Facilitating the process of selecting potential trading partners by providing trust ratings for suppliers
and buyers.

• Conducted target marketing to potential users in specific industries and geographical locations.

• Organized regular meetings, training and offline events for registered users and paying members to
build further sense of community.

• Investment to improve existing instant messaging service, online forums and other communication
services.

RESULTS
• The total number of registered users were 5M+ by the end of 2003.

• In 2000, launched Gold Suppliers membership, starting from US$5,373 per year for standard package
and US$ 8,060 per year for premium package.
PESTLE (2004-2008)

POLITICAL
• In 2004, Government promoting 11 five-year plan for development of ecommerce.

• Political differences between China and Hong Kong.

ECONOMIC
• In 2004, SMEs were the major driving forces in the booming Chinese economy.
• In 2008, Global Financial crisis.
 PESTLE (2004-2008)

SOCIO-CULTURAL
• Only 25.5% of internet users in China were engaged in online shopping.

TECHNOLOGICAL
• In 2007, China’s Internet penetration rate increased from 3.6% to 12.3%.
• Emerging internet technologies.

LEGAL
• Lack of proper law for protection of consumer data.
 STRATEGIC OBJECTIVES (2004 - 2008)
• To expand sales and customer services capabilities in international market.

• To enhance the loyalty of users and becoming an integral part of user's business operations.

FINANCIAL OBJECTIVES

• Monetize its user base by converting free users into paying member and generate more revenue from existi
ng paying members with more than 50% YoY.

• Expand its revenue at CAGR rate of at least 80% every year.

• Raising $1.5 billion in 2007 by getting listed in Hong Kong Stock Exchange.
 IMPLEMENTATION
• Launching website in Korean, Japanese and English languages for international customers.

• Launching ‘Trade Manager’, an instant messaging tool for trade communications in 2007.

• Marketing the benefits of paid membership and sales of value-added services like additional keyword li
sting and premium listing placement.

• Launching the IPO of Alibaba on Hong Kong Stock Exchange in 2007.

 RESULTS
• The total paying members increased from 77,992 in 2014 to 219,098 members by 2006, showing more
than 60% average YoY growth.

• The total paying members from international marketplace grew from 11,450 members in 2014 to 29,52
5 in two years.

• The total revenue increased at 98% CAGR, from US$48.3 million in 2004 to US$183.2 million by 2006.

• Alibaba.com registered more than 5,40,000 online users of Trade Manager.

• On the first trading day at Hong Kong stock exchange, the prices went up by 193%, with a valuation of U
S$ 25.6B.
 2004-2007 Sales & Marketing Expense

2004 2005 2006

GDP v/s Revenue
54.2% 53.4% 50.3%
120.00%
105% Debt to Equity Ratio
100.00%
85% 2004 2005 2006
80.00%
0.99 2.44 5.48
60.00%
Current Ratio
40.00%

20.00% 14.23%
2004 2005 2006
11.39% 12.72%
1.1 1.01 1
0.00%
2005 2006 2007
-20.00%
-30%
Net Profit Margin
-40.00%
2004 2005 2006
GDP Revenue
19% 10% 16%
 5Ps OF HENRY’S MINTZBERG MODEL

• PLAN

- To be a leader in Chinese market for B2B and exp

and internationally

- To do business everywhere with ease

- Focus on IPO in order to be listed in fortune 500 c
ompanies

- Focus on SMEs
 5Ps OF HENRY’S MINTZBERG MODEL
• PATTERN

- Alibaba planned their strategy in a way that they al

ways kept government policies into consideration

- Target marketing to potential users in SMEs based

on various geographical locations

-   Main Focus on B2B market 

 5Ps OF HENRY’S MINTZBERG MODEL

• POSITION

- To be the largest B2B quality ecommerce platfor

m in the Chinese marketplace with continue upgrad
ation with cyber security.

- Maximum returns for the stakeholders

- Acquisition and investments for long term future
 5Ps OF HENRY’S MINTZBERG MODEL

• PERSPECTIVE
- Working culture for employees
- Value system
 5Ps OF HENRY’S MINTZBERG MODEL

• PLOY
- Focus on membership subscription and develop
ment of new features and tools

-Providing basic features free of cost

- Direct and daily contact with prospective custom
ers
BUSINESS MODEL
CUSTOMER SEGMENTATION

• Taobao
• Tmall
• AliExpress
• Alipay
• 1688
BUSINESS MODEL
VALUE PROPOSITION

• Accessibility
The company creates accessibility by enabling buyers and sellers to connect

• Customization
The company enables customization by personalizing the shopping experience

• Convenience
The company offers convenience by making its service easy to use

• Risk reduction
The company reduces risk by maintaining high standards

• Brand/Status
The company has established a powerful brand due to its success.
It is the world’s largest online and mobile marketplace in terms of
gross merchandise volume.
BUSINESS MODEL
REVENUE STRUCTURE

1. CORE COMMERCE

• Commissions
Revenues generated from fees charged to sellers for each sales transaction

• Advertising Fees
Revenues generated from fees charged to advertisers for online
marketing services.

