1.

0 Executive Summary

Alibaba Group (AG) is Jack Ma for leadership and other 18 people, founded in 1999 in
Hangzhou.Alibaba Group operates a number of businesses, and also from the associated
company's business and services to obtain business ecosystem support.Alibaba group's business
includes: Taobao, Tmall, bargain, The global speed sell tong, Alibaba international trading
market, 1688, Ali-mother, Ali-cloud, The ant gold, Novice network, etc.On September 19, 2014,
Alibaba group officially listed on the New York stock exchange, stock code "BABA", founder
and chairman of the board for Mr Ma. Throughout 2015, Alibaba total revenue of 94.384 billion
yuan, net profit is 68.844 billion yuan.On April 6, 2016, Alibaba announced has become the
world's largest retail trading platform.China's e-commerce growth in the past 10 years, in the
near future will be more than the United States. Alibaba group in China's e-commerce market
dominance. Alibaba's Tmall daily turnover reached 120.7 billion yuan.Alibaba group six values
for how to run the business, to attract talents, evaluation staff, and decided to reward employees
play an important role, the six values are: customer first, teamwork, innovation, integrity, passion
and dedication.

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2.0 Background of Alibaba Group (AG)

Alibaba Group (AG) is Jack Ma for leadership and other 18 people, founded in 1999 in
Hangzhou, Jack Ma believe that the Internet can create fair competition environment, for small
businesses to expand business through innovation and technology, and participate in domestic or
global market competition in a better position.[CITATION Ali15 \l 1033 ]

Alibaba Group’s mission is to make it easy to do business anywhere. AG have the Taobao,
Tmall, Pay treasure to more than 10 kinds of services such as business. Alibaba group's goal in
vision is to build the future of business infrastructure. AG believes that the customers will live
and work in AG will continue for at least 102 AG. [ CITATION Ali15 \l 1033 ]

Alibaba group’s main operation of the business is the Taobao, Tmall and Juhuasuan. Taobao is
the one of the AG was founded in May 2003. It is a focus on diversified choice, value and
convenience of Chinese consumers preferred online shopping platform. Asia Pacific region is a
larger network of retail. Tmall is Jack Ma's new building in B2C (Business - to - Consumer)
online retail market. The integrate thousands of brands, manufacturers, between businesses and
consumers to provide one stop solution. [ CITATION Jit15 \l 1033 ]The highest daily trading can
reach 120.7 billion. The Juhuasuan is the China's most popular group-buying market by its
monthly active users. According to official data released its clinch a deal amount of 10 billion.
[ CITATION Gen16 \l 1033 ]

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3.0 SWOT

A SWOT analysis is carried out on 3PL Company of Alibaba Group (AG). The main focus of
SWOT is to present a detailed strategic analysis of the group related to its 3PL services.
Identified the opportunities for the company is on the basis of the assets, which the company can
use as opportunities. It is also to analyze value chains used to measure AG. In addition to
weakness and threats are also identified for the business and a stronger awareness that will help
AG strategies in the future. It’s also takes PEST to help AG. SWOT analysis is a full strategic
analysis tool but unlike other tools, it could be a wide range of products in the external
environment, the business would not take the impact of the company, which could be a
disadvantage for the SWOT analysis.

Strength Weakness
Value Chain Analysis

1. Focus on the product value- 1. Huge number of sellers

added in the market competing in the online market
2. Skillful workforce is the key of
place
success in AG 2. Initial public offering will
3. Alibaba have a strong brand
exposed Yahoo
name in the e-commerce market 3. Lack of loyalty on e-commerce
4. Technology infrastructure
Alibaba
Opportunity Threat
PEST

1. A good relationship with the 1. China government is opposed a

government
2. The economy of circumference
in Alibaba
3. Social and cultural aspect of
China plays an important role
4. The technology in China is
twice bigger than US market
monopoly on China’s basic
online
2. Entrepreneurial opportunities in
US are China’s real economy
hit
3. Many competitors in China
4. Wireless terminal technology

