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Executive Summary

Discuss about the Strategic Analysis of EBay for Pioneer In The Online Marketing?

IT is very fast and is developing at a very high pace some people have taken a great advantage of IT industry. EBay is also one of the industries which have taken the advantage of IT to the fullest. EBay has been using IT to make money and to create value for its customers. EBay is one of the biggest and the well known online auction industry. It has its main objective to enable commerce through auctions. (Trefis. (2015)) The industry started flourishing in late nineties. EBay was founded by a computer programmer named Pierre Omidyar. The mission statement of EBay includes providing a trading platform where it is possible to trade for any person. Millions of people trade on EBay everyday and EBay earns commission for every transaction made from the sellers. EBay charges only the sellers and not the buyers by doing so it makes sure that the buyers are not concerted or tensed about the accidental charges. Basically there are two major problems that are faced by EBay. The first issue that the company faces is the competition and it is obvious because every company has to face the problem of competition now and then. The various competitors of EBay include Yahoo! Auctions and Overstock.com. (Hodsgon (2014))

  • Vision and mission statement of the company

  • External Environmental analysis

  • Internal Environmental analysis

  • Basis of competitive strategy’

  • Strategic Choice

It is a for-profit company so the basic objective of EBay could be to increase its revenue. For achieving this objective the company directs its strategies to attract new users and increase its customer base. The company puts alluring regulations for example its lowers the fees of the listing items , offers discounts and incentives to its customers which helps in bringing more customers to its site. (Luthge (2004))The other objective of the company is to increase the gross merchandise volume and the value of different transactions which are conducted by the users. Further the company has big plans so that it can achieve the leading positions in the fast technology and network traded environment. The mission of EBay is continuous e-commerce site which is expanded on trusted and is motivated by various objectives. The mission of the company is to create a new global place for carrying out online payments for this it has incorporated with various sites like PayPal. PayPal has created a new standard for trustful online payments.

Macroeconomic Analysis:

In order to know the company in a better way it is important to conduct the SWOT and PESTLE analysis of the company.

Corporate Objectives

Strengths:

  • EBay is the leading company in the field of global auctioning and many customers prefer the services of EBay for contributing to growth.(Cohen (2008))

  • No strong or direct competitor: there is no strong competitor of the company.

  • Best Known Brand name: EBay is the well known brand and almost every person is aware of its services and has build up a trust on it.

  • Offering Extra Services: EBay offers extra services to its customers by offering extra services to its customers for example Premium Seller Programs.

  • Payment system: The payment system of EBay is also very strong so the users of the company do not find themselves cheated or insecure while shopping from this site.

  • Best customer relationship with the management: The relationship of EBay with its customers and the management is also very good due to which EBay has various other opportunities.

Weaknesses:

  • High Fees: EBay charges high fees or say commission from the sellers which become the biggest weakness of the company.(Jureviciuos (2013))

  • Chances of fraudulent activities: There are large number of buyers and sellers with the EBay so the chances of fraudulent activities increase. Some of the fraudulent activities might include redistributing the stolen products or promoting the products with false advertisements.(Arias (2014))

  • Technical difficulties with payment gateway: It is possible some times that the payment brand which is associated with EBay might face some technical difficulties.

  • Little advertising and marketing: EBay involves itself rarely in to any kind of marketing and advertisement of its products.

  • Failure in many foreign countries: EBay is not very successful any many of the foreign countries which counts to be its weakness.

Opportunities:

  • Increase services portfolio through acquisition: There are many companies which have been acquired by the EBay so that it can increase the portfolio of its services with the help of mergers and acquisitions.

  • Open more online stores: EBay shall open more online stores in various countries to become a leader in the global market.

  • Growing number of mobile shoppers: There is a huge growth opportunity for EBay because the number of mobile shoppers is increasing day by day and users find it convenient to shop online rather than visiting the stores.(Ali (2014))

Threats:

  • Online Security: There are various personal information of the consumers stored by the PayPal like bank details which might become the target for various thefts. (Trefis (2014))

  • Increasing competition: The competition for EBay is increasing from various other sites like Amazon as Amazon is giving tough competition to EBay.

PESTLE Analysis: PESTLE analysis is one of the important tools for analyzing the external environmental factors affecting the organization:

Political Factors:

  • Political Developments: The various political developments influence EBay and the changing policies of the various countries might affect the company to a large extent.

  • Globalization: Globalization affects the company positively. Due to globalization the company can expand internationally and can find new markets.

  • Government Policies: There are various government policies which may be in interest of the business.(Li (2011))

  • Regulations: Various regulations may be passed which helps the organization to ensure some point of security but might increase the costs for the business.

