Alibaba - Analisi del Business Model

The trend of growing dependencies that influenced the economy since the beginning of the 19th century has disrupted the previous economic schemes and governance of our societies, to the extent that many have been using the term ¿globalization revolution¿. As the former Secretary of the United Nations Kofi Annan once said ¿arguing against globalization is like arguing against the laws of gravity¿. Indeed, embedded as we are in this context of global dependency, we cannot ignore the increasing influence of the emerging economies on the global landscape. It's no secret that developing markets have risen up to represent the around 20 percent of the world's economies, held back by the standard income-per-capita needed to be considered developed markets. The rise of developing markets can be attributed to the competitive advantage that businesses achieved by operating in them. The economies of Russia and Saudi Arabia are flourishing thanks to their availability of primary resources, while India and China can count on an over-sized addressable market: with over a billion people population each, their economies are quickly growing to be amongst the largest worldwide. The market size allows a competitive advantage over companies operating in smaller economies in that for a given market share, the number of clients reached by a Chinese company is way higher, allowing for more efficient economy of scales that ultimately lead to faster growth. A prime example is the case for Alibaba Group (Holding Limited), the Chinese leader of the ecommerce sector. Founded in 1999, it provides consumer-to-consumer, business-to-consumer and business-to-business sales services via their web portal. Since its foundation, Alibaba grew to become in 2007, the history's largest initial public offering, with its 25 billion dollars valuation. This paper will focus its attention on Alibaba's business model, key elements, milestones and achievements that made it what it is today. The analysis will be carried out on the overall Alibaba business model, covering the company's history, analysis of its revenue and cost model, of its market strategies and financial statements, compared with its competitors. The purpose of the paper is to give a better understanding of how the world's economy is influenced by emerging economies through the case of Alibaba, and growing opportunities that are opening in an increasingly globalised economy.