Organizational Analysis

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Organizational Analysis

Organizational Overview

Alibaba (SEHK:1688) is a China based company specialized in global trading. Jack Ma founded

the company in 1999. Currently, it operates five web-based platforms targeting different market

segments (Gilliard and Hoffman). Alibaba has revolutionized the way brands and businesses

market and sell their products while leveraging on the Internet to interact and reach out to their

customers. Through subsidiaries such as the Cainiao Network and its affiliate Koubei, Alibaba

engages in logistics business. The company has a strategic partnership with Alipay, which is the

leading online payment platform in Asia.

The vision of Alibaba is “We aim to build the future infrastructure of commerce. We

envision that our customers will meet, work and live at Alibaba and that we will be a company

that lasts at least 102 years” while the mission is “To make doing business easy” ( “Case Study –

Alibaba”). To achieve the mission and vision, the company has continued to initiate roll out

innovative platforms such as Alisoft, Ali mama and China Yahoo aimed at making the process of

doing business cheaper and convenient in a global scale.

Furthermore, the board of directors has 11members, with Jack Yun MA as the Executive

Chairman, Daniel Yong Zhang as the CEO and Michael Evans as the president. The board has

five independent directors, two executive board members and four directors (Yip et al. 584). The

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independence allows the board to make sovereign decisions in line with the needs of the

shareholders.

Indeed, Alibaba announced the launch of Alitrip in 2014, with the hopes of tapping into

the benefits of the fast-growing Chinese travel market. Taobao Travel was founded in 2010,

which offered flight tickets, vacation packages, and visa services (Gilliard and Hoffman). In the

same year, Alibaba developed Etao, a hotel master-search engine that enables the travelers to

book hotels. In 2013, Alibaba invested in AutoNavi digital maps platform that allowed location-

related data to enable travelers to search Etao’s hotels and make reservations (Gilliard and

Hoffman). Alibaba also acquired Qyer.com and 117go.com, which provides travel information in

the Chinese language, whereas the latter is a travel journal app. By 2013, Taobao had in excess

of 900, 800 International Air Transport Association (IATA) registered flight ticket dealers, more

than 100,000 hotels, and more than 2.4 million travel products, including the popular travel

websites such as Ctrip and eLong (Yazdanifard and Li 7). In 2014, Alibaba merged all the travel

business subsidiaries into a single brand, Alitrip, to leverage the resources and marketing efforts

from its mainstream business platform, Alibaba. The paper will examine the impact of this

amalgamation and the entrance of Alitrip in the online travel industry on the performance of

Alibaba Group.

Conceptual Issues and Theory Application

The Alibaba Group launched Alitrip in 2014 with the Chinese name “Qua” which meant “Let's

Go.” This was a strategic move since its main competitor was “Qunar” which sounded almost the

same, but meant “Where to go.” Alitrip attracted high attention during the launching when

Alibaba used a slogan “Where to go is not important, what counts is, let’s go!” (Yazdanifard and

Li 7).

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The primary objective of consolidating the different units to “Alitrip” was to devise a

consolidated marketing plan to promote the products and services. Alitrip was supported by

Alibaba’s subsidiaries such as Alipay, which provides a convenient platform for its customers to

pay online (“Case Study: Alibaba”). The marketing team adopted a brilliant idea to drive the

brand, instead of assuring the customers of a cheap ride, Alitrip promised an enjoyable and

“value for money” services. Alitrip also identified holiday market gaps that Taobao had not yet

addressed. Alitrip also aimed at granting the travelers the decision-making process over travel

products and services from the service providers. The primary driver of this strategy was

improving the traveling user experience in the online tourism industry through upgraded mobile

service enhancements and consumer-oriented innovation.

Indeed, Alitrip not only consolidated the domestic and international booking platforms,

but also led the introduction of a wide range of innovative services to the travel industry. Online

travel industries were competing in service channel innovations, market share and hotel products

as the main focal point of novelty (Gilliard and Hoffman). A range of service offerings such as

Alipay and Sina mini blogs complements each other in cross-selling and cultivating perfect

customer relationships. Alibaba endorses all travel partners in its platforms and gives refunds as

well as addressing the customers' issues in real time.

On the mobile offerings, the company has started new services in the travel industry.

