Alibaba Group Financial Analysis Harvard Case Solution & Analysis

Alibaba Group Financial Analysis Case Solution


            This paper attempts to analyze the competitive positioning and performs a financial analysis for Alibaba Group, which is a publicly traded corporation and is listed on New York Stock Exchange (NYSE). The Company belongs to the Internet industry and the three key competitors of Alibaba Group are Amazon Incorporation, eBay Corporation and The stock value analysis has been performed by comparing the market value ratios of Alibaba Group with these three competitors in the industry (Horovitz, 2013). The Discounted Cash Flow analysis has also been performed to evaluate the current pricing of the stock. The assessment of the fixed income securities has also been performed and finally, recommendations have been made for the stock of Alibaba Group.

Competition Advantages of Alibaba Group

Alibaba Group Holding Limited (Ticker: BABA)  is one of the leading Chinese e-commerce companies. It provides business to business, business to consumer, and consumer to consumer sales through the established sales portals of the company. Other services provided by the company include cloud computing services, a shopping search engine, and electronic payment services (Baker, Toonkel, & Vlastelica, 2014). The market debut for Alibaba Group occurred in September 2014 with an initial IPO pricing of $ 21.8 billion.

The first competition position of Alibaba Group in terms of the seller’s framework is trust, which is built by the company for both of its suppliers and buyers. The company had launched AliPay in 2005. This service allowed the customers of the company to hold their funds in escrow accounts and pay the suppliers upfront. The legwork of Alibaba seemed to create a competitive advantage for the company.

Alibaba is one of the most recognized names in China and this company has reshaped the Chinese internet economy. Location is one of the most important competitive advantage for the company, as the number of internet users is higher with 560 million internet users who spend on average 20 hours online per week. China is the largest internet market in the world and its size is twice the size of the US internet market. (Picker & Chen, 2014).

The company as well as the whole internet market of China is skipping traditional retailing and moving towards e-tailing. E-tailing generates significant growth for the early movers in the market, such as Alibaba. Another advantage for the company is the economies of scope for it. The cost savings of the company is huge due to its wide offering of the sale of different products, which are sold through a single channel through a single corporation. Taobao and Tmall are two sites, which are maintained by the company and the variety of the products, which are offered on both of these websites, is astonishing.

Scale is also another competitive advantage for Alibaba Group which places it in strong position within the seller’s framework. The cost savings of the company associated with a larger volume of the sales units for the company are high. The Tmall and Taobao account for more than half of the total account deliveries, which are made in China. In the year 2013, the total volume of the transactions of Tmall and Taobao accounted to $ 163 billion, which is more as compared to the combined transaction volume of eBay and Amazon. (Carsten, 2015).

Finally, networking is core strength of the company. The company enjoys significant benefits as a result of the expanding network of the users for its services and products. The company has created a form of a collective entrepreneurship with all those thousands of the merchants, who joined the Alibaba network (Zhe, 2014). Overall, Alibaba Group is well positioned in the market against its competitors in terms of its earnings, relations with the government, and adherence to corporate governance principles, leadership development, good pricing, networking, and low price volatility of the company’s stock. The market analysis of the company and its comparison of financial performance against the key competitors shows that Alibaba Group is financially strong.....................

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