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ALIBABA GROUP PRESENTATION

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Transcript of ALIBABA GROUP PRESENTATION

ALIBABA GROUP
PRESENTATION

KAMPIS ALEXANDROS
KOCH VICTOIRE
LEACH CANIBANO DANIEL
LECLAIRE STELLA ELIZABETH
BY
GROWTH
PAUSE
RETREACHEMENT

GUESS WHICH ONE ALIBABA HAS CHOSEN
THAT TRANSLATE TO THIS COMPANIES
THAT TRANSLATE TO
THESE SIC CODES
So how does it achieve growth
What
are the possible reasons for achieving growth in this way
Nature of interweb business > Footloose
Nature of commerce > Intermidiates (instead of production)
High bargaining power due to increased volumes
Favorable methods of payment > Cash vs. credit > Secure Payment
Who
are rensponsible for achieving growth
Porter's Model
EXISTING INDUSTRY
COMPETITION
In the chinese market:
In the global market:
How does it affect growth & profitability
Threat of new entrants
Suppliers
How do they affect growth & profitability
Consumers
How do they affect growth & profitability
Is that easy to achive growth, or
is it something else...
Ownerwship Structure
Organizational Structure
Organizational Culture
How do all this translate digits
Balance Sheet
P/L account
Ratios
And one last thing...
THANK YOU FOR YOUR ATTENTION


THE END.

*where, the yellow line represents Alibaba Group
Internal Horizontal Growth
Is when the growth is built by the company internal, instead of acquiring it.
In the case of Alibaba how is this achieved?
Through:
The R&D institute (est. 2008), that creates new products, related or unrelated to existing ones.
Creating new companies that help to diversify and enter new industries.
Renewing internal structure > Increased Efficiency
Targeting new markets (primarily US and India)
External Horizontal Growth
When growth is NOT achieved internally, but instead is brought by exogenous factors (namely, merges and acquisitions)
Mostly used
before 2007
In the case of Alibaba how is this achieved?
Mostly used
after 2007
Acquisition of existing firms (Yahoo! China)
Acquisition of parts of existing firms (One-touch), which in most cases were bought entirely
Forward Integration
When the company secures points of sale (distribution channel)
In the case of Alibaba how is this achieved?
OK, but what is the essence of that??
Reach as many people as possible.
The nature of e-commerce (and delivery)
The partnership with retail outlets (in China only)
The creation of a platform (alipay.com) that doesn't require e-payment, but cash, so people from the developing world with no access to bank accounts and credit cards, can proceed with orders (broader target group)
This platform according to UNCTAD, ITC, UPU and ILO, "could...lead to a boost in entrepreneurship and poverty reduction, {in developing regions}"
'E-COMMERCE AS A KEY FACILITATOR FOR SME COMPETITIVENESS', ITU, Geneva, Room C2 22 May 2008
Backward Integration
When the company secures inputs (produces them in-house)
Alibaba's R&D program greatly contributes to this, by creating the basis of many of its products (software and hardware)
This is important because of:
Cost reduction
Efficiency (especially, regarding time)
Autonomy (important in early days)
Alibaba does not operate like a typical e-commerce company, it does not own most of its warehouses and distribution channels, nor does it indulge in direct selling. It is a platform “open marketplace” where small businesses and bigger manufacturers can reach out to prospective customers. Though Amazon and eBay top the list as Alibaba’s global competitors, interestingly they have more differences than similarities with Alibaba.
http://www.investopedia.com/articles/investing/110714/alibabas-top-competitors.asp
November 07, 2014
1. TENCENT:
An on-line company that specializes at social media & entertainment. It includes WeChat (analogous of whats’ up), that was acquired by alibaba for US$ 804, by Alibaba. However, it has announced it will go into e-commerce, with a collaboration with Baidu, the dominant search engine in China (Chinese equivalent of Google)

2. JD.com
China’s largest strictly direct on-line sales company (Chinese analogous of Amazon)
In one word: Minimal
1. Amazon.com Inc
Amazon.com Inc, is a Fortune 100 company. The company in its model is much closer to the traditional style of retailing, as it indulges in direct selling, owning distribution centers and warehouses (unlike Alibaba). Amazon has excellent logistic and manufactures self branded products in addition to being a platform for publishers and authors.

2. eBay Inc
Alibaba is closer to eBay Inc (EBAY) in its set-up, bringing buyers and sellers together on a platform and even providing a payment system like eBay’s PayPal, called AliPay. According to eBay’s 10-K, it is “primarily a transaction-based business that generates revenue from the transactions and payments that we successfully enable.” eBay comprises three segments, with each being a distinct brand; eBay (buy and sell online), PayPal (digital payments) and eBay Enterprise (commerce, retailing and digital marketing).

Negativly, but not that much
Here's how much
But, let's not forget that although, not exactly rivals , the most important substitute service of Alibaba is the self-websites of large companies.

And customers, who prefer to make business at a larger scale, will not turn to Alibaba.com but directly contact the targeted companies .

That is china’s e-commerce
industry future picture
Wang Jianlin, (2013 China’s richest man), has just launched an e-commerce joint venture with Tencent and Baidu.

