As you must already know, Alibaba has announced that they will split up its company into six different parts and all of these companies will now have their own leaders as well as board of directors and can take their own decisions as well. However, the fact that these companies are now working as separate entities also means that if the companies are not doing great, its board can also decide whether to shut it down or not. Right now, the sectors inside the company that were struggling were taken care of by the sprouting local e-commerce business of Alibaba.
However, this will no longer be the case once they become separate entities. One of the most worried division due to this split announcement will be Alibaba’s employee division because they are now worried about their job security. Right now, most of Alibaba’s revenue comes from the domestic e-commerce business and once this is split, most of the revenue will be made by this one company. So people are likely to invest in this company only and other companies will be short-strapped for cash.
Alibaba CEO, during the split announcement, said “When the kids are grown, they need to leave home to face the market by themselves,”. “I hope there will be multiple listed companies emerging from the Alibaba system, and that they will continue to nurture their own sons and daughters, and cultivate more listed companies.” Due to this announcement, the Alibaba share prices in Hong Kong and New York shot up which tells you that the investors loved this announcement.
However, we can tell you that the Alibaba employees not working in the domestic e-commerce business are already feeling the heat. One employee said that their clients might see this announcement differently to everyone else and they can lose business as well. He added that The name Alibaba carries weight when the team is building business relationships in the industry and when this name is no longer associated, it could lose all its weight. The employee added that Being spun off into a smaller organisation could also deprive employees of a sense of belonging to a bigger group.