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Premium member Presentation Transcript Strategic Management : Strategic Management Analyzing External Environment for E-commerce in China Case study of Alibaba.comE-commerce in China: Doing business through internet has been increasingly gaining popularity. This provides some opportunities as well as threats to the firms already working in this industry and also for the new entrants in this profitable-viewed industry. E-commerce in ChinaDominant Economic Traits In E-Commerce: Good Growth opportunities With only 25.5 percent of the internet users in China being engaged in online shopping and a very low utilization rate of online sales and marketing, China has a tremendous growth opportunity in the E-Commerce field with relevance to its growing economy and globalization. Dominant Economic Traits In E-CommerceDominant Economic Traits In E-Commerce: Government Support To promote online business, the Chinese government has development plans for E-Commerce encouraging SME’s to use third party online platforms. Dominant Economic Traits In E-CommerceDominant Economic Traits In E-Commerce: Small and Medium-sized Enterprises (SME)’s in China SMEs have been a key driving force in booming Chinese economy. The number of SMEs as well as the percentage of them using online platform doing business are expected to increase to new heights. Dominant Economic Traits In E-CommerceDominant Economic Traits In E-Commerce: Commercial Factor The use of credit cards and online banking are crucial to E-commerce. The online security system which ensures the safety of the payment system also determines the level on online trading in the industry. Dominant Economic Traits In E-CommerceKinds of Competitive Forces: Rivalry among existing firms Rivalry would be strong as there are diver firms in the industry, such as eBay, Yahoo, MSN, FNAC, etc. on the global perspective. This industry is growing, and the products that are being sold are not very differentiated. Some of the firms try to differentiate themselves by adding some competitions, blogs & a nice shopping for the customer to make them spend more time at the site. Kinds of Competitive ForcesKinds of Competitive Forces: Threat of new entrants The industry is very attractive. There are no significant barriers to entry in the industry, because perhaps the firms of the industry have adopted a diversification strategy of selling, the products available to the customers are not very differentiated. Kinds of Competitive ForcesKinds of Competitive Forces: Bargaining power of Buyers The bargaining power of the buyers is strong, because it is easy to find other supplier in the industry. They have no loyalty to the brand. They look for cheap & better products. Bargaining power of Suppliers In general it is low, because the products existing in this industry are sold by many firms. Kinds of Competitive ForcesKinds of Competitive Forces: Threats of substitute products or services The threat of substitute product is generally low in this industry, as e-commerce refers to buying and selling goods online, there is less possibility of substitute products. However, online selling by the manufacturer’s themselves could serve as one of the threats for the industry. Kinds of Competitive ForcesFactors That Are Driving Industry Change: The major factors that are driving the Chinese E-Commerce industry are Growing economy Growing number of SMEs Growth in the use of internet for doing business, both domestic and global Technological changes/process innovations Globalization Commercial Factors Factors That Are Driving Industry ChangeMarket Positions of Rivals: Incase of Alibaba.com the competitors in E-commerce industry would be Global Sources Covering 21.2 percent of the total online e-commerce market of China, Global Sources is the chief competitor of Alibaba.com Made-in-China.com and HC360.com These two online business site are also the potential competitors of Aliababa.com doing business in the same industry. Market Positions of RivalsNext Likely Strategic Moves of Rivals: As the industry characteristics is well known to everyone, the next strategic move of the rivals towards growth would be similar to that of Alibaba.com Acquisitions, joint ventures, licensing, alliances, cross-selling etc which are gaining popularity in today’s process of globalization. Next Likely Strategic Moves of RivalsKey Factors for Competitive Success: The key factors for competitive success in this industry would be, User friendly interface Providing an attractive, easy to use website that is simple to navigate and understand is an important factor for e-Commerce success. Making use of the available technologies and some innovations to make the website as informative and as easy to use as possible. Key Factors for Competitive SuccessKey Factors for Competitive Success: Ability to build brand equity Building a brand equity in this industry is quite difficult. As there as lots and lots on internet based trading sites, it makes it difficult to make people aware the available site. But however, once the customer does business through the site, it has to have a very good impression on him. Key Factors for Competitive SuccessKey Factors for Competitive Success: Coverage area Wider the coverage area more are the number of users of the site. Ability to attract various customers from various areas would provide a competence to the firm. Availability of the services a firm provides should be beyond the borders so that it can compete well in the current globalized economy. Key Factors for Competitive SuccessKey Factors for Competitive Success: Attract business-business dealings Out of the models of e-business classified as customer to customer, business to customer and business to business, the firm should focus on the last one. As E-commerce is mainly popular among the SMEs, it would be a competitive advantage if the firm could attract SMEs involved in Business-Business Model. Key Factors for Competitive SuccessKey Factors for Competitive Success: Reliability of potential buyers and sellers As trust is the basis of doing business both online and offline, there should be provision to identify genuine buyers and sellers who actually want to do business. There should be some provisions such as ranking or communication flexibility to promote relationships between the buyers and sellers. Key Factors for Competitive SuccessKey Factors for Competitive Success: Well trained and motivated employees As employees are the key to success or failure of any industry, the employees of the firm must be well trained in there field. The employees should work for the customer satisfaction through excellent service deliverance as well as handling complaints and providing feedbacks tailored with innovations and flexibility in the websites. Key Factors for Competitive SuccessAttractiveness of the Industry: Given the current situation and state of the competition in the Chinese e-commerce market, there exists a good opportunity in the industry. As the industry has a great growth opportunity, the investment in this industry in quite attractive. Attractiveness of the Industry You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.