3
Political Factors
 The Communist Party
Vietnam
 Population: 90.38 million
 Capital: Hanoi
 Largest city: Ho Chi Minh City
 Currently, Vietnam has formal
diplomatic relations with nearly
170 countries, trade relations
 Became a member of WTO in
2006
 the dispute and tension between
Vietnam and China has a big
effect on consumer reactions
Social- Culture factor
 53 other ethnic minority groups
 Hanoi capital, 6,67 million
people in which 69.6% of the
population are in the age range
of 15-64 years
 Being ruled by Chinese leave
the traces of Chinese culture
Economical Factor
of  The inflation rate of Vietnam is
18.86%, rank 10th
 The inflation rate was recorded
at 6.81% in December 2012,
 In 2012, the situation has been
improved significantly since the
exports exceeded 100 billion
USD.
 Investment policies should Aim
at improving the quality and
adapting with Vietnam's
economic structure.
Technology factor
 Technology and infrastructure
in Vietnam has been developing
 Consumers faster and more
modern technology. Internet has
also become an important part
in both public and private
sectors.

3.1 Strengths

Alibaba Group’s value proposition for clientele is a new creation of value-added as a result of the
organization intermediaries business processes are integrated served closer to supply sources that
accord cost –effective business strengths.

1. Focus on product value-added

Alibaba Group’s is the largest world business-to-business e-commerce services provider, the
value-added services account for about 30 percent of sales from paying members by next years.
Alibaba Group’s will be more focus on the product value-added which have English language

4
international marketplace website would constitute more than 30 percent of sales and domestic
value-value added services revenue will be 24 percent. Besides that, Alibaba ‘s most popular
value –aded services last quarter was the AliExpress wholesale transaction platform , Ali –
Advance keyword listing , premium placement for searching process and Ali-Loan. [CITATION
Sou10 \l 1033 ]

2. Skillful Workforce

Jack Ma is the founder and CEO of Alibaba Group. Jack Man is one of the world leading e-
commerce web portals, he’s key of success are true and inspiring for all employee to improve the
workforce and human resources. Alibaba is not just having an e-commerce company and also the
3 main platforms TaoBao (consumer to consumer company), Tmall ( business – to consumer
firm ) and Alibaba.com (business to business operation ). This shows that Jack Ma have
providing the great workforce and the company is getting greater and skillful. [CITATION
Mic14 \l 1033 ]

3. Strong Brand Name

Alibaba Group’s have the strong brand name when 1999 Jack Ma founded the website
Alibaba.com. Alibaba is a Chinese American e –commerce company that provides business to
business, business to consumer and consumer to consumer. Alibaba is the world’s largest e-
commerce business and handles sales between importers and exporters from more than 40
countries and regions. (Alibaba, 2017) Giving some example under Alibaba Group which is
TaoBao, Tmall.com , eTao, Alipay, AliExpress , Xiami , Alibaba.com and etc.

4. Technology Infrastructure

AG technology is made possible by access website to search information relevant to the

execution of business transaction and it is easily and save time and cost interaction over the web
interface. Alibaba is bridging the gap between direct manufacturers and producers wholesale and
retail customers through its technology –based solution and having logistics support for the
delivery postage transactions to complete the marketing process which yield the ultimate value.
For example Chinese wholesalers and manufactures supply to global consumers on AliExpress
and global wholesalers and manufactures supply the wholesale on Alibaba.com. (Reuters, 2014)

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6
3.2 Weakness
1. Too many sellers

Alibaba group have a lot of seller whom have been partner in gross number in online market.
Alibaba group has enlarge the e-commerce seller higher because they import their items oversea.
The company continue to increase their foreign products since they see large amount customer
people their products. The result of capital discharge foreign investors move out Alibaba at one
point of time the company weaken the economy. The progress as the government struggle to
stimulate exports through a softer currency. The Alibaba group grand up weaken completely the
second half of 2015. During the time period those products have been sales displeasure the
company but they rebound in 2016. Alibaba group have seen foreign goods consumer whom
trustable and safer sells their products. The sellers are being too freedom and high opportunity to
sell at profitable rates. Its makes most the revenue by selling promote scope for the sellers.
[ CITATION Gen16 \l 1033 ]

2. Initial Public Offering (IPO) will exposed Yahoo

A deal with Yahoo, which owned 40% of Alibaba group shares. It means that the IPO it’s done
would allow Alibaba to buy back its share and end often stormy relationship. The effect of it
extremely difficult to conceive the drawback of getting $10 billion in cash from what will likely
be the most productive tech IPO ever. It been outside limit Yahoo prompt payday from its 24%
stake in Chinese e-commerce huge Alibaba and things aren’t so rosy. Alibaba implement an draw
attention platform for investors trying to gain back the profit from China’s internet economy.
There could be some alertness. The shares end up been bought back by Alibaba Group after
much losing their expense value. [ CITATION Mar163 \l 1033 ]

