Bahn Tugas eBay-Inc-Strategic-Management PDF

Strategic
Management
2nd Individual Case Analysis (eBay Inc.-2009)
NAZIFA BTE ABD. GHANI

MR111037
Associated Professor Dr. Mas Bambang Baroto
International Business School

University Technology Malaysia
June 2012
eBay Inc.-2009 [MR111037]
Contents
1.0 Executive Summary .......................................................................................................................... 4

2.0 Vision and Mission Analysis ............................................................................................................ 5
2.1 Vision: There is no vision stated in the case ................................................................................. 5
2.2 Mission.......................................................................................................................................... 5
3.1 PEST Analysis .............................................................................................................................. 6
3.2 Competitive Analysis .................................................................................................................... 9
3.3 Industry Analysis ........................................................................................................................ 12
3.3.1 The Description of The Industry .......................................................................................... 12
3.3.2 Rivalry Among Competitor ................................................................................................. 14
3.3.3 Potential Entry of New Competitor ..................................................................................... 21
3.3.4 Potential Development of Substitute Products ..................................................................... 22
3.3.5 Bargaining Power of Suppliers ............................................................................................ 24
3.3.6 Bargaining Power of Consumers ......................................................................................... 25
3.3.7 Conclusion of the Industry ................................................................................................... 26
3.6 Defining the Key Success ........................................................................................................... 28
3.6 Opportunities and Threats ........................................................................................................... 31
3.7 The External Evaluation Factor (EFE)........................................................................................ 38
3.8 Competitive Profile Matrix Analysis .................................................................................... 42
4.0 Internal Analysis ............................................................................................................................. 43
4.1 Cultural Analysis ........................................................................................................................ 43
4.2 Management Functions ............................................................................................................... 44
4.3 Marketing Strategy...................................................................................................................... 52
4.4 Financial Analysis ....................................................................................................................... 61
4.4.1 Financial Ratio ..................................................................................................................... 61
4.5 Production/Operation .................................................................................................................. 66
4.6 Research & Development (R&D) ............................................................................................... 79
4.7 Management Information Systems Audit ................................................................................... 79
4.8 Value Chain Analysis (VCA) ..................................................................................................... 80
4.9 Strengths and Weaknesses ......................................................................................................... 87
4.9.1 Internal Factor Evaluation (IFE) Matrix ............................................................................ 102
5.0 Existing Objectives and Strategies ................................................................................................ 106
2 Strategic Management/SEM II/ 2011/2012
eBay Inc.-2009 [MR111037]
5.3 Strategies ...................................................................................................................................... 109

5.3.1 Strategies in Action ............................................................................................................ 109
5.3.1 Generic Strategies (Business Level Strategies )................................................................. 117
6.0 Strategy Formulation Tools .......................................................................................................... 119
6.1 SWOT Analysis ........................................................................................................................ 119
6.2 SPACE Analysis ...................................................................................................................... 126
6.3 BCG Analysis .......................................................................................................................... 129
6.4 IE Analysis ............................................................................................................................... 129
6.5 Grand Strategy Matrix ............................................................................................................. 130
6.6 Wrap Up Process...................................................................................................................... 132
6.7 The Qualitative Strategic Planning Matrix (QSPM) ................................................................ 133
7.0 The New Strategies ...................................................................................................................... 137
7.1 Value Chain ............................................................................................................................. 140

