Strategic Management Of EBay: An Essay.

Current strategic position of eBay

Disucuss about the Strategic management of Ebay.

According to CEO, online commerce provides the customers with the platform to enhance their experience. As per the statement of the critics, eBay has transformed the scenario of the retail landscape. The major drive behind this is the technological innovation. Variability in the products and services helped Ebay in achieving competitive advantage over the contemporary brands. Adequate stock adversely affects the purchasing power of the customers (McNamara et al., 2014).

Resetting of password and web search engine drastically reduced the number of customers. This is due to the increase in the number of cyber crimes, which compelled the personnel to encounter severe losses in the form of customer turnover. Most striking result was the loss of organizational data. The customers were instructed to change their passwords for logging into the account. The customers, occasionally visiting the website disobeyed the orders. This heavily impacted the emergence of the new users (Comberg & Velamuri, 2017).

Escalation in the value of dollar influenced eBay’s trade in the borders. This created obstacles in the export activities to US and North America. Collapse in the sales simultaneously declined the traffic. This decline altered the fate of eBay from “online yard” to a “trendy retailer”. In spite of this transformation, the brand faced intense competition from the retail giants like Amazon, Google, Walmart, Staples, Home Depot among others.  April 2017 was the era, which witnessed expansion in eBay’s business. $500 million equity stake saw the emergence of eBay as a start up within the threshold of India (Comberg & Velamuri, 2017). This was in exchange for the plan of selling the India business to Flipkart.

Table: Consolidated balance sheets for eBay 

According to the table, the total assets of eBay have encountered an increase from $17,755 in December 2015 to $23,847 in 2016. This is due to the adoption of the social media marketing, which has increased the trafficking of the audience towards the brand image. On the contrary, there has not been much increase in the liabilities. Specifically, it has increased from 11,179 in 2015 to 13,308 in 2016 (McNamara et al., 2014).

Lucrative market scenario lured the eBay personnel to construct the plans for setting up the business in India. Conglomeration of globalized eBay and market stature of Flipkart led the CEO to plan for maximizing the business. Unfortunately, rejecting the plan for setting up the business in India provided the chance to Amazon and Alibaba to expand their business. eBay’s debacle in China raised an evident question, “Did the company really possessed the potential to maintain sustainable growth within the competitive ambience of the market?”

Past performance of eBay

eBay has accumulated great shares in the neighboring markets. Mention can be made of GSI commerce, StarHub and Gmarket, which expanded the business geographically. Paypal and Zong are the agents, which resulted in the expansion. Acquiring GSI enabled eBay to check its core competencies in terms of working with the popular brands. This partnership enhances the reputation of the brand. Sharing the e-commerce platforms bestowed creative and innovative ideas on the staffs. Online purchase of the mobile commerce systems securely established eBay’s business (Comberg & Velamuri, 2017). Mention can be made of the flexible payment systems, which reduced the worries of the customers. This introduction strengthened the stability in the relationship between the staffs and the customers. Failure is the stepping stones to success and is the main focus of eBay’s CEO. He is of the opinion that, “The key is to get up in the batter’s box and take a swing”. Here, “swing” refers to the act of evaluation for assessing the effectiveness, appropriateness and feasibility of the undertaken steps.

Table 2: Cash flow statement for Ebay

As per the data, the transactional losses in 2014 were 262 millions. This increased to 271 million in the following year. However, mention needs to be made of 2016, when the transactional losses reduced drastically to 231. The major drive behind this is the consideration of the trade policies and competition policies. These policies ensured that the trade between eBay and the associate agencies is executed according to the standards and protocols (McNamara et al., 2014).

Innovation can also be accounted as one of the agents for eBay’s growth. Strategic approach in this direction proves beneficial in terms of achieving positive results. This is in terms of systematic progress towards execution of the tasks (Chernev, 2018). Herein lays the appropriateness of “Innovator’s DNA”, which places the growth process into the stages of associating, questioning, observing and experimenting. After the emergence of Amazon, eBay observed their marketing strategy and made attempts to associate with them. At this stage, they experimented with the products and services. Legal compliance helped in averting the illegal instances. Moreover, adherence to the competitive policies reflected transparency in the businesses, which resulted in the expansion of the business.

Creation of online shopping sites helped the staffs to increase the trafficking of the audience towards the brand image. Privacy cookies within the sites strengthened the ties with the “strangers”. Along with this, the business model reduced the distance between the buyers and the sellers (Austin & Pinkleton, 2015). One of the striking results is achieving success in attracting over 221 million users. In order to serve the needs, demands and requirements of the users, innovation was planned for producing the products and services.

Financial aspects

Penetration into the foreign markets of China, Japan, South Korea, reflects the attempts towards achieving expansion. The past financial performance was considered for modifying the current performance. For this, strategies were needed in terms of achieving flexibility in the marketing activities. Within this, technological innovation gains popularity. Consciousness towards the mitigating the potential risks provided the users with an opportunity to enjoy thrilling experience. Example can be cited of online classifieds, eBay express, eBay Motors and Skype. Online classified informed the users of advertisements about the latest trends. eBay express acted as an online shopping site, which provided access to 200 million users across the world (Austin & Pinkleton, 2015). eBay Motors was the largest marketplace for the buyers and sellers to transact in terms of automobiles. Skype provided the opportunity to the users to conduct free video calling.

