Going global means new frontiers Essay

IntroductionOn the 19th Sep. 2014, the worlds largest initial public offering (IPO) was successfully sinless in the New York Stock Exchange (big board), U.S., and the total IPO amount has reached up to $25 billion (Chen. Mac. Solomon. 2014). Alibaba, the miracle creator, used only 15-years development to relieve peerlessself the seat in the Wall Street and build an e-commercial empire. The NYSEs IPO is the signal to tell global investors and competitors that Alibaba is ready to join the global mart tilt. For Alibaba, going global means sweet frontier, however, the new frontier could be either a barren cliff or cornucopian grassland. In this essay, we will primarily discuss that why Alibaba want to expand global merchandises, and how Alibaba is going to make the global strategies to against global competitors in abroad foodstuff. by avoiding direct competition, targeting similar merchandise as China and increasing firm size in the global food foodstuff environment to step into a grassland market for persistent development.Alibaba the worlds largest online and mobile commerce company, was established in 1999 by the group of 18 people led by Jack Ma in Hangzhou, China. There ar three main situates in Alibaba China, including T-mall, Taobao and Alibaba.com along with numbers of separate companies to support Alibabas ecosystem development. Moreover, Alibaba also has Alibaba.com and AliExpress.com to return worldwide online shopping swear outs (Pressman 2014). Until 2013, Alibaba has more than 2 million merchants across more than 190 countries and spheres. In 2013, there was amount of $248 billion transactions went through Alibabas online sites which is more than the total of eBay and Amazon. Furthermore, after the NYSEs IPO, Alibabas market cap has reached up to 215 billion dollar, which only followed behind Microsoft, Google and Apple among the global tech firms (Lajoie & Shearman. 2014).Global Market Expansion (convention agency from domestic t o overseas) Why Alibaba want to expand global market?Alibaba is a typical Multi-national corporation, since Alibaba set up the headquarter in the China and operate e-commerce line of productses in othercountries. in As a typical multi-national corporation, going global to exploit new distant market, to merge into larger and more efficient units and to exploit fracture social capital is an irresistible process for Alibaba. As the dominator in the Chinas online shopping market, Alibaba has already controlled 80% of the market share, thus Alibaba needs new distant markets for persistent development. Moreover, For Alibaba, both the internal capabilities and external environment allows Alibaba to make the global market expansion decision.For the internal capabilities, Alibaba is a mature Internet corporation, which has controlled 80% of the Chinas online shopping market. Chinas market profits could constantly provide enormous capital support for Alibabas long-term market expansion. Mor eover, after the NYSEs IPO, Alibaba has won the trust from global investors and acquired sufficient capital for early market expansion. However, the challenges always exist during the process of the market expansion, oddly from the local e-commercial corporations. Despite of the competition, high cost for setting up facilities, cultural shock, and different government policies would also be main concerns before the decision was made. Thus, I have listed three main strategies below to demonstrate Alibabas global market expansion.Avoiding direct competitionInstead of face to face competition with those topically dominant e-commercial corporations, Alibaba decided to operate their business around the market edges and move partial of e-commercial businesses to cross-country trade. In 2004, The Americas largest e-commercial corporationeBay entered the Chinese market by merger with a Chinese e-commercial corporationEachNet. In order to against eBay, Alibaba decided to launch Taobao, one of the main sites under Alibaba for C2C (customer to customer) business model, compete with eBay. Because of Taobaos preponderant business model and domestic advantages, eBay finally failed in Chinas e-commercial market expansion (Wang, 2010).Right now, Alibaba faced the same challenge in the Americas market, but Alibaba will not make the same mistake as eBay did. In order to avoid direct competition with eBay and Amazon, Alibaba has launched AliExpress for cross-country trade wholesale by offering quality products at factory prices. As the advantages, Chineseproducts have unbeatable prices to attract American customers also Chinese customers have strong demands for American high quality products (like Cherry Farmers and Fisherman). Although its too earlier to claim the final result of Alibaba, to avoid direct competition is always a good way to enter a new market without too much pressure from local competitors.Finding similar market as ChinaAlibabas global strategies are more lik ely targeting the large and potential e-commercial market as Chinas market. For instance, Brazil, as one of the largest developing economy in the world, the economy status and