Managing In The Global Environment
Managing in the Global Environment Assignment 5 Vishalkumar Patel 03/09/15 Leon Guendoo
Question 1
Critically analyze the factors that led to Alibaba sustaining its leadership position in the Chinese e-commerce market.
Answer
First mover advantage: Alibaba started its operations when e-commerce in China was in its infancy stage. Considering the potential of the budding e-commerce market, Alibaba started with operations that concentrated on providing B2B services to SMEs that were aspiring to go global.
Smart competitive and marketing strategies: From an early stage, Alibaba had been focusing on differentiating itself by providing better services to its customer. It put an innovative business model in place where customers could try out its services without any cost. Over time, it was able to generate revenue from alternative streams and increase revenue as the willingness of the users to pay for additional services increased.
Local knowledge: The knowledge of the local market also proved crucial for Alibaba‟s success. For instance, its decision to start a payment system in collaboration with a reputed bank in China was due to its local knowledge. Though credit cards were used in China, they were not the preferred medium of transaction as the Chinese were not comfortable using it. Alibaba‟s payment system provided them with a sense of safety and contributed to their willingness to transact online. It was also able to provide a simple yet efficient website that helped SMEs which were not too tech savvy to navigate the site effectively. Negotiating regulatory and other hurdles: Regulatory hurdles could pose huge challenges to companies operating in emerging markets like China. The Internet was highly regulated in the country and that was one of the reasons that foreign companies found it
Question 1
Critically analyze the factors that led to Alibaba sustaining its leadership position in the Chinese e-commerce market.
Answer
First mover advantage: Alibaba started its operations when e-commerce in China was in its infancy stage. Considering the potential of the budding e-commerce market, Alibaba started with operations that concentrated on providing B2B services to SMEs that were aspiring to go global.
Smart competitive and marketing strategies: From an early stage, Alibaba had been focusing on differentiating itself by providing better services to its customer. It put an innovative business model in place where customers could try out its services without any cost. Over time, it was able to generate revenue from alternative streams and increase revenue as the willingness of the users to pay for additional services increased.
Local knowledge: The knowledge of the local market also proved crucial for Alibaba‟s success. For instance, its decision to start a payment system in collaboration with a reputed bank in China was due to its local knowledge. Though credit cards were used in China, they were not the preferred medium of transaction as the Chinese were not comfortable using it. Alibaba‟s payment system provided them with a sense of safety and contributed to their willingness to transact online. It was also able to provide a simple yet efficient website that helped SMEs which were not too tech savvy to navigate the site effectively. Negotiating regulatory and other hurdles: Regulatory hurdles could pose huge challenges to companies operating in emerging markets like China. The Internet was highly regulated in the country and that was one of the reasons that foreign companies found it