Alibaba SWOT and Pestel analysis

Overview of Alibaba Case Study 

Alibaba is a worldwide e-commerce company that advertises, sells, and runs a variety of companies. Its headquarters are in Hangzhou, China, where it was formed in 1999. Its technology assists merchants, brands, and other companies in leveraging their operations over the internet as it engages more consumers. Tmall.com and Taobao (for nonbranded products sold by smaller-unknown merchants), cloud computing and data management services through Alibaba Cloud Computing, digital media and entertainment, online wholesale market on Alibaba.com, online and mobile payment solutions through Alipay, and a partnership with Ant Financial Services are among the services it provides.

Tmall.com and Taobao (for nonbranded products sold by smaller-unknown merchants), Alibaba Cloud Computing's cloud computing and data management services, digital media and entertainment, Alibaba.com's online wholesale market, Alipay's online and mobile payment solutions, and a partnership with Ant Financial Services are just a few of the services it offers.

Alibaba's original website was created to assist small Chinese exporters, manufacturers, and entrepreneurs in selling internationally. Alibaba Group has evolved into a worldwide e-commerce giant, with operations in wholesale and retail online marketplaces, cloud computing, digital media and entertainment, and a variety of other areas.

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Case Study

Alibaba has a market capitalization of $495 billion as of July 2018. Forbes' growth champions list places it at number 63. On the New York Stock Exchange, it is traded (BABA). The Chinese e-commerce behemoth employed approximately 116,000 full-time workers as of early 2020. Alibaba stock has reached all-time highs thanks to strong profits, a promising growth narrative, and the prospect of a Chinese stock listing shortly. Alibaba's mission statement is, "To make it easy to do business wherever." “We aspire to construct the future infrastructure of commerce,” says Alibaba's vision statement. It can be envisaged that Alibaba is a place where the customers will meet, work, and live, and as a firm that will survive at least 102 years. USP (unique selling proposition) of this organization is that it is the largest retailer in the world, one of the world's largest Internet and AI companies, one of the world's largest venture capital firms, and one of the world's largest investing corporations.

The revenue of Alibaba for the fiscal year ending March 2019 was around RMB 376,844 million (50.4 percent growth year on year) and RMB 250,266 million in March 2018 fiscal year. Softbank (30.07 percent), Yahoo (15.34 percent), Jack Yun Ma (Executive Chairman) (7.0 percent), and Joseph C. Tsai (2.5 percent- Vice-Executive Chairman) are the top four Alibaba stockholders as estimated in November 2017.

Alibaba's SWOT / TOWS analysis is a methodology for evaluating the company's internal and external variables that impact its micro and macro environment. The SWOT analysis is a useful tool for analyzing existing strengths, weaknesses, opportunities, and threats, as well as their influence on Alibaba's current business strategy. With a 58 percent market share in China, Alibaba is the largest e-commerce company and the most powerful brand, serving as the main middleman in the C2C, B2B, and B2C categories. Alibaba Group's market, China, is a key strength. China is the world's most populous country and has the world's second-largest economy, all of which contribute to the company's success. Alibaba's founder, Jack Ma, is a qualitative strength; his powerful presence, ideas, and vision are contributing to Alibaba's growth trajectory.

Other important characteristics of Alibaba include strategic alliances, a large product range, and rising demand for wholesale and retail businesses, all of which have contributed to the company's market share preservation. The PESTLE study is a useful tool for examining existing external variables such as law, economic, social, technical, legal, and environmental issues, as well as their impact on Alibaba's business model, growth trajectory, business case, and market strategy.

SWOT Analysis

Strength

Alibaba provides a diverse range of services that are available worldwide based on market needs. It has an online wholesale and retail platform in more than 200 nations that sell agriculture, food, textiles, fashion accessories, automobiles and their components, electronics, and health and beauty items. Merchants, corporations, governments, and start-ups may all benefit from cloud computing. Alibaba's main strength is its ability to operate at a large scale in the markets in which it competes. Alibaba is located in China, and it is common knowledge that China is the world's most prosperous country. Alibaba holds a 58 percent market share in the worldwide market. Alibaba's working method has also benefited from visionary leadership, which has served as a strength.

