Does the company market directly to consumers? Does the company sell through marketing intermediaries (Retailers or Wholesalers)? If so, who are its major intermediary partners?
Alibaba Company is an online marketing platform that was initiated with the intention of marketing Chinese products to foreigners. The company markets its products directly to the customers, as their clients are the people who visit their websites to sell or buy products. Alibaba is an e-commercial company which is service-oriented company (Schepp and Schepp).
Sourcing
Are any aspects of the product or service outsourced?
Alibaba does not outsource any aspect of their products which is mainly provision of information about goods and services as availed by potential seller to the potential buyer.
Google this company or industry and “sourcing”. What ethical, sustainable, or financial decisions have made the news?
Although the company outsourced to an American company while in its earlier stages of development, today, there are no records of Alibaba outsourcing any part of the company operations to a third party (Trumbull). When I googled the term “Alibaba” and “sourcing” together, most of the results were on the way Alibaba can be used to source for new products. Another source indicated the way Alibaba has risen from a start-up to a multibillion dollar company without outsourcing any part of their operations. Several other links in the first page of the results were on the way Alibaba helps companies from all over the world outsource with Chinese companies who are mostly cheap due to the huge population hence cheap cost of production mainly labor (Osawa).
(c) Does the company have a diversified or a consolidated supplier base? How are its suppliers geographically spread around the world? (You can find a list of the company’s suppliers using Bloomberg’s Supply Chain Module; instructions on how to use the Bloomberg Terminals are posted on the recitation site under “Company Analyst Report”.)
Noting that Alibaba is an online e-commerce company, the main product that the company sells is information. To hold the information provided by billions of visitors of the website and keep it available at the click of a button means that the company has to maintain powerful servers that are power efficient. The supplier of efficient servers to Alibaba is Huawei, who according to Huawei.com have provided Alibaba with more than 50,000 servers of different models and types. According to Huawei.com, the products (servers) supplied to Alibaba meet the needs of the latter by; 1. Providing high performance servers with each having a capacity of up to 50 terabytes, 2. Energy saving servers saving approximately 10% when compared to other servers and 3. Integrated rack delivery meaning that information stored in the servers is quickly deployed to meet the need for fast delivery of information to the clients. However, providers of information who are mostly sellers seeking market for their products hail from different countries in the world with most of them coming from China.
Huawei is an ICT company that is based in China, the same country as Alibaba (Tao and Chunbo). Also, most of the companies who advertise their products in Alibaba website are Chinese or owned by Chinese. However, there are sellers at Alibaba who hails from Europe, America, Africa and other parts of Asia such as India despite their small numbers.
Operations
Describe the main resources that are directly used in the company’s operations (e.g., machinery, workforce, technology, know-how, etc.).
Being an online company Alibaba’s most used resources are technology, workforce and machineries. The most basic resource for Alibaba is the World Wide Web upon which the company relies to operate (Schepp and Schepp). The company need machinery such as computers and servers that stores information that is the main commodity for the company. Workforce is required for operations of the machinery and ensuring that the clients get the appropriate responses. However, most of the processes in Alibaba are automated and therefore requiring minimal supervision from human workers to perform.
Use revenue to approximate sales and forecast next year’s based on the previous 4 years of data using the most suitable forecasting method. Justify your choice of the forecasting method. Compare to two competitors.
If the chosen company is a manufacturer, for each major product category, is this product offered make-to-stock (push) or make-to-sale (pull)? What infrastructure supports this? We discussed many inventory policies. Is the company’s inventory policy most likely described as continuous, periodic, or single period? Plot the inventory turns (defined as COGS divided by average inventory) of the company and one of its major competitors in the most recent 5 years in a chart.
The company selected does not manufacture any product.
(d) If the company is in the service industry, what physical resources must the company invest in to maintain service (e.g., retail stores, call centers, cashiers, ATMS, servers, trucks, warehouses, manufacturing centers)? What is the tradeoff between higher/lower investment and customer service and cost?
Alibaba is a service industry company. The physical resources that the company must invest in to maintain service includes server rooms which need to be specifically suited for maximum productivity of the servers and call centers for customer support. Physical offices from which the company staff are able to monitor the online systems is also an investment that Alibaba has to make for success of the operations. In the case of Alibaba, increased investment in the infrastructures of the company such as servers and a bigger call center translates to better customer experience for the clients (Chang and Chen). Increased spending in improving the customer experience on the other hand means that more money is spend by the company, hence increasing the costs and lowering the net profits from the venture.
Works Cited
"Alibaba Depends On Huawei Servers – Huawei Success Story". E.huawei.com. N.p., 2016. Web. 27 Apr. 2016.
Chang, Hsin Hsin and Su Wen Chen. "The Impact of Customer Interface Quality, Satisfaction and Switching Costs on E-Loyalty: Internet Experience as a Moderator". Computers in Human Behavior 24.6 (2008): 2927-2944. Web.
Osawa, Juro. "How Does Alibaba Make Money?". WSJ. N.p., 2016. Web. 27 Apr. 2016.
Schepp, Debra and Brad Schepp. The Official Alibaba.Com Success Guide. Hoboken, N.J.: John Wiley & Sons, 2010. Print.
Tao, Tian and Wu Chunbo. The Huawei Story. SAGE Publications Pvt. Ltd, 2014. Print.
Trumbull, Tyler. "Startups That Got Ahead By Outsourcing". The Gigster Blog. N.p., 2016. Web. 27 Apr. 2016.
