A SWOT analysis is conducted on the 3PL company-Alibaba.

The main purpose of the SWOT is that it helps in

presenting a detailed strategic analysis of the group with respect to its 3PL service provisions. The opportunities for the
company are identified and based on its strengths the company can use as the opportunities. Similarly the weakness and
threats are also identified for the company and more awareness of this will help Alibaba strategize for the future. The
SWOT analysis is a comprehensive strategic analysis tool, however unlike other tools it might not consider the full
range of elements in the external environment that could affect the business, and this could be a disadvantage of the
SWOT.

3.2. Strengths

3.2.1. Comprehensive Set of 3PL Services:

The strength of the Alibaba Group is that it provides a very comprehensive set of services when compared to other local
competitors. It offers services for both the local and the international consumers. Most of the service providers in China
are focused only on local service provisions and hence would not have sufficient exposure to world standards (Alibaba
Group, 2015). The comprehensive suite of services that Alibaba provides is all up to world standards.

3.2.2. Tapped Into Unique Customer Base:

The strength of the company is that it was founded and has been in existence for quite some time. Alibaba group is a
successful B2B ecommerce company that was founded in 1999 and most of its core 3PL services were launched by
2003, this means that the company was able to offer 3PL services to most of the businesses thus gaining their loyalty.

3.2.3. Loyalty and Consumer Base:

This business has over 40 million customers with 5 million virtual storefronts (Euromonitor International, 2014). The
site encompasses a wide array of merchandise. It has been able to garner a good brand image. There is a belief that
exists among the people that Alibaba is a good brand. This is an intrinsic value that has raised the value of the company
in the minds of the investors. In addition the company also focuses on continuous improvement that will be able to get
more niche consumer segments in the future.

3.2.4. Networks and Human Resources:

They have skilled manpower that sets them apart from their competitors. They also use the latest technology, which
makes them more efficient than other similar sites. They have a good security protocol that ensures the safety of the
customer’s information in the Internet. They have been effectively able to connect retailers and suppliers in many
countries around the world. This company has their sites in Britain, China and Japan. Since their site operates in three
countries they have the English, Chinese and the Japanese version. They have their sites defined in three different styles.
This makes their customers develop a sense of ease while operating their sites. The sheer magnitude in which the do the
business is really high and they have managed to become a global brand catering to many businesses (Yang, & Li,
2008). Since their merchandise is not concentrated in one arena they have been able to encompass a larger customer
base. Based on all these factors the company has a huge potential for further growth. Their efficient internal management
system has been the root cause for all this development.

3.3. Weaknesses

3.3.1. Intermediary:

Alibaba has a huge potential for growth however some factors seem to hinder their progress they are the following. This
company serves as an intermediary company between many businesses. The very aspect of it being a third party logistics
provider is by itself a weakness. The businesses can easily replace them with cheaper substitutes. This also encourages
a lot of new competition. This could ruin their sustenance in the future.

3.3.2. Charges:

This site charges a membership fee which initially was a free service. They were free because they wanted to penetrate
into the markets. The act of charging a once free service can put off the businesses. This can make them less attractive
to the potential consumers. The existing business will also lose interest in having transactions with the company. This
will lead to a decline of profits. Alibaba must be able to balance between the service packages in 3PL that it offers for
a price and the marketing amenities and site charges that it presents. Here Alibaba could either reduce for the customers
or allow for free based on the 3PL packages they sign up for.

3.3.3. Information Transparency:

Another factor that has been troubling the company is that the company does not provide enough information about
their merchandise. The people who are about to buy a product must know their exact value and scope. The consumer
must be provided more information according to marketing analysts. This would aid the consumers in making an
informed choice of the merchandise. Since they deliver a wide array of merchandise there is no streamlined approach
(Euromonitor International, 2014). There should be a more robust business process in the company. This streamlined
systematic approach will make them more competitive. The company should invest more resources and time into
creating a business platform that is more streamlined, focused and also is more transparent when it comes to sharing
information. Several experts have pointed this out as a major weakness of the company.

3.4. Opportunities

3.4.1. Globalization and the Demand for Services:

Globalization has been a boon for this company. They have been able to reach wider markets owing to the advent of
globalization. The development of e- commerce trade around the world will be an ideal factor for the growth of the
company. Many countries are investing more and more in online transactions. A company like Alibaba that is already
established will seem to be a very attractive company in the eyes of the businesses. If the company utilizes this intrinsic
factor they can expect huge growth and capture larger markets around the world. They should focus more in the up and
coming economies of Russia, India, Brazil, Vietnam, and south East Asian countries. In these countries the livelihood
and the buying power of the people has increased dramatically. If this company invests in these unchartered territories
they can increase their profit margins and have significant growth. The government of China has also been keenly
interested in bringing in more business to the country.

