. From an outside shareholder’s perspective, what are the potential benefits and risks regarding Alibaba Group’s...

. From an outside shareholder’s perspective, what are the potential benefits and risks regarding Alibaba Group’s partnership structure?

Expert Solution

Alibaba Group’s partnership structure is such that voting rights is awarded to a large group of management partners. The group has 38 partners and these partners can collaborate and override hierarchy within the Alibaba group.

The benefits of the partnership structure are that the structure will ensure that the group’s innovative culture is preserved and the company is not distracted by financial market fluctuations. The structure will enable the group to innovate and maintain its competitive advantage. The level of creative energy will remain vibrant due to the partnership structure. It will enable managers to launch new initiatives easily, without too many constraints. The founders of the company will be able to make long term decisions for the company. Lastly, in the long run, interest of the partners will be aligned with the interests of the shareholders of Alibaba.

The risks of the partnership structure are the dilution of the control of shareholders of the company. The structure will have the power to nominate the majority of board members and so the operational strategy of the Alibaba group will be guided by the ‘Alibaba partnership’. Thus the possibility and chances of interests of the shareholders getting ignored are quite high.

ekkarill92 answered 2 years ago

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