1. Company Overview
Alibaba Group Limited is a Chinese e-commerce corporation that provides online sale services that allows businesses to reach a wide variety of customers as well as businesses. In addition, the company also offers electronic payment services, an online shopping website which is similar to eBay and data-centric cloud computing services.
a. History
Alibaba Group Limited was established by 18 founders, led by Jack Ma, a former English teacher in Hangzhou, China, in 1999 (History and Milestones. (n.d.)). When they launched their first website, English-language Alibaba.com (a global wholesale marketplace), it was believed that internet would be helpful by enabling small businesses to innovate and allow technology to grow and compete more effectively among economies on a domestic and global scale (History and Milestones. (n.d.)). The release of its website allowed small Chinese exporters, manufacturers and entrepreneurs to reach the international market. Between the year 1999 and 2000, the company made 25 million dollars from a consortium of investors such as Softbank, Goldman Sachs, and Fidelity.In October of 1999 Alibaba made 5 million dollars (Alibaba Group Holding Limited. (2016)). In December 2001, Alibaba.com, exceeded 1 million unique users. (History and Milestones. (n.d.)). After that success, the online payment named Alipay, was launched, and until 2005 that the website made available to all businesses and individuals in China. In 2007, an initial public offering of Alibaba.com was completed, listing itself on the Main Board of the Hong Kong Stock Exchange (History and Milestones. (n.d.)). In the year of 2008, Alibaba Group R&D Institute was founded, and the combination of two fastest growing businesses, Taobao and Alimama, took place (Alibaba Group Holding Limited. (2016)). After 3 years, three separate companies, Taobao Marketplace, Tmall.com and eTao, which originated from Taobao in order to obtain the Chinese consumer e-commerce opportunities (Alibaba Group Holding Limited. (2016)). In September 2014, the company went public on the New York Stock Exchange which remarked as the biggest IPO in history (The New York Stock Exchange. (n.d.)). As in 2016, Alibaba opened four new data centers in the Middle East, Europe, Australia and Japan and became the largest retail market in the world (History and Milestones. (n.d.))
b. Main business lines and main markets
There are a number of platforms offered by Alibaba to allow third parties to sell their products such as Alibaba.com, 1688.com and AliExpress. Alibaba.com is the most well-known marketplace offered by the company that operates in a globally. In addition to the e-commerce websites, Alibaba owns Taobao Marketplace, China’s largest online shopping destination, and Tmall which is the largest third-party platform for businesses to market their products online (Puneet Sikka. (n.d)). These three main sites have hundreds of millions of users, and host millions of merchants and businesses. This makes Alibaba become the company that handles more business than any other e-commerce company (What is Alibaba? (n.d.))
Being Asia’s number 1 company and the world’s largest e-commerce platform, the company services are mainly used by people from Asian countries, specifically China and Hong Kong.
c. Ownership structure and governance
In the board of directors, Jack Yun Ma is the executive chairman and the position of executive vice chairman belongs to Joseph C. TSAI (Leadership. (n.d.)). Additionally, there are four directors and five independent directors that oversee the company operation.
d. Financial condition
In general, Alibaba Group Limited has been doing well financially. There is an increase of total revenue from 52.5 Rmb billions in the end of March 2014 to 101.1 Rmb billions in the year of 2016 (Financials and Metrics. (n.d.)). Subsequently, between 2014 and 2016, the number of active buyers grew by 168 million, reaching 423 million by the end of March. Therefore, it can be seen that Alibaba is operating their business successfully.
