Case Study: Alibaba.com: A Born-Again “Born Global” Firm?
Jack Ma had reached the pinnacle of a decade of entrepreneurial success when his firm, Alibaba.com, tripled its 2007 IPO price on the first day listed on the Hong Kong Stock Exchange. Alibaba.com had become the world’s fifth and Southeast Asia’s largest internet firm. Alibaba’s performance continued to skyrocket until 2011, when the company faced success and failure, both of its own creation. On the one hand, Alibaba had amassed over 50 million registered users ranging from entrepreneurs to SMEs, small e-tailers to retail giants. Serving over 240 countries and regions, it operated through 70 offices located in greater China, India, Japan, Korea, Europe, and the United States. On the other hand, new challenges struck at the heart of its mission to “last 102 years.” China’s SMEs struggled with rising raw material, foreign exchange, and labor costs at home, whereas Eurozone debt and slow U.S. economic recovery led to weak overseas demand. Additionally, broad-scale supplier integrity issues led to the resignation of CEO David Wei and COO Elvis Lee who had led the previous five year’s success.
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In January 2012, Jack Ma, chairman of the board and returning CEO, launched a new initiative to reprivatize the company that could cost billions as it buys out investors such as U.S.-based internet portal Yahoo, which holds a minority 23% stake. Many industry analysts asserted that Ma and Alibaba Holdings did not have the capital to make such an aggressive move. However, as of May 2013, 15 banks including the Chinese government’s policy-oriented China Development Bank (CDB) had agreed to lend Alibaba a combined US$ 6 billion toward a US$ 6.3 billion price tag for Yahoo’s stake with the rest of the money coming from Alibaba’s cash reserves.
Alibaba.com now has over 69 million users. It may be that Jack Ma is back in the entrepreneur’s game after all.
Review the attached case study file. Then, research Alibaba’s current
business, entrepreneurial history, and the industry it operates in. In
your analysis, address the following:
- Would you consider Alibaba a “born global” firm?
- How effectively does Alibaba help entrepreneurs overcome “psychic” distance?
- Which internationalization entry modes has Alibaba favored? Were they all successful?
- How effectively has Alibaba utilized the five entrepreneurial strategies identified in the module overview?
- What are the strategic implications for action for Alibaba given your findings?
- Alibaba 2011 Annual Report and company website
- Company, industry, and rival analysis (OneSource, Global Data, MarketLine, and Lexis-Nexis Academic: Company Dossier)
- Recent events (Reuters, WSJ, Financial Times, etc.)