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In general terms, strategic issues are considered as the heart of the strategic planning process, as recalling the strategic issue is one of the fundamental yet challenging aspects which majorly affect the organization mandates, mission, vision, values, product, services, cost, financing and the entire organization at large (Perrott, 2011). Hence the strategic issues which an organization faces is all due to the uncertain future, regulation and the future compliance, changing technology and lastly, finances are the main reason due to which the issue arises and thus, majorly affects the workings and the entire performance of the firm at large (Sommerfeldt, & Yang, 2017).
Alibaba is one of the well-known company which is considered as the world largest or biggest online commerce company. This company mainly works in three main sites named as, Taobao, Tmall and Alibaba. These particular users are in millions and host millions of merchants and businesses. Moreover, Alibaba handles more than three industries than any other E-commerce company does (Barczyk, Falk, Feldman, & Rarick, 2011). Hence, it is considered the most well-known destination for online spending, which is the world's largest and fastest-spreading e-commerce market. Dealings on its operational websites mainly are of around $248 billion in last year, when we compare it with other e-commerce business such as Amazon or eBay it is 4 times of them (Jung, Ugboma, & Liow, 2015).
However, when we talk about its further expansion of Alibaba in the United States, the organization must be facing major strategic issues before and after successful relocation in the new market (Anwar, 2017). For that, this particular report will discuss the market analysis of the United States through considering external analysis, by using pestle analysis, porters five-force model, SWOT analyses which helps Alibaba to know more about the US market more openly. Other than this, this report also carries information about the internal analysis, by understanding the particular framework named VRIO, which mainly highlights the strength and the resource position of Alibaba so that in another country they can mount a successful competitive fight in order to establish the fine position.
The external analysis helps in knowing about the countries or industry environment of the company, which can be tested through as pestle analyses, which mainly comprise of economic, political, legal, technological, social, environmental aspects. This helps in understanding and helps in determining the opportunities and the threats in an industry for which the company needs to work upon to earn or drive profitability, growth, and volatility. Other than this, potters five force model and SWOT analysis, which help in a similar analysis and accordingly the company, set further strategies to win over their competitors.
When we talk about the host country, we are highlighting information about the United States, which carries a populace of over around 318 million, which is culturally assorted and has the largest economy in the world. In recent times, the economy is moving on a steady course forward this, is all because of the investment, customer expenditure and substantial decrease in unemployment (Cadle, Paul, & Turner, 2014).
The political aspect of the United States highlights its strong democratic setup and rules of law, which are quite transparent and fair in nature. It will be difficult for Alibaba is the US enjoys its huge political and economic effect over both countrywide and global policymaking and it is known or renowned as the foremost superpower in the world. Other than this, it is also seen that the country also faces international criticism concerning to the conflict of terror, which mainly sources foreign relations, and these aspects increase the threat of terrorism.
The economic aspect of the United States highlights $16.760 trillion as GDP, which is considered as the largest economy in the world. Thus, such an aspect highlights that the United States economic system is well developed in terms of the service and manufacturing industry. Earlier due to the recession, the economy has faced major downfall in their economy, leads to unemployment rates but later they rebounded back with a development of around 4% in the third quarter of 2014. However, such aspect helps the country and enhances economic prosperity in the long run (Kolios, & Read 2013).
The socio-cultural aspect mainly highlights the society and it is cultural, as the US in this aspect is facing major issues in an aging population, which generates the serious loss to labor, which means there is labor shortage and rising taxes in the future. As in China, there is no less labor, rather the availability of the labor is cheap and in the US, it is vice versa. Moreover, the mainstream of the populace has a generous attitude, but in us, the upsurge in unlawful migration is a real concern. Currently, around, 11.7 million people are living unlawfully and are generating future risk for the country in terms of racial discrimination.
In terms of technological aspect, the US in less in technology upgrading when we compare it with china, as china is technological aspect is more upgraded and adaptive and applying various and newer technology which further helps in faster production and increasing productivity of the firm as well as a country. However, in terms of the US, the country is facing strong rivalry from the increasing frugalities for which they are expecting to continue to recollect its technology supremacy over its rivals. Although they are working over their technical aspect there are still facing powerful rivalry from countries like China and India (Rothaermel, 2013).
The environmental aspect highlights the ecological and environmental issue, which carries information about the international and the national aspect. Other than this, the company while entering into other countries, their will major face the challenges in concern to environmental aspect such as a change in weather, climate change, laws and regulation change in terms of environment, recycling aspect, attitude towards and support the renewable energy are taken into consideration. As such, aspects are majorly considered when a company is shifting in the US for its opening.
The legal aspect majorly highlights information about the legal framework, which is majorly needed to defend the intellectual possessions moralities of the society. As when the firm is, entering into a newer country needs to consider all the legal aspect, which mainly comprises of copyrights, employment law, customers protection and e-commerce, data protection and lastly health and safety law in concern to employees. These aspects help the firm to evaluate the market, which can lead, or help the firm to generate a competitive edge in the long run (Nandonde, 2019).