3. Lack of loyalty on e-commerce Alibaba

There was a lack of trust from the consumers because of the huge amount of fraud have
committed throughout market places. There is a massive cultural influence on Alibaba with most
of the suppliers being affected. Alibaba hierarchies and shares have been break down due to the
effect of IPO. A lot of foreign consumer stop purchase Alibaba products lack of technology, the
trust to leverage massive sever to kill their earning as well. Some of the loyal customer towards
Alibaba after the cheapest deals and best knockoff to retain the customer trust. Alibaba high

7
value and highly secure users attract brands and merchants decreasingly rely on Alibaba online
marketing problem to reach and engage with these consumers. [ CITATION Mar163 \l 1033 ]

4. Alibaba Group rely on the government

Alibaba group apparently major fact is e-commerce which is internet infrastructure China.
Alibaba very dependent rely on government. Alibaba is very new to the US market have been
only traded since 2014. When U.S demonstrate the strength in China, the China bets the risks.
During the time period China was been shaken and the government policies been more difficult.
The specific government bans almost most of the internet access and internet support is under
control by administrative through state-owned telecommunication operators. Alibaba have
biggest lost where all the networks supervised by Information Technology in China. Alibaba
Group not permitted to connected with any alternative networks even though in the events of
disruptions, failures or other problems with China’s internet infrastructure. In addition this cause
a biggest straight forward impact on Alibaba the reputation tremulously shaken. [ CITATION
Jay17 \l 1033 ]

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3.3 Opportunity

The possibilities Alibaba Group has in store are immense. Most of the result from forces. As it
has a solid foundation in the Chinese market and a deep understanding of e-commerce, it has
tremendous opportunities to tap into other markets. Thought the Indian market has two dominant
players, a large influx of Alibaba has certainly the ability to create waves.[ CITATION Hit16 \l
1033 ]

1. Political

Alibaba Group and the Chinese government between the good relations. Although these relations
are important in all countries, the Chinese government's janitor decides who will do it. For
example, Alibaba is one of the five companies selected by the Chinese government to enter
Internet banking, a huge opportunity for a government-owned bank country.[ CITATION
PES15 \l 1033 ]

2. Economy

In Alibaba Post-IPO days doubted business analysts suspect that the company's shares in 2015
may reach 150 billion US dollars. But in September the net assets was 145 billion US dollars.
Jack Ma wrote the best practices in industry. Ma knew he had to do something different to cancel
the other big ones. Jack Ma understands that there is a new bold strategy, familiar with the
logistics process, the trust between suppliers and customers, and mobile and on-demand
technology. [ CITATION Pan141 \l 1033 ]

Alibaba's advantage is circular economy. Cost savings are part of the quotation related to the
various products that sell a single company through the same distribution channel. In this case,
Alibaba has two outlets, that is, Taobao with thousands of non-branded products, sold by
unknown dealers; and Tmall, branded products. All aspects of various products, especially
Taobao, are incredible. [ CITATION PES15 \l 1033 ]

Jack Ma understands the purchasing power in China is very strong. It was affected by the content
and recording of a price of the product family and the availability of credit. As it has been shown
that the recent economic situation has shown a significant decline, it will have a bad influence on
the purchasing power of consumers. For companies that want to sell products to high-income and

9
affordable customers, the current economy would be a disaster for them.[ CITATION Pan141 \l
1033 ]

With more sales related to size, cost savings. "What is the external dimension of Alibaba," wrote
Dazawa. "The company said that Taobao and Lynx are responsible for more than half of China's
parcels, 2012 Taobao and Tmall's total transactions reached 1 trillion yuan (163 billion US
dollars), more than Amazon and eBay.

3. Social

China's social and cultural aspects of the population due to changing and play an important role.
For example, population growth and age distribution are constantly changing. This can also
change social trends and cultural values. Family size and social behavior often affect the way
decisions are made. Other social factors are consumer lifestyles, education, religion and
immigration. China is a collectivist culture based on the value of Hofstede. [ CITATION
PES15 \l 1033 ]

China's literacy rate is above 90%. China emphasizes that the formation of most countries is
literally.