Through the “Hotel of the Future” platform, users can book rooms online while “Post Post Day”

program also allows the users with substantial Sesame scores to book hotel rooms without

depositing cash (Gilliard and Hoffman). Indeed, Alitrip brings numerous benefits to its

customers. The platform provides a wide range of travel choices, which is an opportunity for the

travelers to match services that meet their needs. Through this platform, users can book or cancel

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trips using mobile phone apps. The platform also offers unique services with the support from

Alibaba (Gilliard and Hoffman). For suppliers and intermediaries in the travel industry, Alitrip is

invaluable since it gives them an opportunity to leverage Alibaba’s massive user base, brand, and

reputation. The auto Check-In function allows the users to select their seat choices and menu

choices and this platform is unavailable to the majority of its competitors, giving Alitrip a

competitive advantage.

Besides, the amalgamation of various entities to Alitrip leads to the expansion of the

online travel platform. The new outfit was not only serving SMEs but also attracted world's

major airlines around and global travel agents. Alitrip’s discounted products increased the traffic

not only this platform but also the enhanced the customer loyalty which was absent before

amalgamation. The introduction of “Across China” air tickets that had two products, one

package of $800 for ten domestic tickets or $1600 25 tickets for five people, and these products

targeted the business travelers and family holiday markets, which was missing before the

amalgamation (Yazdanifard and Li 7).

Indeed, the formation of Alitrip enabled the travel platform to attract new customers, who

preferred the traditional way of purchasing air tickets. With more than 10, 000 registered

merchants retailing travel products, Alibaba build the confidence of the travelers by setting up a

$16 million consumer protection fund (Yip et al. 585). This was aimed at assuring the travelers

of their refunds. This was possible after the merger since the parent company could not mobilize

such resources for each entity. This has differentiated Alitrip from its competitors and enhanced

its customer loyalty.

Critique and Conclusion

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According to this analysis, the amalgamation of different subsidiaries to a single brand

entity, Alitrip, brought immense value to the users and to the parent company, Alibaba. Alitrip,

unlike Taobao, expanded its product portfolio and capitalized on the market gaps to provide

holiday products, which were absent before. Under the new formation, Alibaba invested funds

aimed at building confidence to its customers by establishing a refund fund, which also increased

the trust and customer loyalty. After this strategic move, Alitrip attracted large international

airlines and travel industry intermediaries who were absent in Taobao.

Resource-driven innovation allows the company to leverage its capabilities and

resources. This can be achieved through a fresh look at how the product line and process can be

restructured to provide unique offerings (Gilliard and Hoffman). Alitrip capitalized on the

Alibaba’s competencies to develop new products through novel customer-segmentation

approaches for travelers and intermediaries. The company extended its synergies to its

subsidiaries through strategic alliances (Yip et al. 586). With the cloud-based platform, Alitrip

increased its involvement in the hotel industry, which was impossible in the early formation.

Customer-oriented innovation enhances the user experiences, and this requires the organizations

to understand the customer needs and values. Restructuring Alitrip from a customer perspective

enabled Alitrip to deliver satisfactory services that meet the customer needs.

Despite these strategic initiatives and new product development, Alitrip is facing high

competition from the international online travel agencies such as Ctrip, corner and the hotel

specialist Elong. In contrast to its competitors who singled out specific markets, Alitrip has

diversified its outreach to different markets. With the extensive infrastructure provided by

Alibaba group and the innovative new products, Alitrip will continue to be competitive in this

industry. The amalgamation of various entities to Alitrip has brought immense benefits to the

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customers through value creation. Through Alitrip, Alibaba has extended its outreach to different

markets and attracted new customers to its platform. This has also continued to strengthen

Alibaba Group brand, both domestically and internationally.

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Works Cited

Case Study -Alibaba. n.d.,

mba.teipir.gr/files/TEI%20Degree/Global%20Business%20Management/6__ALIBABA.

pdf. Accessed 18 Nov. 2017.

Case Study: Alibaba., n.d., classes.soe.ucsc.edu/tim050/Fall12/Slides/CaseStudyAlibaba.pdf.

Accessed 18 Nov. 2017.

Gilliard, Debora, and David Hoffman. Alibaba Group: A Case Study. 2014,

wdsinet.org/Annual_Meetings/2014_Proceedings/papers/paper6.pdf. Accessed 18 Nov.

2017.

Yazdanifard, Rashad, and Merveen Li. "The Review of Alibaba’s Online Business Marketing

Strategies which Navigate them to Present Success." Global Journal of Management and

Business Research, vol. 14, no. 7, 2014, pp. 1-9.

Yip, Amy, et al. "Benefiting from Business Model Innovation: The Case of Alibaba’s Alitrip."

Journal of Economics, Business and Management, vol. 4, no. 10, 2016, pp. 584-588.

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