2. Hofstede’ work
To start with, China, which scores 80 on IDX, ranks higher than Canada by 41 points. This highlights the fact that the society views inequalities among people as a normal thing and the subordinate-superior relationship tends to be polarized which leaves no space for defense against power abuse. Rigid hierarchy with formal authority influence individuals, and they believe in the capacity to lead and control of their own leaders. It is a society in which people are expected to stay at exactly where they are placed. In contrast, Canadian culture believe that everyone should receive equal rights and be treated equally. Similar to countries that score low on this aspect, Canadians build their hierarchy for convenience. Managers are approachable, and are expected to consult and exchange information with their staff members as they work as a team. Straightforward exchange of information is also preferred. In terms of individualism (IDV), Canadian culture is considered as an individualist one in which people look after themselves and their immediate families. For that reason, self-reliance and initiatives are vital in the workforce. Hiring and promotion decisions are primarily based on one’s merit and competence. On the other hand, scoring very low on this dimension, it can be said that China is a highly collectivist culture where people focus on group interest rather than self-interest. Hiring and promotion decisions can be based on how close an individual is to the superior which shows that closer in-groups are likely to receive preferential treatment. Both China and Canada can be characterized as a “masculine” society as they scores 66 and 52 on the masculinity scale, respectively. Both are success oriented and driven. However, while Canadians work as hard as they can to perform well in any field and to have a work-life balance to pursue personal leisure, Chinese are willing to give up their families and leisure time to work. A significant example is migrated workers who leave their hometown to move somewhere far with a hope of getting a better job. Additionally, both Canadians and Chinese are willing to accept and adapt to new ideas and innovative products. Canadians allows and accepts the freedom of expression while the Chinese are comfortable with ambiguity. With the high score of 87 on Time orientation, China is a pragmatic culture in which people believe that truth depends on different aspects such as the situation, context and time. Canada, however, only scores 36 which marks it as a normative society in which the absolute truth is important and they are focused on the short term. The last dimension to be considered is the extent to which people try to control their desires and impulses, based on the way they were raised. While Canadians place importance on leisure time, act as they please and spend money as they wish, Chinese do not emphasize the need of leisure time but control the gratification of their desires instead. Social norms are what restrain them from acting as they want, and allowing themselves to enjoy life is wrong to some extent (Hofstede Insights. (n.d.))
3. Managerial theory
Every company possesses one unique management approach, whether it resembles the classical approaches in which they share a common assumption that people at work act in a rational manner that mainly driven by economic concerns; or it emphasizes the human resource approaches which focuses more on the human side of the workplace (Schermerhorn & Wright, 2014). At Alibaba, the “Organizations as communities” approach by Mary Parker Follett (Schermerhorn & Wright, 2014) is incorporated in its management practice. According to Follett, she views organizations as “communities” in which employers and employees work together in harmony without the superior dominating the subordinates, and with the freedom of expression and the effort to resolve conflicts and differences (Schermerhorn & Wright, 2014). Moreover, Theory Y (Schermerhorn & Wright, 2014) can also be considered in Jack Ma’s leadership as he believes in the ability to make decisions and run the company of his ground-level managers; the readiness and willingness to work of his employees; and that they are self-directed and willing to accept responsibility. This means that he empowers other managers which essentially helps them become more motivated and more self-directed. “Empowered employees take personal pride in their work and responsibility for doing a good job. As a result, organizations reap the benefits of empowered employees by delivering high quality products and services” (The Benefits of Empowering Employees. (n.d.)). Ma has built a culture of participation, fun and inclusion in which he shows his high energetic personality, and is outspoken, fun loving and charming. He also participates in many company’s events, and is famous for enthusiastically singing karaoke with his employees, holding company retreats for fun and dressing in bizarre outfits (Zakkour, M. (2014, September 29)). This creates an atmosphere in which Alibaba employees look up to him not only as a manager but also as a combination of father figure, inspirational guru and band leader. Consequently, he creates a workforce of a loyal, supportive and hardworking group of executives, managers and employees. Thus, it seems that Alibaba Group’s management approach also consists the human relations movement, suggesting that the managers who improve human relations would achieve productivity (Schermerhorn & Wright, 2014). Unlike Canadian companies, Jack Ma incorporates the elements of Confucianism, Buddhism and Western principles so as to keep the value of a Chinese company while working and expanding the company in a global scale (Art Of Modern Oriental Management: Applying The Chinese, Japanese And Korean Management Styles At Work. (n.d.)).