3.4.2. Favourable Government Rules and Regulations:

The government of China has been revising their business rules and enforcing more streamlined process in order for
easier business to happen in the country. This will prove to be very useful to the company. Alibaba is already an
established brand if the Chinese government would help them they would garner a more prominent place.

3.4.3. Economical Partnerships:

The financial crisis that has been happening in the US and the European countries has actually been a factor for the
growth of this Chinese company. The attractive factor of Alibaba is the low cost transactions (Qing, & Xue, 2009) that
they are able to provide in times of financial crisis this will prove to be very beneficial to the companies hence they
would prefer to invest in the online site. Businesses that are attempting to work with Chinese businesses or enter the
Chinese market will need the help of 3PL services that help them control costs and all. Alibaba is actually a good
economical partner here that will help them in managing their costs. The use of the Alibaba market place tools could
actually give them more exposure to the existing market segment of consumers that shop online. The new business will
not need to find and manage the consumer segments and hence will be able to directly launch product to the required
target consumer.

3.5. Threats

The company has an effective B2B model that has enabled its growth. However in the current modernized world if they
do not adapt and change their business model they will be phased out by the competition. Globalization is actually a
double-edged sword for this company. Globalization is a great opportunity and at the same a great threat to this company.
There is a new breed of competition that emerges at a rapid rate unless they reinvent and change according to the needs
of the consumers this company will not sustain. Since this company is an intermediary business it can be easily replaced
as once business use Alibaba services to first reach the consumer segment, then they can go on to having dedicated
services (Zhao, 2009). Then they will not longer need a third party logistics provider. The company should make changes
internally and have a strong internal management in order to sustain in the globalized world. The global financial crisis
can also make this company weak. This financial crisis has aided in the growth of the company in the past however they
need to be aware of the potential risks involved when a financial
crisis is happening in a country. They should have contingency
plan in case of such a crisis. The company needs to make changes
in their site and make them more informative and robust. Since
they cater a wide array of merchandise they should adopt a
streamlined methodology. This process is immediately needed if
they want to thrive in the future. Also by becoming a global brand
they need to plan according to the individual social and political
ideologies of each country.

3.6. Summary of SWOT of Alibaba

The SWOT of Alibaba reveals that there are many opportunities

for the company in the growing advent of global businesses
entering the Chinese Market place. Alibaba could help these
businesses bring down their costs in operation, however in the long
run the businesses can easily substitute the service of Alibaba with their own dedicated services. They may no longer
require 3PL is they have their own infrastructure launched. For a more sustainable 3PL business, Alibaba hence will
have to diversify more. It might have to break down each of its current modules such as Alimama, Alibaba.com etc. to
even more custom structures which will aid the businesses and might negate the need for business is to form their own
logistics and service infrastructure. Alibaba has strengths that are derived from the loyal client base that it has gathered
over the years. Furthermore the company also has much client exposure. The company should use these strengths in
order to build its future.

