Case Study: Should Alibaba Group Centralize? Jack Ma founded the technologically evolving and economically progressing business, Alibaba Group. Ma saw the potential of the Internet early on and created a multifaceted conglomerate, capturing a business market at its foundation. His goal was to provide a simple, efficient e-commerce platform and now holds half of the B2B in China. Wherever there was a need, Ma would adapt and create different business units to effectively provide the service. Alongside online trading, Ma provided a platform for retailers, individuals, payment services, management solutions, and an entertainment portal. Alibaba Group developed synergies within the units and subsidiaries to coordinate ideas, spread resources, and develop additional units to complement each other. He down streamed manufacturers provided a cheap storefront and added value services (such as keyword bidding and commission based sales). His model was unlike any other at the time. This kind of consolidation, led to competition among the subsidiaries. This kind of competition, however, has inspired efficiency and differentiation. Ma promoted collaboration and created cross-business and cross-functional teams. The business units also did not depend on large teams but rather channeled its focus on engineering and customer service. By the mid 2000’s, China had transitioned into a primarily private economy—which ultimately brought the nation to an economic boom. By 2009, 70% of Alibaba Groups business was B2B. This was Ma’s ideal climate for business. When Alibaba Group brought China Yahoo!, it sought to provide an search and entertainment portal. They immediately tried to incorporate this feature into all its business units. Many of the groups subsidiaries have common core technologies and foundations but independence seems to maximize flexibility and success. Within the technological division, decentralization facilitated the growth of the firm early on. If Alibaba Group were to follow a centralized model, like that of Google Inc, it would risk losing control, slowing development and need to disenfranchise. By maintaining this autonomous culture, the subsidiaries and business units rely on rewards or persuasion. With the firm’s exponential growth, leading new businesses directly to Ma would slow down the start up process and eliminate helpful influences. Instead, Alibaba Group conducts annual strategy review sessions, mid-term reviews and ends the year with detailed plans for each subsidiary. Rapid employee growth is an issue that no company has mastered to resolve. Ma would adjust and extend control to executives overseeing the subsidiaries. By reducing the number of people reporting to him, he was able to streamline and ended 2008 with 8 different financial reports. Ma understands the importance of human resources and has developed a few key roles: 5 vary Chief officers and 3 under the board of directors to oversee all units. This sort of value based culture promoted growth and business development. Because Ma is now seeking to focus on leadership, he should indeed elect an Chief Operating Officer to counter the new permutations in the businesses. This would facilitate the decentralized strategy to cut costs and ultimately promote further growth for Alibaba Group. After initial screening, the new business platforms should seek to be loosely tied to Alibaba Group as additional business units. The “top-down” approach may ultimately be ineffective since the subsidiaries’’ management provides the final incentives. The upcoming platforms should seek to create their foundation at the corporate level to ensure guidance, financial resources. This will allow the business to focus on clients rather than infrastructure, which tend to be the greatest concern in the start up of a new market. With all these subsidiaries under one roof, Alibaba Group verges on a technological and e-commerce monopoly in China.