I. Strategic Issues and Problem
I. Strategic Issues and Problem
I. Strategic Issues and Problem
III. Alternatives
One solution is to decrease the threat of government interference. Presently, ownership interests
lie in China. The Chinese government at any time may choose not to honor the ownership rights
of foreign investors. If this does occur, Alibaba’s stock may fall drastically and Chinese
companies may also lose investor trust. In order to gain investor trust, strategic government
regulation, ensuring the rights of foreign investors is necessary. This plan will improve
Alibaba’s permanence, allowing the company to remain a profitable marketplace for generations.
Although this plan provides the most benefits, the likelihood of success of this plan is uncertain.
Government reform could be extremely lengthy and costly.
Another alternative solution is to change the order of the company’s corporate governance
structure. Currently, investors are fearful of the intentions of the board since the majority is
made up five of Alibaba’s 28 partners. By changing its corporate governance into a more
investor friendly structure, Alibaba may raise more capital through common stock. An increase
in stock price will provide Alibaba with more financial flexibility and security. Unfortunately,
no guarantee exists that investor fears will be relieved by this corporate governance change. The
stock market is also highly volatile.