M RahmanSWOT analysis of Alibaba (Alibaba Group)
This is a comprehensive SWOT analysis of Alibaba (Alibaba group). The purpose of this article is to analyse the strengths and the weaknesses of Alibaba. It also explores the opportunities that the company should seize to grow its businesses operations further, and the threats that it must deal with robustly. Alibaba is a Chinese multinational technology, headquartered in Hangzhou, China. It was established in 1999 by 18 people who were led by Jack Ma – a former English teacher from Hangzhou (Alibaba Group, 2021).
Strengths of Alibaba (Alibaba Group)
Alibaba Group is one of the largest technology companies in the world. It has a number of brands in its portfolio, with the most notable one being Alibaba.com (e-commerce giant). Its other businesses are Taobao, Tmall, Freshippo, AliExpress, Lazada, 1688, Youku, Ding Talk, alimama, Alibaba Cloud, and Cainiao Network (Alibaba Group, 2021). The portfolio is certainly diverse and helps the group spread risk across different areas.
Alibaba is one of the most valuable companies in the world in terms of market capitalisation. It has a market cap of $542.52 billion (Companies Market Cap, 2021). Its revenue was $100.20 billion in 2020 which was an increase from the previous year.
Total number of annual active customers of Alibaba Group is around 1.18 billion including 912 million consumers in China, and 265 million abroad served by Lazada, AliExpress, Trendyol, and Daraz (Alibaba Group, 2021). These figures are simply impressive.
In January 2017, the International Olympic Committee, and the Alibaba Group announced a long-term partnership until 2028 to boost sports across China. In December 2017, the group had announced an RMB 10 billion poverty relief fund. These are good examples of corporate social responsibility. In fact, Alibaba aims to serve 2 billion consumers globally; to support 10 million businesses to function in a profitable manner; and to help create around 100 million jobs by 2036 (Alibaba Group, 2021).
Alibaba.com is one of the key businesses of Alibaba Group. The platform is used by millions of buyers and suppliers around the world. It was launched in 1999 and soon became a leading global wholesale trading platform. It lists millions of products in over 40 major categories. The products are located in over 190 countries and territories.
Weaknesses of Alibaba (Alibaba Group)
Weakness is the next area of discussion in the SWOT analysis of Alibaba (Alibaba Group). The international reputation of Alibaba.com is not that great. This is because many companies have complaints against it. These complaints range from billing and advertising to problems in the delivery of the products and problems with the products themselves.
Another problem with Alibaba is that some of the listings are bad or in some cases, could turn out to be nothing but scam. Alibaba’s Taobao is often considered a notorious place for counterfeit goods. In fact, the customer review of the company in reputable online sites is very poor (Trustpilot, 2021).
As there are many sellers operating on Alibaba.com, the competition is very high. As a result, many sellers are not able to make profits from their transactions resulting in frustration and often their early departure.
Opportunities for Alibaba (Alibaba Group)
Alibaba’s activities include but not limited to e-commerce, cloud computing, digital media, and entertainment (Alibaba Group, 2021). It has the option to further penetrate the existing sectors.
Similarly, exploring diversification opportunities is worth the effort as well. Alibaba has taken over or bought shares in several companies which are outside the tech industry. South China Morning Post, and Intime Department Store are two good examples in the regard.
Alibaba has seen huge growth in China and Southeast Asia. It has over 912 million active users in China alone. However, the growth is beginning to hit saturation. Therefore, it needs to look beyond China and Southeast Asia. Some potential markets where Alibaba could enter to further its growth would be in Africa or Latin America for example. This is due to the fact that the e-commerce market still has room for growth.
Threats to Alibaba (Alibaba Group)
Threat is the final part of analysis in the SWOT analysis of Alibaba (Alibaba Group). China and the US are battling for technology dominance. Due to this, America has stepped up its efforts in limiting the presence of Chinese tech companies in America. This could be a big challenge for Alibaba Group.
Alibaba is facing a big challenge in the domestic market as well. For instance, the government of China is looking to tighten the rules of data collection with the new Personal Information Protection Law (PIPL). Many analysts believe that the effort is to limit the power of technology giants such as Alibaba and Tencent. Similarly, Alibaba was fined 18.23 billion yuan (2.8 billion U.S. dollars) as a result of an anti-monopoly investigation (Kharpal, 2021).
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Alibaba competes with Amazon in the global arena. Likewise, it has a number of competitors in the domestic market as well. JD.com and Pinduoduo are two such examples. These competitors are in battle with Alibaba in the field of market dominance.
We hope the article ‘SWOT analysis of Alibaba (Alibaba Group)’ has been a useful read. You may also like PESTEL analysis of China. Other relevant articles for you are:
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Last update: 06 August 2021
References:
Alibaba (2021) Company overview, available at: https://www.alibabagroup.com/en/about/overview (accessed 06 2021)
Companies Market Cap (2021) Alibaba, available at: https://companiesmarketcap.com/alibaba/marketcap/ (accessed 05 August 2021)
Kharpal, A. (2021) In a quest to rein in its tech giants, China turns to data protection, available at: https://www.cnbc.com/2021/04/12/china-data-protection-laws-aim-to-help-rein-in-countrys-tech-giants.html (accessed 06 August 2021)
Trustpilot (2021) Alibaba, available at: https://uk.trustpilot.com/review/guide.alibaba.com (accessed 06 August 2021)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
