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The Analysis of Alibaba

In: Business and Management

Submitted By smalltim
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B2B案例研習
<<Alibaba>>

課程:電子化採購與B2B
課程序號:09070300
任課老師: 宋培建老師

學生姓名:朱家爵
學號:138354032
Contents * Definition pg.3 * Company Introduction pg.4 * Companies and affiliated entities pg.5-pg.7 * The Growth of Alibaba pg.8-pg.10 * Alibaba Business Model pg.11 * Five Forces Analysis pg.12-pg.13 * Present the Corporation Now pg.13 * Business Environment pg.14-pg.15 * The Financial Analysis pg.17-pg.18 * SWOT Analysis pg.19 * Recommendation for Alibaba pg.20 * Conclusion pg.20 * References pg.21

Definition * E-commerce
Electronic commerce, commonly known as e-commerce or eCommerce, is a type of industry where the buying and selling of products or services is conducted over electronic systems such as the Internet and other computer networks. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction’s life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices, social media, and telephones as well.
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of business transactions. This is an effective and efficient way of communicating within an organization and one of the most effective and useful ways of conducting business.

* B2B
Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer. Contrasting terms are business-to-consumer (B2C) and business-to-government (B2G). B2B branding is a term used in marketing.
The overall volume of B2B (Business-to-Business) transactions is much higher than the volume of B2C transactions. The primary reason for this is that in a typical supply chain there will be many B2B transactions involving sub components or raw materials, and only one B2C transaction, specifically sale of the finished product to the end customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.
B2B is also used in the context of communication and collaboration. Many businesses are now using social media to connect with their consumers (B2C); however, they are now using similar tools within the business so employees can connect with one another. When communication is taking place amongst employees, this can be referred to as “B2B” communication.

Pg.3

Company Introduction

Alibaba Group is a privately owned Hangzhou-based group of Internet-based e-commerce businesses including business-to-business online web portals, online retail and payment services, a shopping search engine and data-centric cloud computing services. In 2012, two of Alibaba’s portals together handled 1.1 trillion yuan ($170 billion) in sales, more than competitors eBay and Amazon.com combined. The company primarily operates in the People’s Republic of China, and in March 2013 was estimated by The Economist magazine to have a valuation between $55 billion to more than $120 billion.
The company began in 1999 with the web site Alibaba.com, a business-to-business portal to connect Chinese manufacturers with overseas buyers. Its consumer-to-consumer portal Taobao, similar to eBay, features nearly a billion products and is one of the 20 most-visited websites globally. Alibaba Group’s sites account for over 60% of the parcels delivered in China.
Alipay, an online payment escrow service, accounts for roughly half of all online payment transactions within China. The vast majority of these payments occur using Alibaba services. As of September 25, 2013, the company is seeking an initial public offering in the United States (US) after a deal could not be reached with Hong Kong regulators
Company timeline * In December 1998, Jack Ma and other 17 founders released their first online marketplace named “Alibaba Online”. * In December 2001, Alibaba.com achieved profitability. * In May 2003, Taobao was founded as a consumer e-commerce platform. * In December 2004, Alipay, which started as a service on the Taobao platform, became a separate business. * In October 2005, Alibaba Group took over the operation of China Yahoo! As part of its strategic partnership with Yahoo! Inc. * In April 2008, Taobao established Taobao Mall (Tmall.com), a retail website, to complement its C2C marketplace. * In September 2008, Alibaba Group R&D Institute was established. * In October 2010, Taobao beta-launched eTao as a shopping search engine. * In June 2011, Alibaba Group reorganized Taobao into three separate companies: Taobao Marketplace, Taobao Mall (Tmall.com) and eTao. * In July 2011, Alibaba Cloud Computing launched its first self-developed mobile operating system, Aliyun OS over K-Touch Cloud Smartphone. * In January 2012, Tmall.com changed its Chinese name as part of a rebranding exercise.
Pg.4
Companies and affiliated entities * Alibaba.com
Alibaba.com Limited, the primary company of Alibaba Group, is the world’s largest online business-to-business trading platform for small businesses. Founded in Hangzhou in eastern China, Alibaba.com has three main services. The company’s English language portal Alibaba.com handles sales between importers and exporters from more than 240 countries and regions. The Chinese portal 1688.com was developed for domestic business-to-business trade in China. In addition, Alibaba.com offers a transaction-based retail website, AliExpress.com, which allows smaller buyers to buy small quantities of goods at wholesale prices. In 2013, 1688.com launched a direct channel that is responsible for $30 million in daily transaction value.

