STRATEGIC MANAGEMENT

ETHICS, SOCIAL RESPONSIBILITY, AND SUSTAINABILITY

ALIBABA GROUP HOLDING LIMITED

By:
Nabila Sekar Hapsari 1506679483
Rahmatania Ekoputri A. 1506679281
Pratama Adipradana 1606884602
Ananda Nandika 1506727204
Fikri Arrasyadi 1506723881
Mohamad Raihan Ghifari 1506679294
Rheinhard Yonatan 1506749634

FAKULTAS EKONOMI DAN BISNIS

UNIVERSITAS INDONESIA
DEPOK
 STATEMENT OF AUTHORSHIP

We, the undersigned, hereby declare that the attached paper is purely the result of our own
work. No work of others that we use without citing sources.

This material is not / has not been served / is used as a material for papers / assignments on
subjects other than we stated clearly that we have used.

We understand that this task can be reproduced and or communicated for the purpose of
detecting the presence of plagiarism.

Course : Strategic Management

Paper / Assignment Title : Ethics, Social Responsibility, and Sustainability – Alibaba
Group Holding Limited
Date : September 10​th​, 2018
Lecturer : Avanti Fontana Ph.D / Anna Amalyah Agus S.E., M.B.A

Name Student ID Number Signature

Nabila Sekar Hapsari 1506679483

Rahmatania Ekoputri A. 1506679281

Pratama Adipradana 1606884602

Ananda Nandika 1506727204

Mohamad Raihan Ghifari 1506679294

Fikri Arrasyadi 1506723881

Rheinhard Yonatan 1506749634

 Ananda Nandika
Finance
1506727204

Nabila Sekar Hapsari Rahmatania Ekoputri A. Pratama Adipradana

Finance Finance HR
1506679483 1506679281 1606884602

Mohamad Raihan Ghifari Rheinhard Yonatan Fikri Arrasyadi

Marketing Finance Operations
1506679294 1506749634 1506723881
 CHAPTER I
PREFACE

1.1 Background
Strategic Management
Strategic Management is about continuous planning, monitoring, analysis, and assessment of
all that necessary for organization to meet its vision and mission. Strategic management is a
process to make decision itself. Decision is made based on current internal and external
situation of an organization. Good decision mean good performance, and vice versa where
bad decision lead to bad performance.

Today, strategic management combines creative, business, organizational, analytical and

other skills as well as adaptation of technology to produce effective decision. Effective
decision will produce desirable results and improve efficiency. Decision can be made faster
and adaptable to situations. Decision will yield another effective decision in short time
because understanding about situations are improved with developing perspective and
technology adaptation.

In the Strategic Management Course, we have to analyze one company about implementation
of strategic management in the company and Alibaba is the company we are going to
analyze.

Brief Company Profile

Alibaba Group Holding Limited is Chinese multinational holding company, headquartered in
Hangzhou, China. Established in 1999 by 18 founders led by Jack Ma. Alibaba hold company
which provides ​consumer-to-consumer​, ​business-to-consumer and ​business-to-business sales
services via ​web portals​, as well as ​electronic payment services, ​shopping search engines​,
capital investment, and ​cloud computing​ services.

Alibaba went public in 19 September 2014 in New York Stock Exchange in a record $25
billion offering (biggest IPO in history). As of 2018, Alibaba market capitalization stood at
$406.24 Billion.

With operations in over 200 countries, Alibaba is one of the biggest holding company in the
world. It has been expanding further into another industry and continuing to develop business
model and strategy.
 CHAPTER II
THEORETICAL BACKGROUND

2.1 Theoretical Background

Ethics and Business Ethics
Ethics are the rules or standards that govern our decisions on a daily basis. Many consider
“ethics” with conscience or a simplistic sense of “right” and “wrong.” Others would say that
ethics is an internal code that governs an individual’s conduct, ingrained into each person by
family, faith, tradition, community, laws, and personal mores. Corporations and professional
organizations, particularly licensing boards, generally will have a written “Code of Ethics”
that governs standards of professional conduct expected of all in the field.