e-commercial structure in Brazil is really similar as in China. ALthough, eBay and Amazon has already colonized down in the Brazils market, its always not too late for Alibaba overtakes the dominance. In 2013, Alibaba set up a Portuguese e-commerce site to allow Brazil buyers directly purchase goods from Chinese wholesalers. Just in a year, Alibaba has became the third largest e-commercial website and took 20% of market share after Ebay and Amazon.In this July 12 millions of Brazilian customers visited the Alibaba.com, which is ten times than last year (Sciaudone, 2014). Moreover, in Brazils market, Alibaba wisely used the local sub-contractor to reduce investment and improve service quality, which subcontracted the online payment services to Boleto and delivery services to Brazils state-owned postal service ( Pressman, 2014). To make it even better, Brazilian President Dilma Rousseff and Chinese President Xi Jingping have signed the agreement to open the Green Channel to support Alibabas business between two countries (Chao, 2014). All in all, the success in the Brazils market indicated that to find the similar market is a feasible strategy for future development.Increasing the firm sizeAs a typical multi-national corporation, Alibaba effectively applied the law of increasing firm size, which have rapidly step-up in the representative size of the firm, culminating in the MNC, and the parallel growth in organizational complexity (Hymer, 1970). E-commercial is the fundamental business for Alibabas long-term development, but not the only business Alibaba does or will do. As the govern of investments show below, Alibabamade plenty of investments in smart phone, video websites, telecommunication and so on.Some of them are complement businesses to support Alibabas e-commercial, like Juhuasua n, Alipay and Alibaba pictures and well-nigh of them are potential businesses for long-term development, like Kabam, Peel, and Tango. Like Jack Ma has said in the Stanford Business Schools presentation, Alibaba would always follow the markets path, where is the market, where is the Alibaba. Alibaba believed those investments are the future market and opportunities. On the global market expansion, Alibabas strategy is to pursue dynamic, diversified, sustaining development.Impacts on global market and host regionWith the development of Alibaba, the global e-commerce businesses will absolutely more competitive than before. There will be more and more cheaper and quality products flow into global market from China. Other e-commercial corporations, like eBay and Amazon, have to find the way out to against Alibabas expansion. On the other hand, Alibabas global market expansion will provide more opportunities and channels for Chinas manufactories and factories to enter into a larger marke t. As Alibabas mission said, to make it easy to do business anywhere. Alibaba champion Chinas merchants to do business much easier and more efficient.ConclusionIt is indeed that Alibaba made a great success in 15-year development, but more or less concerns still exist from investors. Some investors even thought its possible that Alibaba is too big to be expropriated by Chinese government (Crovitz, 2014). However, Its a totally misunderstanding, Chinese government always encourage and support Chinas corporations to exploit overseas market and welcome foreign investment. Furthermore, investors also canvass the instability to an Internet company. Unlike other industries, such as auto or manufacture industry, Internet Company is highly volatile. Internet Company could micturate billions of fortunes overnight, but also could lose everything instantly. In this case, its a significant mission for Alibaba to keep investors trust and faith. Up to now, Alibabas steady-state growth and exp ansion is the outperform response to investors trust and support.For 15-year development, Alibaba completely followed the conventional path from serve domestic market to operate businesses overseas. Eventually, Alibaba has successfully built an e-commercial businesses bridge between China and overseas market. Alibaba will continue to grow, and it will continue to change China and change the world. As William Kirby, and expert on Chinese business in Harvards business school, demonstrated that Alibaba is a private company that has done more for Chinas national economy than most state-owned enterprises (Economist, 2013).ReferencesChen, Liyan Mac, Ryan Solomon Brian. Alibaba Claims Title For Largest Global IPO of all time With Extra Share Sales. Forbes. Web. Available from http//www.forbes.com/sites/ryanmac/2014/09/22/alibaba-claims-title-for-largest-global-ipo-ever-with-extra-share-sales/ Accessed on 14/11/2014Crovit, Gordon L. 2014. Alibaba Too Big to Expropriate? The Wall Street Jo urnal. Web. Available from http//online.wsj.com/articles/gordon-crovitz-alibaba-too-big-to-expropriate-1411339239 Accessed on 14/11/2014Hymer, Stephen. 1970. Lecture notes distributed in Global Business Environment at The University of Birmingham U.K. on November 2014.INC. 2014. How Alibabas Jack Ma Conquered China. INC. Video. Web. 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