There are 420 million Internet users in China. There are Internet access, Chinese shopping is
often online. Taobao is the largest local e-commerce site, many people spend a lot of things from
the site. The Boston Consulting Group expects the figure to grow very quickly in the future.

E-commerce has changed the way local consumers see it at the time of purchase. However, there
is an organization that wants to avoid the risks associated with online purchases. Customers like
to shop and enjoy face-to-face contact. [ CITATION Pan141 \l 1033 ]

4. Technology

Technology has a very good advantage in China. China is the world's largest Internet market, it is
twice the US market, with 560 million Internet users spend 20 hours per week. Most importantly,
China jumps from the traditional e-trailing details.

10
"As China's wireless communications technology continues to evolve, China's tiles retail sales
are actively leveraging e-commerce leaps, which offer huge opportunities for Internet merchants,
especially early workers, such as Alibaba," Ken Hao said. [ CITATION PES15 \l 1033 ]

Alibaba's long-term strategy is to focus e-commerce sites as part of the mobile platform. Has
been dealing with this strategy: June, more and more mobile host more than 600 million Chinese
Internet users to buy Alibaba Alipay, electronic payment association and cloud services sector.
[ CITATION Pan141 \l 1033 ]

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3.4 Threats
1. Political

In China, Alibaba is the largest and most popular online retailing company, Alibaba Group has a
monopoly on China's basic online retailing, the Chinese government is opposed to a company
monopoly an industry. China has been carried out on the Microsoft antitrust investigation,
resulting in a decline in the status of the Microsoft in China a lot. Alibaba Group may be hit by
the China policy at any time.[ CITATION Hit16 \l 1033 ]

The Chinese government has always defended its position as a bank. Alibaba Group to promote
online banking action may also be caught in a dispute with the government. When a business is
in conflict with the government, companies are often hit hard. That is to say, in Chinese politics,
you should be careful not to cross the line.

2. Economy

Alibaba Group filed a prospectus with the U.S. Securities and Exchange Commission, plans to
market in the United States IPO. Prospectus disclosure details of Alibaba holdings,

Institutional holdings, Japan's Softbank group holding 797742980 shares, the shareholding ratio
of 34.4%; YAHOO (40.93, -1.16, -2.74%) holding 523565416 shares, the shareholding ratio of
22.6%.

In terms of personal ownership, chairman of the board of directors of Alibaba Ma holds

206100673 shares, the shareholding ratio of 8.9%. In other words, the Alibaba to the huge wealth
to the Americans and the Japanese.[ CITATION Eri14 \l 1033 ]

The emergence of Alibaba, there are many jobs are virtualized, and many entrepreneurial
opportunities are transparent. China's real economy has been hit. Real economy is the main
driving force of national economic development.[ CITATION Jay17 \l 1033 ]

3. Social & Cultural

Alibaba group in society, there are many competitors, Jingdong mall is his biggest competitor in
China. The two sides often dispute. China's Jingdong mall spending last year about 100 billion,
which will make Alibaba worried. In the rapid growth of e-commerce market, Alibaba account

12
for about 58.6% of the share, the basic flat with a year earlier. However, Jingdong mall share
increased to 22.8% from 19.2% last year.[ CITATION Eri14 \l 1033 ]

In China, people feel that Alibaba's Taobao to sell goods, eighty percent of all fakes, which is the
biggest threat to an enterprise. This is often a corporate social and cultural problems.

4. Technology

The biggest threat is globalization and technology Alibaba wireless terminal technology, how can
let the user at the time of payment card phenomenon does not appear, how to make users more
convenient and efficient payment, how to allow users to quickly find the goods, and view the
logistics information, is the priority among priorities. When you buy goods in the Alibaba, caton
phenomenon will often appear, which will make buyers psychological aversion. If such events
occur many times, buyers will slowly drain.

With the rise of science and technology Tencent, Tencent also began to join the online retail
industry. Tencent Inc's products WeChat is the most deadly threat to Alibaba in communications
technology. In China, Tencent micro credit households exceeded 300 million daily income of
nearly $300 million. Alibaba innovation is not as good as Tencent, Tencent to carry out video
technology to enhance the status of Tencent. People in the purchase of goods Alibaba, is invisible
to the entity of the goods, which means that we do not know the quality and style of this product,
only through the seller to modify the picture to understand the goods. And Tencent's video
technology can see the commodity entity.[ CITATION Her15 \l 1033 ]

Alibaba to sell most of the quality of the goods are defective, it also makes the scrap rate of these
goods is particularly high.

