28 Oct Using an organized seven-step approach in analyzing a case will make the entire process easier and can increase your learning benefits. (THIS IS THE GUIDE, NOT QUESTION) Read the case thor
"WRITE A CASE STUDY, 3 PAGES, AND GUIDE IS BELOW)
Using an organized seven-step approach in analyzing a case will make the entire process easier and can increase your learning benefits. (THIS IS THE GUIDE, NOT QUESTION)
- Read the case thoroughly. To understand fully what is happening in a case, it is necessary to read the case carefully and thoroughly. You may want to read the case rather quickly the first time to get an overview of the industry, the company, the people, and the situation. Read the case again more slowly, making notes as you go.
- Define the central issue. Many cases will involve several issues or problems. Identify the most important problems and separate them from the more trivial issues. After identifying what appears to be a major underlying issue, examine related problems in the functional areas (for example, marketing, finance, personnel, and so on). Functional area problems may help you identify deep-rooted problems that are the responsibility of top management.
- Define the firm's goals. Inconsistencies between a firm's goals and its performance may further highlight the problems discovered in step 2. At the very least, identifying the firm's goals will provide a guide for the remaining analysis.
- Identify the constraints to the problem. The constraints may limit the solutions available to the firm. Typical constraints include limited finances, lack of additional production capacity, personnel limitations, strong competitors, relationships with suppliers and customers, and so on. Constraints have to be considered when suggesting a solution.
- Identify all the relevant alternatives. The list should all the relevant alternatives that could solve the problem(s) that were identified in step 2. Use your creativity in coming up with alternative solutions. Even when solutions are suggested in the case, you may be able to suggest better solutions.
- Select the best alternative. Evaluate each alternative in light of the available information. If you have carefully taken the proceeding five steps, a good solution to the case should be apparent. Resist the temptation to jump to this step early in the case analysis. You will probably miss important facts, misunderstand the problem, or skip what may be the best alternative solution. You will also need to explain the logic you used to choose one alternative and reject the others.
- Develop an implementation plan. The final step in the analysis is to develop a plan for effective implementation of your decision. Lack of an implementation plan even for a very good decision can lead to disaster for a firm and for you. Do not overlook this step. Your professor will surely ask you or someone in the class to explain how to implement the decision.
Runner up Alibaba.com between economic success
and corporate responsibility
Kannika Leelapanyalert, David Beschorner, Kim Nadine
Reckmann and Marie Aslanian (College of Management,
Mahidol University, Thailand)
Free Online Copy This is a free online copy. This work is licensed under the Creative Commons
Attribution-NoDerivs 3.0 Unported License. To view a copy of this license, visit
This case is accompanied by a teaching note, available to faculty only. Please send your request to [email protected] The authors are thankful for any feedback and
suggestions to further develop this case to [email protected]
Copyright © 2015 by the authors. This case was prepared as a basis for class discussion
rather than to illustrate the effective or ineffective handling of an administrative situation.
oikos Case Writing Competition 2016 Corporate Sustainability Track
oikos free case collection http://www.oikos-international.org/cases
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Alibaba.com between economic success and corporate responsibility
The Alibaba Group was one of the biggest and fastest growing businesses in China for about
ten years. Among many other companies under the holding’s umbrella, Alibaba.com had
become the world’s most frequented market place in the Business to Business segment. The
company provided an internet platform for especially small and medium sized companies,
where western demands meet Asian supply.
Although the platform opened the door for many firms to the international markets, there
was room for improvement. Due to the increasing access to information through the World
Wide Web, customers had become more and more sensitive to what is known as corporate
responsibility. Sustainable business models and fair working conditions were more than ever
of huge importance for the customer. In order to respond to this trend, companies on the
demand side had to make sure that their suppliers fulfill not only European standards.
This trend of corporate responsibility recently caused many complaints about the listing and
transparency of the Alibaba platform. On the supply side, suppliers missed a tool for
signaling their working and quality standards to their customers. There was hardly a way to
differentiate from competitors on the webpage. On the demand side companies suffered the
same problem vice versa. There was barely a way for small western companies to control and
check quality and labor issues for their supply chain without long lasting selection and
But not only direct users of Alibaba.com drew the attention to the Alibaba system. Years ago
many NGOs (Non-Governmental Organizations) claimed for more transparency and social
standards on the Alibaba.com homepage.
Jack Ma, the CEO of Alibaba, knew about these problems. However, he also knew that many
firms that once started with poor standards were nowadays great companies with well-known
products all over the world. With a higher entry barrier, these corporations would not have
had the chance to enter the market at all. Developing from a small company with low
standards to a firm with high standards was often a long and time-consuming process.
