How Does Alibaba Group Create A Corporate Advantage? Case Study Example
Management Insights on Alibada Group
Many multibusiness companies exist as a sum of their respective parts and do not coexist in such a way as to create a corporate advantage (Collis & Montgomery, 1998) But a “Great corporate strategy begins with a vision of how a company’s resources will differentiate it from competitors across multiple business” (Collis & Montgomery). The Alibada Group has created a corporate advantage by using the subsidiaries in order to help each its operate effectively, working together in order to grow exponentially each other’s success. It is clear to see how the respective businesses under one roll in the Alibada group coexist in such a way that they create a corporate advantage, answer to the same leadership team, which while allowing each business to grow on it’s own, has founded each business in order to complement each other’s commerce.
For B2B commerce, the members of the group offer needed services to each other, or provide initial partners that can generate an income. Taobao is “China’s largest online shopping website.” It requires an escrow service in order to process payments, and Alipay provides this. Alipay has grown to offer other payment solutions, but was designed in order to facilitate ease of commerce within Taobao. Alipay has grown to be more than just a “partner” with Taobao, and is not China’s leading third-party online payment solution (Alipay, 2015). Some of it’s major costumers include, AirAsia, Jamy, Tapjoy and some of its main partners include Asia pay, Asknet, Digital River, and Worldpay (Alipay, 2015).
Alisof provides Taobao and other subsidiaries Internet-based management solutions, Alimama gives these sights an online advertising exchange and the purchase of China Yahoo by Ma compliments this as a entertainment portal. These combined partnerships, designed with Ma’s vision of online commerce in China create a corporate advantage. It is easy to see how different, less cohesive, their interaction could be if their partnership was not a result of sharing the same founders with the same visions for Internet commerce.
Is this sustainable? Is the current degree of competition among the business units appropriate?
The businesses of the Alibada Group could certainly continue to function under their current structure, but CEO Ma and his leadership team wonders if the best course of action for the future is for these companies to continue to operate under their current structure. But as the companies grow, there is the growing realization within Ma that it might be time for his businesses to leave the proverbial nest as separate entities. Alibada uses a decentralized technology model, as opposed to a company like Google which uses a highly centralized model (Wulf, 2010).
There is competition among the members, unlike, say subsidiaries of Google, but there is also cooperation amongst the members. The Alibada Group has worked to foster a sense of community and team building within the group. Ma’s decision to rotate senior managers among different subsidiaries which has led to a senior staff with knowledge of how to work better within the context of the group.
With competitors out there structured like Google, it seems advisable that Ma pursue a course of further integration among partners rather than increased separation. There seems to be a middle road between cooperation and competitions that could be found in order to continue to grow the cohesion between the existing business, add new ones, and still work together for the shared goals of success in each businesses primary focus. There is actually a term for such a strategy, “Coopetition” which is a neologism for cooperative competition (Brandenburger, 1996).
Jack Ma and his management team should be most concerned about the future. They should look out ot who their major competitors will be and find the best organizational strategy to be competitive in the future. Given the trend for companies to purchase other companies, and to given that Alibaba group will need to be completive against larger companies, it seems sensible to continue to keep the companies as they are, operating independently, but under the same roll. As separate companies, they’re would still be natural competition amongst the companies in places where there were overlapping markets, but there would not be any cooperation amongst then. So they would lose a competitive edge, and not gain anything by that by separating in to separate companies.
It seems in the current organizational structure, it would not be wise to continue to add people who answer to Ma. Most business. Rothman Consulting group recommends being conscious of what you can do with people that you manage and that a person should put limitations on that. The more people that Ma has to oversee, the less time he has to invest in steering the proverbial ship. New or acquired companies should fall somewhere within the hierarchy so that they are being managed by a senior team member that Ma is already currently overseeing. This will lead him time to do what he is good at, looking at emerging markets and imagining what niches will need to be filled within them.
Alipay, China's leading third-party online payment solution. (n.d.). Retrieved February 9, 2015, from http://global.alipay.com/ospay/home.htm
Brandenburger, A., & Nalebuff, B. (1996). Co-opetition. New York: Doubleday.
Creating Corporate Advantage. (1998, May 1). Retrieved February 9, 2015, from https://hbr.org/1998/05/creating-corporate-advantage
Find quality Manufacturers, Suppliers, Exporters, Importers, Buyers, Wholesalers, Products and Trade Leads from our award-winning International Trade Site. Import & Export on alibaba.com. (n.d.). Retrieved February 9, 2015, from http://www.alibaba.com/
Wulf, Julie M. "Alibaba Group." Harvard Business School Case 710-436, March 2010.
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