* Taobao(淘寶)
Taobao Marketplace, or Taobao, is the China’s largest consumer-to-consumer online shopping platform. Founded in 2003, it offers a variety of products for retail sale. In October 2013 it was the third most visited web site in China, according to Alexa.com.
According to Zhang Yu, the director of Taobao, the number of stores on Taobao with annual sales under 100 thousand yuan increased by 60% between 2011 and 2013. Over the same period, the number of stores with sales between 10 thousand and 1 million yuan increased by 30%, and the number of stores with sales over 1 million yuan increased by 33%.
Taobao’s total sales (including Tmall) exceeded 1 trillion yuan (USD 160 billion) in 2012. And on November 11, 2012, the biggest online shopping promotion activity, Taobao accomplished 19.1 billion yuan (USD 3.07 billion) sales in one day.

* Tmall.com
Tmall.com was introduced in April 2008 as an online retail platform to complement the Taobao consumer-to-consumer portal and became a separate business in June 2011. As of October 2013 it was the eighth most visited web site in China, offering global brands to an increasingly affluent Chinese consumer base.

* Juhuasuan
Juhuasuan.com is a group shopping website in China. It was launched by Taobao in March 2010 and became a separate business in October 2011. Juhuasuan offers “flash sales,” products that are available only for a fixed time period, which can last one from or two days to a full month. To buy at the discounted price, buyers must purchase the item within that defined time.

Pg.5 * eTao eTao.com was beta-launched by Taobao in October 2010 as a comparison shopping website, and became a separate business in June 2011. It offers search results from most Chinese online shopping platforms, including product searches, sales and coupon searches. Online shoppers can use the site to compare prices from different sellers and identify products to buy. According to the Alibaba Group web site, eTao offers products from Amazon China, Dangdang, Gome, Yihaodian, Nike China and Vancl, as well as Taobao and Tmall.

* Alipay支付宝
Launched in 2004, Alipay.com is a third-party online payment platform. According to analyst research report, Alipay has the biggest market share in China with over 700 million registered accounts as of the end of 2012.[11] However how many active or unique accounts this translates to is unknown, with Alibaba Group refusing to provide an answer.
Alipay provides an escrow service, in which consumers can verify whether they are happy with goods they have bought before releasing money to the seller. This service was offered for what the company says are China’s weak consumer protection laws, which have reduced consumer confidence in C2C and even B2C quality control.
The company says Alipay operates with more than 65 financial institutions including Visa and Mastercard to provide payment services for Taobao and Tmall as well as more than 460,000 Chinese businesses. Internationally, more than 300 worldwide merchants use Alipay to sell directly to consumers in China. It currently supports transactions in 12 foreign currencies.
The PBOC, China’s central bank, issued licensing regulations in June 2010 for third-party payment providers. It also issued separate guidelines for foreign-funded payment institutions. Because of this, Alipay, which accounts for half of China’s non-bank online payment market, was restructured as a domestic company controlled by Alibaba CEO Jack Ma in order to facilitate the regulatory approval for the license.The 2010 transfer of Alipay’s ownership was controversial, with media reports in 2011 that Yahoo! And Softbank (Alibaba Group’s controlling shareholders) were not informed of the sale for nominal value. Chinese business publications Century Weekly criticised Ma, who stated that Alibaba Group's board of directors was aware of the transaction. The incident was widely criticized in foreign and Chinese media as harming foreign trust in making Chinese investments. The ownership dispute was resolved by Alibaba Group, Yahoo!, and Softbank in July 2011.
In 2013 Alipay launched a financial product platform called Yu E Bao. As of June 2013 the company still had what it called "a minor paperwork problem" with the China Securities Regulatory Commission, but the company said that they planned to expand the product while these are sorted out.
Pg.6
* Alibaba Cloud Computing
Alibaba Cloud Computing (www.aliyun.com) aims to build a cloud computing service platform, including e-commerce data mining e-commerce data processing, and data customization. It was established in September 2009 in conjunction with the 10th anniversary of Alibaba Group.

