Alibaba Group’s Market Entry and Expansion in The United States

Abstract: Background: We are today doing business in a global and increasingly digitalized world where e-commerce has become a significant approach for companies to be successful and to reach a bigger market. Alibaba Group is today considered to be the world’s largest e-commerce company and was founded in 1999 by Jack Ma, a former English teacher from Hangzhou, China. The company’s mission is to make it easy to do business anywhere and their vision is to build the future infrastructure of commerce. Alibaba Group was listed on the New York Stock Exchange in September 2014 and the Initial public offering was the largest of its kind ever. The company has had a remarkable growth and there is a big interest in expanding its presence in the United States. When a company like Alibaba Group is growing so rapidly it is important to have an understanding of what aspects and factors that matters when entering a foreign market and how to solve the problems that arise. Purpose: The purpose of this study is to describe and analyze Alibaba Group’s market entry and expansion in the United States. - What factors have affected the market entry? - What challenges have the company experienced? - What success factors can be identified? By answering the three questions, Alibaba Group gets useful take aways when entering and expanding into foreign markets. Methodology: In order to achieve the purpose, a literature study and desktop research were conducted together with interviews with employees in Alibaba Group and experts in relevant areas. This case study has a qualitative approach and is primarily descriptive and explanatory. III Theoretical The analysis model in this study is built up from four Framework: frameworks: the PESTEL framework, the CAGE Distance model, the Five Forces framework and the SWOT analysis. A Business Model Canvas is applied in this report to describe three of Alibaba Group’s business units in the United States. Conclusions: During the study seven factors were found to be of importance for Alibaba Group when entering and expanding in the United States. These factors are: cultural, language, legal and regulations, logistic, currency fluctuations, lack of trust for Chinese firms and bad brand recognition of the company. In addition, four challenges were identified for Alibaba Group: how to find ways for all of the business units to work together and gain value from each other, how to integrate new platforms into this already very complex business model, how to think big and for everybody and at the same time be near the customer and think narrow, and finally to find the right employees, who can deal with the complexity and share the company’s values. The nine success factors for Alibaba Group in the United States identified in this study are: right timing, the vision and mission of the business, stakeholders believing in the company, a more westernized organization culture, customer first, adapting to the environment, fast moving and innovative company, experience of serving both the countryside and big cities, and that Alibaba Group has many women, American born Chinese and American top executives in the company. The result of this study provide Alibaba Group with an overview and knowledge base that can be valuable for future market entries and employees working with the U.S market. In addition, the study also analyses and discusses the reasons behind the market entry and expansion. The results of this study can in particular be interesting to other Chinese online companies that want to enter and operate in the United States.