Triggered by the recent complaints Ma was challenged by several self-imposed questions. Ma
knew that the listing and policy on his platform were deeply connected with those questions
and that there would be no easy solution. Whatever he decided should be the best answer for
all parties: The Company, the customers and society.
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Alibaba.com between economic success and corporate responsibility
On a cold morning in early February 2015 Jack Ma, CEO and founder of Alibaba.com, sat in
his office and was deep in thought as he drank his breakfast coffee. He had just returned from
the World Economic Forum in Davos (World Economic Forum Website, 2015) to his firms’
headquarter in Hangzhou, China (Qing, 2008, p. 48). Ma was still exhausted from the lively
discussions he had had in Davos. Full of new impressions and ideas he taught about how he
could solve the issue that very often came to his mind the last weeks. He knew the challenge
he was facing might change his whole business and even the Worlds’ understanding of and
doing business with China. Ma was aware of the fact, that the different values of all actors
involved in the business of Alibaba.com, had always been a challenge and it was not deniable
that it became more severe to handle. To align Chinese values on the one hand with the
Western principles, but also with the aims of NGO’s on the other hand, seemed to be almost
impossible. Misunderstandings, lacking tolerance and missing respect on all sides
complicated the problem.
Recently managers of Alibaba.com came up with complaints of listed suppliers and were
worried about Alibaba.com’s future. From their point of view, the problem was that Chinese
suppliers with a very good reputation experienced damages due to suppliers who did not
perform as well. As Alibaba offered no system that showed how good a supplier was, it was
difficult for positive evaluated suppliers to send the corresponding signals. Thus, some were
treated with mistrust, whereas they were reliable. Sometimes bad suppliers were chosen over
good ones, which in turn endangered the business of well performing suppliers. As a further
consequence, the satisfaction on the demand side decreased. Especially the challenge to find
suitable, good suppliers with a sustainable approach was discussed very often and evaluated
as nearly impossible. An improvement was wanted and the perceived lack of transparency
should be reduced (Frasch, 2014). For the evaluation of all listed suppliers, NGOs even
demanded the introduction of labels, which should indicate whether a product was
sustainable or not.
Remembering the convention in Davos Jack Ma always thought directly of the discussion
with the Chinese premier Li Keqiang (World Economic Forum Website, 2015). The politician
appealed to Jack to keep in mind that Alibaba.com has the worlds’ attention. Therefore, he
elaborated that Alibaba.com represents the Republic of China and the Chinese values as one
of the most successful Chinese businesses. Consequently, he made clear that it is important to
many politicians that Alibaba.com does not totally adapt to Western principles, but sticks to
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the Chinese way of thinking and operating. This should also be aligned with being
Jack Ma often felt that the Chinese perspective on adapting to western values is
misunderstood. As a BRIC country and with the most inhabitants worldwide, China was
fighting against huge social challenges as for example starvation. Thus adapting to Western
values often was impossible or led to effects opposite to those the adapted value was aimed
at. To Jack Ma the whole discussion was a truly important matter, especially as the conflict
often occurred when China and the Western World did business. To Ma it was extremely
important to contribute his part for finding a way to align the different perspectives without
losing the Chinese norms and values. Nevertheless, how should he find a solution that was
also beneficial to his company? How could he make the different parties understand each
2. History of Alibaba.com
Alibaba.com was a young Chinese company whose history is elaborated in the following, with
a special focus on the company itself, the company’s environment and the competitors.
2.1 Company history
In 1995, Pinyin Ma Yun (Jack Ma), a Chinese 41-years-old English teacher at Hangzhou
University, visited the United States for the first time. During his stay a friend brought him in
contact with the Internet by telling Ma that everything can be found on it. While discovering
this new tool, Ma realized disappointedly that he could hardly find anything about China on
the Internet at all. From his point of view this had to be changed. Therefore, once back at
home, he decided to launch one of the first Chinese websites, a directory of companies, and
named it China Pages. Although this website was a failure, Ma did not hesitate to continue his
project. Thus, four years later Alibaba.com was born. Ma Yun and 17 other partners launched
Alibaba.com in June 1999 in the city of Hangzhou. The founder realized quite early which
were the reasons of Alibaba.com’s success. The following three reasons were named by Ma
for being able to survive: “We had no money, we had no technology and we had no plan”
Jack Ma, as he was called by a Western friend and which he chose as his name accordingly,
had an unusual personality. First, he was not the traditional technology CEO. He came from a
quite poor family and had never been brilliant at school. Although he was interested in
understanding foreigners and their culture by learning English, he never excelled as a student
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and failed the college entrance exam twice. He finally became an English teacher at a local
university earning only $12 a month. However, Alibaba’s success could not have developed
without the lively and vivid character Jack was, therefore being called “Crazy Jack”. He was a
captivating speaker with an animating manner of speaking. As he said in “Alibaba” – a book
written in 2009 by Shiying and Avery: "I was never afraid of opponents who were bigger
than I". Jack Ma perfectly knew how to motivate his employees providing them a funny,
productive and familiar atmosphere at the company. Porter Erisman, an early Alibaba
employee, said it was like a close-knit family. Since the beginning, “Ma motivated the team by
creating an ethos of being a scrappy little company ready to take on giants” (D’Onfro, 2014).