Porters five force model mainly highlights the five major aspects which comprise of the bargaining power of the supplier, consumers, threat of new entrant, the threat of auxiliary products and lastly, competition in the industry. As Alibaba, in this concern needs to know more about the suppliers, their competitors, their customers, and their substitutes so that there they know about the relocation issues and can work over it so that they can successful relocate themselves in the US.
Bargaining power of the suppliers in United stated is low to medium in e-commerce aspect, as the effect of the supplier on the online retail business surroundings is in a extensive range due to the variety of the commercial and the business exercises a vast negotiating power in relation to the mainstream of its dealers. So in order to stay Alibaba need to work over their effective supply chain with its multiple suppliers (Luo, Sun, & Wang, 2011).
Competitive rivalry mainly highlights the strong competitors of the company. So in the case of Alibaba when they are trying to enter into the US they will face the intense competition for the other e-commerce brands such as Amazon and eBay as they are well-known along with the highest earning and the most successful companies of united states. Along with this, the company will also experience the robust strength of the alternates because of its greater obtainability. As such, aspects make a tough situation for Alibaba while entering the United States.
The negotiating control of the buyers highlights the influence of the clienteles in a firm and industry environment. In this, if the company is majorly focusing on the customers' satisfaction and its product quality it is mainly affecting the powers of the buyers at large. As it is seen that the switching cost is low as the number of e-commerce companies are increasing over the years. As in this, every customer has sufficient information when they search for particular products online and make choices as they have choices on the available information. That is why it is seen that customers’ retention is so important to focus on areas for e retailers (Huggins, & Izushi, 2011).
The threat of substitutes in term of Alibaba when relocating themselves in the US is higher as there is numerous other brands who have entered in the online retail business, other than this, customers can also buy from the physical stores or physical retailers. For example, when we talk about Amazon its competitive advantage is its excellent customer services part from its brand name, so in this people can switch easily from one brand to another in this concern.
Lastly, the threat of new entrants, aspect has moderate to high effect as this is all because of the proliferation of digital technology, which has brought many changes to the retail industry. AS it is seen that there are numerous brands who have entered into the retailing business, other than this, it is all seen that due to the increment in the technology aspect as technological advancement has reduced the barrier to entry and many companies like Amazon and eBay are earning as similar as Alibaba. Therefore, the risk for the new entrant is moderate to high in the coming time for Alibaba if they are thinking to relocate in the United States (Dobbs, 2014).
Moreover, when seeing analysis the main competitors of Alibaba in the United States mainly highlighted the amazon company, which is also one of the well-known companies of the United States, which similarly deals in Retail ecommerce aspects just like Alibaba. However, when we talk about the strategies which amazon applies for its successful aspect is described under the Ansoff matrix,-
As amazon uses e-market penetration strategy aggressively, by majorly targeting its customers at large by improving the quality of the products or convincing current customers to use more of the company’s product by making more use of marketing communication tools such as advertising techniques and promotional tools. Moreover, product development also started its product offerings on an online basis, along with this, it is also seen that amazon initially was dealing in physical books but now they also deal in clothing, shoes, home and kitchen appliances, electronic devices and much more. Furthermore, in the market development aspect, Amazon is currently working in 13 countries and targeting more by finding new markets for existing products. Lastly, in the diversification aspect, amazon in diverse aspects has started working in media, hardware, advertising and another business segment (Gurcaylilar-Yenidogan, & Aksoy, 2018).
Strength- the United States of America is a federal nation, which mainly includes fifty states and one federal region, which is located in central northern America. Like this country, a major strength is its financial and technical growth in almost every segment. This also highlights that it is one of the largest markets with the world's biggest GDP and its customers regarding the service sector mostly determine the economy of the states. Other than this, the strength of the United States highlights that this particular country has a high-valued asset in the research and expansion aspect along with the education. About 2/3 of the manufacture is driven by individual consumption. Moreover, it is also seen that the service segment has a main part and it mainly makes up to almost 78% of the Gross Domestic Product. This country also has strong decision-making power pertaining to initiatives for the development and constancy of the country. Lastly, it also comprehends the use of the source of money, tax rates, and credit regulator in order to adjust accordingly to financial requirements (Ghazinoory, Abdi, & Azadegan-Mehr, 2011).
Weaknesses- In terms of flaws, the nation has noticed a record of the low domestic saving rate. Moreover, it is seen that there is a large fiscal deficit, which is increasing; external debt was around $19.6 trillion, which made the country the biggest debtor country. Other than this, it is also seen that the situation remains a major distress due to the considerable amount of people missing wellbeing assurance. Moreover, it is also seen that the United States is called a free market economy, but the administration controls in a various sector particularly in the dynamism sector intensely. The country also has two-tier marketplace employment, which means many people out of their lack of learning and qualified skills, which are regarded as the top location organizations. Hence, due to this, labor fails to gain the pay raise, health insurance, and other benefits. Lastly, it is also seen that the exchanges rate is also being affected, credit markets are also weak and lacking a sustainable amount supply of money to stabilize the economic conditions (Parnell, 2011).
