ASSIGNMENT ON: STRATEGIC MANAGEMENT

SUBMITTED TO: MERVYN SOOKUN

SUBMITTED BY: SAUMEN ADHIKARY

ID: L0722RBRB1010

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STRATEGIC MANAGEMENT Executive Summary: Paypal is the largest e commerce business allows sending and receiving money through internet with safely. Transferring money with no traditional paper works and the process is quick as well. Actually PayPal is doing their business through the bank. They funded their account by a bank account or credit card at the persons choice. Since 2010 paypal using bank verification because of security and safety reason. For exceeding the credit limit the payers must need to verify their bank account. Here I describe about their process of working, environmental analysis through swot, company brief and future project, their target and with own recommendation. ITRODUCTION: PayPal permits to any business or person with a valid email address to securely and cost-effectively receive and send money online. PayPal builds on the already exist economic infrastructure of bank accounts and credit cards to make a worldwide payment solution. They deliver product fit for small trade, online payers, personal and others recent activities by traditional payment value. The size of the network and expending acceptance of reliable service assist paypal to become no 1 leading networks in online payments solution. PAYPAL WORKING PROCESS AND TIMELINE: After opening in account with paypal must need to verify by bank statement document. They send a few amount of money to the bank statement and we need to submit the amount in payal website. And code verification as well. The funding hierarchy working process: A PayPal account with balance Paypal extra, Paypal credit card, Paypal smart-connections or pay later option A valid registered bank account Different payment options such as non PayPal account The receiver can either request a check from PayPal established their own PayPal balance to their account. Paypal charges a bit to transfer the money they just work as a medium to make the internet paying process securely

Timeline: Confinity was found in last of 1998 by Max Levchin, Peter Thiel, Luke Noesk and Ken Howery at the beginning time it was a palm pilot payments and cryptography organisation. And the X.com was founded by elon musk in March 1999, that time it was internet financial service. Two organisation confinity and x.com lauched their website in 1999. They working together in palm pilot. In 2000 paypal was founded in between confinity and x.com. To block the fraud accessed by automated system, paypal used a system called CAPTCHA by entering number from a picture. That time ebay become more popular and they also need to fix an online payments sysmstem, because the increase of online shopping. After that ebay is announced paypal as their official payment method. In January 2008 paypal connected with new technological company which was situated in israil, starting balance of $168 million, for improving eBay and PayPal security managing system. Paypal use total amount pay volume and the total amount of money was $60billion increase rate is 27% over

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the last year. As 2011 paypal controls in 195 marketplace and handle nearly 235 million user accounts and above 105 million accounts are active. SWOT ANALYSIS OF PAYPAL:

STREANGTH

WEAKNESS

OPPORTUNITY

THREAT

STREANGTH: Their business is totally cost effective The communication system is far better from the past, paypal take the great advantages from it. Now online shopping is very popular so its online growth is outstanding They got a big hand of loyal customer They leading the market share with high growth rate. At this moment they dont have any strong competitor as well. Paypal has a strong brand image and well known to globally They have the powerful financial stability. Lots of liquid money and capital. Their price reasonable and attractive. By paying a few people can get high security Their reputation and customer service is 24/7 base. So any time any customer face any problem they will lend their hand.

WEAKNESS: A bit burden for the people who are not interested in technology. Quite boring for him as we. Need to do so many things verifying bank account and set up direct debit as well. People feel unsecure as the pay hold their bank account and debit card no as well In currency converting process, sometimes they charge a lot, which is unexpected to the people. Alert pay is coming and people using their method as well. Financial difficulties faces when the recession coming, because want to keep their money on their hand instead of spending

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OPPORTUNITY: Paypal are very popular in Europe but on the other hand they can choose a big market which is situated in south Asia like Bangladesh, India and Pakistan. Now a days credit cards are getting the popularity in asian country. So there is a big market waiting for them, if they can capture it tactfully. Now the emerging asian market are very important in world economy. People are felling interest in technology and they also love to shopping from home with relax mode. Payal through their business totally online, even on mobile phone as well. If they made symbian application for phone users they must get more popularity. They can enlarge their business and expend it to other places. THREATS: They still not face strong competition from any opposition. Alert pay coming in this business but still not financially strong or cannot make hindrance in paypal trading Now people using their debit card, through online shopping, no body want to give any bank details and waiting for verification Exchange rate conflictions always happen, because the rate is always changing No so many low cost competitors coming in the market and create a strong competition in their business. Example: alert pay doesnt take any money transfer fee over 2. Price wars seen in every where Internet hacking groups always looking for sites week points to hack customer information. Always be aware of the cyber attack.