* AliExpress
Launched in 2010, AliExpress.com is an online retail service made up of mostly small sellers offering products to online buyers. The site has registered users and buyers in more than 220 countries.

* China Yahoo!
In October 2005, Alibaba Group formed a strategic partnership with Yahoo! and acquired China Yahoo! (www.yahoo.com.cn), a Chinese portal that focuses on Internet services like news, email, and search. In April 2013, Alibaba Group announced that, as part of the agreement to buy back the Yahoo! Mail stake, technological support for China Yahoo! Mail service would be suspended and the China Yahoo! Mail account migration would begin. Several options were offered to users to make the transition as smooth as possible, and China Yahoo! users had four months to migrate their accounts to the Aliyun mail service, the Yahoo! Mail service in the United States, or to another third-party e-mail provider of the user's choice. Yahoo! China closed its mail service on August 19, 2013. E-mails sent to Yahoo! China accounts can be forwarded to an Alimail box until December 31, 2014. Users are also allowed to transfer e-mail accounts to yahoo.com or any other e-mail service. It is estimated there are no more than a million users with Yahoo! Mail for China and chances are they also own other e-mail accounts.

* Laiwang
In October 2013, the company's chairman Jack Ma announced that the company would no longer use Tencent's messaging application WeChat, and would henceforth promote its own messaging application and service, Laiwang.

Pg.7
The Growth of Alibaba

* Generation 1.0 Newborn of B2B

Based on the research on Alibaba’s history and its business model, there were three significant change and they will be explained in following three posts. A new business model was created by Jack Ma according to Chinese condition. Not like many developed countries having a mature market economy, 99% of enterprises in China are SMEs. This determines Chinese e-commerce should mainly face to SMEs not large enterprise. So, Jack Ma came up an idea of B2B (Businessman to Businessman) and then its first trading platform was launched. It greatly helped the domestic and foreign trading with the mission of no difficult business in the world.

First Trading Platform

With the contribution of Internet, Alibaba generated its own business model. Firstly, it introduces Chinese enterprise to international buyers; secondly, it supports the services between Chinese and international business. Thus, the system has the benefits of increasingly usage of e-commerce of Chinese enterprise instead of traditional trading behavior. The unique B2B model of Alibaba.com brought in huge profit. In 2003, it achieved 1 million revenues per day; in 2004, it achieved 1 million profits per day; and in 2005, it achieved 1 million taxations per day. Jack Ma believes, in B2B, the key determinants are not finance or technology, but its integrity, for the reason that Trust Pass was set up for providing the additional services to suppliers and company charges for them. After that, in 2002, Keyword Bidding was released. The products of winner of bidding could show its product forward in online keyword searching in order to gain more trading opportunities.

Pg.8 * Generation 2.0 Merge to C2C

2003, a C2C platform Taobao.com was official launched and expanded its market share from 0% to 86% in five years. It is the largest online shopping marketplace in China with more than 80 million registered users. The success of Taobao.com is because of the Free Mode that means no charge for displaying items and transaction. In 2005, it overtook the rival eBay on account of the different business model. Ebay.com makes profit from online traders of second-hand. However, in China, one of the largest production bases, there are not many second-hand in marketplace. By comparison, Taobao.com had the better understanding of Chinese condition and it offers an online trading place for very many sellers.