Industry Environment Barriers to Entry (Low) High returns results in new entrants, decreases profitability
More new websites try to copy the business model of Alibaba.com Target market to a single industry
finechemical.com textilehome.com Share the special market of Alibaba.com
Buyer Bargaining Power (Medium) •the customers are generally the medium and small-size firms which don’t
have the ability or don’t need to build up their own websites •these firms don’t have too many advantages to fight
for lower cost and nearly all the standards are decided by the Alibaba.com •With the development of B2B websites,
the customers may have the opportunity to choose the other platform and that will also be the opportunity to
negotiate with Alibaba.com for more rights.
Supplier Bargaining Power(limit & stable)  It is not a manufacture firm but an e-service one  The most
important suppliers are the firms supply the advertise for Alibaba.com, such as the famous magazines, newspapers
and websites.  These suppliers are not a union and the price is generally based on the market
Availability of Substitutes(Medium)  Web search engines like google, yahoo, rediff,  self-websites of large
companies.  The customers which prefer to make business with large companies, they will not turn to
Alibaba.com but directly contact with the companies themselves
Competition(Medium)  E-bay, Amazon, Baidu, jd.com, hc360.com  Already established brands  Possess
global identity hence large customer based  Big Players having similar models
Competitive analysis Competitor Market Share(2007) Advantage over Alibaba Global Sources 21.3% • 38 years
of experience in business • 14 online marketplaces in 2007 • Publishes 13 monthly magazines • 9 trade specific
exhibitions Made-in- China.com 14% • Cheaper price • Use of agent system ChinaChemNet 3.8% • Vertical
coverage of Chemical industry HC360.com 9.7% Others 1.4%
Alibaba.com’s value propositions Suppliers Access to active global buyer community Target marketing to
reach buyers Customer service and training Always online Budget certainly through a fixed subscription fee
model Buyers Access to active global supplier community Broad selection of listings Access to high quality,
organized information Easy-to-use interface Convenient, rael-time medium Authentic and trust profiles of
suppliers
Vision  To last 102 years  To be one of the world’s top 10 internet sites  To be an essential partner for all
business people Mission  To make doing business easy Values Customer comes first Customers are everything
Teamwork and Cooperation Team interests are always ahead of individual interests Embrace changes Go beyond
yourself and welcome changes Integrity Honest and upright, honoring commitments Passion Never give up and
stay optimistic
Kelebihan (Stenght)
- Menawarkan kenyamanan bertransaksi dengan Secure Payment yang melindungi konsumen.
- Lokasi di China dengan 560 juta pengguna internet yang online sekitar 20 jam per hari, bisa dibilang china
merupakan pasar terbesar e-commerce di dunia
- Biaya yang lebih murah karena alibaba menawarkan produknya dalam skala besar
- Mempunyai banyak layanan di situsnya dibandingkan website lainnya
Kelemahan (Weakness)
- adanya perbedaan hambatan adanya perbedaan waktu koneksi internet, perbedaan budaya, dan bahasa
- Tidak adanya jaminan tentang kualitas produk yang dikirim.
- Dari segi keanggotaan, Alibaba mempunyai member yang beragam, terjadi sebuah gesekan internal yang sangat
serius antara efek dari pelanggan positif (good customers) dengan pelanggan negatif (poor customers).
Peluang (Opportunities)
- Menciptakan inovasi-inovasi terbaru yang bertujuan menarik costemer baru.
- Selalu mengedepankan kepuasaan castemer.
Threats (Ancaman)
- Banyaknya para pesaing - pesaing yang mulai bermunculan
- Pertannggung jawaban kepuasaan konsumen terhadap barang yang dikirim kurang ( tidak sesuai apa yang
diharapkan.
- Memperbaiki sistem operasional perusahaan.