4. Planning practices
Good planning practices is one of the primary contribution to the success of every company. Similarly, Alibaba Group always has a clear plan of what it wants to achieve and how it can do that. In general, short-range plans of Alibaba are to manage the domestic market which is China effectively, and improve their different services; long-range plans consist of building the future infrastructure of commerce (Company Overview. (n.d.)), the expansion of their services to India, Australia and New Zealand (Sen, S. (2017, February 04)), and the hope “to serve 2 billion consumers around the world, empower 10 million profitable businesses and create 100 million jobs” in the next 20 years (Team, T. (2016, October 13)). In order to achieve the long-range plans, strategic plans are vital to Alibaba Group. For example, to build the future infrastructure of commerce, the company put effort in developing its mobile app, Qianniu, to help merchants run their businesses more efficiently (Team, T. (2016, October 13)). Alipay is also being upgraded regularly to meet the international security standard so that it can be used by customers and merchants from around the world. This definitely serves the company’s purpose of expanding globally. Operational plans are also very important as they are activities to implement strategic plans (Schermerhorn & Wright, 2014). Alibaba can have a set of a policy that protects their users from internet scam or a rule that restricts any scam or fraud activities. By doing this, the company would attract more users, especially ones outside China. With various branches that offer different services, tactical plans (Schermerhorn & Wright, 2014) are always necessary for Alibaba. Moreover, to avoid further failure, it is expected that Alibaba always has contingency and scenario planning (Schermerhorn & Wright, 2014). In case something goes wrong, the managers would know how to respond to it. Especially, benchmarking (Schermerhorn & Wright, 2014) is the most common tool that Alibaba uses to plan for their future improvements. For example, while Amazon plans to open physical stores and Walmart wants to strengthen their online shopping services, Alibaba focuses on developing its cloud computing and payment services so that it allows people to do business anywhere. Additionally, another giant player in e-commerce in China named JD is competing with Alibaba, especially in providing luxury products. “They both offer differing levels of partnership deals to international brands. Alibaba allows brands to launch official flagship stores on the site from which they can self-run their businesses. While JD.com also has flagship stores.” (Pan, Y. (2017, August 21)). Providing similar services as Alibaba Group, it is expected that Amazon and Amazon Canada have similar planning practices.
5. The approach to organizing
Alibaba has a flattened hierarchy in which there are a few to no levels of intervening management between staff and managers (Trends in Organization. (n.d.)). By possessing this organizational structure, workers are empowered to get involved in decision-making process which would help them to be more productive, creative and self-directed. The significant example of this is that employees in the company can always report on problematic products or dispute unsatisfying work evaluation results through the company’s internal communications platform, Alipay (Shao, H. (2014, May 16)). Similar to other companies, the formal structure (Schermerhorn & Wright, 2014) includes the executive chairman, the executive vice chairman, chief executive officer, and other chief officers of different departments or branches of the company. The company also operates in a functional structure (Schermerhorn & Wright, 2014). The informal structure (Schermerhorn & Wright, 2014) is depicted through the relationship between Jack Ma and Simon Xie, a co-founder and vice president who owns many entities that hold the operating licenses to various websites that are important to Alibaba’s business (McGregor, J. (2014, September 18)). Although, Xie is not a member of the Alibaba partnership which manages the company, he is still one of Ma’s most trusted business partner (McGregor, J. (2014, September 18)). The mass wedding held by Alibaba for 102 couples, who are the company’s employees (Shao, H. (2014, May 16)), is another example of how significant and strong the informal structure within company is. Operating various businesses such as taobao.com, Alibaba Digital Media & Entertainment Group, Alibaba Cloud, it likely operates in a divisional structure; each business needs a manager who expertises in its particular area or services, with workers with specific skills that can support its operation.