eBay Inc.-2009 [MR111037]
1.0 Executive Summary

EBay Inc. encompasses eBay.com, the online marketplace, PayPal, which refers to the online
payments platform, and Skype, the Voice over Internet Protocol (VoIP) offered by eBay’s
subsidiary Skype Technologies S.A. Corporate revenues are earned primarily from three
business segments: (1) Marketplaces, (2) Payments, and (3) Communications.
In order to analyse these three segments, the analysis will be provided based on three
separated segments which is absolutely depends on the case study given. As a matter of fact,
this report provides an emphasis on strategic analysis based on its external and internal
environment analysis and company analysis or resources, competence and culture. Two
future strategic options are suggested in regards to the resource based strategies. As
mentioned before, this report analysis information is only based on the case study given.
To be guided, this analysis addresses the following segment:
1) Vision and Mission Analysis for eBay
2) External Environment Analysis
3) Internal Environment Analysis using value Chain analysis
4) Defining the Existing Objectives and the existing Strategies of eBay
5) Strategy Formulation Process with strategic tools
6) Implement New set Strategy
7) Implement new set of marketing and financial
8) Provide figure of existing objective, strategy, management issues, and financial issues versus new
objective, strategy, management issues and financial Issues

eBay Inc.-2009 [MR111037]
2.0 Vision and Mission Analysis

2.1 Vision: There is no vision stated in the case
2.2 Mission
The Original Mission Statement:
“We intend to continue to work toward our mission of creating the world’s leading
ecommerce franchise by investing in our core Marketplaces segment and continuing to
build our adjacent Marketplaces businesses”. (2007 Annual Report)
*Based on the case study, there are three mission statements given in the case study for
eBay. In this case, I only considered and analysed the latest mission statement which is
in 2007.
Mission Components Included Not included Description

Customers ● -
Products and Services ● ecommerce franchise
Markets ● Leader in the online
marketplace
Technology ● Leading in e-commerce
Concern for Survival ● -
Growth and Profits
Philosophy ●
Self-Concept ● Continuously Investing in
Marketplaces segment
Concern for Public Image ● -

Concern for Employees ● -
Table 1: Analyzing the eBay’s Mission Statement Based on the Nine Component
Therefore, there are only 4 components out of 9 general components of mission statements
and in this analysis the mission provided by eBay in 2007 has lacking of 5 components.

eBay Inc.-2009 [MR111037]
Based on table 1, the 5 missing components are; customers, Concern for Survival growth and
profits, Philosophy, Concern for Public Image as well as the Concern for Employees.
Mission Statement Evaluation

Key Variables Case Facts Evaluation
Broad in Scope creating the world’s Acceptable
leading ecommerce
franchise
Length (Less than 250 words) - Acceptable, but too
short.
- Not mentioned
Inspiring
Identify the utility of the firm’s products - Not mentioned
Reveal that the firm is socially responsible - Not mentioned
Reveal that the firm is environmentally - Not mentioned

responsible
Include Nine Component 4 out of 9 Unacceptable
Reconciliatory - Unspecified
Enduring - Unspecified
Therefore, It is clear to say that EBay does not have complete mission statement because of
lacking of 5 components mentioned before. In fact, eBay mission statement is too broad and
unspecified.
3.1 PEST Analysis

Case Facts Opportunity Threat

eBay Inc.-2009 [MR111037]
Political, Legal , and governmental forces
-Legislation is in effect which requires collection of taxes

beginning after December 31, 2010. This new legislation may
cause a reduction in trading activity that would negatively affect 
several business segments (Page 269, Para 6)
-In addition, tax compliance will increase costs. (Page 269, Para 
6)
-Legislation has also been proposed to prohibit sharing of certain

information over the
Internet, (Page 270, Para2) 
Economic forces
-The resources of existing 

competitor firms are larger and as a result, competitors could
weather an economic downturn (Page 268, Para2)
-The company continued its turnaround strategy in a harsh 

climate for consumer spending (Page 263, Para2)
-Weak global economic conditions, in addition to the mortgage

and worldwide credit related financial crisis, are expected to
limit revenue growth, particularly in the Marketplaces segment, 
which is closely tied to consumer purchase patterns (Page 269,
Para2)
-Profitability is also affected by currency exchange rates (page


269, Para3)
-If the U.S. dollar weakens against foreign currencies,

transactions conducted in foreign currency denominations will

increase and inflate revenues, operating expenses, and net
income (Page 269, Para3)

eBay Inc.-2009 [MR111037]
-Alternatively, financial measures will be negatively impacted


by a rise in the value of the U.S. dollar (Page 269, Para3)
-Declining economic environment (Page 268, Para4) 

- The revenue drop was attributable to the impact of the stronger.
-Dollar and the lingering weak economy with high

unemployment (Page 274, Para1)

Social , Cultural , and Demographic forces
-Buyers and sellers enjoy trading among a wide selection of 

goods and services in a secure, trusted, and efficient commerce
environment.(Page 265, Para5).

