Company Overview Alibaba Group Holding Limited (Alibaba), Chinese e-commerce giant, was founded in 1999 by Ma Yun (Jack Ma). It offers a platform for both domestic and international traders to conduct business. It aims to create a convenient trading platform for small and medium sized enterprises all around the world. Alibaba was the first company entered into the Chinese e-commerce industry, so it brought an Internet revolution to China. During these years, its wonderful ability of expanding make it stay on the top of the industry. Alibaba operates various businesses. Its main subordinates and affiliates include: Even thought Alibaba has involved in diverse business fields, it is still planning to expand its business range, such as …show more content…
In September 2014, it went public at New York Stock Exchange (NYSE), and become the fourth largest technology company after Apple, Google and Microsoft. It also became the second largest Internet company after Google. Company Performance In the past years, Alibaba has developed to the largest e-commerce company in China. According to WSJ, Alibaba dominates 80% of China’s e-commerce market. In 2014, its total transaction value was $248 billion which is more than eBay and Amazon’s total. Its revenue increased stably over these years. The total revenue was $8.58 billion, which increased 56.06% comparing to the revenue $5.5 billion in 2013. The net income was $3.81 billion, which increased 180.35% from $1.36 billion in one year. Since Alibaba operates many different kinds of businesses, it also has many different kinds of competitors in the industries. Compare to them, Alibaba had a much stronger profitability ratios than its competitors. In 2014, Alibaba’s return on invested capital (ROIC) was 22.30%, which is used to measure how efficiency the company invests its capital. It can evaluate a company’s ability to create returns. The high ratio means the company is very strong and well managed, and it has the ability to create positive returns. The second highest company was Globe Sources.com (9.76%). Alibaba’s return on assets (ROA) was 13.23%, which is an index to measure how much net profit per unit of assets creates. The higher the ratio
Rate of return on total assets: This ratio compares the operating income against the total net assets. This can show how effective the company is in utilizing its assets prior to paying taxes. To determine this ratio take the net income and add the interest expense and divide those by the average total assets. In year 11 that rate was 12.30% and year 12 only showed a 2.48% increase to 14.78%. This rate has stayed consistent between the last 2 years and is trending in the right direction even if it is slow. I would consider this strength at this time because it is below the upper quartile of 17.2 but above the median quartile and lower quartiles of 12.3 and 8.6.
Return on Total Assets was 4.43% which is below five percent. That indicates that the company is not accurately converting its assets into profit. The total for Return on Stockholders’ Equity was 8.89%, however financial analysts prefer ROE to range between 15-20 %. The company’s low ROE indicates that the company is not generating profit with new investments. Lastly, Debt-to-Equity ratio for the company was 1.01 which indicates that investors and creditors are equally sharing assets. In the view of creditors, they see a high ratio as a risk factor because it can indicate that investors are not investing due to the company’s overall performance. The totals of these three ratios demonstrate that the company’s financial state is not as healthy as it should be.
The Return on Assets ratio is a basic measure of the efficiency with which TCI allocates and manages its resources (assets) to generate earnings. With a 20% projected increase in sales, for 1996, we calculated TCI’s ROA to be 12.95%, and 12.11% for 1997. Although this isn’t an extremely high ROA, TCI will be allocating its resources very wisely with the expansion of its central warehouse. If MidBank lends them the cash they need to complete this project, their central warehouse will be able to hold more tires for their increasing sales, which will then convert into profit. A true test of TCI’s ROA will be after 1998, when the warehouse is complete, so you can see just how well they can convert an investment into profit.
When combining the figures for ROE, ROA and the DuPont analysis it appears that the company is using leverage favourably. ROE is greater than ROA and assets are greater than equity. This is a positive sign for shareholders as it suggests a good investment return in a company that is managing its shareholder equity well (Evans & McDowell, 2009).
Return on Assets (ROA) of 8.74% and Return on Equity (ROE) of 12.4% are both positive.
The return on equity, ROE, is as high as 20.69% (above 15%). It illustrate that the RL Corporation uses the investors’ money pretty effectively. As of return of assets, equals to 13.10%, which reveals how much profit a company earns for every dollar of its assets. Both ROE and ROA for RL Corporation seems really good and they provide a picture that managers are doing a good job of generating return from shareholders’ investments.
The Alibaba group has thrived in the Chinese e-commerce sector from its inception in 1998. They currently account for over 70% of online shopping in China and delivered annual revenues of $636 million in the 12month period ending June 2009 (case p1-2). Alibaba’s successes are due to multiple factors that have allowed them to create corporate advantage, and thus establish market leadership in China (Case p1). The configuration and coordination of Alibaba’s
Nowadays, high-speed development of the technology has changed the daily life and the computer and the Internet have become the mainstream in China markets. The expansion of the Internet rapidly leads the e-commence to develop and change the operation way of Chinese business. At present, there are many people who want to start-up a business on their own. Ma seizes the opportunity to establish a great stage ‘Alibaba’ for
First of all, return on asset (ROA) is a ratio used to measure how efficient a company generates profit using its assets, which is the invested capital. We noticed that HH’s ROA was increasing from 2006 to 2010. However, HH’s ROA for 2011 dropped dramatically from 18.41%(year
There are many factors that lead Alibaba to sustaining its leadership position in the Chinese e-commerce markets, some of the factors explained in the case are:
Alibaba.com shows great traffic and consisting 50% market share in China. The launching of Alibaba.com has enabled the SMEs in China to do their business, where the site can even help them more, as they can trade domestically and internationally. The amount of global buyers has increased to 7 million and 1.6 million in both U.S and U.K respectively. [30] Recent statistic shows that there is more than 10,000 orders per day, placed by global buyers on Alibaba.com [30]
Alibaba is one of the biggest e-commerce companies in China that is founded by Jack Ma in 1999. Alibaba has changed the way of international business model, which is innovated and specialized by information technology. In this essay, it will be discussed that why was Alibaba a game changer, what were the conditions at that time that made it possible for succeed and why has it had a lasting impact by demonstrating the how the revolution of e-commerce industry in China conducted by Alibaba.
Read the case carefully and answer the following questions: 1.Till 2005, eBay EachNet was the leader in the Chinese e-commerce market, controlling more than half of it. But eBay EachNet soon lost its market leadership position to Taobao.com (Taobao). In this context, analyze the reasons that can be attributed to Taobao’s edge over eBay. 2.a. To enable people to trade with each other, Pierre Omidyar created a marketplace in September 1995 which was later called eBay. By mid 1997, eBay received one million page hits per
Alibaba cooperation is a global wide Internet company founded by Jack Ma, Chinese name Ma Yun.Although Alibaba was founded in 1999, the story of how the company came to be actually dates back to 1995, when Jack Ma was on a trip to the U.S. and first became exposed to the Internet. As the story goes, he tried searching for the word "beer" on Yahoo but the search results did not turn up a single Chinese option. In fact, he could hardly find anything about China on the Internet at all. After returning home, he founded a company called China Pages - a directory of various Chinese companies looking for customers abroad. China Pages was a flop. But a few years later, Ma took another stab at an
Alibaba’s sites have currently reached over 65 millions of registered users, hosted over millions of merchants and businesses globally. In 2005, its revenue had reached over approximately US$100 millions. Although China’s gross domestic product