Entrepreneur - Jack Ma

The economy of China is among the world leading economy and the economy of the People’s Republic of China is the third largest in the world, after the USA and Japan (2008) with a nominal GDP of US$4.91 trillion (2009). Because of this there are lots of business opportunity in the country for entrepreneur from china and all over the world. As such, there are many prominent Chinese entrepreneurs who has explored business opportunities here and made their visions become true and became successful . This whole article will tell about the life of the well known & renowned entrepreneur Jack Ma (Ma Yun), “The Godfather of Chinese Internet” for his success factors.

Jack Ma was born on born September 10, 1964 in the small and beautiful city of Hangzhou, Zhejiang Province, China. Jack Ma was not born in to rich family, he belong to a normal lower middle Chinese family, with no financial family background to support his business in his early start of business. Ma in the beginning got failed the entrance exam twice but that never became a reason for stopping to get on the path of success. At the age twelve Jack Ma decided to improve his English language skills by guiding the foreign tourists (FT Online 2009). This wonderful and interesting learning opportunity gave him a reason to produce new idea by talking to the western tourist, this thing became a very important landmark in his life as the English language became a very vital element in starting his dream business. Ma had attended Hangzhou Teachers College and graduated in the year 1988 with a Bachelor of Arts. Then after, he worked as English teacher in the University. In 1995 he got a opportunity to go United State of America for a Chinese government’s highway project as an English translator. During this visit to USA when he was in Seattle he got a chance to use the internet for the first time and than he recognised the opportunity. “I know this will change the world.” said Jack Ma in an interview with BBC reporter Carrie Grace (BBC Online 2009). Ma with the help of friends in the US first started building websites for Chinese companies

After coming back to China from US visit Jack Ma invited 24 of his friends to his house and told his idea of building website to his friends, on the other hand, 23 of his friends told him that he did not know anything about the internet, as well as, he did not know anything about computers, most importantly he did not have any money, how could he start an internet business. However one of his friends told him: “If you want to do it, just try it.”(BBC Online 2009). Therefore in 1995, he tried to exploit his idea by making an internet website named as china Pages, but at that time people were not aware of internet, so it was a big issue in convincing people about the use of the website. Most of the people believe that internet will never become a reason in the improvement of their own business. Although, it was very difficult to start up the business at the beginning, Jack Ma had never thought about giving up. Along with the rapid growth of the Chinese economy, the computer became more and more useful in the daily business.

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Jack Ma with his business to business (B2B), internet service of Alibaba.om has given the Chinese business many opportunities to excel in the market, as well have given opportunity to his self to achieve bigger in life. In 1999 he started to build his own Internet B2B internet platform in the word, which has 36 Million registered users in the 240 countries in the world; this also includes almost 7 million registered users outside of China (Sina Online 2009). Alibaba.com has generated 2.2 billion RMB (220 million Pound) revenues worldwide in first nine months of 2008, is 43 per cent growth of 2007 (FT Online 2009). Since 2007 Alibaba.com has also taken over the Yahoo China (FT Online 2009). Until 2008 Alibaba.com has became the fifth largest internet company in the world (BBC Online 2009).

The fairy-tale of Jack Ma with his venture Alibaba.com which made him one of the richest man in the world, but his motivation is not money, in the interview with BBC reporter Carrie Gracie, Jack Ma said: “I think my happiest time when I was still a English teacher, I only had 10 Dollars a month, at that time I thought if I work for two month I will get a bicycle, and I had never thought to be a rich man.”(BBC Online 2009) According to the theory of entrepreneurship, that money is often just proof of success of the entrepreneur, it is not an end of itself (Burns 2007). Truly, Jack Ma liked challenges, he thinks this is one of his motivations, but motivation alone cannot make entrepreneurship.

According to the business model given by Timmons, the entrepreneur has to balance opportunity, Resource and Team. (Timmons and Spinelli 2006). it is very necessary for an entrepreneur to keep on eye for opportunity, as in 1995 a very few people in china could recognize that the internet would become the one of the most important tool for the future, but Jack Ma not only reorganised but also grab this opportunity and he took advantage of it as he believed in himself and was able to face every challenge that came his way. Furthermore, he had a terrific team as he said in the interview (BBC Online 2009).

