¶ … Alibaba Group operates what it bills as the world's largest online marketplace, based on two main businesses, the B2B site Alibaba and the B2C site Taobao. The company's service is an interface that connects buyers and sellers. It arose out of a need to connect buyers and sellers within China, but the rapid growth of China as a global goods supplier facilitated the growth of Alibaba. Companies anywhere in the world could use the site to get bids from multiple suppliers, creating an efficient marketplace. The large number of customers allowed Alibaba to expand globally, so that today it is a network of buyers and sellers that operates globally. Alibaba is now floated on the New York Stock Exchange, giving the company greater access to foreign capital and solidifying its position as an international company.
Taobao is the largest online retailer in China. While this site is focused on the Chinese market, this is a large market and as a result Taobao is a significant contributor to Alibaba's earnings. Alibaba earned $12.3 billion in revenue last year, on transaction volume of $394 billion. Net income is $3.9 billion, which equates to $1.56 EPS.
Strategy
Alibaba has a transnational strategy. While the company began in China, and focused on that market, it has also had international appeal, in that it would link Chinese exporters with foreign buyers. International trade is a core part of Alibaba's business. A transnational strategy is one where the company has a centralized head office but runs subsidiaries in other countries. These subsidiaries or units are still subject to strong central control. Alibaba remains run out of China, but has sales offices in foreign countries in order to build the brand and attract business. As such, this is a class transnational company. It retains a high level of centralized control, while having a presence in a number of other countries around the world. They are not global in the sense...
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