Economic Factors:

  • Taxation: Taxation affects EBay in two ways. Firstly the profits of the company may be highly taxed secondly if more and more taxes will be introduced then it can seriously damage EBay.

  • Economic Situations: Various economic situations impact the performance of the business.

  • Exchange Rates: Instability in the exchange rate in future can have devastating effects on the online shopping.

Social Factors:

  • Lifestyle Trends: Integration of the internet in future will affect EBay positively.

  • Brand Image: The brand Image of (Vakil (2012)) the company might suffer in future due to increasing competition and it might affect EBay.

Technological Factors:

  • In order to be competitive in this environment the business must keep on changing its technology from time to time.

  • Change in distribution channels: There are lots many changes in the distribution channels as EBay can sell products worldwide.

Competitive Analysis: One of the important tools to analyze the external competitive environment of any industry is the Porter’s Five Forces Model.

  • Threat of Entry: EBay is the internet driven industry and there are lot of barriers to entry. One of the main barriers in entering new markets could be that some of the products are not permitted to enter some states. So, the main barrier includes the regulations and intervention of the government. (Calloway (2013))Various blocks have been established by EBay that takes care of the legislation.

  • Threat of Rivalry: There are many competitors of eBay like Yahoo! Auctions, Overstock.com and Google. (Jackson (2004))There have been various fights with eBay from its rivals. The drop off industry is also one of the biggest competitors of the industry. EBay leaves no room unattended to provide quality services to its customers at lowest possible prices.

  • Threat of Suppliers: There are millions of user of eBay so there are chances that many suppliers join eBay for selling their products but the ultimate supplier’s truth is not known as there are too many suppliers o company cannot take guarantee as to who is the best supplier. (Fleisher & Bensoussan (2015))The company brings together the buyer and the supplier and the supplier do not have much power in the case of the transactions. In order to provide smooth and quick payments eBay has introduced PayPal. But it becomes very expensive to sell the expensive products through PayPal.

  • Threat of Buyers: eBay becomes profitable and powerful due to lot many numbers of buyers dealing with the site. Any item which is listed on the eBay can be seen or bought by the buyers. (Besanko & Shanley (2009))Moreover the eBay supports its customers in every possible aspect. Due to which the bad sellers and buyers are decreased to a large extent from the user list of eBay. So, here it can be concluded that the buyers of the eBay do not have much influence unless they are dealing with expensive items.

  • Threat of Substitutes: for the products which are traded online have few substitutes. One option that is available for the buyers is to go back to the Auction house and the other option could be selling the products directly instead of auctioning them.

4.1. Under this head the strategic capabilities of eBay has been discussed to provide competitive advantage to the company. The strategic capabilities of a firm will be directed and evaluated by its various plans and objectives which further help the firm in taking the competitive advantage by using its resources over a period of time and satisfying its customers. (Pride (2008))For strategic capabilities a well devised plan can be used to achieve the various goals of the company which further offers a suitable solution for handling the important issues which are related to the firm. Implementing a management is required to analysis the strategic capabilities of the firm and hence that plan can be used to achieve the goals and objectives of the organization and can further help in increasing the profitability of the organization. (William. (2004))There are basic as well as unique resources of eBay which are as follows:

  • Offices and facilities
  • Appropriate personnel
  • IT server platform
  • Account management
  • Sufficient customers and suppliers
  • Competent customers and suppliers
  • ICT skills that are sophisticated
  • The eBay Brand
  • First mover advantage
  • Vocal and active community of users
  • Learning from experience
  • Electronic platform for managing skills
  • Leadership
  • Web 2.0 management skills
  • Partnering the internet
  • Collections: There are different groups of products which are collected as well as sold by various sellers.
  • Follow: The eBay feed can be personalized by following selected collections, users and interests.
  • Profiles: There is a new page for the sellers and the buyers which can be customized individually. Personal information is shared here.
  • EBay Today: There is a new page which presents the daily selection of the goods that are made by eBay’s chief curator.

Target market has different characteristics like geographic, behavioral, and demographic.

  • Geographic: The geographic target market can be the consumers in city, country or state. This becomes very important when it comes to international marketing. Ebay targets every country, city and state.

  • Demographic: The demographic focuses on specific age, gender, income level or education level. In the above case of eBay there are various products of different age groups, gender and income level people. Any user can purchase any product of their choice from the site.
  • Cost leadership strategy: To improve the buyer’s experience and enhance the products and services eBay has planned to expand its market places to focus on different customers.

  • Focus Strategies: The management of eBay seeks to become the number one online payment solution.

