What is Alibaba?
“When I have a competitor like Google or eBay, as a Chinese local company, we can learn a lot, we can improve ourselves. They should be careful of us.”
Alibaba set the record for the biggest IPO in history, which took place at the New York Stock Exchange in 2014.
And the year 2017, Alibaba was the first company in Asia to exceed the $400 billion valuation mark, an honor that had previously only been held by American companies. Alibaba is amongst other global eCommerce giants transforming the marketplace from Physical Market Places to Online Market Places.
Also Read: What is an IPO?
The company is made up of three main sites, Taobao, Tmall, and Alibaba.com. Combined, they have hundreds of millions of users and host millions of merchants and businesses. Which means they can pretty much be used by anyone, anywhere, for anything.
So how does it even work? Meet our fictional character, John, she lives in Beijing. John wants to buy a new blender, so he logs onto Taobao. He finds one he likes, being sold by, let’s say, Chris. He lives in Shanghai and sells the blenders to individuals at a competitive price. When John goes to check out, he doesn’t use his credit card. He uses AliPay to purchase the item. Think of it like using PayPal. Chris then accepts the AliPay payment from John.
So where did the supplier, Chris, get the blenders from? Well, he bought a supply of 1,000 units on 1688.com, the popular Chinese version of Alibaba.com. It sells bulk orders to suppliers like himself.
He bought his batch from a manufacturer named Keith on TMall which allows businesses to sell wholesale. Keith owns a blender company and production facility in Shenzhen which produces the items and other kitchen appliances. Previously, Chris only sold to individual buyers in China. But recently, he’s listed his blenders on AliExpress, which sells to customers outside of China.
So now, Laura, who’s living in California and found the blender on AliExpress, can also buy it from Chris. And yes, she can even use Alipay too.
Of course, importing products from China into the U.S. is nothing new. The difference? Now, anyone in the world can do it on their mobile device and all through the same company. But it’s not the only eCommerce. Chris has been selling so many blenders lately that he wants to grow his business faster. But he doesn’t have the money to buy more units from Keith. So Chris uses AntFinancial, to get financing. The loan helps him order an extra 10,000 units.
Also Read: What is Xiaomi?
So, for buying, selling, digital payments, and even financing, you’ve done it all in Alibaba’s platforms. And Alibaba now includes a shipping company, a messaging app, a movie studio named Alibaba Pictures, and more. Alibaba’s growth is primarily fueled by China’s massive population and rising middle class, but Jack Ma wants world domination for the company.
That’s why Alibaba is investing heavily in companies in other markets as well. Most of which are also being pursued by Amazon. The marketplace as we know it has changed forever. And it’s likely going to be companies like Alibaba which continue to lead its evolution.
So this was all about Alibaba. Hope you enjoyed reading the Article also visit our other articles and stay tuned for more interesting articles like this.
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TATA Business Journey – India’s one of Most Successful Company
Tata: the industrial conglomerate that lies at the heart of India’s success on the global business stage. For almost two centuries, the Tata Group has pioneered multiple industries in India and remains a market leader in most of them.
You’ve probably heard of Tata Motors, their car division, but as you’ll soon find out, their reach extends far beyond that one subsidiary.
In this article, we’ll go through three generations of Tata businessmen to see how they built one of India’s most successful companies.
TATA Journey Begins
The story of Tata begins during the reign of the British Empire. India back then was a huge exporter of cotton, but the brutal regime of the British East India Company left little room for local entrepreneurs to develop.
The poor treatment by the British eventually resulted in a rebellion against them, in 1857, which ended the power of the British East India Company and replaced it with the British Raj.
Now, compared to its ruthless predecessor, the Raj was much more focused on keeping the peace. The Raj didn’t exploit the Indian population quite as harshly and it also invested a lot of money in building India’s first railways for example.
Of course, at the end of the day, the British Raj was still an oppressive colonial power, but at least it finally gave the local population the economic opportunity to develop themselves.
Because India was an exporting country, the first Indian entrepreneurs came from exactly that sector and one of them was Jamsetji Tata.
He was the son of an exporter in Mumbai and he graduated in 1858, exactly the perfect time to take advantage of the economic reforms of the British Raj. Because his father’s export business was growing, in 1859 Jamsetji went to Hong Kong to develop a subsidiary there and upon seeing the sheer scale of British commerce there, he realized that the Tata export business had truly global potential.
Over the course of the next decade, he would travel to Japan, China, and Great Britain, establishing a network of distribution for his father’s business. He’d eventually create his own exporting company in 1868 and using the money he made, he started building textile mills of his own, effectively creating a vertically-integrated business.
From the very start, Jamsetji’s philosophy was to find the best practices used across the world and to bring them back to India. In his textile mills, he enacted policies that were virtually unknown to most of India, like offering sickness benefits and pensions to his employees.
But Jamsetji wasn’t content with just the textile industry, he saw the wonders the Industrial Revolution had created in Europe and he wanted to recreate them back home. He began working on a steel production plant in 1901, modeled after the ones he had seen in Germany.