Also Jack Ma knew that his dedication was to help to fulfill the needs of Chinese citizens. His
aim was to align this with the benefits of his company.
Ma found several ways for motivating his people and giving vision to his staff. In one of his
letters, Jack Ma said to his employees: "We know well we have not survived because our
strategies are farsighted and brilliant, or because our execution is perfect, but because for 15
years we have persevered in our mission of 'making it easier to do business across the world,'
because we have insisted on a 'customer first' value system, because we have persisted in
believing in the future, and because we have insisted that normal people can do extraordinary
things." (D’Onfro, 2014).
Between 1999 and 2000, the company raised $25 million from Goldman Sachs, Softbank
Corporation and other institutions and wrote a pure success story. The vision of Ma was to
create a global company with local win. He chose the name “Alibaba” because everyone in the
world was able to understand it and since it referred to the notions of openness, kindness and
business. The company was born to be global, but since the beginning focused on helping
small and medium sized Chinese companies to survive by giving them a mean to make money
especially by enabling them to reach their customers online. The founders’ idea was simple
and could be summarized by “click and get it”. Contrary to other Chinese Internet-business
founders, Ma did not try to copy the U.S. model but was innovative. He decided to adapt his
strategy to the Chinese market and its specific needs. His self-imposed vision and mission
was to build an e-commerce ecosystem that was profitable for both buyers and sellers.
In 2002, Ma realized that although Alibaba.com had a lot of listed members, most actually
did not pay anything. However, he knew that this was not a profitable business model. Profit
was realized for the first time in 2002, as he imagined how Chinese suppliers could reach US
buyers online. At this time, Ma decided to hire foreign experts in order to help the company
to become a global player. At that point of Alibaba.com´s lifecycle the actual vice president,
Porter Erisman, came in. According to him, Chinese people in general had very little
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experience in management. He thought that the success of Alibaba.com came from the fact
that since the beginning the aim was to connect importers and exporters from all over the
world. “It was the first global Internet Company emerging from China” (Walraven, 2009).
Nevertheless, he was convinced that in order to succeed internationally, Alibaba first needed
to prosper in China. The company could not have survived without the domestic sale.
In 2015 Alibaba.com was the world’s first platform for wholesale trade and was highly
profitable. The aim of Alibaba.com was to give buyers from all over the world the widest
variety of options in choosing their products through a web platform. In order to do so,
buyers were connected with a large amount of international suppliers. Alibaba.com made
both supplier’s and buyer’s lives easier since it enabled them to come in touch with each
other, which in turn allowed the involved actors to do business across borders. As a company,
Alibaba.com could be used to find all needed products in over 40 different categories ranging
from electronics to textiles to agriculture and food. This was unique, as almost everything
could be purchased via Alibaba.com. The business model to develop an e-commerce
platform, which connects Chinese suppliers with customers from all over the world, was an
invention itself. Alibaba.com was one of the biggest and the earliest e-commerce platform for
wholesalers. Unique was especially, that every supplier could be listed no matter where it was
headquartered. Thus even small suppliers from rural areas where able to participate in the
global market due to diminishing small communication costs. Additionally, Alibaba.com
could be seen as a kind of “Gateway to China”, connecting the Western World rapidly and
cheaply with the Chinese industry.
Alibaba.com belonged to the Alibaba Group as far as 72% (Alibaba Group website, 2015). In
general, the Alibaba Group hold several different Internet-based businesses. Alibaba.com was
the first company of the group and, as previously elaborated, it was focused only on business-
to-business. The second business which was created was Taobao in 2003. In 2015, it was the
first online shopping marketplace for Chinese private individuals and the main rival of eBay.
Later, Alimama, an advertising exchange platform, and Alipay, a Chinese leading online
payment service, were launched, followed by several other Internet-businesses. Although this
case is focused on Alibaba.com it is necessary to keep in mind that the growth of the company
over the time was not only due to its unique businesses, but also to a multitude of interrelated
2.2 Market and Industry environment
E-commerce – or Electronic Business – is a way of trading by using computing networks such
as the Internet (Springer Gabler Verlag). It is the process of selling and purchasing goods or
services over the Internet by using for example secure connections and electronic payment
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services. It became possible in 1991 when the Internet was opened to commercial use. At the
beginning of 2002, Business-to-Business, the largest form of e-commerce, had aroused
around $700 billion in transactions. By the end of 2007, E-commerce sales counted for 3.5%
of total sales in the world (Ecommerce-Land, 2001).
