MKTG6002 Marketing : Essay Fountain

Question:

This assessment task requires you to develop a Marketing Environmental Analysis that comprises both the micro-environment and macro-environment. The micro-environment analysis involves a scrutiny of internal environment that facilitates specifying the strengths and weaknesses, while, the macro-environment analysis requires the scrutiny of DENPTC dimensions which will assist in specifying the oportunities and threats. Changes within the macro environmental forces are outside of an organisation’s direct control requiring an organisation’s marketing strategies to be adjusted to capture emerging opportunities and minimise any potential threats.

Tasks:

  1. Discuss value propositions, core brand values and buyer behaviour of your chosen organisation;
  2. Analyse the micro-environment (the company, suppliers, intermediaries, relevant publics, customers and competitors);
  3. Analyse the macro environment, that is, demographic, economic, natural, political, technological and cultural forces to demonstrate their impacts on your chosen organisations strategies/capabilities to serve the target market (s);
  4. List strengths, weaknesses, opportunities and threats as well as suggest appropriate strategies to draw from strengths to capture opportunities, to overcome weaknesses and to defend from threats.
 

Answer:

Introduction: 

The aim of this paper is to discuss the influence of the micro and macro environmental forces on the capabilities of the organizations that develop them to serve the needs of the customers and other stakeholders in the market. Only after the companies understand the needs and demands of the market then only they can develop effective strategies for growing immense popularity and expansion to the other markets of the world. Among numerous Asian companies that have expanded in the European, African, American and Australian countries, Alibaba Groups has created a unique position. This paper will be discussing the value propositions, core brand values and buyer behaviour so that connection of the stakeholders with the company can be understood. By analysing different internal and external factors, this paper will be recommended strategies so that the company can expand its business in the most of the developed and developing countries of the world.

Value propositions:

Alibaba mainly offers five main value propositions which include accessibility, convenience, customisation, risk reduction and brand status. The company creates the accessibility through enabling the sellers and the buyers to connect mainly enabling the Chinese small sellers to sell the overseas buyers. Alibaba enables the customers to enjoy the personalising shopping experience. It has a data management capabilities enabling them to predict the needs of the buyers and tailoring the products offerings to be displayed accordingly. Alibaba also makes the service to be easy to use by reducing the wait times of the buyers by shipping high volume products in a regular basis. The company also provides valuable infrastructures support service to the sellers like cloud computing for ERP and CRM systems. The company maintains a high standard that reduces risk and requires the sellers to offer the consumer protection programs like product guarantee and warrantee returns. Alibaba is the largest online marketplace in the world in terms of the gross merchandise volume.

 

Core brand values and buyer behaviour:

The core brand values of Alibaba are primary to the ways it operates and how it recruits, evaluates and compensate the people associated. The six primary values of the company are

  • Giving first priority to the customers, then to the employees and then to the shareholders.
  • Making things simple through trust
  • Keep changing always
  • Giving best performance for future
  • Understanding the call of duty
  • Motivating employees to live seriously work happily

Buyer behaviour:

The company has effectively developed a uni-marketing model for the e-commerce platform which has created scope for understanding the customer buying capacity and behaviours. Through this database, the company can analyse the consumer behaviour and brands the product better (Jia, Kenney & Zysman, 2018). In the countries where Alibaba has been operating, it has got immense popularity due to the unique products and dependable delivery system. The price of these products is one of the most attractive factors for the customers hence the buying behaviours can be seen to be growing with time.

 

Micro-environment: 

About the company:

Alibaba is a multinational conglomerate holding company that specialises in the sectors like e commerce, internet, retail and technology. This company was established in 1999 in Zhejiang with the partnership with 17 people and now provides business to consumer, business to business and consumer to consumer sales service through the web portals, shopping search engines, electronic payment services and cloud computing services (Alibabagroup.com 2019).

Impact of suppliers:

As mentioned before in the values of the company, it has been found that it focuses upon the process of building trust with the suppliers. However, in the industry where the company operates the suppliers is too much powerful making their bargaining power higher than expected (Wu & Gereffi, 2018). This leads to the company to lower the overall profitability in the e-commerce and other retail business.

