According to Alibaba Group’s CEO Daniel Zhang, the company’s recent restructuring will allow all of its business units to become more agile and make faster decisions in response to market changes. During a conference call, Zhang explained that the groundwork for the restructuring had been laid over the past few years, and that the Jack Ma-founded company will operate more like an asset and capital operator in the future, rather than a business operator.
Alibaba announced its most extensive reorganization to date two days ago, transforming itself into a holding company with six individual business units, each with its own board and CEO. The new management bodies of each unit will be responsible for their day-to-day operations. However, Zhang will continue to serve as Alibaba’s CEO.
Zhang referred to the plan as a ‘transformation’ that would make Alibaba’more agile, enhance decision-making, and enable faster responses to market changes.’ The restructuring reportedly allows each of Alibaba’s new individual units to raise funds through their own initial public offering (IPO).
During the conference call, Toby Xu, Alibaba’s Chief Financial Officer, stated that the restructuring allows each business unit to seek independent fundraising and IPOs whenever they are ready. Some analysts believe that Alibaba’s current value does not accurately reflect the value of each division, and that a breakup could result in a more accurate assessment of each division’s worth. They also argue that restructuring could provide better protection for Alibaba shareholders from the demands of regulators, as a penalty imposed on one sector would not affect the activities of another.
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