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Alibaba Case Stydy
Alibaba Case Stydy
In 1999, Jack Ma founded Alibaba as an online marketplace that connect SMEs in China with global
business by providing them with free to encourage them engagement and information services online
according to their needs in different industries.
In 2003, with entering eBay to china market, Jack Ma take the opportunity to found a domestic e-
commerce website through established Taobao for C2C transactions.
After success of Alibaba and Taobao, Jack Ma continued take the opportunities and established
complementary online and offline services like create information system search owned by Alibaba
through cooperation with yahoo, www.yahoo.com.cn and build Alipay online payment through act as a
third party. All that related to core business which is e-commerce to support and success in achieving
Alibaba mission.
The huge success achieved by Alibaba Group is attributed to its founder, Jack Ma, who has become one
of the most important pioneers of e-commerce and business in the world.
1
Understanding the Alibaba Business Model
https://www.investopedia.com/articles/investing/062315/understanding-alibabas-business-model.asp
2
Alibaba Net Worth 2011-2019 | BABA
https://www.macrotrends.net/stocks/charts/BABA/alibaba/net-worth
Jack Ma
Jack Ma was ranked by Forbes magazine as the most influential person in the world for the year 2017.
Also, According to Forbes magazine Jack Ma topped the ten China’s Richest 2019 list for the second year
running with his fortune rising to $ 38.2 billion from $ 34.6 billion in 2018. 3
Jack Ma is considered successful story that addressed in the business world, he build an Alibaba empire
and became the dominator in e-commerce business with minimal technical knowledge requirements.
His life very simple, he faced many times rejection from other, he was rejected by schools because didn’t
have math skills, even was rejected by 30 companies one of them the KFC company. however, he didn't
give up , he decided to complete what he love is the learning English language and became English
teacher which open for him the opportunity to know the world and achieved a huge worth and success .
Additional to that, his character full of traits that converted him of being an English teacher to e-
commerce empire builder. And adopted his leadership style as an organization leadership by many
organization overall world.
Leadership
Jack Ma did many steps that make him a leader, which make “Emerging business leaders turn to Ma for
inspiration, and over the years he's shared his thoughts on leadership, success, and education.”(Business
insider, 2019)4
Here are the most exceptional leadership traits Jack Ma have in building his huge empire, and adopted
by many emerging business:
1. A passion for learning and knowledge: he was wake up before dawn and bicycle for forty minutes
to the Hangzhou Hotel to meet foreign tourists. And invite them for a free tour and they taught him
English. He aimed to practiced his English and discover the world through foreign tourists. So, he
distinguished himself from others by learning speaking English skill.
2. Accepting the failure without giving up : Jack Ma faced the failure and keep going try to apply for
many jobs and with all rejection faced in his life he have persistence to make a change in the world and
for china , and never lose a hope . So, before he established Alibaba he failed in two businesses: Hope
Translation and China Pages which granted him the experience of learning from past failures and
mistakes. One of his quotes about failure is "Of course, you're not happy when people say 'no.' have a
good sleep, wake up, and try again."(Jack Ma).5
3. Patient and Positive Attitude: the leader have to be patient, Jack Ma was patient and have a
positive thinking when he was riding his bicycle for 8 hours for 40 minutes to a hotel to practice his
3
Forbes.com
https://www.forbes.com/china-billionaires/#3ede6739ae43
4
Jack Ma, the richest man in China, stepped down as Alibaba chairman — here are 27 of his most brilliant quotes |
Markets Insider
https://markets.businessinsider.com/news/stocks/jack-ma-quotes-alibaba-inspirational-2019-6-1028295089#-
leadership-is-your-instinct-then-it-s-your-training-leaders-are-always-positive-they-never-complain-1
5
Jack Ma, the richest man in China, stepped down as Alibaba chairman — here are 27 of his most brilliant quotes |
Markets Insider
https://markets.businessinsider.com/news/stocks/jack-ma-quotes-alibaba-inspirational-2019-6-1028295089#-
leadership-is-your-instinct-then-it-s-your-training-leaders-are-always-positive-they-never-complain-1
English . Patient and positive attitude be essential when there difficult situation, also, positive attitude
needed to leading the team to motivate and make them positive. One of his quotes about positive
attitude is "Leadership is your instinct, then it's your training. Leaders are always positive, they never
complain."6
4. Seeking opportunities: Jack Ma in 1995 visited the America for the first time, he gained the
knowledge of internet and used it to find the “beer” china product but there was no results about
china , he noticed that there many china products not listed on the internet 7, which make him seize the
opportunity to introduce internet in china and make change for small and medium business through
decided to create a website support this segment to promote their product internationally , and in last ,
the final result is Alibaba .com. another point clarify the ability of Jack Ma to seize the opportunity is on
marketing level , he took advantage of Singles day (11/11 each year) event which consider important
celebrate in china , and offer discounts prices and marketing campaigns for this day which lead to huge
sales. So, adopted this marketing promotion yearly.