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4.1 Strategic Competitive Advantages and Major Weaknesses

China's population of 1.3 billion, the current average annual growth rate of GDP reached 9% to
10% over the past 30 years, China in the United States will soon become the second largest
economy in the world more and more important and influential. This positive change can also be
seen, the rapid development of China's middle class.

This favorable economic situation and the accumulation of many Chinese societies have created
tremendous opportunities for growth and established a great marketing empire. Alibaba Group
Holdings today in China's e-commerce market dominated, the effective use of these
opportunities.

Let take a closer look at the Chinese giant's strategic competitive advantages and the major
weaknesses

4.2 Strategic competitive advantage - Strong Brand Name

Alibaba Group (AG) is the largest B2B website. Has the world's largest online trading provider,
the world's largest business forum, Registration of AG member of more than 2000 every day.
Simplified Chinese, Korean and English website for the global merchants to provide professional
services. AG's business reputation is very high. Such as Taobao, Tmall, corporate publicity,
almost all over the world have AG's advertising. [ CITATION Gen16 \l 1033 ]

Alibaba Group has a unique corporate culture, as well as the powerful influence of Jack Ma,
caused the company to maintain a strong competitive advantage. Quite a lot of entrepreneurs to
the worship of Jack Ma and AG, the AG brand are getting stronger and stronger. At this point
there is no other e-commerce companies can compete with AG. AG's corporate values: customer
first, teamwork, embrace change, integrity, passion, dedication. AG allows millions of small
businesses to obtain capital, and to provide the necessary help for small businesses to form a
good reputation in the industry.

Alibaba Group to use its own strong brand benefit, established the Alibaba Public Foundation.
AG announced since 2010 to the annual income of 0.3% set aside for public welfare funds,
mainly used in environmental protection, is the first domestic Internet enterprise environmental

14
protection fund. AG chairman Jack Ma to 12.4 billion yuan in donations, the new title of "China's
national capital".[ CITATION Pan141 \l 1033 ]

With the Internet growth, Alibaba has more than 10 years of development history and operating
experience. Through the Internet development period, well into the current rapid development.
Alibaba Group master powerful Internet technology, deep understanding of user needs, in a
growing user has a higher visibility and credibility, strong brand appeal.

4.3 Strategic competitive advantage - Skillful Workforce

Skillful workforce which mean the Founder and CEO of Alibaba Group whom success and
inspiring all employee and improve the workforce. Alibaba Group having 3 main platform of e-
commerce company which is Taobao (consumer to consumer) Tmall ,(business to consumer firm
) and Alibaba.com (business to business operation).There is some problems occur in Business to
business and consumer to consumer. [ CITATION Pan141 \l 1033 ]

Based on the Alibaba Complaint Centre, some customer may complaint about received the fake
products and old version of the products, some customer did not received the order for a month,
and another complaint is there is no answer or reply to the complaint centre.( Alibaba Complaint
Centre , 2017) This is the huge problem that Alibaba is facing.[ CITATION Mar163 \l 1033 ]

4.4 Major weakness – Technology issue

In July 2015, China released a draft cybersecurity law that would give the government an almost
unfettered access the user’s data where national security is concerned. The government ties the
security where Alibaba cannot access oversea networks. The Chinese government announced a
plan to have police officers stationed in internet companies so the company can better secured
the strict policies. At the end of 2015, China passed a controversial anti-terrorism law that
required telecommunication and internet service providers to provide the Chinese government
with "technical support and assistance" such as decryption, in terrorism-related investigations.
Alibaba business plan is to continue focus on the small and midsized that drove Alibaba’s
growth.

Branding competition and the cultural barriers associated with Chinese companies are just a few
of the obstacles Alibaba would have to overcome if it targeted the US market. During the time

15
Chinese internet companies lost the trust on oversea country especially Us. Alibaba have losses a
lot because US exchange changed. It’s eventual IPO is expected to be one of the biggest but it’s
drop eventually.

