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have studied the markets and penetrated them with a local market structure. Jack Ma realized that many SMEs distrusted the idea of online payment.Buyers refused to send money to sellers before they had received the goods and sellers were unwilling to ship the goods until they had received payment.To counter this problem, Alibaba launched an online payment platform called “AliPay” based on lines of eBay’s payment system, PayPal.
The company was originally free of charge but in 2001 Alibaba began charging its members for the services provided. Alibaba started selling its advertising space, offering a customized online marketplace for its members called “Alibabies” for a premium.Jack Ma made plans to provide various products targeting the SMEs in various countries. They have slowly become a global company with a local mindset. Because of their strong integration in the Chinese market Alibaba has maintained its leadership in this country and is expanding globally. 3. Critically examine Alibaba’s business model. Do you think it is sustainable? After having captured the Chinese ecommerce market, what steps should Alibaba take to expand globally?
Alibaba offers several services to aid the e-commerce, some of which are free and come with the basic account, and others must be paid for. Income is primarily generated from suppliers who purchased services to be listed on the site, such as priority placement in industry listings and searches.Alibaba has managed to surpass and exceed any competition presented by other international companies (like eBay and Yahoo) in China. When it was first founded, Jack Ma established 3 basic strategies (Back to China, Back to Central, and Back to the Coast) with the main goal of targeting the Chinese local market and penetrating it successfully. This company also managed to survive the economic crisis in 2008 and has actually expanded globally ever since it was first created. For all these reasons I believe that Alibaba’s business model is sustainable.In order for Alibaba to expand successfully as a global company they need to know specifically what their customers from each specific country demand and want. They could implement a global geographic structure to cover specific geographic regions and penetrate the market in that area. Alibaba has to think globally but act locally. Another way they could expand in other countries with ease is by acquisition. By acquiring other ecommerce companies from different countries they can learn the other company’s values and culture, and business methods that company uses with their local customers. That way they will penetrate that country’s local market successfully.
BibliographyDeresky, H. (2011). International management. (seventh ed.). New Jersey: Pearson Education.Alibaba.com (2011). Our business units. Retrieved from Alibaba.com (2011). What is alibaba.com?. Retrieved from