Breaches in data security are on the rise (Page 270, Para3)
Technological forces
Online classifieds help people meet, share ideas, and offer


goods/services at a local city or regional level(Page 266, Para4)
Competition is intense in communications services and subject

to rapid technological 
Change(Page 268, Para2)
- The need for substantial resource investments in

technology and marketing in order to remain competitive 
(Page 268, Para1)
Total 5 12
Conclusion:

eBay Inc.-2009 [MR111037]
From the above PEST analysis, eBay has being treated by the Treats occurred from other
Political, economic, social as well as Technology point of view. Since threat cannot be
controlled, the company who want to invest in this industry really need to be aware of the
treats in order to continuously sustain in the industry. As a matter of fact eBay Inc. cannot
avoid from facing this treat but it can control to reduce the treat.
3.2 Competitive Analysis

eBay is active in three different categories such as; Business segment I:Marketplaces,
Platforms, and Services; Business Segments II: Communications; and Business Segments III:
Communications. Generally, E-Bay competitors include: online and offline retailers,
distributors, liquidators, import and export companies, online and offline auctioneers,
catalogue and mail-order companies, classifieds, directories, search engines, products of
search engines, virtually all online and offline commerce participants (consumer-to-
consumer, business-to-consumer and business-to-business), and online and offline shopping
channels and networks. However, Amazon’s strong growth and satisfied customer base
pose the greatest threat to eBay (Page 267, Para6)
The summary of each category of segments comes as below:
1- Market place: competitors in this field includes traditional department, warehouse,

discount, and general merchandise stores, emerging online retailers, online classified
services, and other offline and online home shopping networks such as Wal-Mart, Target,
Sears, Macy's, J .C. Penney, Costco, Office Depot, Staples, OfficeMax, Sam's Club,
Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC, and Home Shopping
Network. Companies such as Google Base and Microsoft Live Expo also offer similar online
services and classified ads.
2- Payments: The Payments segment competes against other online Payments services and
offline Payments methods, such as cash, check, money order, and established credit card
merchants. (Page 268, Para1). Pay me Later is funded by CIT Bank and Bill Me Later is
responsible for all functions related to the account (Page 269, Para5). Additional revenues
are also earned from advertising and revenue-sharing contracts with third parties that provide

eBay Inc.-2009 [MR111037]
transaction services to eBay and PayPal account users.(Page 264,Para1) PayPal is a

recognized global leader in online payment solutions with 70 million active accounts. PayPal
generated $60 billion in net total payment volume in 2008, an increase of 27 percent over
2007.(Page 266, Para9) The Payments segment competes against other online payment
services and offline payment methods, such as cash, check, money order, and established
credit card merchants (Page 268, Para1)
3- Communications: Communications segment’s competitors have larger amount of

resources compare to Skype. The Communications segment faces competition from local
telephone or cable companies and other VoIP providers. (Page 268, Para 1). Traditional
Communications companies offer bundled services, such as cable or satellite television, along
with internet and voice Communications services. (Page 268, Para 3)
For the second quarter of 2009, eBay reported nice growth in both their PayPal and Skype
business segments, which offset decline in their Marketplaces business segment.(page 263,
para2) EBay’s popularity is due to the value offered to its users. EBay provides a “faster,
easier, safer online commerce experience” (eBay, 2006, p. 7).(Page 263, para4).
*Because of lack of data for Communications segment’s competitors and Payments

segment competitors, the competitive analysis is only focused on Marketplaces segment.
Competitive Analysis for Marketplaces segment
Key Case Facts Opportunity Threat