Business ethics is the study of proper business policies and practices regarding potentially
controversial issues such as corporate governance, ​insider trading​, bribery, discrimination,
corporate social responsibility and ​fiduciary responsibilities. Law often guides business
ethics, while other times business ethics provide a basic framework that businesses may
follow to gain public acceptance.

Business ethics ensure that a certain required level of trust exists between consumers and
various forms of market participants with businesses. For example, a ​portfolio manager must
give the same consideration to the portfolios of family members and small individual
investors. Such practices ensure the public receives fair treatment.

The concept of business ethics arose in the 1960s as companies became more aware of a
rising consumer-based society that showed concerns regarding the environment, social causes
and corporate responsibility. Business ethics goes beyond just a moral code of right and
wrong; it attempts to reconcile what companies must do legally versus maintaining a
competitive advantage over other businesses. Firms display business ethics in several ways.

Business ethics also refers to contemporary organizational standards, principles, sets of

values and norms that govern the actions and behavior of an individual in the business
organization. Business ethics have two dimensions, ​normative business ethics or ​descriptive
business ethics​. As a corporate practice and a career specialization, the field is primarily
normative. Academics attempting to understand business behavior employ descriptive
methods. The range and quantity of business ethical issues reflects the interaction of
profit-maximizing behavior with non-economic concerns.

Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within
major corporations and within academia. For example, most major corporations today
promote their commitment to non-economic values under headings such as ethics codes and
social responsibility charters.
There are some examples of where ethics plays a role in defining whether the action is right
or wrong:

1. Whistle-Blowing

It is a policy that encourage employees to report any wrongdoings or misconducts that

has occur in the workplace. Employees are bound to report such unethical activity to keep the
workplace conducive and align with the company’s code of ethics. Whistle-blowing may
sometimes be difficult due to pressure from the culprit to not blow the whistle/report it, or the
employee decided to turn a blind eye to the matter. In order to encourage employees to report
such act, incentive are prepared in such a large amount because what they report might safe
the reputation of the company. It is highly encouraged to report once employee discover any
unethical activity in the workplace. If the employee failed to report and being found out that
the employee witness the action, they might go down as an accessory to the crime.

2. Bribery
Bribery refers to when a party or parties receive a gift or gifts in any form (money,
item, authority, intangible gifts) to influence the action made by someone with enough
authority to bend the final decision of one matter, in the end abusing their power for
individual or certain parties advantage. Bribery can happen for various reasons. Some parties
might have to push through to someone to make something happen. Any amount of bribery is
still considered a bribe. However, many parties cleverly disguise bribe as bonus or incentive.

3. Workplace Romance

Workplace romance are considered unethical because it might influence someone’s

decision based on subjectivity, and not objectivity. It might also distract the person to make
fair assessment in given situation, causing them to not prioritize the company’s goal, but their
loved ones. Some argue that workplace romance is harmless because it claimed to improve
work performance, adding a dynamism and energy that translates into enhanced morale,
communication, creativity, and productivity. Although, the opposition side of those who
against workplace romance argued that it may lead to various misconducts that might caused
harm to the company, such as:

● Favoritism complaints can arise.

● Confidentiality of records can be breached.
● Reduced quality and quantity of work can become a problem.
● Personal arguments can lead to work arguments.
● Whispering secrets can lead to tensions and hostilities among coworkers.
● Sexual harassment (or discrimination) charges may ensue, either by the involved
female or a third party.
● Conflicts of interest can arise, especially when well being of the partner trumps
well-being of the company.
 The question about workplace is not to whether allow it or ban it, but rather how can
the company manage the phenomenon.

