Case 3: Alibaba.com (30 marks)

Technological advancement has been a key driver of globalization, which promotes easier interaction between buyers and sellers. The advent of internet has deepened such relationship, facilitating consumers to purchase goods like books, clothing and electrical items from international retailers. While many companies establish their own online store, some firms rely on the services of independent online retailers like eBay and Amazon to sell their goods and services.

Electronic commerce (e-commerce) is not just limited to business-to-consumer (B2C) sales, but also business-to-business (B2B) sales. Riding on this growing trend, Jack Ma founded the Alibaba Group in Hangzhou, China in 1999, which consists of a number of internet- based businesses that facilitate e-commerce. Its portfolio includes Alibaba.com, the small- business retail platform; Taobao.com, Chinas largest online retail website; and Alipay.com, a third-party online payment platform. In 2011, Taobao was reorganized into three separate entities: Taobao Marketplace, Taobao Mall (Tmall.com) and eTao.

The company initially operated out of an apartment and raised US$25 million in start-up capital from various financial institutions. Soon Alibaba.com became the preferred platform for B2B transactions in China. The launch of proprietary Alipay.com allowed the company to gain more control over the payment issues and reassured consumer confidence from online fraud. Other operations include a platform (www.1688.com) for trade between Chinese firms, and one (www.alibaba.co.jp) facilitates trade to and from Japan. Today, the Alibaba Groups platforms have registered over 61 million internet users across 240 countries and regions. The group has over 22,000 staff working in 70 cities spanning from Asia to the UK and USA.

While the company has been successful, it faces its share of controversies. Like most independent e-commerce platforms, there remain concerns over how these sites are monitored and what products are allowed to be sold. There are also concerns over how legitimate are the claims of the buyers and sellers on the website, and how the quality of the goods can be guaranteed.

In the case of Alibaba.com, the controversy arose from companies' listing of shark fins for sale. Although Shark fins are used in some Chinese cuisines and medications, critics see the process through which shark fins are obtained as cruel and a threat to the worlds shark population. Initially, Alibaba rejected activists demands for removing shark fins from their website, claiming that the goods listed and sold on the website were the sellers responsibility, if they did not breach any laws. This led to online petitions against Alibaba and calls by animal protection bodies to boycott the company. In view of rising criticism, the company announced to stop the online sale of shark fins and promised to contribute 0.3% of the groups annual revenue for environmental protection, including clean water and air.

(Adapted from International Business: The New Realities by Cavusgil, Knight, Reisenberger, Rammal, & Rose (2015). Pearson Australia.)

3a. Based on the above case, explain THREE factors that have contributed to the success of Alibaba.com.

3b. Describe Alibabas practice of social responsibility. 3.Suggest TWO other ways for Alibaba to fulfill social responsibility.