6. Leadership style and communication
One of the main reasons that contribute to Alibaba’s outstanding success is their implementation of a good combination of different leadership styles. This is the key to the success or failure of a company. In the case of Alibaba, Jack Ma experimented with a number of leadership styles while building his own empire in order to find the one that best fits the company. Another reason for Ma to incorporate many styles to lead his business is because every stage of its growth would require different management approach. Being born and raised in China, the founder of Alibaba is familiar with the concept of autocratic style (Schermerhorn & Wright, 2014). Although Alibaba was first founded and launched by a group of 18 people, Jack Ma was the captain and had to take an autocratic position. Moreover, he was the only man that knew internet existed in his small province so he had to prove its existence to his family and friends, and that there was a potential in his new business (Jo Ee, C. T., & Yazdanifard, R. (n.d.)). Thus, Jack Ma had to come up and carry out his own plans which essentially made him become the executive decision maker for his company. However, when the company started to prosper, it attracted more qualified workers who could offer new ideas and provide expertise to the company. In the autocratic style, the decisions are mainly made by the top managers which limits the employees’ participation in decision-making process, then results in a high rate of absenteeism or even of turnover. Therefore, Jack Ma knew that he needed to adopt another management style which allowed people not only work for him, but with him as well. Running the company in a global scale with a lot of creative executives and employees, Jack Ma demonstrates a democratic leadership style (Schermerhorn & Wright, 2014). In this leadership style, the manager is committed to both task and people, putting effort to achieve objectives while sharing information, encouraging participation in decision-making, and helping others develop their skills (Schermerhorn & Wright, 2014). Although he has stepped down as an executive chairman, Ma states that he would still focus on strategic issues under the guidance of their board of directors, and he would assist the CEO in developing the culture and talent, and helping their team to strengthen their social responsibility efforts (Hille, K. (2013, January 15)). Interestingly, Ma’s letter to shareholder also states that customers would be put first, employees second, and shareholders third (McGregor, J. (2014, September 18)), which shows that he is a leader with a democratic style, emphasizing the importance of both tasks and his people. The founder wants the company to always offer the first and foremost valuable things to the customers while ensuring that they have happy, talented and focused employees to contribute to their work (McGregor, J. (2014, September 18)). On the other hand, the CEO of Amazon, Jeff Bezos, places a great focus on his customer instead of both customers and employees. Surprisingly, there are numerous complaints from Amazon workers about work conditions (Edwards, J. (2013, August 05)) and even said that workers constantly cry at their workplace (Johnston, I. (2015, August 16)). Apart from being a democratic leader, Ma also uses different sources of power such as coercive power and referent power (Schermerhorn & Wright, 2014). As 2013, when the company launched its new messaging app called Laiwang, Jack Ma threatened to take away bonus from staff who failed to promote it (Li, A. (2013, October 22)). This is an example of him demonstrating the ability to influence his workers through punishment. Similarly, by 1999, 500 Amazon employees were expected to answer twelve emails per minute, and could be fired if the number dropped below 7 (Blazek, K. (2016, November 29)). Jack Ma also knows how to take the advantage of his referent power (Schermerhorn & Wright, 2014). He incorporates the “Management-By-Walking-Around style” (Tucker, A. L., & Singer, S. J. (2013, September 4)) in which the senior manager observes frontline workers, seek for ideas about improvement opportunities, and work with staff to resolve the issues (Tucker, A. L., & Singer, S. J. (2013, September 4)). This style does not only make him a proactive listener but also improves his communication and informal relationships with his employees. This makes Ma admirable and people want to identify positively with him. Communication within the company is transparent. All Alibaba employees can always report on problematic products or dispute unsatisfying work evaluation results, regardless of their positions, through the company’s internal communications platform, Alipay (Shao, H. (2014, May 16)). Interestingly, managers and employees are asked to set nicknames on it in order to minimize the sense of structure and superiority (Shao, H. (2014, May 16)).
7. Control in the company
Controlling is the vital action for companies to keep track of their performance to ensure that they are going on the right path to achieve their objectives. Control in Alibaba group is likely to be distinguished from other e-commerce companies such as Amazon that operates in Canada. This is because the culture of each country is very unique, requiring different approaches on controlling the company. Feedforward control in Alibaba group might not be used as much as Amazon because Chinese workers are likely to be more comfortable with ambiguity. It is like that they would adjust directions and resources as they continue to work. In terms of applying concurrent control, Amazon seems not to be fond of this. For example, it does not respond immediately respond to PR damage control but endures it instead; the larger game plan is more important (Rao, V. (2016, March 28)). Moreover, Canadian workers are described to be self-reliant and initiative which makes supervision and specific guidance unnecessary. On the other hand, managers at Alibaba are likely to apply concurrent control as their employees would rely and expect proper guidance from them during their work process. Feedback control is vital for both Alibaba and Amazon because it is important to evaluate their performance after work process is done. For instance, Alibaba launched a technology designed to fight counterfeit goods after receiving criticism from their web users (Clover, C. (2015, May 18)). It is reasonable to say that a bureaucratic control is more applicable within Alibaba Group as China scores high on the Power Distance Index (PDI) (Hofstede Insights. (n.d.))