Corporate Social Responsibility

Corporate social responsibility (CSR) is a self-regulating business model that helps a
company be socially accountable — to itself, its stakeholders, and the public. By practicing
corporate social responsibility, also called ​corporate citizenship​, companies can be conscious
of the kind of impact they are having on all aspects of society including economic, social, and
environmental. To engage in CSR means that, in the normal course of business, a company is
operating in ways that enhance society and the environment, instead of contributing
negatively to it.
Corporate social responsibility is a broad concept that can take many forms depending on the
company and industry. Through CSR programs, philanthropy, and volunteer efforts,
businesses can benefit society while boosting their own brands. As important as CSR is for
the community, it is equally valuable for a company. CSR activities can help forge a stronger
bond between employee and corporation; they can boost morale and can help both employees
and employers feel more connected with the world around them.
In order for a company to be socially responsible, it first needs to be responsible to itself and
its ​shareholders​. Often, companies that adopt CSR programs have grown their business to the
point where they can give back to society. Thus, CSR is primarily a strategy of large
corporations. Also, the more visible and successful a corporation is, the more responsibility it
has to set standards of ethical behavior for its peers, competition, and industry.

Environmental Responsibility
Although businesses seek profit through their operation, Businesses must not exploit and
decimate the natural environment. according to the international Standards Organization
(iSO), the word environment is defined as “surroundings in which an organization operates,
including air, water, land, natural resources, flora, fauna, humans, and their interrelation.”
Employees, consumers, governments, and society are especially resentful of firms that harm
rather than protect the natural environment. conversely people today are especially
appreciative of firms that conduct operations in a way that mends, conserves, and preserves
the natural environment. consumer interest in businesses preserving nature’s ecological
balance and fostering a clean, healthy environment is high. Failed to do so could affect
businesses reputation.
At the present day, it is good business for a company to provide a sustainability report
annually to the public. a sustainability report reveals a firm’s operations impact the natural
environment. this document discloses to shareholders information about the firm’s labor
practices, product sourcing, energy efficiency, environmental impact, and business ethics
practices.
A few years ago, firms could get away with placing “green” terminology on their products
and labels using such terms as organic, green, safe, etc, because there were no legal or
generally accepted definitions. however, at this present day, these terms carry much more
specific connotations and expectations. Uniform standards defining environmentally
responsible company actions are rapidly being incorporated into the legal landscape. it has
become more and more difficult for firms to make “green” claims when their actions are not
substantive, comprehensive, or even true.
The ecological challenge facing all organizations requires managers to formulate strategies
that preserve and conserve natural resources and control pollution. Firms increasingly are
developing green product lines that are biodegradable or are made from recycled products.
green products sell well. Managing environmental affairs can no longer be simply a technical
function performed by specialists in a firm; more emphasis must be placed on developing an
environmental perspective among all employees and managers of the firm. Many companies
are moving environmental affairs from the staff side of the organization to the line side, thus
making the corporate environmental group report directly to the chief operating officer.
Environmental strategies could include developing or acquiring green businesses, divesting
or altering environment-damaging businesses, striving to become a low-cost producer
through waste minimization and energy conservation, and pursuing a differentiation strategy
through green-product features.
The international Organization for Standardization (ISO) have a series of voluntary standards
in the environmental field known as ISO 14000. the ISO 14000 family of standards concerns
the extent to which a firm minimizes harmful effects on the environment caused by its
activities and continually monitors and improves its own environmental performance.
included in the ISO 14000 series are the ISO 14001 standards in fields such as environmental
auditing, environmental performance evaluation, environmental labeling, and life-cycle
assessment. The ISO 14001 standard requires that a community or organization put in place
and implement a series of practices and procedures that, when taken together, result in an
environmental management system (EMS).
The major requirements of an EMS under iSO 14001 include the following:

● Show commitments to prevention of pollution, continual improvement in

overall environmental performance, and compliance with all applicable
statutory and regulatory requirements.
● Identify all aspects of the organization’s activities, products, and services that
could have a significant impact on the environment, including those that are
not regulated.
● Set performance objectives and targets for the management system that link
back to three policies: (1) prevention of pollution, (2) continual improvement,
and (3) compliance.
 ● Meet environmental objectives that include training employees, establishing
work instructions and practices, and establishing the actual metrics by which
the objectives and targets will be measured.
● Conduct an audit operation of the EMS.
● Take corrective actions when deviations from the EMS occur

In addition, in the recent years, Businesses should also aware with their responsibility
regarding wildlife environment and using renewable energy such as solar power by
implementing policy that support the preservation of wildlife environment and the using of
renewable energy.
 CHAPTER III
DISCUSSION

Case Analysis
Theoretical basis and concepts can be integrated together into becoming Sustainable
Development theory that had further augmented existing concept of Corporate Social
Responsibility (CSR) and Triple Bottom Line (TBL). Within doing so, they focus on internal
and external interest of a company by asserting four aspects of CSR such as:
● Economic aspect, to be the reason of the company’s existence;
● Social aspect, to eradicate poverty and safeguard human rights;
● Environment, to preserve the nature for future generations; and
● Organizational culture, to align the corporate and social values with individual values.

