SUBJECT : STRATEGIC MANAGEMENT

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Questions in this section are based on the following article. Alibaba to Split Into Six Groups and Explore IPOs in a Departure From Jack Ma Era. Founded in 1999 by Jack Ma, a former English teacher from Hangzhou, Alibaba is claimed to be the world's largest online commerce company. It has three main sites: Taobao, Tmall and Alibaba.com. The former is actually Alibaba's biggest shopping site. It hosts 7 million merchants which sell everything from clothes to decorations and it is free for users. However, sellers can pay for ads to make a difference within the crowd. There are hundreds of millions of people using Alibaba as well as millions of merchants and businesses hosted there. With this being said and within this fast-growing e-commerce market, Alibaba is the most wellknown place to visit for online shopping. At some point, transactions on its online sites reached $248 billion which are significantly more than those of eBay and Amazon.com combined. In fact, according to recent researches, in 2018 Alibaba made RMB250,266 million in transactions, RMB376,844 million in 2019 while in 2020 it reached RMB509,711 million. As a result, Alibaba makes up 80% of China's online shopping market. Fast forwarding 22 years, Alibaba to split into six groups and explore IPOs in a departure from Jack Ma era Chinese tech giant makes announcement just after its co-founder reappeared in China after months overseas. Alibaba Co-Founder Jack Ma visits shool in China after year overseas. Chinese e-commerce giant Alibaba Group Holding Ltd. BABA 3.46\% increase; green up pointing triangle said it plans to split itself into six independently run companies that could seek separate IPOs, effectively dismantling a business empire built over two decades by 2 charismatic entrepreneur Jack Ma just 88 the tycoon resppeared in China. The reorganization of one of China's largest private-sector companies, cnce valued at more than $800 billion but now worth aboul a quarter of that, comes after Chinese euthonties signaled in reoent months they 'were winding down a swesping regulatory clampdown aimed at reining in the country's powerful tech sector. Mr. Ma, a co-lounder who built Alibabs into one of the world's biggest ecommerce compenies on China's rising affluence, was once known for his cutspoken viaws. But since China embarked on its campsign to tame intemet compenies, the bilionaire has largely kept a low profile and remained abroad. He returned to mainland China in recent days for the first known time in almost a year, visiting a school in the eastern city of Hangzhou where Alibaba is based. Albaba's planned reorpanization reverses efforis to centralize cperations. Albaba's restructuring culminates a yearslong shift inside the company to make it more nimble atter Mr. Ma stepped back from the oompany's helm in 2019. It reverses a centralization drive he embarked upon before his departure in which he sought to bring the company's subsidiaries and affiliates into closer alignment, part of the so-called Alibaba Economy. The power of tech titans such as Mr. Ma and their influence over society caused uneese in Beijing: Companies such as Alibaba heve a grip on data of more than a bilion users and investments across a range of companies in Chins. Beijing has in the past criticized the "disorderly expansion" of the country's biggest intemet comparies. "if you don't change yourself, you will be defeated by the times," Albaba Chairman and Chief Executive Daniel Zhang said in a letter to employees reviewed by The Wall Street Joumal. He added that Albaba's variaus businassas are facing different chslenges and market conditions. Under the restructuring, Alibaba's varicus businesses will be split up into six mejor areas: cloud computing. Chinese e-commerce, global e-commerce, digital mapping and food delivery, logistics, and media and entertainment, the company said Each business group would have its own CEO reporting to a board of directors and be fully responsible for the group's performance. Albabe Group is set to become a holding company overseen by Mr. Zhang. Those business groups will be allowod to raise external capital and seek initial public offorings when they are ready, Alibaba said. Its domestic commerce business wil remain a wholy owned unit of Alibabe, it 8dded. Mr. Ma, 58 years ald, was listed as a commitlee member of Alibaba Partnership, a strategy-making body of serior executives, in the company's latest annual report published last July. He held less than 5% in Albaba Group at the time. Mr. Zhang in February said he saw 2023 as a year of progress for Alibaba. In videotapod remarks published by Chinese business publication Yicai on Tuesday, he said the reorganization was a big step forward. He explained the main reesen to reorganize is to improve the sprawling business empirn's orgarizational efficiency. He said splitling the businssgas would make each area more agile to better compete with rivals. Alibaba has been weighed down by flerce competition in its bread-and-butter domestic e-commerce business in the past few years. Rivals JD.com Ine. and PDD Holdings Inc. 