Many companies globally adopt strategic development in their bid to attain the desired goals. Most successful organizations associate their success with persistent strategizing. Diverse business strategies enable such companies to outshine other producers within the industry and market. Transnational, global, multi-domestic, and international strategies are at the center of success realized by various corporations. Alibaba is one of the successful companies whose success is associable with the formulation of such strategic approaches. The paper formulates an in-depth analysis of the strategic measures associated with the success that Alibaba continues to enjoy in the market since its formation.
Key Details about Alibaba Organization
Alibaba is one of the largest multinational technology corporations not only in China but also globally. The company has specialized in the fields of technology, internet, retail, and e-commerce. The company was founded and started in Hangzhou Zhejiang during the year 1999. Alibaba deals with C2C, B2B, and B2C sales (Anwar, 2017). Taobao.com platform is an example of C2C model adopted by the company. An example of B2B strategy is the company’s eCommerce Model (Platform), Alibaba.com. The model is associated with the company’s diversification. Tmall.com Website is an example of a B2C model adopted by the company. There are diverse values and cultural aspects that guide all operations within the company since its formation. Championing small businesses is at the center of the company’s corporate culture. The spirit of innovation and entrepreneurship is vital as far as the company culture is concerned. Alibaba focuses on the adoption of unwavering focus aimed at ensuring that all personnel within the company work towards meetings customers’ needs. Working happily, living seriously, prioritizing customers’ needs, adoption of transformative changes and trust are some of the core values guiding all operations within the company. The company’s mission is “To formulate the best operational operations to make it viable and easy to do business anywhere” (Havinga et al., 2016). The company’s vision is aimed at building the future as far as commerce infrastructure. Through such approaches, the company is optimistic about offering a conducive environment in which clients can meet, work, and live.
Alibaba’s Business Strategy
There are three major international level strategies considered by Alibaba Company. They include multi-domestic, transnational, and global. The company is seemingly focused on a multi-domestic strategy. The strategy is focused on the formulation of best operational approaches towards attaining maximum local responsiveness and ability to meet specific customers’ needs and specifications. A multi-domestic strategy is associated with organizational strategic approaches through which corporations adopt decentralized operating and strategic decisions within an absolute corporate unity in every nation (Phadtare, 2010). This is aimed at allowing such decentralized units to have total control and tailor commodities to local markets. This explains why the company formulated an ecosystem of companies with a significant aim of complementing each other. The company’s close working relationship with Baidu is an excellent example revealing how the company adopts its strategic, operational approaches. There are diverse companies formulated by Alibaba including;
- Alimama –The company adopted this online marketing platform in the year 2004 with the primary aim of offering a wide range of advertising and marketing services.
- Alipay –This is a third-party online platform whose adoption aimed at facilitating financial transactions within the company’s group platforms.
- Aliyun –The central role of Aliyun is the development of platforms used in data management and cloud computing. Platforms developed by Aliyun are vital in enhancing the ability of the company e-commerce platforms to cater to the many transactions and massive traffic encountered daily.
- China Smart Logistics –This is a proprietary platform adopted by the company to offer real-time access to crucial data and information. The platform deals with the provision of such information to both sellers and buyers.
The rationale for International Competitive Capabilities
The primary rationale of developing international competitive capabilities is to attain sustained global competitive advantages (Reuter et al., 2010). Increased investors in different sectors characterize the modern business world. Investors are exposed to high levels of competition, thus dictating the need for perfected strategic measures to enable an organization to leverage competitive advantage. There are many companies offering products and services that are similar to those sold by Alibaba Company. Pinduoduo, Amazon, eBay, BESTBUY, Costco, Walmart and JD.com are some of Alibaba‘s key competitors offering services that are closely related. As such, Alibaba has no choice but formulate excellent global strategies to get the ability to counter such levels of competition. Firms need to have an ideal approach in utilizing, enhancing, and renewing their core capabilities that improve competitiveness in the market. Such considerations explain why this strategy is vital as far as Alibaba’s ability to achieve the set functional goals is concerned. Global competition is increasingly getting more complicated and more stringent, and only the strategic corporations can stand the threats posed by emerging companies. Having international competitive capabilities is essential towards enabling Alibaba Company to leverage competitive advantage and outdo other investors venturing into this industry.
Alternative Strategies for International Market Entry
There exist other alternative strategies approaches through which Alibaba Company can enter the international market. Companies select the entry strategy that is best fit for their operations to enhance effectiveness and success. Transnational and global strategy are some of the approaches through which the company can enter the international market.
- Global Strategy
A global strategy is associated with an approach in which an organization deals with the provision of standardized commodities across the country (Phadtare, 2010). Under this strategy, the home office is vital in dictating the approaches for competitive strategy. It is worth noting that this strategic approach has its primary emphasis and consideration on the economies of scale. The major strength of this strategy is that it enables an organization to lower risks. This is vital in allowing a firm to maximize sales volume and profits. On the contrary, this strategy’s major weakness is that it may lead to a situation that an organization foregoes the existing opportunities within the local markets.
- Transnational Strategy
This is a strategic approach adopted by firms to attain both local responsiveness and global efficiency (Phadtare, 2010). Organizations need to ensure they have both local flexibilities and close global coordination to enhance the effectiveness of this strategy. The two are critical in enabling firms to have a successful implementation of this strategy. The major strength of this strategy is that it is effective in allowing firms to manage their connectivity with partners, suppliers, and customers. The major weakness of the strategy is that it has conflicting goals which may pose operational challenges.
Organizational Structures used in implementing the Strategies
An organization needs integrated networks and structure when using a transnational strategy. On the other hand, an organization using the global strategy need a centralized home office and headquarters control to enhance its effectiveness. Such structures are vital in improving standardization which is required when utilizing global strategy. Thirdly, organizations using multi-domestic strategy need structures that strengthen the management of a portfolio of subsidiaries. Alibaba aligns such structures by having an ecosystem of companies.
Key Takeaways
- International strategy is crucial for organizations aiming at leveraging competitive advantage.
- Firms can adopt multi-domestic, global, or transnational international strategy based on the targeted goals and nature of operations.
- The two takeaways are critical gives an insight into how strategic approaches can enhance performance.
Conclusion
To sum up, firms consider international strategies to tap on opportunities available in the global arena. Companies may use diverse strategies when venturing into international operations. Alibaba Company, which is based in China, adopts multi-domestic strategy to enter into the international market. The ability to leverage competitive advantage is the primary rationale explaining the essentiality of formulating international competitive capabilities. Each of the alternative strategies has strengths and weaknesses. The key takeaways are associated with primary considerations through which companies can utilize international strategy to maximize sales and profits.
References
Anwar, S. T. (2017). Alibaba: Entrepreneurial growth and global expansion in B2B/B2C markets. Journal of International Entrepreneurship, 15(4), 366-389. https://doi.org/10.1007/s10843-017-0207-2
Havinga, M., Hoving, M., & Swagemakers, V. (2016). Alibaba: a case study on building an international imperium on information and E-Commerce. In Multinational management (pp. 13-32). Springer, Cham.
Phadtare, M. T. (2010). Strategic management: Concepts and cases. PHI Learning Pvt. Ltd.
Reuter, C., Foerstl, K. A. I., Hartmann, E. V. I., & Blome, C. (2010). Sustainable global supplier management: the role of dynamic capabilities in achieving competitive advantage. Journal of supply chain management, 46(2), 45-63. https://doi.org/10.1111/j.1745-493X.2010.03189.x