Scale of the dominance

Founded by former English teacher Jack Ma, Alibaba accounts for about 80 percent of all online retail sales in China. Internet
usage in the Middle Kingdom is continually expanding, and as the largest e-commerce company in the country Alibaba boasts
279 million annual active buyers who place 14.5 billion orders a year. This dominance was achieved through Taobao (C2C),
China’s version of eBay, and Tmall (B2C), another popular shopping destination where major international brands like Nike and
Samsung have online stores.The company also operates Alibaba.com, which connects small businesses around the world with
Chinese suppliers, and it has developed a fast-growing cashless payment system, Alipay, which is a Chinese version of PayPal.
The major strength of Alibaba is that it now offers a wide ecosystem for all participants – consumers, merchants, third-
party service providers and others. It provides services such as: financial products, highly scalable platforms for cloud
computing and data management, and a logistics information platform which provides real-time access to information for both
buyers and sellers.
This vast ecosystem is also supported by a wide selection of products, from televisions, home appliances and food to
cars. This could be developed because Alibaba’s sites are general in nature: anyone can sell anything.
This flexibility, combined with a favorable environment for e-commerce in China where offline competition is relatively weak are
the reasons why the Taobao Marketplace is one of the world’s top 10 most visited websites according to Alexa Ranking, and is
now worth more than Facebook, Amazon or eBay.
Fast track to high valuation
Jack Ma, a former English teacher, founded Alibaba in 1999. From 1999 to 2000, the Alibaba Group raised a total of US$25
million from SoftBank, Goldman Sachs and some other institutions. Then, during the beginning of the Chinese domestic e-
commerce boom in the mid 2000s, Alibaba received a $1billion investment from Yahoo in exchange for 40% of the company.
Years of successful decisions and impressive growth prepared the company for going public in the U.S. Jonathan Lu, a former
CEO of Alibaba, successfully went through the process of initial public offering on the NYSE, which was the largest IPO in
history. Alibaba became one of the most valuable tech companies in the world after raising $25 billion from its U.S. IPO.
The high valuation and resources of the company have opened many possibilities and created many new opportunities which are
described in the words of co-founder and executive chairman Jack Ma:
We want to be bigger than Walmart (…) We hope in 15 years, they’ll say this is a company like Microsoft, like IBM, like Walmart
changed, shaped the world.
Plans for the future
China is moving from an export driven economy to a more Western one that is geared to its local consumers. This creates
many opportunities for Alibaba and chance to further development of relationships between Chinese merchants and consumers
with foreign buyers and sellers.
At the same time, studies of China’s inequality report show that the gap between urban and rural household incomes in
China is large and has increased over time. Alibaba seems to perfectly understand the environment in which it operates, and
already planned cooperation with China Telecom to take advantage of this urban/rural income disparity. Alibaba plans to sell
inexpensive smartphones aimed at boosting mobile commerce in smaller cities and rural areas with its applications pre-installed.
This is an excellent example of Alibaba making use of resources and scale of operations. In the future, the partnerships and
collaboration with companies from different sectors seems to be a natural and promising way to further expansion, by using
Alibaba’s big data analyses to prepare ads to prospective car buyers, offer loans and provide after-sale services.
Political Issues
The understanding of the environment in which Alibaba operates also can be applied to the political issues, because China is a
long way from being a completely free market. The Communist Party runs most major businesses, either through direct control
or by fiat. But the government has had relatively hands-off policy in the e-commerce space, and Alibaba is an excellent example
of innovative entrepreneurship that can count on the government’s kind support. However political favor in China can vanish
overnight because of Communist Party’s dominant role — this can result in a decision to curb the economic and social power of
tech monopolies, or other unfavorable decisions. These political risks may become Alibaba’s biggest financial threat.
The Chinese government already accused e-commerce giant Alibaba of failing to crack down on the sale of counterfeit goods,
bribery and other illegal activities on its sites in a rare public dispute. This can be a double warning sign for Alibaba, that it has
its weaknesses such as “credibility risk” and possible threats, such as operations in only one country.
Skala dominasi
Didirikan oleh mantan guru bahasa Inggris Jack Ma, Alibaba menyumbang sekitar 80 persen dari semua penjualan
ritel online di China. Penggunaan internet di Kerajaan Tengah terus berkembang, dan sebagai perusahaan e-
commerce terbesar di negara itu Alibaba menawarkan 279 juta pembeli aktif tahunan yang menempatkan 14,5
miliar pesanan per tahun.Dominasi ini dicapai melalui Taobao (C2C), eBay versi China, dan Tmall (B2C), tujuan