Both online buyers and sellers achieved advantages in doing e-commerce, especially at
Alibaba.com. On the one hand, consumers had a large database of products and services and
they could compare prices easily in order to obtain the best one. On the other hand, online
vendors got a cheaper way to be selected by their customers. Even the smallest brands could
reach global markets. Moreover, web technology enabled to track customer preferences and
to deliver individually tailored marketing (investorwords.com, 2015).
It was expected that in the future e-commerce would confirm itself as a major tool of global
trade. E-shopping should become more and more popular and commonly used at work
although not used privately. In 2015, competition between the several websites became
severe and experts assumed that the developments would lead to an enormous growth of
Internet sales in the 21st century. Since the Internet excluded geographical factor, the location
of the stores did not matter anymore. However, the online sellers became competitive by
adapting themselves quickly to the new environment. They had to pay attention to e-
marketing details and used modern technologies to improve their website design and
presentation in order to make their platform user-friendly and to stay competitive in the
world of E-commerce.
Chinese market: a new huge market for e-commerce industry
During the 2000’s, China and the Chinese life underwent various changes. Since its adhesion
to WTO in December 2001, China moved on to modernize step by step (World Trade
Organization, 2015). Consequently, the total volume export of China was growing extremely.
China started to be seen as the manufacturer of the world, and an increasing number of low-
cost suppliers was entering the marketplace. As around 2000 the Internet just started to
become significant in China, Alibaba.com could not have been created at a better time than in
1999. Just in time, as the Chinese people were able to realize that it was worth opening
themselves to the world, Alibaba.com appeared. International trade was increasing, China
was opening its borders, the Internet was growing and more and more people got Internet
As Alibaba.com put in evidence on their website, “to understand Alibaba, one must
understand how China is changing”. With the turn of the millennium, e-commerce became a
way of life for China’s aspirational middle class. Indeed, in 2013 China overtook the United
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States in becoming the first e-commerce market (in 2015, $672b in China VS $349b in the
US) and the biggest e-commerce provider in the world (Alibaba Group Website, 2015).
However, as the case focusses on Alibaba.com, which is B2B focussed, it is necessary to
explain E-commerce in the B2B sector in the following:
B2B form of e-commerce
Three architectural models of B2B commerce exist:
– Supplier oriented marketplace: the supplier provides marketplace (e-store) to his
– Buyer oriented marketplace: the buyer has his own marketplace (e-market). He
invites suppliers to bid in product’s catalogue.
– Intermediary oriented marketplace: an intermediary company runs a marketplace
where business buyers and sellers can interact and transact with each other (Beynon-
Davies, 2013, S. 250ff.).
Alibaba.com could be defined as being an intermediary oriented marketplace because of the
fact that the buyers and the sellers had been directly interconnected since the first step of the
As a matter of fact, business customers had a different approach than individual consumers.
Their purchasing decisions were described as being cooler, harder and more logical than
individual consumers’ decisions. The act of purchasing could not be an impulse buy but was a
very careful decision because it concerned the whole company. Purchasers always had
supervisors, who should not be deceived.
A B-to-B commerce website had to focus on providing as much useful information and
customer service as possible in a short time frame in order to make the purchase decision
easier (Beynon-Davies, 2013).
Regional developments of China
Because of the fact that the coastal areas of China offered a unique transportation system, the
economic development in those regions was way more rapid than in inner of China. However,
the National Bureau of Statistics of China reported that the number of firms in rural areas
was increasing. For example, the number of enterprises grew by nearly 28 percent from 2012
to 2015 (National Bureau of Statistics, 2015). The report “A new era for manufacturing in
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China” published by McKinsey in 2013 discussed the fact that especially suppliers, who
manufactured fast-moving consumer goods were increasingly producing in smaller
enterprises. Those were often not located in the big cities as e.g. Beijing or Shanghai (Eloot,
K., Huang, A. & Lehnich, M. (2013), but in rural areas. Thus, the total number of companies
across less developed ranges of China increased. Especially firms in rural areas were
challenged by how to get into contract with potential clients and especially with customers
from the other end of the world? Alibaba.com offered a unique business model helping to
solve that problem by offering a platform, which connected Chinese suppliers with clients
from all over the world easily and fast. To Jack Ma it was especially important not only to
offer the platform, but also to support new listed firms by entering e-commerce. Also firms
located in wealthier and a lot more central regions welcomed Alibaba.com as an efficient way
to do business.
The two world-known American companies eBay and Amazon were the first to start selling
products over the Internet respectively in 1994 and 1995. Although Alibaba.com entered the
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