The another most important thing for an entrepreneur is Resource, and people are the most important Resource for Jack Ma and as Jack posses the quality and ability to lead from the front. During his student life when he was studied in University he was in charge of his student union. Thereafter on his career he became the chief of the student union for the entire university in the Hangzhou city (Youku Online 2009). From 1997- 1999 he has also worked for the government at the department of E-commerce and he lead 16 internet engineers, who all of them not only followed him when he left and set up his own website Alibaba.com, but also pooled all of their money (total 500000 RMB, 50000 Pound) to found Alibaba.com. Until know none of these engineers have left Alibaba.com. furthermore, the other vital factor is Jack Ma’s family, because of his wife’s support to him and looking after the family very well ; Jack Ma was tension free from his family affairs due to this he can concentrate on his business. As Timmons mentions, Team is also very important for entrepreneurship (Timmons and Spinelli 2006).Jack Ma had a terrific team working for him, which he mentioned in the in the interview (BBC Online 2009). He mentions that he will let engineer make everything and he will test it. It means that he trust his team, this is the empowerment of the team, one of leadership’s function (Grint 1997).

It is also very reasonable that Jack Ma said, if an any company has a many intelligent and capable employees, nevertheless most of them will fighting for their own idea and want to be the best of the team member, because of this, everybody work for their own. It is always very difficult and hard for an company to pull every bodies head in the same direction. On the other hand in Jack Ma company the employees were not extra ordinary, people work for him but this people are join together and moving together into the same direction as a team or family, however the employees in Alibaba.com are working for the same goal, the goal will be reached faster, even if Alibaba.com does not have very intelligent employees.

Why has Alibaba.com become so successful, is it just a run of good lucks for Jack Ma, or all of his creations? According to the Opportunity Business Model, this includes the Market Analysis and Industry Analysis to understand the success of Alibaba.com.

As we look into the dimension in the industry analysis, there are basically four main Dimensions such as, Proposition, people, and profit. As we have discussed Process and people have been mentioned now we will focus on the Timmons Model.

First, the Proposition, as Jack Ma said in the interview, that he wants to help the small and medium size enterprises (BBC Online 2009). He knows the key business model is to provide small and medium size companies with very easy access to buyers or suppliers all around the world (FT Online 2009). Following the rapid growth in the Chinese economy, the internet have grown at a faster role and has played his role in the success of the local business, information exchange needs to be faster worldwide.

Following the take off of the Chinese economy, the internet users have grown each year rapidly, especially business usage, the information exchange needs to be faster worldwide. This is the opportunity which Jack Ma has found. He knows his mission statement and he knows that is value for the potential customer, and it can keep attracting the customer.

Second, the Profit, Alibaba.com has generated 2.2 billion RMB in the first nine months of the 2008. It is just like a money generator machine. Therefore, how the Alibaba.com generated the revenue? According to the interview of Jack Ma, when the customer joint the membership they will automatically get three years free services in order to attract

More members, than there is a 500USD annual membership charge and for domestic trade the charge will be only 300 USD (BBC Online 2009). This is the way that Alibaba.com makes their profit.

Looking at the market Analysis, we can see that Jack have targeted the business customer with small and medium enterprise, who want to find the buyer or supplier in the world wide market platform. This reason behind this target market is that small and medium companies because large multinational companies have their own source and are very difficult for them to make a change. In the other side, we see the Industry Analysis that there are not any industry rivals. Jack Ma take advantage in First Mover Dominance of Lock in Strategy (Johnson et al 2008), due to the internet being very new in the middle of the90’s when he started up the business. Until the internet became more popular, the economics of scale of Alibabao.com has become unreachable, if there any new firms entry to the market, the new entrée will not able to compete the Alibaba.com.