New websites try to copy the business model of Alibaba.com, while being more professional and targeted:
Finechemical.com (for the chemical products)
Textilehome.com (for the textiles)
AND DO NOT FORGET:
"where is honey there are always bees"
How do they affect growth & profitability
Reaction of Alibaba:

As the competition has intensified, Alibaba has gone on a spending spree, buying firms, or stakes in firms, in areas ranging from video to mapping, from logistics to sports, in order to keep ahead of the competition.
Included in the firms, at wich a percentage was acquired, there are also included, some of is major chinese competitors.
Last year alone, Alibaba group underwent a major shopping spre of acquisitions, with a total cost of more that 40 billion yang (US$ 6.5) - (Before IPO)
As Jack Ma said:
"...these acqistions will provide as with the opportunity to expand in several other sectors"
"Its shares climbed as much as 3% to a record high after Alibaba reported an impressive 49% rise in the total value of merchandise sold. For the quarter ended in September, Alibaba reported revenue of $2.74 billion, up 54% from the same quarter a year ago. Earnings per share were 45 cents, hitting Wall Street forecasts. Alibaba also said its number of annual active buyers surged 52%.
USA TODAY, November 4, 2014
WHO are they??
Alibaba doesn’t own or manage most of its merchandize, but brings consumers and suppliers together. So strictly specking there are not any suppliers to Alibaba.

However, properties of suppliers can be identified at:
Companies that Alibaba has bought share in and provide it with information
Suppliers of raw materials (for the few product Alibaba produces in-house)
Suppliers of Labour
Suppliers of advertisement, including its major rival Baidu (Chinese Google)
How would we asses their bargaining power
In one word: Minimal
Excluding, the suppliers of labour, who although posses the same amount of bargaining power with employees of other companies of the industry, because it is one of the goals of the company to have "happy employees", they enjoy higher wages.
Generally, supplier bargaining power is limit and stable.
Alibaba, has the strategy for the goods/services it outsource, to employe different individual suppliers, to diversified risk
Possitively, because they provide a great return, based on what they cost
Let' s see how Alibaba compares with Amazon, its's biggest (monetary) rival
Who are the consumers and how many are there?

90% of consumers come from China (251.1 m)
Only, 10% comes from abroad (27.9 m)
Out of the 279 million consumers:
1. Those who Buy
How do they generate revenues for the company
If we concentrate to the four biggest activities, then Alibaba's consumers can be distinguised into:
However, they hold allot of bargaining power against individual suppliers, because:
They can to choose between millions of them.
They can negotiate the price (and other parameters)
They can evaluate how good they are, according to the consumer's satisfaction rate.
Since Alibaba doesn't offer the goods itself, but acts as an itermidiate between buyers and sellers, consumers do NOT enjoy any amount of bargaining power on Alibaba.
2. Those who Offer
The only bargaining power that consumers posses over Alibaba, is that if they are not pleased with its service they can switch to other substitute services, since no switching costs are assumed.
Mainly, medium and small-size firms, which are not repotable enough to sell their products through their own network (including websites).
Who are they?
They do not posses almost any bargaining power, since each one is so small compared to the total size of products Alibaba offers.
However, even if they did posses any bargaining power, they would not have any incentive to use it, since the advantages of being part of Alibaba surpus the disadvantages, since Alibaba (Taobao) does NOT charge any fee, but makes its revenue through ads (mainly through sellers on the site)
N.B!
These growth rates are, with only 10 % of revenues coming from orders abroad.
And why will this change?
Alibaba gained allot of publicity, by making the biggest IPO in the history of the world.
Its listings have very competitive prices, compared to the listings of its main rivals.
Strategic acquisitions (signaling, entry in new industries and new markets-primarely, US & India)
Rival Marketing will eventually kick in, once some start using it in the western world.

Wall street jurnal.
The organizational structure defines the way in which responsibility, tasks, authority, and accountability are distributed and related historically. An organizational chart shows in which the chain of command works within the organization.
WHAT IS OWNERSHIP STRUCTURE?
BEFORE THE IPO
AFTER THE IPO
Get ready to be confused...
That is basicaly, a typical example of a firm with a VIE structure
VIE STRUCTURE?
But why did Alibaba Choose a VIE structure?
To go abroad (Chinese law forbids the sale of shares in key industries (e.g. Internet and telecommunications) to foreigners
Not to dilute control of the company
To reduce the tax durden
To increase the share of Jack Ma and Simon Xie
Customer First Team Work
Embrace Change Passion
Commitment
2013
Equity + LTL > FIXED ASSETS
8,487,000,000 > 3,318,000,000
Current Assets > Current Liabilities
6,946,000,000 > 3,861,000,000
2014
Equity + LTL > Fixed Assets
11.927.000.000 > 7.149.000.000
Current Assets > Current Liabilities
10,790,000,000 > 6,012,000,000
2012
2011
2010
2009
?
Equity + LTL > Fixed Assets:
875,063,592 > 214,509,298
Current Assets > Current Liabilities:

1,329,473,787 > 668,919,492

Equity + LTL > Fixed Assets:
1,033,000,000 > 272,000,000
Current Assets > Current Liabilities:
1,804,000,000 > 1,043,000,000

Equity + LTL > Fixed Assets:
1,362,000,000 < 2,164,000,000
Current Assets > Current Liabilities:
334,000,000 < 1,138,000,000


Equity + LTL > Fixed Assets:
11.927.000.000 > 7.149.000.000
Current Assets > Current Liabilities:
10,790,000,000 > 6,012,000,000

2009
2013/14
Three Month Comparison
Ended on Sep. 30
2013/14
Six Month Comparison
Ended on Sep. 30
$
Full transcript