Business

Alibaba.com

Explain the implications of the company’s new ownership structure and shareholder expectations.

The company, after the initial public offer, became seventeen percent owned by the public shareholders with the rest of the ownership remaining with the parent company, its employees and its consultants. The new ownership means that the company has raised more capital to put into the market, invest and expand the business. Shareholders expect the management of the company to come up with new methods and policies that shall promote the profit making ability of the business. Since the reward for a shareholder is the dividends made from the profits of the company, the most important thing for a shareholder is the profits made by the company.
Describe how important a rapidly expanding domestic market is in Alibaba.com’s strategic assessment.

A rapidly expanding market at home is very important to Alibaba.com since it is in this market where it is able to expand its business through investments, partnerships, acquisitions and licensing arrangements with the small and medium sized enterprises at the home market. This shall eventually lead to the expansion of its user and revenue base. It shall also lead to the expansion of the company’s geographic coverage, advancement in technology and strengthen the talent team of the company (B. Schepp & D. Schepp, 2009).
Describe the merits of proposed changes to Alibaba.com’s pricing strategy.
First, the new pricing strategy shall encourage the enrollment of new customers. Secondly, the current and new customers shall get a chance to buy more since they are saving more. Thirdly, it shall go a long way in combating the competition that exists in the market since other business-to-business e-commerce companies still have their prices higher than those that Alibaba.com do. Fourthly, due to economies of scale, there shall be an increase in the revenue earned and the net income altogether. Fifth, the customer retention rate shall go higher due to the reduction in prices.

Recommend how the company can position itself competitively against B2B giant, Global Sources.

Alibaba.com should concentrate on the penetration of the market. This can be done through the promotion of contact with customers. The promotion of contact can be done by the selling of more booths while increasing the revenue per booth, cross selling to mostly new clients who shop at exhibitions and are not online, using print media or shows and by increasing the online customers by introducing new services and affordable price packages. The company should also develop new products. This can be done by increasing the marketplaces both online and in the retail world, increase its print media and magazine publications and increase its trade shows. The company should also toil to penetrate China’s domestic business-to-business market. It should target the growing domestic trade in China by opening new exhibitions to capture the increasing volume of buyers and it should not only stop there but also try to complement the exhibitions with other markets. The company should have its ears on the ground and be on the watch for other companies that can be potential complementary businesses, technological companies for example, internet companies, and other products that can be sold. These acquisitions and alliances shall help the company to get to the top spot in the markets it serves and maintain it (B. Schepp & D. Schepp, 2009).

Describe three major concepts you learned in this course and explain how you would use them in your current position or a future position.

Pricing strategies go a long way to promote the business in several ways. The price shall dictate the number of customers that come to the childcare centre. The price shall also set the number of parents that shall remain customers of the centre. Since the business has a more personalized setting, contact with the customers and interaction with them on a personal level is important. The charges for the services offered shall also dictate how many new customers come to the centre (B. Schepp & D. Schepp, 2009).

The domestic market is always the best market to start with before expansion to the rest of the world. The proximate physical area around the childcare centre should be the most important market for the business and should be concentrated on. This is because the customers from this area shall act as the litmus to test the successfulness of the business. Thus, with the opinion drawn from them, decisions can be made whether to expand or not to expand. Since the business is on the side of the service industry, people’s opinions on the business should be very important.

Acquisitions and alliances contribute much to the growth of a business when targeting to expand internationally. This entails scouting for other related businesses, which should not necessarily be smaller ones, to collaborate with or to purchase and incorporate in the business. This shall bring on board the customers that the new businesses had and increase the market base.

References:

Schepp, B. & Schepp, D. (2009). The official Alibaba.com success guide: insider tips and strategies for sourcing products from the world’s largest B2B marketplace. Hoboken, NJ: John Wiley and Sons.