5. Problem solving and decision making: To arrange the relationship between buyers and sellers,
and solve the quality and trust of manufactured products, he adopted quality assurance procedures for
manufactures through Alibaba purchase the specific products from suppliers and passes it in a sequence
of transactions to check of the quality. Based on quality assurance procedures result, Alibaba grant the
supplier the "gold supplier. In this solution he guarantee the high quality of supplier products, and
guarantee the satisfaction of buyers , “therefore, they increased and retained the number of users by
increasing switching costs and multi-homing costs “(B. Mamtaz, 2014). Switching costs build for both
buyers and suppliers, the supplier will lose its reputation if not follow the quality assurance by losing the
“the gold supplier” and buyer will lose trusted seller that was benefited of its existence in gold suppler
membership .8
Another issue faced by Alibaba is the safety from fraudulent transactions. “There are two identified
ways in which a buyer could potentially get scammed in Alibaba: payment frauds and delivery of
damaged/defective goods. “(B. Mamtaz, 2014). To solve the problem related to payment fraud, Jack Ma
turn it to opportunity, by established Ali pay online payment which provide a safe payment system
through existence of third party hold the money until buyer and seller confirmed the health and
complete of transaction . To solve the issue related delivery of damaged or defective goods, Alibaba
found Fair Paly Fund for compensation for losses occurred from this fraud with high procedures. 9
6
LAI, L.. "Chinese Entrepreneurship in the Internet Age: Lessons from Alibaba.com". World Academy of Science,
Engineering and Technology, Open Science Index 48, International Journal of Economics and Management Engineering
Engineering and Technology, Open Science Index 48, International Journal of Economics and Management Engineering
7. Have a clear vision: Jack Ma has a vision enable him seeing what is invisible to other, in 1995 when
he visited America he impressed of the culture of America and development of internet, at that time he
has a vision and predicted about the entering internet to china, he has a vision that will change and
revaluation the commerce concept in china .he build Alibaba B2B the first platform that link foreign
companies with Chinese manufacturers , after that , his vision strived him to found the B2C platform and
C2C platform , it is clear vision enabled him to compete the big e-commerce companies in the world
such Amazon and EBay.
8 Unites people: Jack Ma unites people to work under a single and common goal not under one person
of the company. This was clear in when Jack Ma spilt Taobao into three independent units which are
Taobao C2C platform, Tmall on large branded and Etao focus on search information , and asking from
employees to compete each other in the market where in the same time they belong to the same
company by unite employees under goals .
