Alibaba Group

Case Study

Alibaba Group is a Chinese company which specializes in e-commerce (online trading system). It was established in 1999 in Hangzhou in east China under the leadership of Jack Ma.

The company provides consumer-to-consumer (C2C), business-to-consumer (B2C), and business-to-business (B2B) sales services through its 3 main platforms namely Taobao (China's largest online shopping marketplace like a huge bazaar), TMall (an online platform for selling brand items such as Nike and Gap), and Alibaba (connects Chinese companies with others worldwide). In reality, the parent company, Alibaba Group, functions as a middleman connecting buyers and sellers by facilitating trades between them.

Alibaba Group's mission is to make it easy to do business anywhere. It aspires to be the world's leading company in online and mobile commerce that will last for 102 years. Its goal is to provide technology and services to all participants including suppliers, consumers, sellers, and/or merchants providing them with a trading platform to conduct business independently around the world without the need to meet each other physically.

Alibaba became a successful e-business in the world in a short period of time. For example, since its launch in 2003, it only took 2 years for Taobao to overtake its U.S. rival, eBay. As of June 2019,the company has 755 million active users, larger than the entire population of the United States.

What sets Alibaba apart from other companies is its unique management strategies. In fact, it was Ma's transformational leadership which he implemented carefully within the organisation that led him to a great success. He was flexible and friendly with his employees as he was confident about them. Employees were encouraged to voice their opinions through regular meetings and consultations. In addition, an intranet system was set up by the CEO for employees to share their thoughts informally and privately.

Despite creating an amicable (friendly) and welcoming atmosphere within the organisation, Ma kept a good rate of power-distance between him and his employees. In fact, he never allowed the friendly culture of the organisation to reduce the respect of the rules and his instructions in leading the company.

Alibaba's success is also based on hiring employees with superior skills. Ma appreciated hard work and passion considering these much more important than the applicants' theoretical knowledge of technology and the internet. The company's former CEO (Ma retired in 2003) focused on group motivation and leadership. He united his employees under a unique goal.

To motivate his employees, the CEO used to hold annual entertaining ceremonies such as the Talent Show party in which he participated with his employees (Stone & D'onfro, 2014). He aimed to give his employees challenges to work towards to professionally grow and inspired them to reach their dreams.

Ma had a strong foresight and was tenacious; he had a unique skill to forecast the risks facing the company and used his determination to come up with a creative solution to ultimately adapt to change. An example of this is in 2003 when China was suffering from the SARS, as a result of which businesses across China were suffering from reduction in revenue, Alibaba Group continued to operate normally because employees were allowed to complete their work from home. Doing this, he not only prioritised the health of his employees but also earned money like normal days.

Like any other running business, Alibaba Group faced several barriers. One example could be when Alibaba decided to expand its business to the United States. The U.S. organisational culture was not similar to the Chinese organisational values and structure. Differences in organisational culture resulted in lack of trust of American entrepreneurs (businessmen) in Chinese e-commerce market.

Apart from this cultural barrier, language was another obstacle. This challenge along with Ma's lack of familiarity with other markets led to a reduction in the quality and extent of interaction and ultimately trade between local and foreign investors.

Read the Case Study above and answer the following questions.

Question 1Jack Ma was considerate of his employees' needs. Use Maslow's hierarchy of needs to identify two of the employees' needs being satisfied in Alibaba Group and justify the relationship between these met needs and types of employees at Alibaba Group. Use McGregor's motivational theory to help you with your justification.(10 Marks)

Question 2Using the PESTLE tool, identify two challenges faced by Alibaba Group and explain how these challenges influence the company's strategic planning.(5 marks)