Table of Contents
Some time ago, popular Western companies were on the top list of the most valuable brands in the world. Nowadays, Asian countries are serious competitors in the amount and quality of transnational companies. The Chinese company, like Alibaba Group, is an international company, which originated in China and mostly operates on its national market, but has a great potential and prospects for operations abroad. The essential mechanisms of a company’s success are appropriate business strategy and human resources’ practices and processes. Alibaba Group, in pursuit of achieving success, should hire only professionals (HR practices) and obtain some Western corporate culture to spread its influence in Europe and in America .
Socio-cultural. Alibaba Group is very diverse. The company involves people from all over the world with different religions, cultures, languages, customs, as well as education degrees (Guo et al. 2006). Since the company has so many employees of different cultures and operates in many countries, it is considered multicultural. The company efficiently understands the cultural needs of their clients because its internal structure is multinational.
Technological. The technological environment is highly suitable for Alibaba due to the fact that this is an e-commerce company. All sales are made online, so Alibaba is more successful in countries with a high Internet penetration rate (Tan et al. 2015). Since citizens of all developed countries and many residents of developing countries have an access to computers, smartphones, and other devices, Alibaba has a direct access to the biggest target audience in the world – Internet users.
Economic. Alibaba Group is based in China, where the currency rate is forcedly decreased by the government, so that national companies have favorable conditions on the international market. Items, the company is offering, are highly attractive in developed countries. Since Alibaba is e-commerce company, much attention is paid to the security of online payments, but technologies of the 21th century offer the best conditions for it (Tan et al. 2015).
Environmental. Alibaba Group positions itself as eco-friendly. The company even set up environmental protection foundation a few years ago (Tan et al. 2015).
Political. Alibaba Group has a strong connection with the government of China. As a matter of fact, governmental officials often visit the company to ensure it is trustworthy (Tan et al. 2015). The company has many favors for the Chinese government, in comparison with other similar companies in the country.
Legal. As it was mentioned, the company has all appropriate conditions for doing business: its currency, in comparison, is low to foreign currencies and it has good relations with governmental authorities. Furthermore, it has a low impact on the environment, so that it cannot be limited due to some environmental regulations.
Ethical. Since the Alibaba is e-commerce company, it has a little connection with ethic issues. The only thing that is worth to consider is that the company is multicultural and multinational, so that racial, gender, religious biases are absent in the company’s internal and external environment (De Giovanni 2012).
As any company, Alibaba Group has its opportunities and threats of the external environment. The first opportunity is the rising demand for e-commerce portals. In the modern world, e-commerce is starting to dominate over the traditional one, so that the database of clients for the company is only rising. The second opportunity is the growing Internet penetration, that also fosters more people to use Alibaba instead of traditional commerce. The third opportunity is that the delivery is developing from year to year, from day to day, meaning that in the near future, customers who refuse from e-commerce, due to long or expensive shipment, will not have any arguments against e-commerce. The fourth opportunity is that more and more SMEs consider it more profitable to use online supermarkets, rather than do business alone (Tan et al. 2015). It allows them to get more customers and not struggle with all organizational issues online. Hence, Alibaba Group, as a major company, in the near future can attract more partners.
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Despite the fact that Alibaba is a big company, it still has some threats that can significantly impact the company’s business. First, the threat of existing competition can be a serious obstacle for Alibaba Group. Such companies like Globalsources.com and HC360.com, despite the fact that they are smaller, can still bring an economic damage for Alibaba Group (Tan et al. 2015). Second, the threat of new entrants is also important to mention. Alibaba is a leader in such cities as Shanghai and Beijing, but it does not have the appropriate influence in rural regions. Hence, another company that will pay more attention to the rural region will dominate and will get a major market share. Therefore, the Alibaba Group has much more opportunities than threats, so that if managing its business right, the company will maintain or even strengthen its leading position on the market.
Proposed Business Strategy
The foremost goal of Alibaba’s business strategy is to expand its company to such an extent that it will cover up to the half of the Earth’s population. The company’s business strategy includes three major components, like valuable infrastructure, global growth and e-commerce eco-system. First of all, the company understands that its efficient existence is impossible without the main partners, such as small and medium enterprises (Verbeke 2013). The bigger amount of such partners is the wider target audience the company can receive. Second, the global growth is another significantly important part of Alibaba Group’s business strategy. Despite the fact that the company is a leader in the Chinese market, it still has a low impact on European and American markets, which are more prospective, if taking into consideration western salaries. Hence, the goal of the company is to have a bigger influence in India, Europe, and the United States. Third, the e-commerce ecosystem should always grow and develop. Alibaba Group wants to involve new significant components of its e-commerce ecosystems, such as Tmall Global, Taobao and 11main.com (Verbeke 2013). Hence, the main goal of the company is to become the largest company, rather than the most valuable one.
Indeed, the proposed business strategy is rationale, since becoming the largest e-commerce company in the world also guarantees to be the most valuable. The offered business strategy is more oriented on the international business and foreign countries, since Alibaba Group has already managed to become a leader in the national market. Hence, the next stage is ‘step by step’ to conquer the foreign market, starting from the nearest ones, such as Indian and, finishing with the most profitable ones, European and American.
The offered business strategy will also improve the company’s environment. The company is now considered as a transnational company that mostly operates on its national market – China. Hence, the proposed business strategy can significantly change the environment fit for the company. Initially, it will change its image: from a Chinese company, it will turn into the global one. Later, due to the fact that Western citizens differ from Eastern, it will allow the company to build another marketing approach that can even bring more profits to the company (De Giovanni 2012). Finally, the company will become more independent. In spite of good relations with the government, turning into a global company with great influence in numerous countries means that Alibaba can do business the way it wants to.
