The Alibaba Group is embarking once again on a major reorganization of its business structure that will divide the company into 25 different units, each led by a general manager.  The move is the latest in several the company has made to grab greater control over its future after an often tense partnership with Yahoo.

Back in July of 2012 Ma announced a restructuring that split the company into seven groups, amid concerns that Alibaba had prioritized growth over scrutinizing the quality of its online vendors and suffered from poor communication between its divisions.  Alibaba and Taobao were involved in fraud cases.

The reasoning behind this latest re-organization is to ensure that Alibaba Group has the flexibility to take advantage of rapid changes and developments in the e-commerce landscape, while keeping its current management team intact.  Competition in e-commerce is fierce in China.

John Spelich, vice president of Alibaba Group stated: ”Consistent with our stated goal of promoting an e-commerce ecosystem, we’ve organized the company into smaller business units that will be better prepared to pursue their business with focus while also encouraging collaboration when required in order to build up that ecosystem. In addition, it allows Alibaba’s young leadership to further grow and develop as well.”   Alipay, Alibaba Group’s online payment platform, and micro-lending arm Aliloan are not included in the restructuring).  According to Ma, “This is the most difficult reorganization in Alibaba’s 13 years.  It’s a culture shift!”  In his message, Ma added that though each unit has its own responsibilities, he wants them to focus beyond their key performance indicators and look toward the company’s overall performance as a barometer of success.

This is the latest in several major strategic realignments for Alibaba since Ma took private. The move was strategic to be able to take pressure of, which saw its revenue drop in 2011 after announcing that it would focus on improving the quality of its platforms instead of aggressively building its paying user base in a move to improve the trustworthiness of suppliers on the site.  Analysts saw the move, however, as a way to consolidate control over Alibaba Group in preparation for an IPO. The company is also currently integrating and Taobao Marketplace, its consumer-to-consumer retail platform,  which will make it easier to conduct business.


BIIA Comment:  The strategy is slowly shifting from a focus on growth to value added, retaining competitive advantage and managing innovation.  The combination of B2C, B2B online trading platforms, payment systems and micro lending will eventually put Alibaba in the unequaled ownership of a wealth of consumer and business performance data waiting to be monetized.  BIIA’s editor-in-chief has always maintained that Alibaba may one day become the combined D&B, Experian and Nielsen of China.