Question

1. How do entrepreneurial firms such as Alibaba grow?

Answer 1

Introduction:-

Over the years, it has become extremely important for companies to be aware of practices and policies of the government for them to be able to grow.

Most importantly, companies often do not fail because of the lack of products but rather these happen because they are unaware of policies or practices which may help them or may cause harm to them.

This brings us to the discussion on companies such as Alibaba which will be evaluated in the case study to analyses the reasons for their growth and development in the way that it has been.

Case Specifics:-

Alibaba is a giant company which helps producers and consumers interact with one another over a global platform which is easily accessible over the internet. It has Chinese origin and has become a boon for small business owners which were always looking for a platform to sell their products.

The basic reasons for Alibaba’s giant success is how they have used economic conditions, policies & rapid growth of technology to their advantage.

That said they have also implemented internal policies and strategies which has made them one of the key internet retailers across the globe which has seen tremendous growth over the years.

Few of the key reasons why such entrepreneur firms have seen growth over the years is as follows:-

• Increasing role of internet and related technology:-

Companies such as Alibaba and others have largely gained from wide spread adoption of internet and technology across the globe. Countries began realizing the immense potential of creating technology and therefore companies such as this spring into action. This basic help of companies receiving technological benefits by development of the government meant that a set platform was created for delivering IT services across the globe and this has been largely cashed in by companies such as Alibaba and others.

Further technology helped companies in running operations in a smoother manner with them being able to use the same for forecasting, managing finances and other operations such as marketing etc.

• Virtual Markets and increasing Consumer Awareness:-

Internet has brought with itself not only benefits for companies alone but has created a level playing field for the consumers also. Companies such as Alibaba have been able to successfully create virtual markets which are accessible across the globe and are backed by government programs.

These Virtual Markets serve as a mediation between suppliers and consumers and mediating companies can then earn money from these interactions just by their own presence.

Internet also brought in increased consumer awareness and people realized that they could purchase things online. This backed by government ease of business made companies such as Ali baba richer, while providing small entrepreneurs a platform to sell their products, and at the same time allowing people to have wide variety of choices at the same time.

• Rapid Globalization & Easing Business Norms:-

The growth of entrepreneurship in the recent times can largely be credited to how fast globalization as an economic policy has been enabled by all parts of the world which have begun realizing that all parties engaged in free trade largely benefit from the same.

Companies such as Ali Baba just served as intermediaries which had a strong brand name and recognition and thus found themselves selling to people across the globe and had producers across different countries listing their products and getting better prices for the goods sold which also had higher numbers.

Financial transactions became extremely easy to undertake and it took minutes to confirm orders and ship the same in most local cases which facilitated growth for these companies

• Personalized Selling and Customer Service:-

Companies heavily have invested in personalized selling of websites as per the needs and wants of the consumers. Development of technology meant that target based marketing could happen and each user could be treated differently with different types of schemes, ads etc. At the same time companies maintained high service standards which allowed them to become big brand names over the years and gain trust of the consumers which increased sales and overall revenue

• International Protection:-

Strengthening of globalization meant that companies could face tough situations which could lead to international arbitrage. Countries dealt with such situations positively and increased economic laws between one another. This feeling of cooperation meant the development of entrepreneurs such as Ali Baba which then could sell across the globe and their interests would be safeguarded and they would not be subject to international losses.

• Capital Availability:-

The biggest challenge which entrepreneurs used to face in their early days is that they lacked any security and banks would not easily grant those loans. As a result of this they would face problems in arranging funds for themselves and would fail altogether.

The reduced costs of running a website, combined with factors such as government macro-economic reforms has led to policies which have made it increasingly easier for companies to get funds for themselves. Angel investors as well have largely contributed in development of companies. All that entrepreneurs today need is an idea which can be sold and they can get into business relatively much easier than it ever was in the past.

Please feel free to ask your doubts in the comments section if any.