Alibaba: Competing in China & Beyond

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Case Details:

Case Code : BSTR288
Case Length : 23 Pages
Period : 1999-2008
Pub Date : 2008
Teaching Note : Available
Organization : Alibaba.com
Industry : Internet and E-Commerce
Themes: Competition | Innovation | Growth Strategy | Emerging Markets
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Alibaba had several Internet businesses focused on various e-commerce business models such as Business-to-Business⁸ (B2B), Consumer-to-Consumer⁹ (C2C), and Business-to-Consumer¹⁰ (B2C). It also had a presence in the intensely competitive web search market. Being one of the first companies to enter the Chinese Internet industry, Alibaba played a major role in bringing about an Internet revolution in the country (Refer to Exhibit II for a brief note on the Internet market in China). Alibaba was launched with the vision of serving the small and medium enterprises (SMEs) in China and across the world. As of 2007, it had 24.6 million registered users spread across more than 200 countries.¹¹

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According to Analysys International¹² (Analysys), Alibaba had been the clear market leader in the rapidly growing Chinese e-commerce market with a market share of 69.04 percent in the second quarter of 2007.¹³

However, the company lagged behind in the Chinese online search engine market despite having acquired Yahoo! China's operations in 2005.

The Chinese search engine market was dominated by players like Baidu.com, Inc.¹⁴ (Baidu) and Google Inc.¹⁵ (Google) with market shares of 74.5 percent and 14.3 percent respectively in September 2007.¹⁶

Moreover, with Baidu announcing its plans of foraying into the rapidly growing e-commerce market in 2008, competition was expected to intensify for Alibaba.

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8] B2B or Business-to-Business e-commerce is trading between two businesses using the Internet.
9] C2C or Consumer to Consumer e-commerce is trading between two consumers through the Internet.
10] B2C or Business to Consumer e-commerce relates to business transactions between a company and a customer using the Internet.
11] Amy Or, Lorraine Luk, and Sky Canaves, "China IPO Frenzy Rolls on with Alibaba.com Debut --- Shares of B2B Site Skyrocket as Investors Buy its Growth Story,"www.resources.alibaba.com, November 7, 2007.
12] Analysys International, headquartered in Beijing, China, is a leading advisor of technology, media, and telecom industries in China.
13] "Analysys International Says Alibaba, Global Sources and Made-in-China.com Led China Online B2B Market in Q2 2007,"www.english.analysys.com, September 2007.
14] Baidu.com, headquartered in Beijing, China, is a leading Chinese search engine. Its revenues for the fiscal year 2006 were US$ 107.4 million.
15] Google Inc., headquartered in Mountain View, California, USA, is one of the leading Internet companies in the world. Its revenues for the fiscal year 2007 were US$ 16.59 billion.
16] "CNNIC Reports Baidu with 74.5% Market Share,"www.chinatechstory.blogspot.com, September 25, 2007.

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