9. Team work and culture development: Jack Ma focused on attract superior skills employees and
support them because he was not a professional in many field related to technology and coding, he
consider teamwork as a partner not employees 11.Jack Ma was leading them, not asking them to do
things as a manager, and he believe that teamwork can achieve extraordinary things. Jack ma was
sharing data with his employees and motivate them to embrace change in organization environment to
achieve unites goals. He introduced the reward system based on employee performance, and create a
set of values that shared with employees and confirmed to be commitment and respected it. 12
10. Focus on customer: The first value adopted by Alibaba is “customer first “ he give the ultimate
importance for customers, he was developing the Alibaba by looking to Alibaba as a customer not a boss
which enabled him to discovered the needs of customers and providing a diversity of best services . One
of these services is AliSourcePro which allow buyer to order customize products. 13
9
Bin Mamtaz, Md Raziun & Sheth, Urvil & Yang, Jonathan & Karinda, & Janssen,. (2014). How did Alibaba.com
become and still remains a dominant platform in the e-commerce market?. 10.13140/RG.2.1.3045.5848.
10
Alibaba
Social Responsibility Report of Alibaba Group / Alibaba compass. Preface Alibaba’s Main Awards (2014-2015)
csr.alibaba.com/file/download/id/2fcc99869bf7321119eea5e3392119e0
11
Evaluation of Jack Ma’s Leadership Style
https://www.ukessays.com/essays/leadership/evaluation-of-jack-mas-leadership-style.php
12
Jack Ma At Alibaba: Building a Learning Organization
https://www.thecasecentre.org/educators/products/view?id=166727
13
Bin Mamtaz, Md Raziun & Sheth, Urvil & Yang, Jonathan & Karinda, & Janssen,. (2014). How did Alibaba.com
become and still remains a dominant platform in the e-commerce market?. 10.13140/RG.2.1.3045.5848.
In 1999, Jack Ma introduced the internet in china through established Alibaba .com, he aimed to build
B2B platform for SMEs through provide information, technology and online services for free to attract
small business to enter the market, Jack Ma focus on this segment enterprises to meet their need to
involve in E-market and conduct internationally . Alibaba act as a third party between seller and buyer in
business environment to moderate this relationship.
After that, Alibaba become the leading B2B Company in china and start to generate revenues from
online advertising. Alibaba drive the growth for china by changing how companies can conduct and
market internationally not just demonically.
Jack Ma’s vision enabled him to achieve the mission, he develop and innovate what customer need and
look for, by providing set of services. All that open eyes on china market as an opportunity for global
companies to expand and enter the china market.
One of these global company is eBay, in 2002, eBay decided to enter china market by acquisition of
market leader in C2C platform “Each Net”, and held approximately 85% of china market in that time, but
there were no people shopping online it was just 1% make online shopping, because they not familiar
with internet, additional fair of fraud transactions without strong incentives force them to online
shopping.14
However, Jack Ma was ready in that time for any threat in future, this was clear in a battle with eBay,
when eBay decided to enter china market to compete Alibaba in 2002, but after four years exist from
market due to following reasons:
1. Jack Ma from the start put Alibaba as a global website because he recognized that his competitors is a
globally not domestically. All of this stems from his vision for the future as a leader. So, Jack Ma was
benchmarking Alibaba with the best competitors not just internationally competitors.
2. Based on the earlier point, Alibaba was performing and enhancing continuously provided services and
expand in these services to extent that over customer expect.
3. Jack Ma have a focus strategy to expand in China and be the leader in all platform e-commerce rather
than expand internationally and put him in a high competition with internationally competitors, this was
clear when eBay entered the china market , it found Alibaba is a dominator player in china market in e
commerce.
4. Alibaba a leader in B2B platform in china and considered a competitor for eBay B2C platform, and in
any time eBay can build B2B platform and compete Alibaba in strong way, but that not happened
because Jack Ma realized that earlier and he felt of threats, therefore, was the faster than eBay and
changed the rules of game by build C2C platform and called Taobao (“digging for treasure”) as a
defensive strategy to competed eBay in China market which is considered a playground of Alibaba,
which is not expected for eBay , because Jack Ma create a teamwork and keep it secret to work on
Taobao C2C platform that serve all customers to buy everything need .