During the time period from 2002 to 2003 the internet business has dropped to its all time lowest in the internet history. Alibaba.com does not make money these days. However the online gaming sector is very profitable. Jack Ma had seen this opportunity, as he saw he own son playing these games all day long. Although, Jack Ma knew this was a huge potential market, he realised that online gaming do not bring any benefit to the people; in fact is a drug it can destroy people’s life. Therefore, He told his employee; “we will die for hunger, forget about the on line gamming.” (BBC Online 2009) Jack Ma’s decision challenges some theories of questioning about entrepreneur and ethical issue. Hannafey (2003) suggests “Entrepreneur may not adequately the ethical consequences of their own decisions and their firm activities.” Although, the online gaming could make good profit that can help Alibaba.com out of a rut, by considering the ethical issue and Corporation Social Responsibility Jack Ma has given up the opportunity.

Social networking players a very important role for entrepreneurship, as there is no evidence that the social networking played any role in the life of him. The reason could be that there might be no reason for him as the business he is in might be of high technology. Furthermore, some elements that in the Opportunity Business Model and in the Timmons Model might not have mentioned, those are at the right time, in the right place (Wagner 2006) and make the right decision, which those elements are being superposition coincidently in the same time and cannot control by entrepreneur himself. If Jack does not catch the time of the Internet boom, if he had no conflict with his E Commerce of the government and he didn’t leave his job or he did not make the correct decision in setting up his own business.

Even more, if he was not born and lived in China he would not catch the internet booming in China. Sometimes, a successful entrepreneur is also made from a serial of the coincident elements, therefore those elements might be consider in the Opportunity Business Model as shown in the Of course, it is based on the own willing of that entrepreneur, such as whether he keeps looking for a new opportunity and takes the risk with a great team.

Chinese Entrepreneurs have done a lot for the Chinese economy and they have been a major force in putting the Chinese economy on the right track. . As above we analysed his background and his Entrepreneurial and Innovation Process. Furthermore, by comparing and analysing his business activities with the theories of the Timmons Business Model (Timmons and Spinelli 2006) and the Opportunity Business Model we found some similarities.

However, there are some factors that these models may not able to clearly explain, which might significantly affect the entrepreneurial activities. These factors such as being in the right time, in the right place to make a right decision. Nevertheless, by analysing the success of Jack Ma we can truly understand that a run of good lucks cannot make a success entrepreneur. A successful entrepreneur is the one who has a vision of opportunity, who believes in his idea and has the willing to take the challenge, who has a great team and a family to support him, and who can combine all the elements of the Business Models to process his idea to become workable.

So as a personality Jack is an example for other, who had a vision and who believed in his ability and these thing made him a successful entrepreneur.

Reference:

• BBC.com online

  http://www.bbc.co.uk/worldservice/specials/924_interview_archiv/page17.shtml [Accessed on 18/04/2010].

• Burns Paul (2007) Entrepreneurship and Small Business (second edition) New York: Palgrave Macmillan.
• FT.com online

  http://www.ft.com/cms/s/0/109db374-e3e9-11dd-8274 0000779fd2ac.html?nclick_check=1 [accessed on 18/04/2010].

• Grint, K. (1997) Leadership Classical, Contemporary and Critical Approaches. New York: Oxford University Press
• Hannafey F. T. (2003) Entrepreneurship and Ethics: A literature Review, Journal of Business Ethics; Aug 2003; 46, 2; ABI/INFORM Global pp.99
• Johnson G., Scholes K. and Whittington (2008) Exploring Corporate Strategy Text and Cases 8th Edition, Harlow: FT Prentice Hall
• Lockett N. (2009) Lecture on Entrepreneurship and Innovation, Elective module, Post Praduated Programme 2009/ 3, University of Bradford, School of Management, 15/4/2009
• Sina.com online

  http://english.sina.com/technology/p/2009/0301/222327.html [Accessed on 16/04/2010].

• Timmons J. A. and Spinelli S. Jr. (2006) New Venture Creation: Entrepreneurship for the 21st Century, New York: McGraw – Hill
• Wagner M. (2006) Accidental Entrepreneurs InformationWeek: Jul 3, 2006; 1096 ABI/Inform Global pp.47