Impact of intermediaries:

Unlike the suppliers, the intermediaries are also effective in lowering the profitability of the company. It is also a true fact that Alibaba operates in the e-commerce system where the presence or power of the intermediaries are less than the other industries (Rui, 2018).  The markets where the company is currently operating have the presence of the wholesalers and delivery agents. These people act as the intermediaries and press the company to share profits as much as possible thus increase the price of the final product.

Impact of relevant publics:

The publics here relate to the people in the community with whom the company operates in the different parts of the world. These people create pressure on the operation of the company. These people are aware about the operations of the company as well as aits decisions for the welfare of the society. Here are four target groups present ion the company which include the employees of the company, industry partners, customers and the people focusing upon the social, environment and economic development through the business of this company (Ding et al., 2018). These communities ask for the service of providing proper infrastructure, training and employment to the youths of the relevant publics.  

 

Impact of customers:

The bargaining power of the customers in the market is high that put pressure upon the operation of the company. The company has a large base of customers who asks for the reduction of price as much as possible. These powerful base of customers seek growing discount and offers otherwise they will be choosing the same product from the other company (Rui, 2018). The substitute product threat is higher than expected in this e-commerce market which makes the company too very threatened for keeping the customers satisfied with their expectations.

Impact of competitors: 

The rivalry in this industry is very much evident in the case of Alibaba. This is due to the fact that the commutation in the market is highly intense. This decreases overall profitability of the industry when Alibaba operates in the retail industry (Tan et al., 2015). The competitor takes toll on the overall term profitability of the company.

Macro environment:

Demographic forces: 

In this Chinese e-commerce company, the factors like demography of the customers impact hugely. The main target customers are the middle income people in any market were the customers ask for discounts and low prices for the high quality products. The age of these target customers are from 20 to 40 age group because these people try to collect their household materials from the online stores without visiting any shop. Both men and women show from Alibaba providing to a great scope to expand the business among a large base of consumers.

Economic forces:

China is the second largest e-market in the world with high demand for the online shopping among the consumers. In addition to this, China is the second largest economy of the world also that makes the company to operate at any level (Jia & Kenney, 2016). The GDP rate is high and the people have the buying capacity. However the recent problem of restricting foreign influence through the investment. The people here have grown habit of shopping online and the company is taking advantage of the nation’s healthy economy. As the economy of the country is strong then the employment level is also growing making Alibaba perform greatly.

Natural forces:

The natural resources of the county are highly supportive for the growth of the manufacturing industries which ultimately help the retailing industry positively. Starting from the coal, iron and woods, water resources and fertile soil, the companies get perfect infrastructure for growth (Romagnoli & Garbelli, 2017). Similarly in the case of Alibaba, the manufactured products are collected is effective through transport system and it can focus to deliver the customers with their products more easily.  

Political forces:

The country has strict and stable political governance. The political parties do not follow the path of creating issues preventing the growth of the business in any part of the country (Wu & Gereffi, 2018). Therefore, the government can invest properly in the development of the infrastructure and bring changes in the legal systems. The import and export costs are supportive for the growth of the company so also the taxation system. Hence it can be stated that the company gets all the needed support from the political and legal factors of the country.

Technological forces:

It is a well-known fact that China is famous for its technological growth. All the biggest technological companies have their business subsidiaries in China (Maria, 2017). The information stem, social networking and utilisation of automation process in the manufacturing and other industries are quite natural for the Chinese labours. The government of the country invests hugely in the development of the technological factors so that this can help in the growth of the companies like Alibaba.

Cultural forces:

The culture of China is supportive of business. With proper hierarchal system of management and tendency to prevent indulgence have created a pool of skilled labours in the country. The religious essence of the business methods creates perfect understanding of the business partners hence the tendency of conflicts is minimal in the business organisation.

 

Strengths, weaknesses, opportunities and threats:

Strengths

Weaknesses

· High scale of operations

· Leading the retail market directly

· Huge market share

· Great and visionary leadership

· Flexibility to change (Fan & Liu, 2015).

· Skilled and hardworking employees

· Great connection with the suppliers, dealers and other business partners

· Support from the technologic al and economic growth of the country.