Opportunities- In this aspect, United States can upkeep diverse modifications by solid nationwide reserves that would evade the affliction of falling on both asset and development. It is also seen that the increased fund in a sector such as housing will generate a radical effect in times of emergency. Moreover, expenses from the sides of the customers will also help in initiating superior constancy and development in the economy. Other than this, it is also seen that if the country consumers will be able to encourage themselves financially, this will further help in steadying the economic condition of the country. Moreover, the role of the Federal Reserve also helps in deducting rates the interest in order to encourage investment and it also introduced the measures that would help in generating opportunities to push liquidity to various financial markets. Furthermore, it also helps in generating more incomes online by ingoing into a partnership with other websites and the introduction of groundbreaking structures, which grab attention with less criticism. Lastly, TARP, which highlights about troubled asset relief program, which shows the favorable outcomes it helps in buckle up the economic condition, is hard times as practice of encouragements (Gürel, & Tat, 2017).
Threats- this particular aspect highlights the rising markets in Europe and recent growth in Asia, which are growing economies internationally, particularly China that is predicted to surpass the US marketplace in bulk in 30 years. Moreover, it is seen that customers are paying more attention more for necessities such as food, fuel, college fees, and medical care. Moreover, it is also seen that the deficit of the country has been coined as the unsustainable according to the international monetary fund, which would definitely generate an undesirable effect on the interest rates and capital market globally. Other than this, it is also seen that the customers are also majorly dependent on the debt to re-mortgaging the properties to attain higher loans. In threat, aspect is also highlighted that there are many barriers faced to an international market due to the high competition in the market or the rivals. Lastly, the rate of unemployment is also rising with time and the flat wage rates of employees (Johnson, 2012).
The VRIO analysis of Alibaba, a company who has a broader variety analysis which provides the company with opportunities to acquire a viable competitive benefit against its competitors in the retail aspect-
Valuable- the resources applied by the Alibaba business are very much valuable in nature for the business, a resource such as finances, human resources, management of operations and specialists in marketing, which helps the company to grow at the border level.
Rare- In a rare aspect, the valuable resources used by Alibaba are even unusual or costly. Are there resources are commonly found that it would be easier for the competitor and the new rivals in the industry to effortlessly move in the competition (Watson, et al, 2015).
Imitation- the replica process is costly for the competitors of the Alibaba business. It can be done in two different methods, product duplications that produced and manufactured by Alibaba and will generate or introduce the alternatives of the items with the changing cost. Therefore, this aspect increases the dangers of disturbance to the recent structure of the industry (Nylund, et al, 2018).
Organization- this part of VRIO analysis mainly highlights information about the compatibility of the company to place them in the market by making efficient usage of its important resources, which are harder to imitate. Frequently, the advancement of the management is completely dependent on the firm execution system, their technique and team members and their working aspect are taken into consideration. Hence, such aspect helps the company to polishes the skills of the company that are based on the choices of the company for the development of its strategic capitals (Carrère, et al, 2015)
In order to manage the instability in the external environment, Alibaba must focus on developing the appropriate market entry strategy so that the company is able to create positioning in the United States. It is analyzed that the United States faces the challenge of labor shortage however, it develops the need for the company to recruit and retain the employees by developing effective rewards and recognition that motivates the employees and make them more committed towards the organization goals (Bubel, et al, 2015).
It is analyzed that the main competitors of the brand use differentiation strategies and has developed strong positioning in the minds of the customers. Therefore, Alibaba must focus on designing effective promotional strategies and must adopt cost leadership strategies to capture the market and switch the customers towards its brand. It must analyze the pricing offered by the competitors and must lower the prices to increase brand awareness and develop a position in the new market (Jiyuan Wu, 2016).
The company may also face the challenge in the creation of technological upgradations. This, in turn, develops the need for Alibaba to make the investment in the research and development and upgrade the technological innovation that will help the company in delivering superior quality and will aid in delivering a unique experience to the customers. It will help in creating a competitive edge in the competitive market (Gurcaylilar-Yenidogan, & Aksoy, 2018).
It is analyzed that the consumers in the United States prefer more to enjoy their lives and upgrade their social status. However, this creates fluctuations in the preferences and the expectations of the customers. It developed the need that Alibaba must scrutinize the socio-cultural aspects and must develop the products that allow the customers to maintain their status quo and deliver maximum satisfaction. This will increase the profitability of the company and will aid in creating strong brand positioning in the new market (Kaul, 2019).
From the above report, we can conclude that Alibaba while entering the US market will face many issues in terms of political aspect as, every country's rule, regulations and government laws are different. Therefore, to manage in the US market Alibaba needs to focus on the United States political aspect. In socio-cultural terms, when we study about the cultural aspects US and China are very different from one another as china is very rigid in its language, respect, communication whereas, the US market has a flexible environment that generates the major issue for Alibaba to enter into the US market. In terms of strategy, companies such as Amazon and eBay apply market penetration strategy whereas Alibaba will not be successful while following this strategy as amazon and eBay have already through this strategy has captured the main market of the US. Therefore, for this, Alibaba need to focus on the cost leadership strategy in which the lower prices of the products may attract the large base of a customer can this would help in generating the successful installation of the company in the newer market.
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