Alibaba’s Taobao (B) Harvard Case Solution & Analysis

Alibaba's Taobao (B)

Question 1:

Alibaba was launched in the late 90s as a business to business facilitator for the business community of China. It enhanced business to business contacts among the people and increased its reach from a global to international levels as well. The online networks of the group provide an opportunity and serve as a podium for the local Chinese businesses and companies to seek international business partners and buyers.

These networking websites and systems enhanced the reach of the segregated markets of the country by providing great publicity to the local business community of the country and immensely expanding their customer base and the market reach of the whole business industries and small time businesses no matter what they produced or did.

The online markets system was a new trend in the business sector of the country and not many people were acquainted to it, there fore the management of the company had to wisely plan their strategies and policies. The trust level of the society and businesses was low in the country as they were worried about scams and frauds and the management of the company was aware of this issue thus,it devised policies and strategies that motivated them and build the trust that was absent in the newly established industry.

This was done by adopting several procedures that were relatively distinguished and user supportive. The organization enhanced the reach and co-ordination of the local business community among each other through its networking websites that hosted local retailers and whole sellers. This created immense market awareness and co-ordination among the businessmen. While the company’s activities and services were offered free of charges to the business and this attracted and motivated several business entities of the country.

The challenges for the management of the group surfaced when eBay launched itself in the Chinese market. EBay is a multinational giant of the online business industry; it is an American organization that is the most expanded company of the industry globally. The company is a very well established entity of the industry both financially and by market share and dominance. It has well penetrated the markets of Europe and India and in the south-east Asia. The global sales and revenues of the company accounted for roughly more than 30 percent of its annual margins and revenues.

The management of the Alibaba group realized the threats that this rival posed to its business interests and the market that the company had. The eBay entered the Chinese market by buying out a local company Each Net and this was a sign of worry for Alibaba group as the Each Net Company had immense market share in the locality. The founder and co-owner of the group studied and invested the rise of the eBay group in order to realize the threats and the business strategies that this company practices in the market. He also carefully studied the demise of the company in the Japanese market to attain the critical causes of that part of the eBay’s corporate history. He learned those lessons to apply those in the Chinese markets to safeguard the interests of his company.
The management of the Alibaba group realized that the local markets and businesses of the country were very segregated and blurry as there were no immense differences between the small and franchised businesses of the market. They knew that once eBay established itself in the market then it would directly compete with Alibaba in the business to business and therefore, it was necessary for the company to expand itself to counter the threat of this giant rival of the industry. The company had gathered immense expertise and experience in facilitating the Chinese business to business services and it was natural and normal for the company to expand into the Chinese retailers and consumers field of the business. The organization was in complete affiliation and association with the Chinese population’s norms and traditions and it already had the supporting facilities to launch this initiative. The Ali pay service assisted the growth of the company in the consumer and the retailer sector and it proved to be very critical for the company`s growth and potential. There were some other motivating factors also that motivated the management of the company to diversify its operations and services and the most prominent one among those was the ever increasing proportion of the population that was starting to get inclined towards the use of internet and online services. The massive population of the country also attracted the country to launch and diversify its services. China is a developing market and country and there is a huge potential for economy and technology as it is already progressing and increasing with every passing day. All these things were a factor of consideration and they played immense role in the expansion of the group by the launching of Taobao.....................

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