Variables
Competitors Amazon states their success is √
strength based on: the ability to attract
buyers and sellers; the volume of
transactions,
price, and selection of goods;
customer service; brand
recognition, community
cohesion, interaction, and size;
Amazon system reliability; delivery and
payment reliability; Web site
convenience and accessibility; level
of service fees; and quality of
search tools (eBay, 2006).(Page
eBay Inc.-2009 [MR111037]
269,Para1)
Competitors Amazon achieved Low gross profit √

Weakness
margins. Low in gross profit
margin can be considered as a
weakness for Amazon (Financial
analysis)
Competitors
objective - Several other online marketing
and strategy channels such as: (1) syndicated √
store programs, (2) sponsored
searches, (3) portal advertising, and
(4) e-mail campaigns Amazon.com,
Amazon 2006, p. 37).(Page 269, Para1)
- Amazon has initiated alliances

with partners to gains sales by √
referring customers to
Amazon.com (Page 269, Para1)
- The success of Amazon is built

on similar customer-centric √
entrepreneurial business models
that focus on customer-driven
value creation. (Page 268, para1
Competitors However, Amazon’s strong growth

Capabilities and satisfied customer base pose √
the greatest threat to eBay (Page
267, Para6)
Amazon
Competitors
Distribution - No Data Available - -

eBay Inc.-2009 [MR111037]
Channels
Competitors -Amazon, a leading online retailer,
Financial reported net revenues of $19.2 √
Position billion as of year end 2008. (Page
268, Para4)
Amazon
Total 1 6
Conclusion:
Based on the competitive analysis, only Amazon has been found as the major competitors for
eBay in the industry. Other competitors mentioned in the case study cannot be analysed since
they only mentioned the name of the companies. Therefore, there are 1 opportunity with 6
threats have been found in this analysis.
3.3 Industry Analysis
3.3.1 The Description of The Industry

As mentioned before, eBay is active in three different segments such as; Business segment
I:Marketplaces, Platforms, and Services; Business Segments II: Communications; and
Business Segments III: Communications. In order to analyse the industry based on the
external analysis, five Porter Forces, which covered 5 components have been chosen in this
study, which are: (1) Rivalry among Competing Firms; (2) Potential entry of new
competitors; (3)Substitute Products; (4) Bargaining Power of suppliers; (5) Bargaining Power
of Buyers.
The description of each category of segments for eBay in each industry is shown as
below:
1- Market place:
In 2008, eBay has a 14 percent share of global e-commerce with 86.3 million active users. In
addition EBay is involved in long-term contractual agreements with firms that provide
marketing, customer support, and technology (Page 263, Para7) June 2008, eBay Inc. was
found liable for damages in the amount of €38.6 million Euro payable to the Louis Vuitton
and Christian Dior firms competitors in this field includes traditional department, warehouse,

