Alibaba Company was founded by Jack Ma in 1999 with the main purpose of enabling small enterprises to benefit from innovation and technology in order to grow and compete favorably with other companies both in the domestic and international economies (Alibaba Group, 2013). The company began as a small technology venture with eighteen people with its headquarters in Hangzhou. The founders of the company believed that this was a profitable way to leverage the internet as a medium for economic exchange that would help small business owners in a way that had not been realized in China (Alibaba Group, 2013).
With companies such as eBay and Amazon dominating the market especially in the west, Alibaba saw this as an opportunity to satisfy a vacant economic gap in China. Currently, the company has grown and employs over 24,000 people in 70 cities across the world with several subsidiaries. The subsidiaries that are owned by the Alibaba group company include; Alibaba. com, Taobao, eTao, Yahoo! China, Alipay, Aloft, and Alimama which are the main ones (Alibaba Group, 2013). In its 15 years of existence, Alibaba has been characterized by challenges and successes that have enabled the company to expand its capital through strategic acquisitions and partnerships.
In the year 2005, the company merged with Yahoo in a partnership which consequently led to its acquisition of Yahoo Operations in China (Jacob and Gough, 2014). In addition to this, in 2009 the company was able to buy HiChina one of the most renowned and internet infrastructures in China. With its multiple acquisitions, the company expanded and launched educational programs on e-commerce that was open for both marketers and buyers.
This was followed by Alibaba Group listings on the Hong Kong Stock Exchange in the year 2007. Recently in 2014, the company made history by launching an Initial Public Offering on the New York Stock Exchange where the stock began at $68.00 and ended at $98.89. Consequently, enabling the company to set a new record within its category in the stock exchange (Jacob and Gough, 2014) The e-commerce company is currently listed as one of the biggest IPO in the world. Alibaba’ s current competitors include; Amazon, eBay, and Facebook of which it all beat in the recently concluded IPO.
Critics argue that Alibaba has emerged to be more powerful than its competitors, eBay and Amazon combined which existed before it was founded (Jacob and Gough, 2014). The company is believed to value between $150billion and $200billion. According to Chiang and Lin (2014) Alibaba, the main focus of Alibaba is to develop and implement an integrated delivery infrastructure within China and across the world. 1.3 Contextual Analysis of Alibaba Group Company Alibaba Group Company is currently rated second in the net income category.
When compared with other related companies, the company is reported to have 46.54 of current valuation per net income (Walvaren, 2009). The company stands as a unique business enterprise that is among the few companies in China that did not copy already existing models from either Europe or the U. S (Walvaren, 2009). In 2012 the company handled an estimated $170 billion sales from two of its portals. According to Wei (2007) Alibaba Company is a global leader in business-to-business (B2B) with its subsidiary Alibaba. com Limited being the largest online market place for both international and domestic customers.
Web services provided by the company have expanded the Alibaba Group Company to offer business management solutions and retail websites services. This has contributed towards the success of the company making it one of the largest and successful comprehensive providers of internet retail and Business-to-Business services (Wei, 2007). According to Walraven (2009), Alibaba has been successful in implementing its business model. The e-commerce company has facilitated a 24/7 online platform that allows suppliers and buyers to interact across the world without moving.
Since it was founded the company has constantly made improvements on its brand and has gone beyond and connected Chinese business people with the rest of the world. This way it has managed to maintain high levels of customer loyalty due to the improvements. The company has used its web services to engage consumers while reducing operating costs and at the same time obtain large profits. Walvaren (2009) affirms that the structures of the business model by Alibaba Company are efficient, flexible and responsive in meeting the customers’ demands as well as enhance networking with partners as well as sustaining reliable revenue streams.
Alibaba Company continues to impress its customers with the services it provides including, electronic payments, cloud computing services which are data-centric and search engines for shopping. These services have made the company to be more powerful and customer-oriented than its competitors. In 2013 the company served over 231 million customers who spent a sum of $248 billion on Alibaba’ s web portals, with these sales the company had sold more than what eBay and Amazon combined. CEO Jonathan Lu attributes their success to customers who are the first priority to the company (Jessica, 2015).
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