Taobao.com Online Trading Platform

In addition, the success is also due to Alipay which is the leading online payment system in China. The idea was generated for the purpose of solving online payment security problems. There is a third-party, Alipay, between buyer and seller when trading and money transaction so it has the functions of supervising and controlling. Up to 2008, there were over 80 million users of the system and exceeded three hundred thousand organisations supported Alipay payment.

Then, in order to improve customer experience, attract quality sellers and better consumers; a B2C shopping platform was launched called Tmall.com in 2008. It has different concept from Taobao. Tmall is for creditable sellers and bigger companies selling products to customers, however Taobao aims to open to every seller.

Pg.9 * Generation 3.0 C2B Came into Being

To cope with the international crisis and adjust to world trend, Alibaba.com Limited introduced a concept of “One Company” that combines its subsidiaries together to form an integrated model CBBS; in other word, this market system focuses on the collaboration among consumers, channel distributors, producers and e-commerce providers.

On 25 December 2006, Time Magazine had “You” as person of the year on cover page, which opened the period of “consumers as creator”. Furthermore, a slogan of “this time it’s personal: from consumer to co-creator” was used by Ernst&Young in 2012. The world trend shows current business focuses on the cooperation with individual customers. Alibaba keeps its step with the new era and introduced C2B which paid closely attention by society. The chief adviser of Alibaba said, B2C greatly fits traditional industrial age, and with the development of Internet, customization will be the main trend of future business which is C2B, with the requirements of individualized demand, diversification of products, small quantities production, quick reaction and platform cooperation. The concept of customization exists long since. There is no doubt network greatly improves the efficiency of message delivering, thereby reducing the cost. However, the trend is never been decided by technology, but is by customers. It is hard to say customization will be future trend. Nevertheless, C2B age’s coming means customers has increasing influence on business.

Pg.10
Alibaba Business Model * Revenue Sources The revenue of Alibaba.com is generally from the advertisements and payment of members. It’s free to search the results in the websites, but if the firms want to sell the products through the platform, they have to be the members of Alibaba.com and pay for it. Because the high visibility of Alibaba.com, it also earn lots of profit from the advertisements in its websites.

* Revenue Model The revenue model of Alibaba.com is advertising based. This advertising based is not only the traditional one, but also includes the payment of members, the webpage prepare for the small and medium-size firms belong to another kind of advertisement for the products.

* Cost Drivers The cost drivers of Alibaba.com are generally the fixed cost and the semi variable cost. Because of the e-business model, the firm has seldom variable cost such as the material cost. The fixed cost includes the cost of revenue, research & development and operation; it takes about 45% of the total cost. The semi variable cost is the cost for selling such as advertisement and the cost of sells man; it takes about 55% of the total cost.

* Critical Success Factors

1. Clear Strategy
To be the best e-business website not only in China, but also all over the world is the mission of
Alibaba Corporation. The clear strategy is the beginning of the team of Ma Yun and the highest demand of all the team members. The right strategy born with the right period of e-business development in right place of China, that makes the half success of Alibaba.

2. Effective Execution The ability of effective execution is the sign of a mature team. CEO Ma Yun, CFO Cai Congxin, CTO Wu Jiong and CPO Guan Mingsheng are all the best members in their own area before join n Alibaba. Their high experience of managing a team and maximum the performance of each employer is the success factor of Alibaba. They refine each activity to be feasible, high effective and high feedback, which make Alibaba to be one of the business deifies.

