Case study

Case 1: Alibaba Group: Fostering an E-commerce Ecosystem

Topic(s): Platforms, Growth strategy

Industry: Media & telecommunications, E-commerce, Online retail

Alibaba Group: Fostering an E-commerce Ecosystem

Seung Ho Park, Ziqian Zhao

In 2014, Alibaba Group (Alibaba), the largest e-commerce platform operator in China, boasted in its New York Stock Exchange prospectus about its e-commerce ecosystem, which was being built over time. Alibaba’s chairman and chief executive officer declared that the company’s mission was to “make it easy to do business anywhere.” However, the ecosystem, which was well suited for people’s Internet habits of the past, would not likely be up-to-date in the mobile age, when browsing for information no longer posed a problem and people became fascinated by mobile apps that provided practical and entertaining services. Internet traffic, representing people’s attention, started to take on a new pattern. Having thrived on pooling Internet traffic by displaying a huge variety of merchandise on its platform, Alibaba could not afford to now lose Internet traffic to countless customized small apps.

Suggested case study questions:

How would you characterize Alibaba’s growth strategy over time?
What was its primary core business in each stage and how did it affect the direction of growth?
Was there strategic consistency in Alibaba’s continuous business expansion?
Was vertical or horizontal growth appropriate in each stage?
Did continuous growth contribute to Alibaba’s overall competitive advantage?
How did growth create value for the company?
Has Alibaba created a platform for sustained profitable growth?
What strategic and managerial challenges did Alibaba face in managing growth?
What challenges did moving from a business-oriented to a consumer-oriented platform present?
What type of managerial problems did Alibaba face as the company grew larger?
How was the coordination managed across units? Was it necessary to maintain tight control of businesses? Why or why not?
How did Alibaba maintain flexibility while the company became bigger and more bureaucratic?
What was the role of corporate management in managing growth?
What was the reason for frequent restructuring of the organization?
How would you characterize Alibaba’s strategy in the mobile Internet sector?
What do you foresee as potential challenges for Alibaba in its future growth?