8. Major organizational change
The organizational change that would be appropriate for Alibaba is the bottom-up change in which all parts of the organization are allowed to take the initiatives for change (Schermerhorn & Wright, 2014). By doing this, the company would be able to innovate and be more flexible to adapt operations and technologies to the changing requirements of work. Although Alibaba does not follow a rigid bureaucratic hierarchy, it is influenced by democratic centralism of the government. Thus, it is the senior managers who are capable of making changes within the company. According to Hofstede’s Model of national culture, China is a highly collectivist culture in which people enhance groups’ interest more than their self-interest (Hofstede Insights. (n.d.)). This explains why Chinese workers do not put too much value whether they are allowed to recommend or make any changes within the company. If the managers ask their staffs to do something that might interfere with their self-interest, they will do it without having any question. Incremental change (Schermerhorn & Wright, 2014) should also be applied as Alibaba is expanding their market to other countries such as India. This does not necessarily change the company’s way to operation that can result in a major redirection of it. It bends and adjusts existing ways to improve performance (Schermerhorn & Wright, 2014). Additionally, self-managing work teams (Schermerhorn & Wright, 2014) could be implemented because they can help the company grow faster, and eliminate the power distance between first-level supervisors and immediate subordinates. However, the obstacles that the company might encounter are different sources of organizational resistance to change. Firstly, the structural inertia in which the organizations have rigid mechanisms to produce stability (Individual and Organizational Resistance. (n.d.)) might create difficulty for Alibaba to apply changes. Many workers, especially long-time ones, are shaped and directed to behave in certain ways and they might find that it is challenging for them to bend and adjust their way of operating in order to improve performance. Secondly, limited focus of change (Individual and Organizational Resistance. (n.d.)) can be another challenge to applying organizational change. This should be carefully considered when the company carries out its incremental change because one department that changes, can affect the others. Thirdly, considering the fact that Chinese workers value groups’ interest, group inertia (Individual and Organizational Resistance. (n.d.)) can be one of the most challenging obstacles facing the company in its organizational change process. For example, if managers suggest changes in a group and one individual is willing to accept, group norms may act as a barrier. In case that most of group’s members resist to accept any change, it is likely that that individual eventually resists. Lastly, threat to established power relationships (Individual and Organizational Resistance. (n.d.)) can be one reason that employers resist to change. It is known that most of the senior managers in Alibaba are capable of making changes within the company. Some of them might feel that they might lose the control if the bottom-up change is applied; because all employees would be allowed to speak up to change the organization. In order to overcome these sources of organizational resistance to change, my suggestion is that the company has to ensure their employees see the benefits that changes can offer. Managers should also take their time to listen to initiatives for changes offered. By doing that, employees will feel more encouraged to adapt with new perspectives. Checking the simplicity of the changes is also suggested; it is easier for long-time employees to adapt with changes if they do not have difficulty in understanding and using them.
9. Effectiveness of teamwork
The effectiveness and efficiency of group work is undeniable in the business world. John Chambers, corporate CEO, once says that in team sports or even in business, a group working together can always defeat a team of individuals even if the individuals, by themselves, are better than your team (Schermerhorn & Wright, 2014). By analyzing the cultural dimensions of both China and Canada, it can be assumed that teamwork is effective in both Alibaba Group and Amazon Canada. Both of them are international corporates that require a huge number of employees. Thus, the use of teams and teamwork is vital as it helps the business to grow and function smoothly. According to Hofstede’s model, China is a highly collectivist culture which enhances group’s interest rather than individuals’ (Hofstede Insights. (n.d.)). Therefore, Chinese workers are likely to be more willing to work in a group and contribute their best effort to achieve objectives. Although, Canadian workers are described as self-reliant and have more initiatives, it does not mean that teamwork will not be used effectively. This means that when they encounter any problems, they will face them with more ease and suggest solutions to address those problems quickly as a team. Additionally, Amazon.com founder and CEO Jeff Bezos states that he is a great fan of teams (Schermerhorn & Wright, 2014) which emphasizes the fact that teamwork is important in a company. Both Canadians and Chinese share one common characteristic is that they live in a masculine culture (Hofstede Insights. (n.d.)). Thus, they are considered to be success oriented and driven. It is expected that both of the companies will prosper and grow stronger if the use of teams and teamwork is applied in the daily function. However, some of the problems caused by teamwork may occur such as social loafing (Schermerhorn & Wright, 2014); longer time needed for decision making process; substantive conflict and emotional conflict (Schermerhorn & Wright, 2014). All of these problems can create a potential failure in achieving objectives as a team.