3. Special Culture
Without a charismatic culture, a firm can not attract the excellent employers and investors. In the low of Alibaba Corporation, the wage of each employer is just 500 RMB, which is near the lowest wage in that period. But the team didn’t break, even more, it attracts the million dollars earning investor Cai Congxin to join in the team, that’s the charismatic culture to help the firm across the obstruction.
Pg.11
Five Forces Analysis * Barriers to Entry
High returns will draw firms. This results in many new entrants, which will effectively decrease profitability. With the development of B2B market and long-time high profit of Alibaba.com,
There are more and more new websites try to copy the business mode of Alibaba.com. The most common way to entry B2B e-market is try to position its target market to a single industry. For example, in the recently 2 years, finechemical.com for the chemical products and Textilehome.com for the textiles and so on. Although these firms don’t have the broad market as Alibaba.com, in another word, they share the special market of Alibaba.com because they are more professional and targeted.

* Buyer Bargaining Power
The buyer bargaining power is the ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes. For Alibaba.com, the customers are generally the medium and small-size firms which don’t have the ability or don’t need to build up their own websites. To negotiate with the biggest B2B e-platform, these firms don’t have too many advantages to fight for lower cost and nearly all the standards are decided by the Alibaba.com. But with the development of B2B websites, the customers may have the opportunity to choose the other platform and that will also be the opportunity to negotiate with Alibaba.com for more rights.

* Supplier Bargaining Power
Suppliers of raw materials, components, labour, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. But for Alibaba.com, there are seldom suppliers of raw materials, components and labour because it is not a manufacture firm but an e-service one. The largest cost for this firm is cost for selling, so the most important suppliers are the firms supply the advertise for Alibaba.com, such as the famous magazines, newspapers and websites. Because these suppliers are not a union and the price is generally based on the market (it seems to be impossible for the firms to demand higher price special for Alibaba.com), the supplier bargaining power is limit and stable.

* Availability of Substitutes
The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases. The most important substitute service is the self-websites of large companies. For the customers which prefer to make business with large companies, they will not turn to Alibaba.com but directly contact with the companies themselves.

Pg.12 * Competition
For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. The most competitive firms of Alibaba.com are the search-websites such as Baidu.com and Google.com. The potential customers may search the results just through these free and simpler websites but not through the B2B e-platform, which will lead Alibaba.com to lose lots of profit.

Present the Corporation Now
Vision
* To last 102 years * To be one of the world’s top 10 internet sites * To be an essential partner for all business people

Mission * To make doing business easy

Values

Pg.13

Business Environment * Macro environment According to the latest Research released "in 2007 China's small and medium-sized B2B e-commerce study," data show that in 2006 the total number of Chinese small and medium-sized
31518000, in the state system conditions gradually improved, well-developed macro-economic environment, China has become the world's such as a manufacturing centre, driven by favourable factors, next 5 years will be for the expansion of China's small and medium-sized, small and medium enterprises will remain 7% -8% annual growth rate, the total number of SMEs in 2012 will reach 50 million.

* Competitors Analysis 1. Global Sources

Global Sources is a Hong-Kong based business-to-business (B2B) media company that facilitates trade between Greater China and the world. It provides sourcing information to volume buyers and integrated marketing services to suppliers. A wide range of media is used to connect suppliers and buyers worldwide – online portals, magazines, research reports, and trade fairs.

Pg.14
Global Sources advantage

A. The promotion of more channels and market research reports and organize their own event.
B. Promote experienced Global Sources has been done for 38 years, is the old platform to promote and experience.
C. Has its own fixed base of buyers, manufacturers

Global Sources disadvantage

a. Less well-known domestic brands than Alibaba
b. Less number of suppliers than Alibaba groups.
c. Publicity and advertising no better than Alibaba channels.
d. If the three channels at the same time promoting the relatively high cost.
e. Alibaba positioned to service small and medium-sized, Global Sources in the large enterprises (SMEs are more).
f. Apart from the "world managers" journal, other magazine subscription needs to reduce the number of the issue. With the rise of e-commerce, CD-ROM and paid magazines will be gradually out the stage of history.

