Performance Analysis of Alibaba
In general, industry attractiveness and firm’s competitive advantage with respect to other firms in
the industry both contribute to the performance of a firm. Regarding to E-commerce business in China,
Alibaba has become the industry leader without any doubt. This essay will explain the relevant issues in
the E-commerce industry as well as analyze the success of Alibaba Group.
Alibaba was established in 1999 by Jack Ma (Yun Ma). Back then it was only a B2B E-commerce
business. Today Alibaba is the unbeatable leader of B2B industry with more than 50 percent share of
Chinese B2B market in 2014 (shown in Exhibit 1). And when people talk about B2C business in China,
the first website appears in their mind is T-mall, which belongs to Alibaba Group. In spite of the entrance
of new competitors every year, T-mall still reached 50 percent share of Chinese B2C market in 2014
(shown in Exhibit 2). In addition to this, as China’s own eBay-like C2C platform, Taobao, also operated
by Alibaba Group, has become the market leader of Chinese C2C business with the help of its annual
1111 shopping event. Alibaba was founded in China but now it’s a publicly listed company. To evaluate
its environmental threat, we will conduct Porter’s 5 forces framework.
Threat of New Entrants – It’s not difficult to set up a new smaller and more focused e-commerce
business like Zappos.com in China right now. However, Alibaba has developed quite the reputation for
new innovation and its global influence that others can’t catch up within a short time, and Alibaba credits
the fierce competition for helping it to have the achievement. New entrants will also face bigger
difficulties because of the good performance of other E-commerce businesses such as HC360 and JD.com
since the industry is much more mature than past.
Bargaining Power of Suppliers – The creation of a powerful E-commerce business platform needs
a mass of hardware and software. There are quite a lot of hardware suppliers to be chosen from, either
purchase or lease. And the core software usually come from self-development or affiliated company. So
the bargaining power of suppliers is quite low.
Bargaining Power of Buyers – Alibaba is substantially an internet service provider which provides
