ALIBABA’STAOBAO

1KEYISSUEThe company wants to find the best way to monetize their business model without losing

large market share they have achieved in these years of operation.

2 ExternalAnalysis

P E S T•Communist regime

•Business Tax: between 3% - 20% depending on the business (Real Estate, sports, Telecommunications Services, etc..)

•Customs duties between 10% - 20%

•Second superpower as nominal GDP

•Is believed to overtake USA in 2016.

•Depends heavily on exports.

•Country with the highest

economic growth

•Economic growth: China will slow even more in 2012.

•Population: 1338.3 million inhabitants by 2012.

•Owns 50% rural and 50% Urban approximately.

•513 million Internet users by 2012.

•Internet users in China will reach 50% of the population in 2015 (670 million).

•The revenues of the industry from

Internet will grow 25% annually projected 2012.

•70% of internet users purchased by

internet

•Technological growth: 41.8%

•Growth of 50% per year in cyber sales.

HIGHThreats of new competitors

HIGHBargaining power of suppliers

LOWRivalry among existing competitors

HIGHThreat of products and substitute services

HIGH

PORTER’S5MODEL

Bargaining power of customers

5PORTER’SMODEL

WEIGHT RATE VALUE

Threat of substitute products and services 40% 3 1.2

Threats of new entrants 25% 2 0.5

Bargaining power of customers 15% 4 0.6Bargaining power of suppliers 15% 4 0.6

Rivalry among existing competitors 5% 5 0.25

AVERAGE 3.15

High Quality

Low Cost

PerceptualMap

High Cost

Low Quality

COSTS - QUALITY

High Income

LowMarketShare

PerceptualMap

HighMarketShare

Low Income

MARKET SHARE - REVENUE

High Security

LowCost

PerceptualMap

HighCost

Low Security

SAFETY – COST

OPPORTUNITIES•50% annual growth in cyber sales

•Internet users in China will reach 50% of the population by 2015.

•Revenues from the Internet industry will grow 25% annually projected 2012.

•70% of internet users purchased by internet

•World's largest population

•Fastest growing and emerging economy in recent years

•Priority of the Government to promote and encourage technology

THREATS•Low barriers to entry for new competitors

•No custom fee payment

3 INTERNALANALISIS

· Mktg y Vtas: mas omenos porque en areamktg se dan a conocerbien como marca, peroen ventas al no tenerganancias estan mal.· Servicios: no es 5 porquehay insatifiscacion enservicio, según tablascaso.

SUPPLY

TECHNOLOGICAL DEVELOPMENT

HUMAN RESOURCES

ENTERPRISE INFRASTRUCTURE

--

54

VALUECHAIN5

INTERNAL LOGISTICS

5

OPERATIONS

5

EXTERNALLOGISTICS

5

MARKETINGS

ERVICESAND SALES

2 4

VALUECHAIN WEIGHT RATE VALUE

Supply 0% - 0

Technological Development 20% 5 1

Human Resources 5% 4 0.2Infrastructure 5% 5 0.25Internal Logistics 25% 5 1.25Operations 15% 5 0.75

External Logistics 5% 5 0.25

Marketing and Sales 10% 2 0.2Services 15% 4 0.6

AVERAGE 4.5

STRENGTHS•The second largest Chinese Retailer.

•Full understanding of Chinese culture and economic behavior.

•Own 84% of market share.

•More than 55 million registered users.

WEAKNESSES•Not generating large revenues with the current business model.

•Sale Alipay payment service (competitive advantage).

BENCHMARKINGSatisfaction Percent

TAOBAO EBAY

Very Satisfied 24.3 10.9

Satisfied 52.2 51.5

More or Less Satisfied 21.4 31.3

Not Satisfied 2.1 6.3

Market Share of Companies responsible for C2C

2002 2003 2004 2005 2006 2007

Taobao 7.8 29 59 65 84

Ebay 85 72.4 65 36 26 7

PaiPai 4 9

Others 15 19.8 6 5 5 0

MATRICES

BCGMATRIX

SHARE MARKET PERCENTAGE

IND

US

TR

Y G

RO

WT

H

COMPETITIVENESSLow

SelectiveDevelopment

Divest

Medium High

Invest

Protect

LowProfile

GEMATRIX

AT

TR

AC

TIV

EN

ES

S

Low

Med

ium

Hig

h

PRODUCT

ANSOFFMATRI

X

Existing

MarketPenetration

MarketDevelopment

New

ProductDevelopment

Diversification

Exis

ting

New

MA

RK

ET

4 STRATEGICALTERNATIVES

Vision

Being number one in e-commerce in each country of the Asian continent.

Mission

Provide a secure e-commerce service and quality, which understands the culture and local needs.

OBJECTIVES

SHORT TERM 1 YEAR

Develop a business model that has higher marginsProfitability (15% annually)

Begin to raise awareness of payment (Measured by number transactions)Increase market size by 12%.

MEDIUM TERM 3 YEARS

Start expansion to India and Japan, and their similar cultures with highly developed online medium.

LONG TERM 5 YEARS

Consolidate presence in neighboring countries mentioned above.Possessing the largest share of e-commerce in Asia (51% of the total market).

UPPSALARISK

CONTRACTUAL LICENSING

TIME

5 IMPLEMENTATION

PRODUCT

E-commerce service that deliversSearch space and offer Products Or Services in Chinese market.

PRICE

The price is charged differently according to two segments:

•Small purchases (C2C): It charged 2% of the total sales, charging 1% to Seller and 1% to the buyer.

•Big Purchases (B2C): It charged a 3% of the total sales, To the whole seller.

COMPANY REVENUES : $ 3,762,774,612,000

PLACE

Website:

www.taobabo.com

PROMOTION

•Banners that highlight benefits of using the payment throughsafe "Alipay”.

• Advertising on the busiest China streets.

•Presence in newspapers and magazines where it is specified to educate Consumers about the new System.

•TV commercials explaining the new system, Payment and insurance benefits.

4 P`S

COUNTRY OFORIGIN EFFECT

Emphasize that our company is China,so we understand the needs, demands and so same tastes, different consumers of our nation.

http://www.prensa.com/uhora/tecnologia/usuarios-de-internet-en-china-llegaran-800-millones-en-2015/89920

http://www.geekets.com/2012/04/consumidores-online-china-superan-europeos/

http://datos.bancomundial.org/pais/china#cp_prop

http://www.doingbusiness.org/data/exploreeconomies/china#paying-taxes

http://portal.lacaixa.es/deployedfiles/particulars/Estaticos/PDFs/InfolineaAbierta/El_regimen_impositivo_en_China_es.pdf

http://www.laprensagrafica.com/el-salvador/lodeldia/252046-china-reduce-su-prevision-de-crecimiento-y-cambiara-su-modelo-de-desarrollo.html

http://www.eco-finanzas.com/noticias/Eco-Finanzas/201203/China-reduce-proyecciones-de-crecimiento-para-el-2012.html

ALIBABA’STAOBAO