Analysis Of External And Internal Environmental Factors Of Alibaba Company
We live in a world that is constantly evolving, and nowadays, one of the factors that evolves the most is technology. There are many large and rich companies throughout the world, but tech companies, are starting and have started to claim their own dominium in the world’s biggest industries. With the sixth biggest market value in the world behind companies like Apple, Amazon, Google and Microsoft; China’s biggest company, and one of its very own technology firms, Alibaba is the company that I chose to center my focus on for my first portfolio.
- Alibaba: an introduction
- External Environmental Factors
- Internal Environmental Factors
Alibaba is China’s, and almost, the world’s biggest commerce company. It is the cheap, and Chinese or Asiatic version of Amazon. 80% of China’s shopping market is dominated by Alibaba, keep in mind China’s population is 1.379 billion people, that is a very big margin for the company. Alibaba stands fourth for biggest market capital for any tech company in the world, and its founder, Jack Ma, the richest person in Asia, and the 14th wealthiest in the world, has a net worth of 41.8 billion U.S.Dollars. Jack Ma’s inspiration to create the first internet organization in China in 1999 came from Malaysia very own president, since they had a very similar idea, but never patented it. Another fun fact about Alibaba and Jack Ma, is that he chose to register his company in the United States, and not in China, due to the Hong Kong government not accepting his idea and structure.
Alibaba has many competitive advantages or strengths, starting from its location, workface, technology and structure. One of the company’s biggest external factor is the fact that they are operating in China, the largest country in the world by population. On the other hand, Alibaba’s other biggest external factor is its use of technology. This business location together with its technology services presents great advantages for the company. The demographics of China includes that it is one of the world’s center for cheap products, which is the main focus of the company, and joint with the technology aspect, this creates a great connection of e-commerce and trade, connecting companies with companies and companies with consumers. Technology is the main interface from which the organization does its business, it is basically a web page, where anyone can buy the cheap version of most products you could find in Amazon or other e-commerce pages. Without this web-page access, the company wouldn’t be anything, so this technology factor improves the way the company organizes and operates. As well, it improves the quality, access, and speed of delivery of the products, since its interface is so smooth and easy to use, which improves efficiency and communication.
Alibaba understand the demographics of where it works, it serves all of China and a very major part of Asia and Europe, and to please all customers they have a clear understanding of the needs and want of the clients. They offer a very impressive range of products with very impressively cheap price tags, with a very impressive fast service. In order to survive and grow, Alibaba competes with three very big companies. The first one is one of the biggest companies in the world, and its direct competitor, Amazon. The other main competitors are Export-Hub, and Made-In-China. Alibaba competes with Amazon due to their same service, but while Amazon controls America and part of Europe, Alibaba controls China and as well part of Europe. To compete with Amazon, Alibaba is making bets towards the Indian and Australian markets. Their main issue when compared to their competitors is the internet penetration, as amazon is more wildly logged into than Alibaba. Another strategy Alibaba is following is that they are investing, while Amazon is acquiring.
Finally, to conclude Alibaba’s external environmental factors, it is important to mention the most recent, and one of the only collaborators in the company’s history. Earlier this year they joined forces with the Chinese group Tencent, who owns part of Tesla, Snapchat, and Spotify. The collaboration was short, and now both companies are back to full competitiveness.
Alibaba is at the same time a very simple organization, and a very complex one. Its role consists of allowing suppliers and consumers to make business. The company’s mission statement is, “to make it easy to do business anywhere”, and its vision statement is, “to solve the challenges of small businesses in procurement, sales and marketing, management and financing through information and technology.” These are two great examples of what the internal environmental factors of the company revolve around, business, technology, and trade. Alibaba’s active patent portfolio contains more than 3,000 active grants and applications globally, only 25% of which are issued patents. The company creates value through their specific business model of selling cheap products worldwide in a fast manner.
What the company doesn’t have that is considered a disadvantage as it competes is that it lacks a strong sense of guidance. Compared to their competitor, Amazon, who has a very well rounded, smart, competitive, and motivated leader, throughout the last 5 years, after the company was bought, it has had a major unimprovement in leadership, and as Amazon keeps growing and improving, Alibaba is stuck without major changes.