The feedback forum form helped the staffs to gain insight into the specific tastes and preference of the users. This acted as a negotiation towards the disputes between the buyers and the sellers. The staffs believed that feedback from the users was crucial in terms of achieving sustainable growth. Acquisitions and partnerships were needed in terms of fulfilling the demands of the users. This was done through theoretical consideration. Person-to-person business model was used for bidding on the items and purchasing them. Creating a forum helped the buyers and the sellers to carry out the transactions effectively and efficiently. Auction resulted in the emergence of new brands, which altered the workplace environment (Alvi & Carsrud, 2017).

Table: SWOT analysis of eBay

Table: PEST analysis of eBay

Governmental assistance is an opportunity for eBay in terms of introducing effective schemes and offers for the customers. On the contrary, it is also a threat, as harsh policies act as obstacle in the import and export activities. Economic stability of the developed countries paves the way of expansion for eBay. This is through the means of auction, which enhances the awareness of the personnel about potential buyers. This possesses the flexibility towards increasing the income. Identification of the disposable income is assistance towards increasing the trafficking towards online purchases. Changing preference of the customers aggravates the complexities of the personnel towards the manufacturing process (Comberg & Velamuri, 2017). Increase in the online activities is strength in terms of upgrading the communication with the customers. Technological innovation is a threat, as it intensifies the competition between the eBay and the contemporary brands.

eBay’s international growth

As a matter of specification, eBay adopted three channels for increasing the sales revenue. These were marketplace, payments and communication. Marketplaces accounted 65% of the total revenue of the company. PayPal contributed to $4.4 million of the revenue. Skype accounted for $620 million revenue. Adoption of the business model assisted in the achievement of success. Mention can be made of the forum, which was auctions, which bestowed potential buyers to the brand. Creation of the Feedback Forum was a wise step in terms of gaining an insight into the specific tastes and preferences of the users (McNamara et al., 2014). Maintaining frequency in the creation of such programs helped the brand personnel to attract the clients. Meeting with the directors proved effective in preparing and implementing the strategies.

Preparing the budgets informed the staffs about the expenses in the different business aspects (Chernev, 2018). Revision of the allocated expenses proved beneficial in terms of evaluating the feasibility of amounts. This helped in tracking the outflow of cash from the internal to the external environment. Joint ventures prove effective in terms of producing collaborative output, which helped in achieving successful completion of the business activities. These ventures extended support in terms of making up for the crisis and failures. Mention can also be made of the strategy of ‘fixed pricing”, which resulted in the partnership with a range of large companies. Countering this, the method exempts the middle class from the dream of exercising their purchasing power (Chernev, 2018). Securing an interest in the rivals can be considered as a means of negotiation. This is in terms of averting the instances of conflicts. Strategic approach enabled eBay to deal with the matters efficiently and effectively. Acquisitions enhanced the workplace diversity. Specifically, it placed the focus on the target market (Austin & Pinkleton, 2015).

Focusing on the niche markets enabled the company to differentiate itself from the other contemporary brands. Herein lays the appropriateness of innovation within the products and services for luring more and more clients. Moreover, introduction of special offers, discounts and schemes resulted in increasing the traffic towards the services. Strategic planning proved fruitful in terms of popularizing the newly launched products across the borders. Online transactions resulted in an increase in the internet usage (Alvi & Carsrud, 2017). Observing the steps of the contemporary brands helped eBay in producing services according to the needs of the users. Herein lays the appropriateness of the search engine optimization, where keywords took the staffs directly to the specific tastes and preferences of the clients and the customers (Alvi & Carsrud, 2017).

Conclusion

eBay gained popularity at the time when popular sites like Google, facebook, Amazon were attempting to establish their position in the competitive ambience of the market. Strategic planning was the agent, which helped the brand to secure their market position. Evaluation of the proposed strategies helped in discovering the drawbacks within the services. This evaluation, in turn, resulted in upgrading the standards and quality of the products and services. Feedback from the clients and the customers brought innovation within the workplace, enhancing the reputation of the brand.  

References

Alvi, F. H., & Carsrud, A. L. (2017). Strategic Entrepreneurial Agency in Emerging Markets. The Journal of Entrepreneurship, 26(1), 77-101.

Austin, E. W., & Pinkleton, B. E. (2015). Strategic public relations management: Planning and managing effective communication campaigns. Routledge.

Chernev, A. (2018). Strategic marketing management. Cerebellum Press.

Comberg, C. and Velamuri, V.K., 2017. The introduction of a competing business model: the case of eBay. International Journal of Technology Management, 73(1-3), pp.39-64.

McNamara, G., Dess, G., Lumpkin, G. T., & Eisner, A. (2014). Strategic management : Creating competitive advantages. 6(1), pp 38-813