Question

Yet in his understated way, Zhang is proving as radical as his predecessor. He says Alibaba is uniquely positioned to pull together the online and offline worlds in groceries and beyond, and dozens 3 of his new initiatives are leading Alibaba deeper into fields including finance, health care, movies, and music. Especially in the U.S., where the company’s shares trade, these efforts have baffled some investors, who worry about overreach. In Zhang’s view, they’re a matter of survival. “Every business has a life cycle,” he says during an exclusive interview at Alibaba’s Hangzhou headquarters. “If we don’t kill our existing business, someone else will. So, I’d rather see our own new businesses kill our existing business.” Based on the above extract, Alibaba’s new chairman appears to be implementing a strategy meant to reinvent retail as a matter of survival. Identify and critically discuss any TWO (2) types of managerial strategic decisions that could be used by Alibaba to “kill [its] existing business,” innovate its operations and optimise its offerings. As part of your discussion, define and explain the two strategic decisions you have identified and highlight the potential role they could play in Daniel Zhang’s bundle of new initiatives which are “leading Alibaba deeper into diverse fields such as finance, health care, movies, and music.

Answer 1

New retail is a concept that was introduced by Jack Ma in 2016. This concept combines online and offline facilities to provide seamless customer experience. The strategies that encouraged new retail are the customer-centric transactions, integrated shopping, and seamless omnichannel. The strengths of Alibaba are the Chinese market, innovation, and others. The weakness is the lack of EBITDA margins. The opportunity is to capture the global market through innovation. The threat is the booming e-commerce industry.The two managerial decisions are the strategic decisions and the organization's decisions to kill its existing underperforming businesses with the new. The two types of strategic decisions are analytical decision making and expert decision making.

New retail is a concept introduced by Jack Ma, the chairman and founder of Alibaba group in 2016. It is a business model that connects offline and online shopping experiences. This strategy combines the best of both shopping experiences without any boundaries. Under Daniel Zhang, the chief executive and the chairman, the new retail is to combine a grocery store, a restaurant, and a delivery app using robotics and facial recognition. This new retail will be based on:

i. Extreme innovation ii. Data iii. Immediate shopping experience iv. Traceable quality.

The strategies that encourage "new retail" are:

i. Earlier transactions were limited by product availability in the store. So, the Alibaba group opted for a strategy of customer-centric transactions beyond time and location constraints.

ii. They have tried to integrate the shopping experience using the "new retail" concept.

iii. Introduced a new concept of trans-retail seamless omnichannel where customers have both the online and offline facilities at a time.

SWOT analysis of Alibaba:

Strengths:

• Alibaba's strong presence in the Chinese market, the world's populated country, and the second-largest economy.
• Innovation is the key strength as the chairman always tries to bring a new concept to ease customer retail operations like the "new retail" concept.
• iThe large growing customer base of Tmall. Tmall is the largest B2C online platform that sells premium products globally.
• Singles day, the world's largest shopping festival.
• Taobao, China's largest C2C sales channel.

Weakness:

• Decreasing margins that affect the core competency.
• Over-dependence on the Chinese market.

Opportunities:

• An opportunity to capture the market with Lazada
• The potential of becoming the market leader through innovation

Threats:

• Stiff competition in E-commerce

Managerial decisions are the decisions that the managers need to take to support their duties and responsibilities. The two types of managerial decisions taken by Alibaba are:

i. Strategic decisions:These decisions include alternative solutions to the existing problem and have long term implications. Alibaba's strategic decisions are to diversify its fields and enhance the retail operation through cloud computing that will become the future of technology. They have used artificial intelligence to enhance retailing experience.

ii. Organizational decisions:To kill the existing business with the new business is the organizational decision. These decisions will help Alibaba to establish itself as a competitor and kill the existing one to gain a competitive advantage over the other competitors.

Strategic decisions are the decisions that deal with the business environment, the resources, and the people. The two types of strategic decisions that could be used by Alibaba to kill existing business are:

i. Analytical decision making: Alibaba's chairman has used all the information and the situation to innovate its operations. Zhang believed that if they have to sustain in the market, they have to keep innovating by crushing the underperforming business before anyone in the industry could kill their business. Alibaba's new initiatives are in the fields of finance, healthcare, movies, and music. These decisions could play a potential role in increasing global presence and profits.

ii. Expertise decision making:Alibaba's culture is to follow the autocratic style of leadership. The Chairman has taken all the decisions on his experience and expertise level. As Alibaba is leading e-commerce in China, they are diversifying their horizons for the new retail experience in every field like finance, healthcare, movies, and music through cloud computing.  

Here, based on the above extract, New chairman of Alibaba will implement a strategy that could reinvent retail as a matter of survival. Let me identify and discuss any two types of managerial strategic decisions that could be used by Alibaba to kill its existing business, innovate its operations and optimize the offerings, here, such types of managerial strategic decisions are as stated below:

• Here, they could implement creative strategic decision making model, as we see existing businesses are to be killed and they are uncertain about the solution, hence, they require to be creative and put more emphasis on research and development, they want to bring new business processes and solutions, here, they could keep invest sufficient time to bring out strategic response towards the current business issues or problems.
• They could also implement rational decision making model that focuses on bringing out various alternatives and next all the alternatives are measured or evaluated and given quantitative score, here, we like to optimize the offerings, and we will consider such alternative that could not only implement new business processes, that also could bring better cost effective choices and consider quality or service level.