belanja populer lainnya di mana merek internasional besar seperti Nike dan Samsung memiliki toko online.
Perusahaan ini juga mengoperasikan Alibaba.com, yang menghubungkan bisnis kecil di sekitar dunia dengan para
pemasok Cina, dan telah mengembangkan sistem pembayaran tanpa uang cepat, Alipay, yang merupakan versi Cina
dari PayPal.
Kekuatan utama Alibaba adalah bahwa ia sekarang menawarkan ekosistem yang luas untuk semua peserta -
konsumen, pedagang, penyedia layanan pihak ketiga dan lain-lain. Ini menyediakan layanan seperti: produk
keuangan, platform yang sangat skalabel untuk komputasi awan dan manajemen data, dan platform informasi
logistik yang menyediakan akses real-time ke informasi untuk pembeli dan penjual. Ekosistem yang luas ini juga
didukung oleh berbagai pilihan produk, mulai dari televisi, peralatan rumah tangga dan makanan hingga mobil. Ini
dapat dikembangkan karena situs Alibaba bersifat umum: siapa pun dapat menjual apa pun. Fleksibilitas ini,
dikombinasikan dengan lingkungan yang menguntungkan untuk e-commerce di China di mana persaingan offline
relatif lemah adalah alasan mengapa Taobao Marketplace adalah salah satu dari 10 situs web paling banyak
dikunjungi di dunia menurut Alexa Ranking, dan sekarang bernilai lebih dari Facebook, Amazon atau eBay.
Jalur cepat menuju valuasi tinggi
Jack Ma, mantan guru bahasa Inggris, mendirikan Alibaba pada tahun 1999. Dari tahun 1999 hingga 2000, Alibaba
Group mengumpulkan total US $ 25 juta dari SoftBank, Goldman Sachs dan beberapa institusi lainnya. Kemudian,
selama awal booming e-commerce dalam negeri Cina pada pertengahan 2000-an, Alibaba menerima investasi $ 1
miliar dari Yahoo dengan imbalan 40% dari perusahaan.
Keputusan bertahun-tahun yang sukses dan pertumbuhan yang mengesankan mempersiapkan perusahaan untuk go
public di AS Jonathan Lu, mantan CEO Alibaba, berhasil melewati proses penawaran umum perdana di NYSE, yang
merupakan IPO terbesar dalam sejarah. Alibaba menjadi salah satu perusahaan teknologi paling berharga di dunia
setelah mengumpulkan $ 25 miliar dari IPO A.S.
Valuasi tinggi dan sumber daya perusahaan telah membuka banyak kemungkinan dan menciptakan banyak peluang
baru yang dijelaskan dalam kata-kata pendiri dan ketua eksekutif Jack Ma:
Kami ingin menjadi lebih besar dari Walmart (...) Kami berharap dalam 15 tahun, mereka akan mengatakan ini
adalah perusahaan seperti Microsoft, seperti IBM, seperti Walmart yang berubah, membentuk dunia.
Rencana untuk masa depan
China bergerak dari ekonomi yang didorong ekspor ke ekonomi yang lebih Barat yang diarahkan untuk konsumen
lokalnya. Ini menciptakan banyak kesempatan untuk Alibaba dan kesempatan untuk pengembangan hubungan lebih
lanjut antara pedagang Cina dan konsumen dengan pembeli dan penjual asing.
Pada saat yang sama, studi tentang laporan ketidaksetaraan China menunjukkan bahwa kesenjangan antara
pendapatan rumah tangga perkotaan dan pedesaan di Cina sangat besar dan telah meningkat dari waktu ke waktu.
Alibaba tampaknya sangat memahami lingkungan di mana ia beroperasi, dan sudah merencanakan kerja sama
dengan China Telecom untuk memanfaatkan kesenjangan pendapatan perkotaan / pedesaan ini. Alibaba berencana
untuk menjual smartphone murah yang ditujukan untuk meningkatkan mobile commerce di kota-kota kecil dan
daerah pedesaan dengan aplikasi pra-instal.
Ini adalah contoh bagus dari Alibaba yang menggunakan sumber daya dan skala operasi. Di masa depan, kemitraan
dan kolaborasi dengan perusahaan dari berbagai sektor tampaknya menjadi cara alami dan menjanjikan untuk
ekspansi lebih lanjut, dengan menggunakan analisis data besar Alibaba untuk menyiapkan iklan kepada calon
pembeli mobil, menawarkan pinjaman, dan memberikan layanan purna jual.
Isu-isu politik
Pemahaman tentang lingkungan di mana Alibaba beroperasi juga dapat diterapkan pada masalah-masalah politik,
karena Cina masih jauh dari pasar yang benar-benar bebas. Partai Komunis menjalankan sebagian besar bisnis, baik
melalui kontrol langsung maupun oleh fiat. Tetapi pemerintah memiliki kebijakan yang relatif lepas tangan di ruang
e-commerce, dan Alibaba adalah contoh yang sangat baik dari kewirausahaan inovatif yang dapat mengandalkan
dukungan baik pemerintah. Namun dukungan politik di Tiongkok dapat lenyap dalam semalam karena peran
dominan Partai Komunis - ini dapat menghasilkan keputusan untuk mengekang kekuatan ekonomi dan sosial dari
monopoli teknologi, atau keputusan yang tidak menguntungkan lainnya. Risiko politik ini dapat menjadi ancaman
keuangan terbesar Alibaba.
Pemerintah Cina telah menuduh raksasa e-commerce Alibaba gagal menindak penjualan barang palsu, penyuapan
dan kegiatan ilegal lainnya di situsnya dalam sengketa publik yang langka. Ini bisa menjadi tanda peringatan ganda
untuk Alibaba, bahwa ia memiliki kelemahan seperti "risiko kredibilitas" dan kemungkinan ancaman, seperti operasi
hanya di satu negara.
Overall rising competition – Other entities like Tencent and JD.com are local competitors to Alibaba in China while Amazon
and eBay are the global threats.
Stability of the economy – The stability of the Chinese economy will also play a role in deciding the success of the business.
But since almost all of Alibaba’s business comes from within China, the global markets will have an impact only in dire situations.
Dropping profitability – With rising demand in service levels from E-commerce portals, the profitability of most E-commerce
firms is dropping which is a point of worry for Alibaba as well