Even more ambitious was his hydroelectric project, inspired by his visit to the Niagara Falls power plant in 1903.
Jamsetji realized the incredible power of tourism and so he also created a chain of hotels, starting with the Taj Mahal Palace Hotel, which even today is one of the most recognizable buildings in Mumbai.
Jamsetji was truly a man dedicated to business and to help people through it. He valued education to the point where he donated land and buildings towards the creation of the Indian Institute of Science, the eminent University of India.
He would not, however, live to see most of his projects realized, because he died while on a business trip in Germany in 1904, leaving the already sizable Tata company to his two sons.
Together they consolidated their ownership into a single holding company, which in turn is owned by the charitable trusts they created for future generations.
Jamsetji’s sons fulfilled many of their father’s ambitions, they oversaw the creation of India’s first steelworks in 1907, India’s first cement plant in 1912 and the first indigenous the insurance company in 1919.
By the time the leadership mantle passed onto the next generation in 1938, Tata Sons were comprised of 14 different companies. This time, however, instead of it going to one of Jamsetji’s grandsons, leadership instead went into the hands of a distant cousin with a very interesting background.
Jehangir Tata, better known as JRD, had been in the company since 1925, but he had been raised in France and was a close friend to the man who made the first flight across the English Channel.
In other words, JRD was a passionate aviator and in 1929 he obtained India’s first pilot license, so unsurprisingly his first big project at Tata was to develop an airline. In 1932 he created the Tata Air Service, which originally only carried mail, but then in 1938 started doing passenger flights as well, even helping out the British in the Second World War.
Now, you’d imagine India’s independence in 1947 would’ve been beneficial to the Tatas, but in reality, the socialist policies of the newly-created government were at odds with private business.
India’s first prime minister saw just how successful JRD had been with his airline and in 1953 he unilaterally decided to nationalize it.
He kept JRD as the airline’s chairman until 1977 and as you can imagine, the company only went downhill from there, drowning in ever-increasing debt.
Of course, JRD would not let politics get in the way of business and so he did his best to grow Tata while avoiding the wrath of the socialists.
He created Tata Motors in 1945, originally with the idea of building locomotives, but in 1954 he branched out into commercial vehicles through a partnership with the German car company Daimler.
Over the course of his 52 years of leadership, JRD expanded the Tata Group from 14 companies to 95, but to do that he had dramatically lower the ownership Tata Sons had in each one in order to appease the socialists.
In 1969 the Indian government introduced the Monopolies and Restrictive Trade Practices Act, which was essentially targeted at Tata even though they were very far from a monopoly by western standards.
But as JRD expanded the group and lowered its ownership in the individual subsidiaries, he started losing control. Some of his companies just weren’t performing and the man he sent to fix them was this guy: Ratan Tata.
He is one of Jamsetji’s great-grandchildren and he joined the Tata Group in 1962. His first major project came in 1971 and it was pretty difficult: Ratan was given charge of a struggling Tata company known as NELCO, which in the 1950s was India’s biggest producer of radios, but just twenty years later it had fallen to a 3% market share.
Ratan’s focus was on technology and the future, so instead of trying to salvage the radio, he instead funded the development of new products like satellite communications, which restored NELCO in the 1980s and made Ratan the apparent successor of JRD.
Ratan claimed leadership of the Tata Group in 1991, right as a wave of economic liberalization swept across India.
The Socialists lost power and India finally joined the global capital market, but this presented a big threat to Tata. Up until now, it had operated in a very protected economy, which was suddenly open to competition from foreign companies.
Worse yet, JRD had let Tata become extremely decentralized, so it would be very slow to adapt to new competitors.
Ratan had no choice but to re-establish ownership over all the Tata subsidiaries and that didn’t come cheap. He sold 20% of Tata Sons, the holding company, and used that money to buy shares in the Tata subsidiaries, especially Tata Steel and Tata Motors.
He then reorganized all hundred subsidiaries into seven sectors, establishing a framework along which he could actually control them. But just wielding power isn’t enough to turn around a struggling business and in the 1990s pretty much every Tata company was losing ground to international competitors.
Ratan’s answer, however, was brilliant: he started acquiring foreign competitors and absorbing them into the Tata Group, effectively buying all their talent and supply chains and experience in order to strengthen his business back home in India while also expanding internationally.
Ratan’s buying spree began in the year 2000 when his beverage company, Tata Tea, acquired the Tetley company from Great Britain.
Over the next decade, Ratan ended up acquiring hundreds of companies for pretty much every subsidiary in the Tata Group.
Most notably, he purchased the European steel titan Corus for $12 billion in 2007 and then Jaguar Land Rover for $2 billion in 2008.
As you can imagine, the international buying spree has been paying dividends for Tata and today the majority of their revenues actually come from outside of India.
What’s even more beautiful is that the majority of Tata subsidiaries are actually public companies whose shares you can purchase on the stock market in India.
Stay tuned with us. We keep bringing this kind of content for you.
Source: Business Casual
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