5. Alibaba launched Taobao for free charge and declared to be free for three years, but eBay was not for
free, and in the last eBay forced to be for free. Add to that, Alibaba was contacting with china audience
for enough time enabled it to understand the customers and knowing them in depth, which was not
good for eBay which need time for that. Which represented in design of website for Taobao and eBay,
14
Wulf, J. (2010). Alibaba Group. Harvard Business School Case, 710, 436.
Taobao was more comfortable with customer’s styles and tastes through young, jazzy graphics and
personable style.15
6. eBay had a high confident to take a place in china market , without seeking to deeply understand
customers and employ successful marketing tools, it relied on its confidence and arrogance of its success
in the United States and used unsuccessful marketing campaigns without adapting to the differences in
the Chinese culture and market. EBay used aggressive campaigns, and after Taobao launched e bay
entered with” exclusive advertising rights with major portals Sina, Sohu, and Netease with the intention
of blocking advertisements from Taobao.”() on other hand, Jack Ma focused on TV ads because realized
that people prefer to watch TV than use internet, which proven that Alibaba ads tools is successful than
eBay ads tools. 16
7. EBay’s PayPal depend on direct payment between buyers and seller, dropping the safety and fraud
issues that may happen. While, Alibaba's AliPay take of these issues as advantage and provide customer
with more safety by acting as a third party that hold money until both parties confirm the complete
delivery of product for buyer without any problem or fraud . 17
No doubt, all that provided to Alibaba a huge of user base by switching users from eBay to Taobao
and enable Alibaba to spread and expand overall world not just in China, and make of Alibaba a
difficult number to defeat. The main point Jack Ma used to incentive people for shopping online is the
concept “for free “ which called no revenue model , that motivate people to try use it , also, facilitating
all related transactions between buyers and sellers from entering the website until deliver the order
and confirm payment with high safety and quality assurance.
In 2007 , Taobao succeed to hold 82% of china market , and leave eBay with 7 % of it , which force them
to exist from the market because decline in revenues .18
With change in customer’s needs and preference, rapid advance in technology and high competition in
global markets, the best strategy adopted by Alibaba is dynamic strategy instead traditional strategies
15
How Ebay Failed In China
Helen Wang - https://www.forbes.com/sites/china/2010/09/12/how-ebay-failed-in-china/#3fe48a7d5d57
16
How Alibaba Took on Ebay in China (and a Few Lessons For Indian Entrepreneurs)
Aish Sinha - https://medium.com/@aishsinhaindia/how-alibaba-took-on-ebay-in-china-and-a-few-lessons-for-
indian-entrepreneurs-4f5ae9709089
17
How Alibaba Took on Ebay in China (and a Few Lessons For Indian Entrepreneurs)
Aish Sinha - https://medium.com/@aishsinhaindia/how-alibaba-took-on-ebay-in-china-and-a-few-lessons-for-
indian-entrepreneurs-4f5ae9709089
18
Wulf, J. (2010). Alibaba Group. Harvard Business School Case, 710, 436.
which is a static planning and not suitable to Alibaba environment because Alibaba environment
Characterized with fast changes and unpredictable environment . Also, since the core competence of
Alibaba is e-commerce and it depend on real-time information to make best decisions.
Alibaba recruited foreign expert in strategy to assist Alibaba to put foot on global level, which attracted
Ming Zeng a professor in strategy, as a chief strategy officer for Alibaba group, to provide tools and
advise how to compete internationally and develop the business with keep sustainability.