MISSION AND VISION STAEMENT: Like other company paypal has also some mission for future and some vision as well. To thinking about future activities are called vision and the target to reach the goal is the mission. To be the number on secure online payment company in the world. Their future mission is to expand their business to asia pacific area main target to india. India starting to access paypal now but still not get the popularity and that could be the huge market for paypal. Over 120million people leaving there. Make their site more stronger in security purposes Careful about hacker attacks and they monitor it from 24/7 basis.

PAYPAL BUSINESS MODEL: Pay pal success in the terms of customer and number was the three product phase strategy by former ceo of ebay says. First paypal give attention to enlarge its services among ebay users in the u.s then expand it to international market. Then expand paypal s business outside the ebay as well. Stage1: In the starting of the paypal the payments volume were mostly coming from ebay auction website. The system was much more attractive to used material sellers, most of them were personal or small in trade that was not valid for credit card and for the buyers as well. Actually many buyers are not

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succeed for credit card seller account cause the lacked a commercial credit background. The facility also petition to buyers cause they funding paypal using their card or by through a bank account. Paypal owner an aggressive marketing campaign to run the business properly, they offered $10 if new customer register through him. STAGE 2: The main challenge for paypal in 2000 was its indefensible industry model. Primarily paypal offered its deals with very low cost and decide to earn on funds, which use paypal accounts. However, most recipients try to withdraw their money immediately. And most of the recipients sending their money through their credit and paypal will pay 2% of payment value. Sometime they face some problem when people say they dont get the product yet and they want their money back. In delivery process they using new rule that must be signature if the product price is over $250 STAGE 3: Reduce their transaction fee for high level customer from 2.2% to 1.8%. but qualify for this section the transaction volume in monthly basic should be over $100000 Inspire their users not to recruit the ebay products by raising its referral bonus which can the maximum of $1000 In us credit card Providers Company pay pal offer them to their online merchants. Hiring the new sales forces to get large merchants company like apple, yahoo, itunes and thousands of online merchants They diminish their fees to encourage people to buy music online and a option for micropayments By opening new mobile application in apple store and android market. After that lots of people can use paypal through their mobile phone. It makes our life more easier.

GLOBAL CHALLENGES FOR PAYPAL: Paypal has not established yet in many places that shows in the statistics that high no of people using internet there like Bangladesh, Egypt and Geogia. Coutry basis restriction for paypal: CHINA: In china paypal offer two types of account. There is no relation in between this account. Paypal.com accounts are global account for sending more and receiving money. In this account people cannot add money from other bank account. All non Chinese payment are paypal.com accounts On the other hand paypal.cn is the account for Chinese bank user. People can add money , buy products but the only currency is renminbi. There should not be possible to send any money outside china.

JAPAN:

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In the past march2010, new banking rule come in japan and they force paypal to reduce the ability to personal holders money. For this reson pay pal now using money for their all types of transaction TAIWAN: As mid of july 2010 in the user of Taiwan show that in sending money option is disappear without any kind of notice, thus they should force to pay the fees. It makes paypal embarrassing in front of the e commerce world. BRAZIL: Same thing happen here as well, there is no sending money option. But the balance transfer between two paypal accounts of the same holder force to pay 6.4% fee and also there customer cant withdraw any money from debit or credit card. INDIA IN the march of 2011 paypal made some changes to the user agreements for the people of india to combined with RESERV BANK OF INDIA. The changes are shown in below The payments which is related to export must not be over $500 No future pay or previous payments allowed for buy goods or services Debit card or credit card should be used through paypal method The per transaction limit has now increased to $3000 in the middle of October in 2011

SOME REGULATION FOR PAYPAL IN INTERNATIONAL BUSINESS In Europe paypal was got registered in a bank in Luxembourg under the legal name of paypal Europe and it was doing their business by under the full control of Luxembourg bank. For that all European company transfer their bank account into paypal in Luxembourg bank in july 2007. Before that paypal registered in the uk as paypal Europe ltd. But after this move the users of uk loss their legal redress from the company in England, Ireland and Scotland people. In the u.s although paypal got an user agreement and it is not regulated by us government directly, because it serves the money immediately to the merchants account. It also face the state law as well and we know that in us different state got different rule but its vary to the definition s of banks types, narrow banks, money transaction and many more. FRAUD ALERT IN INTERNATIONAL MARKET: If any unknown third party wants to login someone else paypal account information and completes a transfer using the account holders debit or credit card, that paypal will be resposiable for bridge Paypal account holders personal documents are protected under the federal law. If any kind of fraud are being saw in paypal account they put the limited access option. In this circumstances account holder need to follow this steps Try to log in Resetting their password

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Facing security question, what they put to the account Verify location by mobile or mail And proof of address as well, can be bank statements, gas bill.