's Pinduoduo have continued to bite into Albaba's market shere. In addition, short-video platiorms including ByteDance Lid.'s Douyin, the Chinese version of TikTak, and Kuaishou Technology incressingly pose a challenge. Albaba's revenue growth in the past two quarters performed below the overall growth in China's e-oommerce sales of physieal goods. Mr. Zhang has acknowledged competition and said the compeny would explone innovative ways to better engage with customers, such as lve streaming and smart recommendations. Alibaba business-segment revenue, in bilions of Chinese yuan, nine months ended Dec. 31 , 2022 Note: $1 billion=\$0.1452 billion. Cainiso represents revenue from logistics services and supply-chain management. In 2021, the Journal reported that Mr. Zhang had boen delegating more power to the heads of Alibaba's various business units, which had the potensial to open the way for spinoffs and independent fundraisings. The move echoes previous sweeping rearganizations by Westem tech giants such as Google, which created Alphabet Inc. 88 a hoiding company while separating its growing cast of businesses. Sell, the holding-company structure isn? common for Chinese tech giants. In 2021, ByleDance reorganized its operations, formerly divided by functions, into six business units that now focus on different product lines. Albsba's split comes after Mr. Ma reappesred in China and at a time when Beljing is seeking to revive entrepreneurs' confidence following more than two years of regulatory dampdosns and Cavid-19 restricticns. The announcement wasn't related to his return, people inside the company said. The listing status of Alibaba's shares in New York and Hong Kong won't be affected, people familiar with the matter said. Albabe's American depositary recoipts climbed more than 9% in early trading on Tuesday in New York. Beiling started to crack down on the Chinese tech sector in late 2020, calling ofl Ant Group Co.'s blockbuster IPOs. The cancellations came atter Mr. Ma's speech at a financial forum drew the ire of regulators by criticizing their work as anachronistic. Regulators subsequently launched a probe into Alibaba for alleged anticompelitive behevior on its e-commerce platform and later hit the compary with a record $2.8 bilion fine. Regulators also slapped helly fines on ather tech giants over issues including antitrust and data-secuity breaches, erasing more than $1 trillion in market value from China's largest publidy listed tech companies. Hopes that regulatory headwinds may be essing began to build as the country's top brass sounded more conciliatory toward private businesses. But tighter oversight has become the new normal, and in January, Chinese authonities accuired a stake in a subsidiary of Alibaba. The sudden tieappearance of star investment benker Fan Bao recently sent shivers through China's business community. Like many large tech compenies that are burgeoning conglomerates, Alibaba has expanded its e005ystem by offering consumers and businesses multifaceled services, from shopping and travel to payments and logistics. Since 2020, Albabe has been establishing subsidiaries based on business functions. Apart from the six companies, other businesses could be regrouped as similar independent entities in the future while teams such as research, data management, finance and human resources will be spread across subsidiarios. Mr. Zhang said in his letter to emplayees. "This transformation will empower all our businesses to become more sgile, enhance decision-making and enable faster rosponses to market changes," he said. Mr. Zhang is sat to continue to lead the cloud-computing division, (Source : Alibaba to Snlt Into Six Groups and Explore IPOs in a Departute From Jeck Ma Era - WS.J. Retrieved 20 February 2023) Questions for the article. 1. Briotly relate the main issue of the article. (5 Marks) 2. Examine TEN (10) different strategies that Ali Baba's business has used aver its years of its establishment and the impact to the company. (20 Marks) 3. Appraise why was the founder of Albaba made decisicn to reorganized the business? (5 Marks) 4. Presume you need to advice Jack Ma to judge the best strategy matching for Alibaba, select TWO (2) strategies that you would undertake and justify chosen of the strategles. (20 Marks) 5. Relating to Question 4 , assess FIVE (5) issues that the management may encounter while implementing the strategies. (20 Marks)