Human Resources Management
Human resources management is a key to success in every company and Alibaba Group is not an exception. Despite the fact that the company is e-commerce one, it does not have its stores, but it requires more employees. Alibaba Group, as an experienced one, has developed its own management of human resources that has its weaknesses and strengths. On the one hand, expensive human resources are a weakness of the company. Alibaba, as an e-commerce company, needs the assistance of programmers of different specialty that are highly valuable in the modern world and, accordingly, demand for high salary (Daley 2012). Furthermore, due to the fact that Alibaba operates in many countries, it requires staff with foreign languages skills. People that know foreign language may require higher salary. Hence, the biggest disadvantage of human resource management of the company is its great expenditure on employees.
Paying high salaries, the company improves its image and earns more customers. There are strict rules towards company’s employees. Employees are required to perfectly know foreign language or languages, be polite, quick, have a pleasant voice, and etc. (Demo et al. 2012). Such a representative of the company, in spite of high salary, also creates a good image, so that funding in professional employees may result in additional customers. Additionally, most of the company’s employees work in China, where salaries are still comparably low.
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Maintaining the same human resource management, the company cannot implement the proposed business strategy and achieve success. The global company ought to have its representatives all over the world, in each country, where it operates. Furthermore, since China has become such a developed country, the workforce has ceased to be the cheapest one (Hendry 2012). Now the company can consider opening customers’ and clients’ support centers; for instance, in India, where the work force is very cheap, but can, at the same time, be professional.
The offered human resources strategy differs from the existing one. Its key idea is globalism and professionalism. Almost all employees of the company are Chinese or foreigners living in China. Nevertheless, each country, as a potential market, requires a special approach and, accordingly, different human resources management. For instance, Indian employees can be perfect for many Asian, Middle East, African and, probably, South American countries, but they may lack professionalism for European and North American countries (Alfes et al. 2013). Those are some issues regarding consultants: both technical and customer. The other story regards programmers working in the company. Programmers should be professionals of the highest level. Programmers in Alibaba Group (e-commerce one) are like architects, cleaners, and designers of stores in traditional types of businesses. That is the reason why programmers should be hired to meet all customers’ demands. As a growing company, Alibaba needs to assist more staff and programmers, who are the most valuable sector of human resources management.
The proposed human resource practices will assist in the achievement of the proposed business strategy due to the internationalization of both of them. Since the main aim of the proposed business strategy is to make Alibaba Group a global company and the one that has a major influence not only in China, but also in Europe and the United States, the proposed human resource practices that recommend involvement of the best programmers and different types of customer service employees are very suitable. The offered human resource practices will allow to make the company meet European and American standards and maintain dominance in the Asian market with the same expenditures on staff.
Human resource policies and practices improve the horizontal internal fit for the company, since all processes of human resource are supportive and connected. The main aim of the company’s human resource strategy is keeping only professionals. That is the reason why the company involves only people with high education with a good level of foreign language skills, as well as with appropriate personal characteristics. If there is a need in training employees, the company kindly does this free of charge. If some employees perform their job better than others, than they deserve premium or promotion. Therefore, such a well-organized mechanism of work will only improve the internal horizontal fit of Alibaba Group.
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The internal vertical fit is more global, since it regards the connection of all business strategy components, such as financing, marketing, and human resource. Due to the fact that all departments in the company are linked, the problem in one of them leads to the problem in another one. That is the reason why good human resource practices and processes are like a wheel in the car: if wheels do not work like they should, the whole process suffers (Daley 2012). Since proposed human resource practices of Alibaba Group involve only professionals and offer a good system of penalty and rewards, the department of human resource will only foster beneficial cooperation of all departments and will improve internal vertical fit.
There is a set of human resource policies that will lead to successful achievement of offered human resource strategy. All employees should be treated equally and have equal conditions of work; employees of different specialties should be chosen in different ways. For instance, programmers should be the professionals of high level, attracted from different countries, while consultants can be different; for instance, Europe and North America will demand only native speaker consultants, while some Asian and African countries may have lower demands. All successful employees should be rewarded for any additional or efficient work (Alfes et al. 2013). Employees in the company should have the motivation to work better than their co-workers to achieve better results. Such corporate culture is not common for China, but, in pursuit of becoming a global company, Alibaba should learn how to do business in the West.
The company should not keep employees that are not effective or those who lead to conflicts in a team (Demo et al. 2012). Despite the fact that the company needs a high number of professional employees that is not easy to hire, the company should not keep those who neglect their work. Employees should be trained for free. Alibaba, as a big company, needs an enormous amount of employees that are difficult to find. It means that the company can face a serious problem with recruitment searching for professionals only. That is the reason why conducting qualification training courses is good both for the company and for potential employees. Such training will turn out to be much cheaper, in comparison with hiring well-educated people, since employees who will obtain some skills in the company will not demand a higher salary, as other professionals do. Therefore, such a set of human resource practices will lead to successful achievement of proposed human resource strategy and proposed business strategy.
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In conclusion, the main goal of Alibaba Group is to become a global one. Its business strategy includes spreading its influence in Europe and America and become a leader in the Indian market, improving its e-commerce system and becoming a favorite company for two billion people. The proposed human resource strategy includes hiring only professionals, especially regarding programmers, training the staff to improve their skills without great expenditures on salaries, developing the system of rewards and punishment and obtaining Western corporate culture in pursuit of achieving success in the West. Becoming a global company, Alibaba Group will have employees of different cultures from all over the world, so that the biggest challenge in human resource strategy will be to consolidate them. Hence, following those simple directions of proposed business and human resource strategies, the Alibaba Group can become a global one and a leader in the market of e-commerce.