Organizational Structure and Management: Alibaba and The 21st Century

Millman (3) asserts that organization structure of a company has a great influence in its progress and relation to the public and employees. Management is influenced by structure of command from the employees to the management. An ideal design eases communication, promotes competition, and promotes innovativeness. The design of an ideal organizational structure is dependent on many factors, which both directly and indirectly relate to the organizational environment. Many intrinsic factors, however, have a great influence on the system an organization is designed. Each unit is headed by a department head that is answerable to the overall head of the organization. However, different organizations apply different structures that suit their functionality and the type of work. This paper, therefore, provides an analysis of organizational structure of Alibaba and management for organizations in the 21st century.

Alibaba is one of the leading countries in the world with operational branches in United States, India, China, Malaysia, Thailand, Turkey, United Kingdom, Japan, Vietnam, and Taiwan. A high number of customers in the different stores demands an organizational system that will enable the company satisfy the needs of its customers and, at the same time, realize profits from their services. The organization of the company is defined as a traditional VIE (Variable Interest Entity). The system is integrated into the operation of the company to propel it to success in the midst of other competitors (Picker and Wu 5). The VIE structure operates with other subsidiary organizations that monitor the flow of goods and the market systems in the different parts. For a complete cycle of relations within the organization to occur, the local companies work closely with the WFOEs (wholly foreign-owned enterprises). The management is done through 27 managers with no representation of the shareholders to the company such as SoftBank and Yahoo! The organization structure was designed to China’s companies with government licenses that did not allow them to operate in the international market get access to the markets in the global scene (Picker and Wu 5).

The application of the structure in Alibaba is using five companies that are given the jurisdiction to operate in the local markets. The biggest owners of the companies include the co-founder Jack Ma, executive Xie and Ma (Reuters 6). The local companies are used in the creation of a variable interest for a larger organization and are used in the assessment of the progress of the company in the different markets. The advantage of the structure is that the shareholders get to be integrated into the company’s progress with a contract that binds them in their agreements. Alibaba applies the VIE structure with the no assurance to their shareholders that the company will always progress with the interest of the shareholders prioritized. The company also does not assure them of ethically maintaining their agreements, and in case of a break out the company to settle the debts incurred.

The structure of the organization divides the different departments into sub-units each headed by a department head. The department heads are answerable to the manager of the branch and who is the overall decision maker of the branch. The division of the management of an organization into different smaller sectors helps attain a more competent work as compared to the traditional management structures. The division of the departments in an organization helps in the management through the sampling of information from the different departments within an organization. These divisions provide an organization with the ability to monitor the different sector and, at the same time, implement the policies that propel the organizations’ operations. Alibaba is divided into different sub-sections, which are overseen by managers as the head. Each of the managers heads a branch with the task of ensuring that the collective operation of the branch attains the set goals. The article is a representation of the approach that Alibaba has used in creating a market entry and maintaining their position compared to their competitors. The detailed definition of the VIE structure presents a glimpse of the operation of the organization and the relationship that the management has with the employees and the market. Efficient management system of the organization is a representation of the systematic system of relation between the CEO (Chief Executive Officer) and the different branches in the international market.

The market trends in the different places that Alibaba has opened up branches present different systems and approaches that are sensitive to the operation of the organization and the management of the different departments within the organization. Three key determinants are applied in determining the operation of Alibaba in the different markets it operates. The way the job is divided among the employees and the leadership system, the coordination of the different jobs, and the person who will make the decisions in the organization. The differentiation of work in the Alibaba follows a horizontal system with the employees answerable to the managers in their department. Therefore, communication is from the management either to the employees or from the employees to the managers. However, the channel follows that the employees pass information to the department heads, which then lets the manager know. After the decision had been made, the same channel is followed.

The local companies have been used as a local hub for the organizations operations, but with the incorporation of other international stores, the organization can operate with less tension and competition in the local markets. The structure is a link for the different stores of Alibaba all over the world giving guidance on what is expected of the different managers.

In conclusion, Alibaba is among the companies in the present generation still applying the VIE structure of the organization. The structure fits the company with a large international market that it serves and the high number of customers. Efficiency of the structure has enabled the Alibaba introduce its products in new markets and emerge as the leading suppliers and service providers. However, from time to time, changes are made in the organizational structure to help in determining areas that lack the improvement and the strategies to apply. The changes in the structure are done to ensure that the organization runs within the objectives set and can successfully propel the company to success. The structure is a system that has helped many companies effectively manage their operations in the global and local scenes with a huge return for the owners and the shareholders. However, the VIE structure has weaknesses that might cost the organization market position and its publicity leading to losses in their sales. Similarly, the structure gives the organization a direct system of administration and helps manage all the different stores.

Implications

Modern age management systems are based on the operations of the organization and not on the factors that might influence the changes. Therefore, in the case of a problem in the management and system of command, the different departments are unable to come to a unanimous solution to solve the problem. Conversely, management systems in the 21st century are designed with the capability to shift from time to time making the management prone to external forces that affect its operation. Similarly, the transformations of management systems have limited the flexibility of the structure to include other departments that might be created within the organization.

The report on Alibaba reflects on the different principles of management and efficiency in the organization of the company. The management system in the modern age is driven by organization’s size, the number of employees, technological prowess, and the functions of the company. Therefore, considering the case study of Alibaba, the vital components of an organization structure are highlighted. Adopting these different principles, into the modern businesses that portend to expand in operations saves the challenge of identifying the system of entering the market.

Similarly, the strategies of Alibaba reflect on the different approaches a business may use in entering into the global markets. Similarly, report on the organizational structure of Alibaba is a representative of the complexity of the structure but if well maintained, the organization runs effectively. Efficiency in management is not dependent on the sophistication of the structure or the resources used, but the simplicity and ability to link the different systems and departments and work as a single unit. The successful application of the traditional management structure proves that modern organizations can still apply these structures in the management of their operations.