• Service Fees
Revenues generated from fees for various online services

-Free Supplier Membership

-Premium Gold Supplier Membership

BUSINESS MODEL
COST STRUCTURE

• Employee Cost
• Traffic Acquisition Cost
• Sales Cost
• Marketing Cost
BUSINESS MODEL
CHANNEL

• Website
• Mobile App
• Social Media Pages

KEY RESOURCES

• Software Platform
• Data Analytics
• Engineers
BUSINESS MODEL
CUSTOMER RELATIONSHIP

• Automation
• Self- Service
• Customer Assistance

KEY PARTNERS

• Marketing Affiliates
• Logistics Service Providers
• Retail Operational Partners
• Independent Software Vendors
• Professional Service Providers
SCHOOL OF STRATEGIC MANAGEMENT (DESIGN SCHOOL
AND POSITIONING SCHOOL )

DESIGN SCHOOL OF MANAGEMENT

• During this period 2000-2004, Jack ma was the CEO took all the important decision.

• External match fit with internal environment –

Emerging internet technology and growing SME sector in China

Launched a website to serve the China's mainland marketplace where the buyers and sellers

can do business easily

 POSITIONING SCHOOL

• Alibaba’s breath and depth of the market were difficult to replicate by the new entrants and compet

itors

• Alibaba created a premium brand in the minds of the suppliers and buyers of B2B market

• Alibaba enhanced the customers loyalty through its technology.

 MINTZBERG EMERGENT MODEL –ALIBABA

• Deliberate strategy –Alibaba wanted to make an ecommerce website where business can be done
easily anywhere by leveraging innovative technology to it .
• Intended strategy – Alibaba tried to expand in marketplace by increasing their user base and activ
e listing .
• Unrealized strategy –Alibaba discarded the bulletin board website where sellers were allowed to p
ut their listing only
• Emergent strategy – Focused on SME’S sector and provided tools and solutions to attract them
• Realized Strategy-Enhanced more community experience through providing more developed tools
and technology
VERTICAL INTEGRATION

• Alibaba did not choose to make or buy the product

• Create the business with all services that internet user needs

• Diversified the business

• Created a brand
PORTERS FIVE FORCE ANALYSIS

Bargaining Power of THREAT TO ENTRY (Low)

Buyers

• B2B market in India was dominated by

Alibaba

Bargaining
Threat to • Large Initial Investment
Power of
Entry
Suppliers

• Long time high profits of Alibaba

• Alibaba’s business model was difficult to

replicate
Threat of Substitutes
PORTERS FIVE FORCE ANALYSIS

Bargaining power of BARGAINING POWER OF BUYERS (low)

buyers

• Low price, wide variety a strong distribution network

offered by Alibaba

Bargaining
Power of • Large no of Buyers
Suppliers

• Low switching cost

Threat of Substitutes
PORTERS FIVE FORCE ANALYSIS

Bargaining Power of BARGAINING POWER OF SUPPLIERS

Buyers
(Low)

• A Large No of suppliers at the same platform

Bargaining
Power of • Low Switching Cost
Suppliers

Threat of Substitutes
PORTERS FIVE FORCE ANALYSIS

Bargaining Power of THREAT OF SUBSTITUTES (High)

Buyers

• Substitutes available :

-physical retail stores

Bargaining
Power of -self websites
Suppliers
-social websites like google

• Directly contact to the companies

Threat of Substitutes
PORTERS FIVE FORCE ANALYSIS

Bargaining Power of COMPETITIVE RIVALRY (High)

Buyers

• B2B platform was growing and therefore,

Alibaba had many competitors
- Amazon, Ebay, HC.360, ChinaChemNet
Bargaining
Competitive Power of • The major competitor- Global sources
Rivalry Suppliers
• The rates offered by Alibaba were less than its
competitors

• Success of the other alternate markets has led

to the loss for Alibaba
 TRAITS OF JACK MA

Foresight Transformation
and Vision Management
of a Leader skills

Philanthropist Positive Attitude

CURRENT SITUATION

Revenue Market Capitlaziation

US$109,480 million $477.99 Billion

Net Income Share Price

$22.941B $173.73
CURRENT SITUATION

Annual Active Countries where buyers are located

Buys 190+
828 million

Annual Orders
Annual Active Seller
73.6 million
1,50,000
 CURRENT SITUATION
• ALIBABA CLOUD
Alibaba Cloud empowers the digital transformation of enterprises by providing
comprehensive technology solutions and services.

• SUN ART RETAIL GROUP LIMITED

New Retail – gaining market share in the grocery category

• ALIBABA CAINIAO LOGISTICS NETWORK

Cainiao is highly digitalised as the whole warehouse and delivery
process is highly automated.

• DIGITAL MEDIA AND ENTERTAINMENT

Alibaba's digital media and entertainment segment exists as part of the company’s
strategy to capture revenue from consumption beyond its core commerce businesses.

• ANT GROUP BUSINESS MODEL

Ant Group is Alibaba’s fintech arm and it was formerly known as Alipay
THANK YOU