Alibaba Group’s Market Entry and Expansion in The United States

Abstract

Background: We are today doing business in a global and increasingly
digitalized world where e-commerce has become a significant
approach for companies to be successful and to reach a bigger
market. Alibaba Group is today considered to be the world’s
largest e-commerce company and was founded in 1999 by Jack
Ma, a former English teacher from Hangzhou, China. The
company’s mission is to make it easy to do business anywhere
and their vision is to build the future infrastructure of
commerce. Alibaba Group was listed on the New York Stock
Exchange in September 2014 and the Initial public offering was
the largest of its kind ever. The company has had a remarkable
growth and there is a big interest in expanding its presence in
the United States. When a company like Alibaba Group is
growing so rapidly it is important to have an understanding of
what aspects and factors that matters when entering a foreign
market and how to solve the problems that arise.
Purpose: The purpose of this study is to describe and analyze Alibaba
Group’s market entry and expansion in the United States.
- What factors have affected the market entry?
- What challenges have the company experienced?
- What success factors can be identified?
By answering the three questions, Alibaba Group gets useful
take aways when entering and expanding into foreign markets.
Methodology: In order to achieve the purpose, a literature study and desktop
research were conducted together with interviews with
employees in Alibaba Group and experts in relevant areas. This
case study has a qualitative approach and is primarily
descriptive and explanatory.
III
Theoretical The analysis model in this study is built up from four
Framework: frameworks: the PESTEL framework, the CAGE Distance
model, the Five Forces framework and the SWOT analysis. A
Business Model Canvas is applied in this report to describe
three of Alibaba Group’s business units in the United States.
Conclusions: During the study seven factors were found to be of importance
for Alibaba Group when entering and expanding in the United
States. These factors are: cultural, language, legal and
regulations, logistic, currency fluctuations, lack of trust for
Chinese firms and bad brand recognition of the company. In
addition, four challenges were identified for Alibaba Group:
how to find ways for all of the business units to work together
and gain value from each other, how to integrate new platforms
into this already very complex business model, how to think
big and for everybody and at the same time be near the
customer and think narrow, and finally to find the right
employees, who can deal with the complexity and share the
company’s values.
The nine success factors for Alibaba Group in the United
States identified in this study are: right timing, the vision and
mission of the business, stakeholders believing in the company,
a more westernized organization culture, customer first,
adapting to the environment, fast moving and innovative
company, experience of serving both the countryside and big
cities, and that Alibaba Group has many women, American
born Chinese and American top executives in the company.
The result of this study provide Alibaba Group with an
overview and knowledge base that can be valuable for future
market entries and employees working with the U.S market. In
addition, the study also analyses and discusses the reasons
behind the market entry and expansion. The results of this
study can in particular be interesting to other Chinese online
companies that want to enter and operate in the United States.

• author: Caroline, He
• supervisor: Johan Marklund
• organization: Production Management
• course: MIO920
• year: 2015
• type: M1 - University Diploma
• subject: Technology and Engineering
• other publication id: 15/5524
• language: English
• id: 7454883
• date added to LUP: 2015-06-26 13:44:49
• date last changed: 2015-06-26 13:44:49