What Alibaba has done as its strategy for sustainable development includes all of the four
aspects above. Below we will give you some example.

1. Earmarks 0.3 Percent of Annual Revenue for Conservation of Environment

Since 2010, Alibaba has earmarked 0.3% of their annual revenue to fund initiatives
with the objective of encouraging environmental awareness and conservation as well
as other CSR efforts. In 2011, they have established the Alibaba Foundation, which
serves as a private charity platform that focuses on supporting environmental
protection in China and also helping out the disadvantaged, for instance children born
with heart defects in underdeveloped rural areas in China. In 2017, the company
alongside Alibaba Foundation gathered over US$16 million in donations to support
more than 80 national and international charity projects. Ever since 2015 in
September, they also have encouraged their employees to undergo a minimum of
three hours doing service activities every year. Within two years of running the
program, in 2017 there were over 140,000 hours of social service activities performed
by their employees. They also facilitated 4.7 billion charitable participations involving
over 300 million consumers and over 1.7 million merchants. Through this act, they
encourage every single one of their merchants, consumers and other participants in
their business ecosystem to participate in socially responsible activities.

2. Creates Job Opportunities throughout China

Alibaba has played a part in China’s economic growth. Alibaba has helped reduce the
number of unemployment in China. It could happen because many types of service
providers needed and it create employment opportunities. Alibaba provides direct and
indirect business opportunities for merchants, Alibaba creates new opportunities for
service providers in logistics, marketing, consulting, operation outsourcing, training,
and online commerce professional. Also provides direct and indirect job opportunities
in China, makes people working directly online storefront and service to merchants. A
platform that they have impacts on business in many aspects, help to foster economy
 for everyone. Alibaba estimated on December 2016, their china marketplace
contributed over 33 million people to get a job and help supported livelihoods
approximately 160,000 disabled sellers.z

3. Supports Rural Areas Development in China through Their Expansion Program

“Our Rural Taobao”
The uneven distribution of business infrastructure and lack of information has made
the rural economy difficult to reach out to markets. Fortunately, the new era of
information technology, especially the growth of mobile Internet, has significantly
brought new changes for economic development in rural areas.
In order to boost this condition, Alibaba has released its rural strategy by putting
forward the objective of “serve farmers, conduct innovations in agriculture, and make
the rural areas better.” Alibaba has planned to invest 10 billion Yuan to 100 thousand
administrative villages from 1000 counties in the next three to five years by building
local e-commerce system.
This rural strategy has led Alibaba to launch its service center named “Rural Taobao”
in October 2014. Rural Taobao is one of Alibaba’s strategic projects that aim to
enhance the trade between China’s rural and urban areas. Alibaba’s Rural Taobao has
been helping the rural society by smoothing information flow and establishing
channel for villagers to buy and sell goods from and to urban consumers through
online marketplace platform.
In 2016, AliResearch published that by the first quarter of the fiscal year, Rural
Taobao has reached 14 thousand villages in almost 300 counties of 27 provinces
across China. The success of this project is shown by the improvement of
consumption power of rural population which has been gradually growing. The
sustainability of this program will be followed by the expansion of number of
counties that is covered by Rural Taobao which expected to be complete in 2019.