4.5 Major weakness – Political Issues

Understanding environment of Alibaba Group can also be used in a political issue because China
is far from a completely free market. The Communist Party leads the majority of large
companies by direct control or by law. But the government in the field of e-commerce policy is
relatively absolute, Alibaba Group is an example of the spirit of innovative entrepreneurs,
depends on the government's friendly support. However, due to the leading role of the Chinese
Communist Party, China's political favor can disappear overnight - which may lead to economic
monopolies or other negative choices that determine the restriction of economic and social
power. These political risks may be the biggest financial threat facing Alibaba Group.

The Chinese government accused the e-commerce giant Alibaba Group in rare public disputes in
these places refused to sell fake and shoddy acts of corruption and other illegal activities. This
may be the double warning sign of Alibaba Group, which has the "risk of credibility" and the
potential threat of a single country and other weaknesses.

16
5.0 Recommendations

5.1 Strategic Recommendation

5.1.1 Strong brand name

The website of Alibaba is an intermediary form mode, the Alibaba can use
the strong brand appeal, to invite the international big brand products
enterprises and Alibaba, which not only improve the sales of other
products, but also can improve the Alibaba's revenue and reputation.In
recent years, the business model of B2B has not only developed rapidly in
the world, but also gradually formed a trend - e-commerce alliance - that
is, the trend of mergers and cooperation, which will lead to increasingly
fierce competition.
Suggested that Alibaba's search engine can support fuzzy search. Clear
old, useless information to ensure the effectiveness and availability of
information. Alibaba's revenue from ninety percent domestic, Alibaba
should increase investment in the international market and publicity.
Chinese products are guaranteed in terms of price and quality, and many
foreigners are interested in Chinese products.

5.1.2 Skillful Workforce

Follow up the strategic competitive advantage of skillful workforce, there
may be good and bad, it is successful to be a e-commerce business and use
to help Alibaba Group (AG) to be more better and improvement form the
bads. Thus, the recommendation for this problem is to check the supplier’s
profile correctly. Every AG will have a supports verification serves which
to ensure the sellers are legally registered companies of representative of
AG. Be sure that the suppliers profile information is correctly legally
accomplished by AG. Therefore, consumer could also use the onsite check
and assessed supplier.

Onsite check is verification processes which to confirm that the supplier

company premises are checked by Alibaba.com’ staff to ensure that onsite
operation is exist in AG. Furthermore, assessed supplier is define as the
independent and impartial third-party verification of your prospective

17
 suppliers. This is to ensure the AG commissions several agencies is based
on the international reputation and proven credibility to test the claims.
Assessed suppliers which represent the assessment report, videos and
Verified Main Products. (Fake products of Alibaba, 2017) Lastly, it could
make sure that Alibaba can helps the user or consumer to avoid the fake
products and increase the skillful workforce on the time.
5.1.3 Technology Issue
Alibaba start to build up traditional business economy because the
customers ecosystem cannot be isolated from the participants. Alibaba’s
development therefore must embrace rapid change according to our
evolving environment. Alibaba growth rise up in China building more
consumer brands, where a lot start buying and invest more than expected.
But whether or not Alibaba can be successful in the U.S. shouldn't worry
investors, not yet at least, "It doesn't have to be successful in the U.S.
anytime soon because there is so much room for growth in China," Cohen
said. "The market potential in China is still humongous and growing."
Cohen said. After public company in US faced a lot challenging issues.
When the Internet was scale up from China enter global scene. Alibaba
creates innovation level the playing field for small business and
transformation for social and economic growth.

5.1.4 Political issue

Alibaba Group will continue to be the e-commerce company and the main
technology in China, and on the way to becoming one of the e-commerce
business and the most important technology in the world. Alibaba Group
should look for greater investment in overseas technology companies,
supply chain infrastructure in China and platforms to help foreign
companies of all sizes and forms help the Chinese consumers. E-
commerce will continue to grow in all areas in China and mobile
technology easier. This can avoid government problems in China and keep
the financial strength of the company.