2. Made-in-China.com

China manufacturer directory and China products catalogue, providing trade leads among China factory, manufacturers, suppliers, and global buyers Made-in-China.com advantage
A. It is under the Focus Technology Co. ltd, has financial strength.
B. English name is made-in-china, a good Web site optimization, to some extent the search engine to facilitate search.
C. The prices are cheaper.
D. The use of agent systems.Rapid accumulation of short-term source of funds to expand the business scale. Made-in-China.com disadvantage
a. Less well-known domestic brands than Alibaba.
b. Less number of suppliers than Alibaba groups.
c. Publicity and advertising no better than Alibaba channels.
d. Agents management uneven, and sometimes have a negative impact on Made-in-China.com’s services. Pg.15
The Financial Analysis * Cost structure

As the chart above, the cost of Alibaba.com includes 4 parts: cost of revenue, selling, research & development, general & operation. Hereinto, the rate of cost of selling is the most costly part of the total cost and the rate of cost of revenue is very low, because the business of Alibaba.com is supplying the electricity service for B2B customers.
Through the current of the past 3 years, the cost of revenue decreases about 2%. That’s because the technique using for revenue is renewed continually. From yellow pages website, business advertising website to the B2B e-business communication tool, the company turn to the high-technical company successfully.

* Margin Analysis

Pg.16

The EBIT and EBITDA increase directly in the past 3 years, but the increasing current of profit before tax decrease distinctly from 2007 to 2008. That’s because the interest of 2008 increases a lot also. Although the profit of Alibaba.com is still perfect from the financial report of 2008, it will be dangerous signal if it does not pay enough attention in the drop of increasing current, especially in the period of financial crisis in 2009.

* Financial situation

Working Capital Ratio
As a part of operating capital, Alibaba.com had a working capital deficiency in 2006. That means it was short of liquidity and it was dangerous for the firm to continue its operation. Fortunately, from 2007, the working capital becomes to be positive and increases a lot to more than 4000 millions RMB in 2008. That means the firm has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses.

The Capital Employed
Based on the chart of capital employed, we can find that the firm’s ability of generating revenue increase about 27 times in the past 3 years. It is a perfect imagine for any company especially for the large enterprise like Alibaba.com.

Net financial Debt
Because of the high profit, Alibaba.com did not have any debt in the past 5 years, its operating cost is all from its earning and that’s a signal of strong capacity for a company. But the net financial debt is like a big “V” below zero in the chart in the past 3 years, that’s because the cash was far from maximum use in 2007.

Pg.17

Return on Equity
Although the most of date shows that the financial situation is perfect in the past 3 years, the date of return on equity gives a warning to Alibaba.com. In the past 3 years, the return on equity decreases from 1.5 to 0.2, which means the profitability of the shareholder’s equity in 2008 decrease to 0.18 of 2006. Generally speaking, the return of equity is still competitive in the e-business industry.

Return on Capital Employed Nearly the same, the return on capital employed of 2008 decrease to 0.18 of 2006. The gaining of its assets decrease so much maybe because of the highly increase in asset such as land. But furthermore, the main drawback of ROCE is that it measures return against the book value of assets in the business. As these are depreciated the ROCE will increase even though cash flow has remained the same. Thus, older businesses with depreciated assets will tend to have higher ROCE than newer, possibly better businesses. In addition, while cash flow is affected by inflation, the book value of assets is not. Consequently revenues increase with inflation while capital employed generally does not.

Pg.18
SWOT Analysis * Strength(S)
1. The site has a team of three (Britain, China, Japan), to include broader customer base, and conducive to information exchange, an increase of the amount of information, but conducive to building momentum to expand its influence.
2. Alibaba increases segmentation of information and comprehensive, so that more targeted and effective.
3. The world's largest Chinese Forum –“以商会友”, has created a great convenience for traders around the globe to exchange, and also closer to the distance between the various traders, but also to enhance the visibility of the website.
4. A large number of members, to enhance the visibility of the brand so that the set of information Alibaba increasing coverage, the advent of attracting business.
5. To open the "Golden supplier", a web-based transactions to ensure security.