SOME STRATEGIC MODELS: FIVE FORCES:

THREATS OF NEW ENTRANTS

BERGAINING POWER OF BUYER

RIVALRY WITH COMPETITOR

BURGAINING POWER OF SELLER

SUBSTITUTE PRODUCTS

THREATS OF NEW ENTRANTS: No particular investment on store because of online base business To open a new service make sure that it got the unique quality Slow the scale of financial support No legislation or government regulations If it shows lower profit, that indicates threatening of new entrants

RIVALRY AMONG COMPETITOR: Need to give full concentration on it Low cost can be happen Diminishing the profitability for the organisation

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 Lack of variation from other company, which plays a very important role in e commerce base business organisations Because of paypals success we can think that their strategy has been clicked

THREATS OF SUBSTITUTES: Strong substitute is coming in this business. The main competitor is GOOGLE CHECKOUT. Google invented this method to take the place from paypal and they give some extra offer as well like as allows of 1.4% +$.20 per transaction. And the next one is money bookers services. This service is based on the uk market only and it got the huge popularity because of easy payment method and automatic verification process. Paymate is using mainly is Australia, USA, New Zealand and their main facility is you dont need any bank account, all transaction going through via credit card.

BURGAINING POWER OF BUYER: Careful about price sensitivity Become more reliable and try to provide best customer service, which is most essential Because of its brand image, they still on top BERGAINING POWER OF SUPPLIER o o o Because of ebay paypal have huge bargaining power There few factors are must be monopolised Its quite high in switching the cost

PORTERS GENERIK STRATEGIES:

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COST LEADERSHIP: Need to more control on cost in the board meeting. Give a huge attention on the other competitors price market. If other company offer the same thing with low price people will diverted to them its no matter about the brand images. Always high volume of price and high volume of market share does not click and the same thing low price low market share also not click all the time as well. So need to concentrate on market and take the proer leadership model DIFFERTIATION: Paypal always tell the world that they got the safest way to transfer money or shopping online. They got unique strategies which make difference from other competitor. Example alertpay is also entering into this business but because of their weak security they are not still in a good position and they lose the peoples liability as well. FOCUS: paypal mainly focus on cost leadership and the differentiation of the products together in the specific place of the market. From market to market it can be varying. Different strategy should be taken in different place as well. Suppose some strategy can work for u.s market but not click in the European market. Same thing happen with the strategy taken in india and china as well. RECOMMENDATION: Paypal is a no 1 e commerce business organisation in online secure payments trade. They got the big hand of loyal customer, though they can make some changes in their strategy or daily activity Make the process Easier: they have so many customers but one thing they complain is the processing time of paypal account verification time. They need to give big attention to make the process easier. Suppose one customer want to buy some from ebay, who visits firsts time ebay, he will not able to buy anything without paypals verification and its takes approximately 3-5 business day. It makes the person boring about this product. Restriction of credit limit: paypal have the restriction of credit limit, so if a person who got the valid account, thus he cannot buy anything more than 2000 a year except business customer. So they need increase their limit of credit for the customer who already verified. Expand the service to south asia: In Bangladesh there are huge number of peoplr are using internet at this moment but they are get paypals benefit. In this circumstance if paypal expand their business to Bangladesh they will get more profit from as well as the country people.

CONCLUSION: Every successful e-commerce organisation got the unique strategy, some extra feature, which is only available in particular organisation. In the example of Microsoft : Microsoft windows for all types computer Intel inside chipset for majority of the computer

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As a total base of online e commerce in payment business PAYPAL got the highest position in worldwide. From the starting of its first journey in 2000 they gaining peoples loyalty, hustle and great respect.

REFERENCES: 1) Hitt, Ireland, Hoskisson (dec 2011), strategic management, competitiveness and glovalisation 9th edition. 2) Philip Sadlar, James C. Craig(2003), Strategic Management 2nd edition 3) Gregory G. Dess, Gregory Dess, G.T Lumpkin (2009): Strategic Management: Creating Competitive Advantages. 5th edition 4) Charles W.L. HILL, Gareth R. Jones( 2007), Strategic Management: An integrated Approach 8th edition. 5) https://www.paypal.com/uk/cgi-bin/?cmd=p/gen/about-outside 6) http://www.webdistortion.com/2010/07/28/paypal-alternatives-e-commerce/ 7) THE ECONOMICS TIMES (APRIL 6. 2012) http://articles.economictimes.indiatimes.com/keyword/paypal 8) ONE INDIA NEWS (JAN 6 ,2012) http://articles.economictimes.indiatimes.com/keyword/paypal 9) http://www.geek.com/articles/news/paypal-challenges-google-wallet-with-office-depot-pospayments-launch-20120124/ 10) WILLY ONLINE LIBRARY: STRATEGIC MANAGEMENT (Richard A betiz). June 2012 copy.

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