5.2 Justification of Strategy

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5.2.1 Feasibility
5.2.1.1 Alipay and Regulatory Risk
Alipay is part of the payment service in China, Alibaba is used to
deal with most of the transactions on its website - it is regarded as
Alibaba's eBay or PayPal. According to records, Alipay deal with
Alibaba's business in China, accounting for about 78% of all
payments - if the central bank to propose new financial regulations,
may be a problem. [ CITATION Her15 \l 1033 ]

The bank is proposing limits on the size of payments on processors

like Alipay, to the tune of about $800. That wouldn’t be a problem,
except a sizeable amount of the transactions Alibaba does are
business-to-business expenses, which often run into the thousands
of dollars. In other words, if those rules go through, it could make
it a lot harder for a big part of Alibaba’s customer base to use it.
[ CITATION Her15 \l 1033 ]

5.2.1.2 Uncertain Revenue Growth

One of the most shocking parts of Alibaba’s financials is just how
fast its revenues are growing for a multibillion-dollar company.
From 2010 to 2013, for example, it grew by 400 percent, even
though by that point it was already booking sales in the billions.
Investors, then, are likely to be expecting a certain amount of
upside when they put their money into it — perhaps an
unreasonable amount of upside. As Alibaba notes in its filing, the
company doesn’t have any ongoing agreements with its customers
that would lock in its growth. That means maintaining its revenues
at even the existing level is not assured.[ CITATION Gen16 \l 1033
]

In particular, Alibaba’s current growth has been fueled by its

growth in mainland China. Only about 13 percent of its revenue
currently comes from overseas, and growth in those sales has not
kept pace with its domestic revenue growth — in the future

19
 (From2017 to 2019), overseas sales accounted for about 34 percent
of Alibaba’s business.[ CITATION Her15 \l 1033 ]

Fiscal Year U.S. Dollar

9

0
2010 2013 2016 2018 2019

5.2.2 Acceptability
It’s not all doom and gloom, however. Crucially, the limit doesn’t affect
escrow payments, and Alibaba does have a well-used escrow business. As
long as it's able to move customers over to its own escrow business,
Alibaba thinks it will still be able to collect the fees that make up most of
its income. But with all the moving pieces involved in this, and the impact
that even modest increases in the difficulty of making a payment can have
on an e-commerce company’s bottom line, this is definitely something that
potential investors should watch closely.

Alibaba may be reaching a saturation point in China (it’s said to account

for something like $4 out of every $5 spent on e-commerce in the
20
country), and recent economic estimates suggest that the Chinese economy
is slowing down after years of sky-high growth. That means that its future
growth might depend in large part on its ability to grow that overseas
revenue number, something it’s not yet demonstrated much ability to do.
[ CITATION Her15 \l 1033 ]

21
6.0 Conclusion and Consequences

In conclusion of the whole assignment, according to the strategic recommendation there are 4
way to conclude Alibaba Group(AG). Firstly, strong brand name of AG can use to increase the
strong brand appeal, and brings in the international big brand products enterprises. AG can
increase investment in the international market and publicity. Therefore, the skillful workforce
will follow up to recommendation customer problems to make a different change. For example to
check the supplier’s profile correctly and onsite check and assessed suppliers. This would have to
verification serves which to ensure the sellers are legally registered company of representative of
AG. Following is AG start to build up traditional business economy because the customers
ecosystem cannot be isolated from the participants. AG creates innovation level the playing field
for small business and transformation for social and economic growth. So, AG growth rise up in
China building more consumer brands. Lastly is the political issue. AG will continue to be the e-
commerce company and the main technology in China. AG become the most important
technology company and the best supply chain infrastructure in China and platforms to help
foreign companies of all size and forms help the Chinese consumers. Ag could avoid government
problems in China and keep the financial strength of the company.

Furthermore, there will be the justification of strategy which have included feasibility, Alipay
and regulatory risk, uncertain revenue growth, and acceptability. Alipay is a payment process
services which will process about 78 percent of Alibaba payments in China, it might be a
problem if new financial regulations proposed by China. It could make a lot harder for a big part
of Alibaba’s customer base. Thus, the uncertain revenue growth is just state that the revenues are
growing for a multibillion –dollar company. Alibaba’s current growth has been fueled by its
growth in mainland China. The growth in those sales has not kept pace with its domestic revenue
growth and international for about 34 percent of Alibaba’s business. Next will be the
acceptability. The limit doesn’t affect escrow payments, and Alibaba does not have a well –used
escrow business. But Alibaba will collect the fees and moving pieces involved in this, and the
impact that even modest increase in the difficulty of making a payment can have an e-commerce
company bottom line. This show the future growth might depend in large part on its ability to
grow .

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