Strategic Management:

Use the video transcript to answer the questions:

Video Transcript:

>> It could be the largest share sale in history. Chinese internet giant, Ali, has filed documents from market floatation in New York. And analysts predict the company could raise more than $15 billion, topping Facebook's initial public offering. Ali did not disclose details of the number of shares it intends to sell, or the price range. But the euphoria is already in the markets with estimates of the e-tailer's market value soaring to even beyond this enormous number. $200 billion. The difference is, Ali actually already makes profits, and a lot of it. Last year it raked in more money than its American peers, Amazon and eBay combined. Let's go to our Asia business hub in Singapore. And join Rico. Nice to see you Rico. So at last, they have filed in New York. So we can move onto the next stage.

>> Absolutely. And at this point we still do not know the stock price, or when it will be launched. But, you know, the big issue here was over the past several months, Sal, is if whether Ali should be listing in New York, or in its home base here in Asia. Particularly on the Hong Kong Stock Exchange. And basically you have them listing in New York, after the exchange in Hong Kong was against the company's proposed governance structure. Which would have breached rules there, by allowing senior executives to nominate the majority of the board. And among the major shareholders set to benefit from this massive initial public offering of Alibaba, are US technology giant, Yahoo. And Japan's SoBank. Yahoo owns a 22.6% stake in the firm. While SoBank owns 34% of the company. And you know what, Sal? Ali is not very well known outside of the mainland, where they have about an 80% share of the online retail market. But it is best described as a mix of eBay, PayPal, Amazon.com, and Google. And many described it as an 800-pound gorilla in China's internet economy. Sal.

>> Well that's a very good way of putting it. We can all visualize that. But as you say, we've heard of the company, but we can't yet use the company here in the UK and the United States and elsewhere. Will it take on the likes of Amazon outside mainland China do you think?

>> Well, according to analysts, that could be a potential strategy going forward Sal. But Ali is already trying to make its presence felt, by appealing to British and American companies who are thirsting for a piece of China's growing population of wealthy consumers. One of its major businesses is Tmall, which is its shopping site. And it has already lured a number of British brands to open up store fronts on its platform. You have the likes of Blurberry. You have Mars & Spence. And Mothercare. It has also attracted famous American names such as Apple, Microsoft, P & G, Gap, Nike, and Levi's. And with its massive war chest, and it being awash with cash, it's already making some major investments in technology startups in the United States.

Questions:

If the Hong Kong Exchange did not deny Ali the initial public offering, what may have happened to the stakeholders of the Chinese internet giant?

a.Stakeholder interests would be a focus because of the control the managers of Ali would have had.

b.Stakeholder interests are not a concern because of China's control economy.

c.Stakeholder interests may have not been addressed as diligently as they should, causing an agency relationship problem.

d.Stakeholder interests would have been ignored due to the large-block ownership concentration.

The Hong Kong Exchange denied Ali the IPO while the NYSE did not. Why would the Hong Kong Exchange be stricter in its acceptance rate of IPOs?

a.China will only accept companies who are projected to grow exceptionally.

b.To ensure international investors have a strong corporate governance system and that their investment in the growing Chinese market will be protected.

c.China wants to be able to have full managerial control of its public companies.

d.China is not concerned with growing its economy.

Ali is a company that is very profitable and has a large market value. What would be a beneficial use of the funds generated by the IPO?

a.Over diversify to give Ali the largest potential for growth

b.Give considerable pay increases to the Board of Directors and the senior managers

c.Diversification and reinvestments to help the company and its stock grow, which benefits stakeholders and shareholders

d.Employ more people to benefit the community as a stakeholder