Zeng worked on developing a concept “called smart business, which consists of using digitized
information and ability to get real time feedback on business performance to drive experimentation
through ongoing self-tuning of strategy “(H.Ibarra et al, 2019)
Alibaba consider data-rich and highly interactive environment. He put the buyers and sellers in online
platform and listed many of seller’s goods through advanced technology and internet and give them
more and more services with high creative and innovation. This created constant flowing data from real-
time interactions and processes online which used in get feedback to make decisions and develop the
business .Zeng, explained to Alibaba how the latest technological developments, such as artificial
intelligence, machine learning, the mobile internet, and cloud computing are redefining how completely
value is created and generate automatic decisions all the time . He also, work with his team in Alibaba to
transform into smart business which developed and enabled Alibaba to” Automate decisions through
machine learning; Create products informed by real-time data from customers; Determine the right
strategic positioning to maximize value from platforms and suppliers; Repurpose your organization to
further human insight and enable creativity; Lead your company's transformation into a smart
business.”(Zeng, 2018)19
The implications for how to create smart business strategy is to automate all operations and use of
algorithmic which depend on technological innovations like machine learning, cloud computing and
others. Alibaba adopted these following steps automate the process and respond in real time:
1.” Datafy” the physical world: Datafication is the process of making a business data-driven. It
involves collecting (new) data from various sources, storing them in a centralized location, combining
them with each other and finding new insights that could lead to new opportunities. 20The main factor of
success and expand of Taobao that is depending on a strong database which contain enormous number
of transactions.
2.” Software” activity business: smart business should capture every activity; including customer
relations, in digital form so that decisions affecting the activities can be automated through machine
learning. The first software build on Taobao is” Wangwang” which allow buyers and sellers easily
talk and contact to each other , introduce products and negotiate prices , as they are in traditional or
physical retail store. Also, Alibaba support sellers with software tools enable them design and launch a
19
M. Zeng ,(2018) . Smart Business: What Alibaba's Success Reveals about the Future of Strategy , Harvard
Business Press Books
20
5 Steps to Datafy Your Business and Be Successful
https://datafloq.com/read/5-steps-to-datafy-your-business-and-be-successful/1014
variety of online shop fronts, to offer discounts, promotions and loyalty programs to conduct and
manage customers relationships activates. Taobao, the average seller might subscribe to more than a
hundred software modules offered through the platform.
3. Get data flowing : data flow and coordination are readily achieved through common internet
protocols and application programming interfaces (APIs). These allow applications to communicate
automatically and almost instantly, even over long distances, to mobile and other devices.
4. Record data in full: The opposite of live data is static data that is sampled or profiled for analysis at
a later date. Live data also requires metrics and infrastructure that can interpret and evaluate the data,
and smart businesses must develop these in the algorithms they use in their data-intelligence engines. 21
5. Apply machine-learning algorithms: Intelligent real-time software decisions are quickly replacing
after-the-fact analytics. Only with full live data, built-in metrics, and artificial intelligence to iteratively
improve the decision process, can your business keep up with the pace of change, and unique markets
around the world.22
These steps lead to what Zeng defines as a customer-to-business (C2B) model, where every direct
interaction with customers sets into motion a striking reorientation of all business activities, and builds a
feedback loop from customers. This allows businesses to automate all decisions productively, to scale
and compete effectively, in tune with trends and new marketplaces. 23
The corporate culture that established by Jack Ma at Alibaba group which emphasizes group decision-
making and bonding, and welcomes employee feedback and criticism is hard to effect badly from the
departure of Jack Ma the co-founder of Alibaba . And the set of values and culture along with leadership
principles as leaders lead the team not manager give orders, keep eyes on your competitors which will
help the organization to reinvent itself, predicted the future through study today what will look like the
future, it is also ensuring on buy not bet when acquisition another business be sure to acquire the
majority rather minority of the company, and hire adventure not employee , all that create a solid base
to sustainability of Alibaba group regardless what will happened in the near or long time .
Jack Ma realized from 10 years that he should planning for his point out of Alibaba group in future
without cause any bad impact on its succession so he announced that "We believed the only way to
solve the problem of corporate leadership succession was to develop a system of governance based
21
5 Steps to Automating Your Business Strategy
https://www.inc.com/martin-zwilling/what-alibabas-success-reveals-about-value-of-automating-strategy.html
22
5 Steps to Automating Your Business Strategy
https://www.inc.com/martin-zwilling/what-alibabas-success-reveals-about-value-of-automating-strategy.html
23
5 Steps to Automating Your Business Strategy
https://www.inc.com/martin-zwilling/what-alibabas-success-reveals-about-value-of-automating-strategy.html
on a unique culture and mechanisms for developing consistent talent and successors," he said. "For
the last 10 years, we kept working on these ingredients."(Jack Ma) 24
Alibaba changed landscape of the industry by employment of robotics and artificial intelligence and
transform to complete digital company.
