Alibaba Case

Considering the case study, I believe that the level of competition among Alibaba’s business units is appropriate. First, by analyzing the services provided by the different subsidiaries of Alibaba, we find that each business caters to a unique requirement of the customer population. As the article Strategies for Managing Internal Competition suggests that it the ultimate goal of a business to look for ways to integrate, however a business should also be ready to accept coexistence as a possible outcome. For example, from a long term perspective Alibaba.com has already achieved a significant share of the Chinese market and hence would benefit from a global strategy as it aspires to compete in the international landscape. However, Taobao still has tremendous potential in China, as indicated by the growth in Chinese internet penetration (28.4 % in 2009 versus 4.6% in 2002) and therefore would benefit from a China focused strategy. Even though some of Alibaba’s subsidiaries might have a potential for cooperation, it is also worth noting that businesses such as Alimama and Yahoo China have very little in common with each other.

Second, the business units have featured the ability to quickly grow in a decentralized environment. This is illustrated when Jack Ma separated Alipay from Taobao, making it an independent business unit. The result exposed Alipay to a limitless number of opportunities beyond Taobao and Alipay ended up capturing 50% of China’s online payment transactions, making it China’s leading online payment business. As the article Strategies for Managing Internal Competition states market and technological uncertainty should favor a coexistence strategy. This sentiment is also shared by Alibaba’s CFO Joseph Tsai, who said that Alibaba foregoes forced synergies to quickly pursue subsidiary opportunities to better handle its competition. Finally, the ability to grow with decentralized model, Alibaba finds the benefit of internal competition far outweighs...