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Yahoo! and Alibaba
Transcript of Yahoo! and Alibaba
4. NO Introduction Yahoo! and Alibaba:
Seeking dominance in Chinese cyberspace Yahoo! Inc.
-An American multinational internet corporation
-It is one of the most popular sites in the US
-Founded by Jerry Yang and David Filo in 1994
-Paid $1bn for 40% stake in Alibaba in 2005
-A Chinese B2B portal, owned by Jack Mar
-Cover B2B online marketplaces, retail and payment platforms,
shopping search engine etc T.O.W.S+PESTLE Analysis Threat
Strength Porter's 5 forces Unique Selling Points Diversity of Alibaba
-Alibaba.com (strong position in B2B e-commerce)
-Alipay (online payment facility similar to eBay)
-Taobao (eBay-like auction site) Economic:
-Yahoo! paid $1bn for 40% stake in Alibaba (some analysts suggested that they overpaid)
-There are cultural and linguistic differences between US and China
-Diversity as a lack of focus (Alibaba has many business in their company)
-Rival (eBay) is contacting Alibaba Threat Opportunity Economic:
-The value of e-commerce transaction, online advertisement and online auction market in China is expected to rise
-Alibaba has 15M users (2005)
-Alibaba would take control of Yahoo's assets in China Politics:
-Chinese government strictly controls the internet
-Most of the top players in China's market are homegrown (e.g. Sina, Baidu, Shanda Interactive) Weakness Environment:
-The diversity of Alibaba's business (a strong position in B2B e-commerce, a online payment facility like Paypal, a auction site like eBay)
-Former success (Yahoo Japan, Sino-US) Strength Competitive
Rivalry Threat of New Entry
in China's Internet
market Buyer Power Threat of Substitution Supplier Power -Time and cost of entry: H
-Specialist knowledge: M
-Economies of scale: H
-Cost advantages: M
-Technology protection: H
-Barriers to entry: H -Number of customers: H
-Size of each order: L
-Price sensitivity: H
-Ability to substitute: H
-Cost of changing: H -Substitute performance: H
-Cost of change: H -Number of suppliers: L
-Size of suppliers: L
-Uniqueness of service: H
-Yahoo!'s ability to substitute: M
-Cost of changing: L -Number of competitors: H
-Quality differences: M
-Other differences: M
-Switching costs: L
-Customer loyalty: L
-Costs of leaving market: H Was Yahoo! right to outsource
its future in China to Alibaba? I think YES 2. The case points out that Alibaba/Yahoo!
combination led to a mishmash of internet
brands. How should Alibaba manage this
mix of brands?
3. What other marketing actions would you
prescribe for the Alibaba/Yahoo! combination
to succeed? I think they should have started SNS 4. Do you agree with some of the critics
that the new entity lacks focus?
What might be some of the advantages
that diversity offers to internet players
in China? I think NO