2. Leader’s role is to develop team strengths and improve weakness through delegate the required tasks
to the appropriate employee and enable them to embrace changing in environment business. Alibaba
adopted approach which frequent rotation of employees, switching them between various products and
regions regardless of performance and encourage them to accept failure and ask them to "embrace
setbacks".25
3.leaders in digital business should motivate employees to innovate , sharing decisions and opinion,
they are knowing that differing opinions can improve a team's ideas over time and yields valuable ideas
which leading the organization to best position in market. 26
4. Leaders empower employees to trust in their own judgment and make decisions based on best
available information.
5. Leaders through their vision should inspire and win employees and other related stakeholders in
organization to achieve values and mission.
6. Leaders craft the future, understanding what the future of organization will be and how to effective
response to societal, economic and technological changes. 27
24
Alibaba Is Well-Positioned to Succeed Without Jack Ma in the Near Term
https://www.thestreet.com/opinion/alibaba-is-well-positioned-to-succeed-without-jack-ma-in-the-near-term-
14707520
25
H. Ibarra, J.Spungin,(2019)Jack Ma at Alibaba: Building a Learning Organisation - London Business School
https://publishing.london.edu/cases/jack-ma-at-alibaba-building-a-learning-organisation-2/
26
'Command and Control' Leadership Is Dead. Here's What's Taking Its Place
https://www.inc.com/robert-glazer/command-control-leadership-is-dead-heres-whats-taking-its-place.html
27
Ming Zeng,(2018), Alibaba and the Future of Business https://hbr.org/2018/09/alibaba-and-the-future-of-
business
7. Leaders should identify a fundamental change in the competitive environment and move to counter a potential
disruption or, better yet, gain an advantage by seizing on new opportunities before competitors do.
References:
1. Understanding the Alibaba Business Model Retrieved from
https://www.investopedia.com/articles/investing/062315/understanding-alibabas-business-model.asp
5. (LAI, L ,2010) "Chinese Entrepreneurship in the Internet Age: Lessons from Alibaba.com". World
Academy of Science, Engineering and Technology, Open Science Index 48, International Journal of
Economics and Management Engineering (2010), 4(12), 2252 -
2258.publications.waset.org/15135/Chicago
6.Bin Mamtaz, Md Raziun & Sheth, Urvil & Yang, Jonathan & Karinda, & Janssen,. (2014). How did
Alibaba.com become and still remains a dominant platform in the e-commerce market?.
10.13140/RG.2.1.3045.5848.
10. How Alibaba Took on Ebay in China (and a Few Lessons For Indian Entrepreneurs)
Aish Sinha - https://medium.com/@aishsinhaindia/how-alibaba-took-on-ebay-in-china-and-a-few-
lessons-for-indian-entrepreneurs-4f5ae9709089
11. Alibaba Is Well-Positioned to Succeed Without Jack Ma in the Near Term, Retrieved from
https://www.thestreet.com/opinion/alibaba-is-well-positioned-to-succeed-without-jack-ma-in-the-near-
term-14707520
13. 'Command and Control' Leadership Is Dead. Here's What's Taking Its Place , Retrieved from
https://www.inc.com/robert-glazer/command-control-leadership-is-dead-heres-whats-taking-its-
place.html
14. Ming Zeng,(2018), Alibaba and the Future of Business, Retrieved from
https://hbr.org/2018/09/alibaba-and-the-future-of-business
15. M. Zeng ,(2018) . Smart Business: What Alibaba's Success Reveals about the Future of Strategy ,
Harvard Business Press Books.
16. 5 Steps to Automating Your Business Strategy , , Retrieved from
https://www.inc.com/martin-zwilling/what-alibabas-success-reveals-about-value-of-automating-
strategy.html