Essay Sample on Alibaba Response To China's Slow Economic Growth

Introduction

Alibaba.com is a global leader of business-to-business B2B e-commerce under its flagship Alibaba group of companies. The firm was found at Hangzhou in 1999 with the aim of making the internet resource trusted, reachable as well as valuable. The company has a total of seven business group namely Alibaba International Business Operations, e Tao, Alibaba small business operations, Jahuasuan, T-Mall, Taobao as well as Alibaba cloud computing. This company is currently one of the largest online and mobile commerce company globally. The company has experienced massive growth in over the recent years although being in the e-commerce business only for nineteen years. This exceptional performance was not anticipated as the company offers business opportunities for small and medium-term enterprises. According to the firm, its recent innovative technology tends to be the reason for highly competitive advantage globally.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

The firm has also integrated various marketing strategies, promotion as well as distribution channels in the world of online trading. These strategies are due to the challenges it has faced over the years through greater competition. A promotion has been one of the key strategies for the company's success in service provision. Through digital technology, the firm has developed its online presence of using internet promotion strategy: sponsorship programs and media advertising. The firm's distribution service has been active through the intermediaries that include several websites, distribution channel and more than 40 outlets specifically in China.

The firm offers perfect competition for business entry into its e-commerce website. Its website offers quality products as well as services sold lower at prices in comparison to its competitors. There is no possibility of economies of scale as there is a limitation of the number of products each user lists on the website thus no chance of monopoly. There is no restriction on the type of product or service sold as anyone can sell a variety both small and large scale. The firm also allows easier restriction on entry and exit as a business in Alibaba. Alibaba e-commerce website allows cost, time, communication efficiency as well as the flow of information and an effective supply chain management. Its e-commerce website allows sellers to create sellers accounts, make the preparation of their sale items, list their items, track their listing and lastly receive payments for products and complete the sale process.

Demand and Supply

The company uses an economic model of demand-supply which determines the price determination within its market (Mankiw and Taylor,2011). This is model uses a competitive unit price to offer the company's product and services to its customers. As a competitive advantage, the companies are entitled to accrue and maintain profitability. This competitive advantage is through setting prices equally between supplied quantity and the quantity demanded at current prices. When this is achieved the firm is said to have attained economic equilibrium for its products sold at a particular price.

The recent news of Alibaba by the New York times indicating Alibaba's feeling the pinch from recent China's slow economic growth. This statement came after the firm's release of its latest quarter revenue that was amounting to $12.4 billion lesser than analyst estimates. The firm has been resilient amid signs of slow economic growth in China. This report purports that the slowdown is mainly affecting China's middle-income class. The economic slow down has therefore led a reduction in the consumption of products purchased through phones and computers. According to this report, the Alibaba was enjoying an unmatched grip on Chinese online shopping through its e-commerce website. However, the firm seems undisturbed with the changing trend and sees its future relying on a great presence on the large non-virtual shopping.

The tumbling of China's stock market and its currency is an indication that idle income citizens are reduced their spending. Likewise, the ongoing trade war set by U.S administration under Trump has made it difficult for China to purchase U.S products. This is due to high tariffs make makes U.S products and services more expensive. Although Alibaba executives reassured investors that its large Chinese consumers could get alternative products and services from other countries. It is important to note that the state plays an essential role in developing the financial networks both locally and abroad. This means that the policies of protectionism and nationalism of a country could breach terms of the trade agreement between countries. The most affected sector is the regulation of intellectual property and knowledge transfer which seems to be the cause of the Sino American trade relations. The cross-border e-commerce and outbound foreign direct investment seemingly is a major cause of concern for U.S o the protection of its nationalism policies.

Alibaba management has confirmed that the company is more concerned about the company's recent investment. In conclusion, Alibaba management is confident that the firm is ready to strategize itself by widening its non-virtual shoppers. Likewise, the company's great size and expansion are built to build its opening business opportunities on its various segments. The ongoing trade wars between China and U.S could further affect Alibaba's massive performance, sales and market expansion in the U.S.

Chui, M., & Manyika, J. (2015). Competition at the digital edge:'Hyperscale'businesses. McKinsey Quarterly.

Gang-lan, H. U., Xiang-hua, L. U., & Huang, L. H. (2009). Research on E-business Ecosystem and Its Coordination Mechanism--A Case Study of Alibaba Group [J]. Soft Science, 9(003).