4. Develops Commercially Viable Charity Projects to Address Social Problems

In running their our day-to-day business, Alibaba is at the forefront in witnessing and
understanding the social problems in China. Alibaba is committed to running their
social responsibility program through a unique charitable environment that focuses on
innovation and scalability. Alibaba also supports and promote another charitable and
social responsibility initiatives as long as that programs in ways that Alibaba believes
and alignment with Alibaba core values and mission. proof that Alibaba focused on to
take care about social responsibility are got named on one of the top 10 charitable
enterprises in China and the top charitable private enterprise in China. In addition,
Alibaba has projects for developing commercially viable charity that focused toward
long-term and sustainable philanthropy. That philanthropy product that Alibaba
develop including:
● The “reunion” platform that connects to our mobile apps and those of our
partners to help locate missing children in China
 ● Anti-Scamming apps that help the public to report and identify scam call
and text messages
● Apps that enhance the user experience for people with vision disabilities
● A new feature in the Cainiao Network App that allows users to send clothes
and book for donation
5. Alibaba Code of Ethics
Alibaba has been known for channeling humanism throughout every aspect of
business and every stakeholders they have. In conducting their business, Alibaba
always refers to Alibaba Code of Ethics. This Code contains general guidelines for
conducting the business of Alibaba Group consistent with Alibaba Group's values and
the highest standards of business ethics, and applicable laws, rules and regulations
that applies to all directors, officers and employees of Alibaba Group Holding
Limited and its consolidated subsidiaries. The conduct of all Alibaba Group’s
employee must align with company values and promote a work environment that
improves Alibaba Group’s reputation. The company values include customer first,
teamwork, embrace change, integrity, passion, and commitment. These values must
be internalized by all Alibaba Group’s employee by respecting each other, respecting
information privacy, promoting equal opportunity and non-discrimination, and
providing safety in the workplace. To implement this code, Alibaba Group has a
whistleblower mechanism for reporting violations and also prohibiting retaliation.
 CHAPTER IV
CONCLUSION, SOLUTION, AND RECOMMENDATION

4.1 Conclusion
Based on our analysis regarding Alibaba, Alibaba has implemented a code of ethics
that regulate what their employee should do, what are the rights that their employee
has and also with an intention to benefiting their stakeholders. This code of ethics not
only comply with Alibaba’s value but with law and regulation as well. Regarding
their social responsibility and environmental responsibility, Alibaba has involved
themselves in various activity to promote their social and environmental
responsibility, such as, supporting rural areas development in China under the name
of “Our Rural Taobao”, and through various charitable and donation activities to
support the disadvantaged in undeveloped areas in China and financing
environmental projects such as providing funds to support clean water and air. In
addition, while Alibaba has created job opportunities in China, including for disabled
person, we believe that Alibaba also benefited from it because is not only created job
opportunities across their value chain but also contributed either directly or indirectly
to increase the number of user in their marketplaces. Thus we can conclude that
Alibaba has already aware with the importance of implementing code of ethics and
aware of their social and environmental responsibility.

4.2 Solution and Recommendation

Seeing that Alibaba is already doing really good with living up to their corporate
social responsibility and environmental responsibility, we recommend that Alibaba
not only maintain their commitment through their sustainable corporate responsibility
projects but to also increase their annual budget for their sustainable corporate
responsibility and involve in more area regarding their corporate social and
environmental responsibility, because not only would it benefit their stakeholders but
it would also sustain Alibaba’s business environments. One thing to note is that it
becomes very important for Alibaba to maintain this stellar performance regarding
their business ethics, social responsibility and sustainability considering that Jack Ma
would no longer be the Chief Executive Officer of Alibaba and would be replaced by
Daniel Zhang. It was Jack Ma who felt the personal need to give back even more and
more with the immense fortune the company makes out of their day-to-day
operations, and this incredible value should be extremely maintained by Mr. Zhang in
the future because this aspect is one of the things that make Alibaba even more
valuable as a company and a great place to work according to employees.

4.3 Comparison to presenting team (Nokia)

Alibaba and Nokia are similar in terms of having their own company’s code of
conduct, in which addresses quite similar things such as the ways they do business,
how to treat each stakeholders, and their social responsibility. They also share the
same values of protecting the environment and conducting business with integrity,
and also about social issues such as unemployment, hunger, and poverty. In terms of
differences, Alibaba being a growing company intensifies a lot on their CSR
initiatives compared to Nokia who is experiencing a step backwards, business-wise.
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