* Weaknesses (W)
1. Alibaba's Web site model is an intermediary form, and replicability of this model, which other competitors from entering the industry to provide a sample; it increased by competitors for itself.
2. Alibaba membership system to increase the fees in the process of transformation, will lead to the loss of existing members, will create the opportunities for competitors, the development of the site will be difficult.
3. Alibaba's business platform large and cluttered that it had 27 industries, 800 - 900 categories of industries as a business platform to optimize the greatest obstacles.

* Opportunities (O)
1. In China, several large banks and credit companies to participate fully in the field of e-commerce, which the depth of the development of e-commerce has created opportunities.
2. China is now speeding up the development of e-commerce legal provisions, and actively creates a safe and regulated business environment.
3. China's existing small and medium enterprises cannot afford to start their own b2b business website, so that online intermediaries such as the popular Alibaba their welcome.
4. The Internet continuous development and improvement, the popularization of computers, there will be more companies have joined the online business.

* Threats (T)
1. Alibaba profits mainly in China, but China b2b business environment has constrained the further development of Alibaba, such as a sound law, loopholes in online payment security, not so good infrastructure in some cities, which will hold back the development of Alibaba.
2. B2B business site model, not only in the last few years with the rapid development of the world, and gradually formed a trend - e-business alliance - that is, the trend of mergers and cooperation, which will lead to more competitive. Pg.19
Recommendation for Alibaba
Since the importers and exporters are complete strangers, Alibaba.com as the owner for the platform, it has responsibility for protecting every user and verifying the credibility and reliability of the importer and exporters. For solve the problem as following suggestions:

1. Implementing stricter authentication and verification procedures; when the importer and exporter enter in the platform and starting the business, they need to subject the document authentication and verification, and Alibaba need to review the user by semi-annual.

2. Set a section as safety & security center to addressing the fraud; the importer has the rights to report the fraud, and the section should be strictly investigation and implementation the fraud.

On the other hand, Alibaba still can make a lot of difference to attract more customers and investors. For examples:

3. Alibaba should find information on foreign markets to reduce difficult and time-consuming than finding information and analyzing domestic markets. In less developed countries, because reliable information on business practices, market characteristics may be unavailable or very limited. So it’s better Alibaba to find information on the foreign market to get easy information about the market and reduce time consuming.

4. For the promotion Alibaba should use other promotion tools like public relation and other advertisement media to increase high awareness of their product instead of focusing on online because online can communicate information about Alibaba but majority cannot get the information so using public relation Alibaba will have high performance than the current situation.

Conclusion
With Alibaba’s business model and value chains, the future strategy of the company includes strengthening and securing their supply chain to increase their substantial market share, profits and hold off competitors. Many of these planned strategies will happen through various marketing and customer service initiatives, such as targeting marketing to increase the customer base, continuously adding tools and features to the software, monetizing a user base that has been receiving many free services for years, and expanding their service platform from trading to customer relationship management. As Alibaba expands out of Chinas, it must face fierce competition from Global Source and nicheB2B service providers. If they can expand while the competition threaten to move onto Alibaba’s home turf, their future will be shine and bright.

Pg.20
References
* http://contextchina.com/2013/02/analysis-alibaba-chinas-king-of-e-commerce-pushes-deeper-into-financial-services-industry/ * Alibaba.com: A Smiling Community with A Dream.” 2005. http://www.ft.com/intl/cms/c6aba388-74a6-11db-bc76-0000779e2340.pdf * Farhoomand, Ali. “Alibaba.com” Asia Case Research Centre University of Hong Kong. 2008. * Wulf, Julie. “Alibaba Group.” Harvard Business School. April 2010. 9-710-436 * www.Alibaba.com * http://zh.wikipedia.org

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The End

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