· Huge competition

· Lower profitability due to discounts and offers upon the products

· Demanding suppliers

· No scope for manufacturing for own products (Naidu et al., 2019)

· Changing laws and strict government rules relating foreign investment

Opportunities

Threats

· It has a dependable and string experience in working in china

· More and more people are preferring online shopping

· Rising investments in the ecommerce portals

· Expansion in the other Asian countries

· Increasing demand for the Chinese products in the other markets

· Application of the aggregator based model

· Over all rising competition with the business giants like Amazon and Flipkart.

· Economic depression in the world economy

· Constant dropping profitability for high bargaining power of the customers and suppliers.

Recommendation: 

  • The company must expand in the terms of larger customers base through the process of product and service innovation
  • It can build economies of scale so that the company cab lower the fixed cost per unit.
  • Investing hugely in the research and development process in order to enter the dynamic industry and defining standards regularly. This will enable the company for experimenting with product designs.
  • Focusing on the capturing new market through properly understanding the demands of the customers and bringing variation in the product for them
  • Invest more in the building of efficient supply chain with the multiple suppliers.
  • Increasing switching cost so that the customers do not have the existing and increasing bargaining capacity.
  • Being service oriented rather than only product oriented.
  • Providing the customers with the personal assistance through e-mail, phone, and live chat support.

Conclusion: 

Therefore it can be concluded that Alibaba is one of the leading e-commerce rand in the Chinese market that has huge popularity in the overseas markets also. It has a huge market share and large customer base for its unique products and dependable delivery system. The company can analyse the consumer behaviour and brands to make the the products as well as services better. In the countries where Alibaba has been operating, it has got immense popularity due to increasing demand for the Chines products. Hence the company is leading the retail market directly. However the higher competition level and demands of the customers have hampered the profitability through discounts and offers upon the products. The company also provides these to sustain in the market. To conclude Alibaba has been doing well in the market of china greatly as well as of the other countries by utilising all types of sources in a proper manner.

 

References:  

Alibabagroup.com. (2019). Alibaba Group. Retrieved 20 October 2019, from https://www.alibabagroup.com/en/about/culture

Ding, D., Chong, G., Chuen, D. L. K., & Cheng, T. L. (2018). From ant financial to Alibaba’s rural Taobao strategy–how Fintech is transforming social inclusion. In Handbook of Blockchain, Digital Finance, and Inclusion, Volume 1 (pp. 19-35). Academic Press.

Fan, J., & Liu, S. (2015). An Analysis of a New Business Model: A Case of Alibaba-Ecosystem. PROCEEDINGS: Advances in International Interdisciplinary Business and Economics Volume 5.

Jia, K., & Kenney, M. (2016). Mobile Internet business models in China: Vertical hierarchies, horizontal conglomerates, or business groups. Berkeley Roundtable on the International Economy Working Paper, 6.

Jia, K., Kenney, M., & Zysman, J. (2018). Global Competitors? Mapping the Internationalization Strategies of Chinese Digital Platform Firms. In International Business in the Information and Digital Age (pp. 187-215). Emerald Publishing Limited.

Maria, A. (2017). Localization and Adaptation of B2B/B2C Business Model in Russia: Case Study of Alibaba Group Holding Limited.

Naidu, G., Widhianingtyas, V. K., Alenzi, J. M., & Alfahad, A. (2019). Studying the E-commerce based Business conglomerate (A Study Case: Alibaba. com). Journal of the community development in Asia, 2(1).

Romagnoli, D., & Garbelli, M. E. (2017). Why Promoting Online in a Global Electronic Marketplace Is a Successful Strategy for Small and Medium Sized Enterprises: The Alibaba Group Holding Business Model. In Country Experiences in Economic Development, Management and Entrepreneurship (pp. 423-442). Springer, Cham.

Tan, B., Pan, S. L., Lu, X., & Huang, L. (2015). The role of IS capabilities in the development of multi-sided platforms: the digital ecosystem strategy of Alibaba. com. Journal of the Association for Information Systems, 16(4), 2.

Wu, X., & Gereffi, G. (2018). Amazon and Alibaba: Internet Governance, Business Models, and Internationalization Strategies. In International Business in the Information and Digital Age (pp. 327-356). Emerald Publishing Limited.

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