Its footprint is rising in Australia, especially as demand for its health and nutritional supplements grows in China, as seen by 600 million active yearly users as of mid-2019. Forbes is on its platform to the tune of 75%. The Top 100 Most Valuable Brands in the World. As of 2019, the marketplace includes over 20,000 brands from 77 countries. An increase in the number of merchants who use TMall will boost revenue. Alibaba's growth has been fuelled in large part by its extensive online marketing services, which have had a beneficial influence on the online marketing inventory.

Weakness

Alibaba's major flaw is that the number of vendors is just too large. This is the primary reason for increased rivalry among sellers. This is the major reason why a seller evaluation may not be successful. This is the most common cause for sellers to cancel their contracts, influencing seller statistics.

Opportunity

The most important opportunity is to gain relevant experience in China. The possibility of producing ripples has benefited from increased investments and the needs of the E-Commerce site. With the aid of the aggregator-based approach, this will also be a possibility.

Threat

There will be an increase in the number of web applications for online shopping. As a result, there has been competition among the brands. The sales section will become more diverse as a result of this. Economic stability has also posed a significant challenge to Alibaba. The Chinese economy has recently experienced difficulties with stability, which may have an impact on income collected.

PESTLE Analysis

Political

The rise of protectionism in China's economy is assisting Alibaba in expanding its market share in the world's second-largest economy. The Chinese government is assisting Al's expansion by providing personal data such as ID pictures for monitoring purposes. By 2030, the government plans to spend $150 billion on infrastructure. Alibaba has partnered with government agencies to create an e-hub for trade clearance and logistics in Malaysia, boosting cross-border trade between China and Southeast Asia and among Southeast Asian countries. It will lower Alibaba's trade obstacles in new regions and get regulatory approval, allowing it to sell its digital services to merchants through simple financing.

Economical

The key things to consider in the processing of the company management system are macroeconomic considerations. It may be argued that because Alibaba is based in China, the most important factor to examine is that Alibaba as a brand enjoys a strong economic standing. There is a problem with China's economic instability once again.

Social

The growing population in target markets has been a key factor in the segmentation of the target market. It may be claimed that appropriate market evaluation will be done with improved confidence in the target audience. It will be necessary to sustain the introduction of CSR initiatives. With the existence of an aging Chinese population as well as a young Chinese population, Alibaba has thrived.

Technological

The application of AI in data-driven user experiences has been observed, and as a result, a careful evaluation of the data-driven user experience will be carried out. This integration of data-driven user experience aids Alibaba in making accurate predictions, which enhances the operation of Alibaba's digital platform-based application.

Legal

The key things to consider in the processing of the company management system are macroeconomic considerations. It may be argued that because Alibaba is based in China, the most important factor to examine is that Alibaba as a brand enjoys a strong economic standing. There is a problem with China's economic instability once again. Since November 2019, the business has been trading in Hong Kong, allowing investors to purchase and sell shares even if ties between the two corporations deteriorate. The firm is also expected to profit from an increase in Chinese demand since Chinese investors will be able to purchase equities that were previously unavailable to them due to the company's US listing.

With New York-listed Chinese firms experiencing tremendous political pressure from the US, numerous companies, including Baidu, JD.com, and Weibo, have chosen to list in Hong Kong to alleviate the strain. Alibaba, too, has established a presence outside of the United States in Hong Kong to expand its choices in the face of the continuing US-China trade war. The organization is also expected to profit from an increase in Chinese demand since Chinese investors will be able to purchase equities that were previously unavailable to them due to the company's US listing. The firm will be able to trade on the Stock Connect, which connects Shanghai and Shenzhen with Hong Kong, starting in June 2020.

Environment

Alibaba must take measures to undertake water conservation since China is experiencing severe water conservation difficulties.

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