  • Differentiation Strategy: It has planned to offer variety of products to its customers to gain competitive advantage.
  1. Strategic Choice:

The two important factors are defined by the Ansoff Matrix which are what is sold and who it is sold to, therefore there are four alternative courses of actions in the matrix which are:

  • Diversification strategies

  • Product development strategies

  • Market penetration strategies

  • Market development strategies
  • Market penetration: eBay is very successful on the World Wide Web. The strategic direction is market penetration for eBay, which has its main aim to increase the market share in the existing market with the same products. The company focuses on making improvements in its product so that the reputation of the company can further be improved. EBay further focuses on the improvement of services by the use of high-tech information system and updated applications which further helps in gaining more customers by improving the quality of its products.

  • Diversification: The name given to the growth strategy is diversification where new products are marketed by the business in the market. This strategy involves more risks as compared to other strategies.

  • Market Development: Under this strategy existing products are sold by the business to the new market it can be through new geographical markets, packaging, new distribution channels and different pricing policies.
  • Product development: Under this strategy new products are introduced in the market here development of new techniques and competencies are required so that the product becomes more appealing.
  1. Strategic Evaluation: The most appropriate option for the eBay is market penetration as the company is quite successful on the internet and the main aim of ebay is to increase its market share so it can improve its current products so that it can achieve this aim.
  • Suitability: The particular decision can be said to be effective after testing the suitability with the plans of the organization. It becomes essential to check whether the particular option make the proper use of the strengths and avoids the weaknesses of the organization.(Hosskison (2008))

  • Feasibility: This question can be answered if the option can be carried out and it would help in achieving the required results.
  • Acceptability: This point takes in to consideration if the selected option will cause any crises with the stakeholders. Market penetration can be best if it does not cause any crises to the stakeholders of eBay.

Conclusion and Recommendations:

By the analysis of the overall report of eBay it can be concluded that though eBay is a pioneer in the online marketing but there are few issues which disturbs it working and eBay shall from time to time look into these matters to handle the situation. It can further be concluded that the company is making every effort to capitalize its strengths efficiently from time to time by making different strategic choices when ever required. The main weakness that the company is facing at the moment as compared to its competitors is it totally relies on the technology and the technology is not always in favour there are times when the technology failures gives worst results. Yes, the company is taking different measures to manage its threats effectively though sometimes there are few contradictions between the strategic choices made by the company and its vision.

References

Ali, F (2014), Prezi, viewed 27 March (2016), <https://prezi.com/fvczpqbs0sou/ebay-swot-analysis-26th-march-2014/>.

Arias, M (2014), , viewed 27 March (2016), <https://prezi.com/9edvvizfviev/ebay-case-analysis/>.

Besanko, D & Shanley, M (2009), Economics of Strategy, 5th edn, John Wiley and Sons.

Calloway, M (2013), Prezi, viewed 27 March (2016), <https://prezi.com/kcnuakc2lyjs/ebay-case-study/>.

Cohen, A (2008), The Perfect Store: Inside eBay, Hachette., New York.

Fleisher, C & Bensoussan, B (2015), Business and Competitive Analysis: Effective Application, 2nd edn, Paul Boger.

Hodsgon, P (2014), Fortune, viewed 27 March (2016), <https://fortune.com/2014/03/21/the-real-problem-at-ebay-corporate-governance/>.

Hosskison, M (2008), Understanding Business Strategy: Concepts and Cases, New York.

Jackson, E (2004), The PayPal Wars: Battles with EBay, the Media, World Ahead Publishing,Inc. (2004), USA.

Jureviciuos, O (2013), Startegic Management Insight, viewed 27 March (2016), <https://www.strategicmanagementinsight.com/swot-analyses/ebay-swot-analysis.html>.

Li, X (2011), , viewed 27 March (2016), <https://www.scribd.com/doc/67570542/EBAY-Five-Force#scribd>.

Luthge, M (2004), Strategic Analysis of eBay - Page 4, grin.

Pride, W (2008), Marketing Express - Page 27.

Trefis (2014), Forbes, viewed 27 March (2016), <https://www.forbes.com/sites/greatspeculations/2014/11/24/ebay-through-the-lens-of-porters-five-forces/#36d06ce12179>.

(2015), Forbes, viewed 27 March (2016), <https://www.forbes.com/sites/greatspeculations/2015/06/04/key-challenges-besetting-ebays-marketplaces-segment/#6ef6db6e1c50>.

Vakil, B (2012), , viewed 27 March (2016), <https://business.wikinut.com/External-environment-of-EBay-within-the-framework-of-Porters-Five-Force-analysis/15qyvbgr/>.

, P (2004), Marketing - Page 31, Routledge(2004), New York.

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