eBay Inc.-2009 [MR111037]
discount, and general merchandise stores, emerging online retailers, online classified
services, and other offline and online home shopping networks such as Wal-Mart, Target,
Sears, Macy's, J .C. Penney, Costco, Office Depot, Staples, OfficeMax, Sam's Club,
Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC, and Home Shopping
Network. Companies such as Google Base and Microsoft Live Expo also offer similar online
services and classified ads. The Marketplaces platform is the core online commerce
platform eBay.com. (Page 265, Para6)
2- Payments: For the second quarter of 2009, eBay reported nice growth in both their
PayPal and Skype business segments (Page 263, Para2) The Payments segment competes
against other online Payments services and offline Payments methods, such as cash, check,
money order, and established credit card merchants. (Page 268, Para1). Pay me Later is
funded by CIT Bank and Bill Me Later is responsible for all functions related to the account
(Page 269, Para5). Additional revenues are also earned from advertising and revenue-sharing
contracts with third parties that provide transaction services to eBay and PayPal account
users.(Page 264,Para1) PayPal is a recognized global leader in online payment solutions with
70 million active accounts. PayPal generated $60 billion in net total payment volume in 2008,
an increase of 27 percent over 2007.(Page 266, Para9) The Payments segment competes
against other online payment services and offline payment methods, such as cash, check,
money order, and established credit card merchants (Page 268, Para1) Future profitability
depends on the ability to manage credit while attracting new profitable consumers. EBay’s
Bill Me Later has significant exposure to consumers’ potential default on loans.
3- Communications: For the second quarter of 2009, eBay reported nice growth in Skype
business segments (Page 263, Para2)Communications segment’s competitors have larger
amount of resources compare to Skype. The Communications segment faces competition
from local telephone or cable companies and other VoIP providers. (Page 268, Para 1).
Traditional Communications companies offer bundled services, such as cable or satellite
television, along with internet and voice Communications services. (Page 268, Para 3)
For the second quarter of 2009, eBay reported nice growth in both their PayPal and Skype
business segments, which offset decline in their Marketplaces business segment.(page
eBay Inc.-2009 [MR111037]
263, para2) EBay’s popularity is due to the value offered to its users. EBay provides a
“faster, easier, safer online commerce experience” (eBay, 2006, p. 7).(Page 263, para4).
As a matter of fact, due to the lack of information about other competitors to compare with
eBay, I have chosen only Amazon as the main competitors involved in this industry.
3.3.2 Rivalry Among Competitor
Key
Variables Case Facts Competitive Forces
Strong Moderate Weak
Competitors -Amazon states their success is

’ strength based on: the ability to attract
buyers and sellers; the volume of 
transactions,
price, and selection of goods;
customer service; brand
recognition, community
Amazon cohesion, interaction, and size;
system reliability; delivery and
payment reliability; Web site
convenience and accessibility; level
of service fees; and quality of
search tools (eBay, 2006).(Page
269,Para1)

-Amazon, a leading online retailer,
reported net revenues of $19.2
billion as of year end 2008. (Page
268, Para4)
EBay’s popularity is due to the

value 
offered to its users. EBay provides
a “faster, easier, safer online
commerce experience”
(eBay, 2006, p. 7).(Page 263,
eBay para4)
(Market 
places) EBay offers millions of items for
trade through
auction-style and fixed-price
trading in 39-markets and boasts
86.3 million active global
eBay Inc.-2009 [MR111037]
users as of 2008.(Page 264, para3)


-The key to success is eBay’s user
support, such as announcements,
bulletin boards, customer support,
personal pages, and more. (Page
265, Para5)
- EBay has also expanded specific

Customer Support efforts, such as
online self-help features
to increase efficiency of trades.
EBay offers both “pre-trade” and 
“post-trade” Value-
Added Tools and Services to
facilitate faster and safe trading and
collections (Page 266, Para 2)
-EBay’s popularity is due to the

value offered to its users. EBay
provides a “faster, easier, safer
online commerce experience” 
(eBay, 2006, p. 7).(Page 263,
para4)
-Increased in ROA is considered a


strength for eBay(Financial
analysis)
Competitors -Bay compared to Amazon

Weakness 
achieved High gross profit margins
High in gross profit margin can be
considered as a strength for eBay

eBay Inc.-2009 [MR111037]
(Financial analysis)
Amazon
-For the second quarter of 2009, 

eBay’s profit fell 29 percent and
revenue declined
4 percent as the company continued
its turnaround strategy in a harsh
climate for consumer
eBay (MarketSpending (Page 263, Para2)
place)
- For that 
quarter, eBay reported
decline in their Marketplaces
business segment.(Page263, Para2)
- EBay recently increased its fee

structure for its Marketplaces
business, which may negatively 
impact the number of new
customers and revenue from
existing
users.(Page 269, Para7)
- eBay Revenue Growth of rate has

been decreasing for the last 3 years.
Therefore, this decline trend lead to 
decreasing the growth rate in 2009
by 4%. This revenue decline trend
is considered as the weakness of
eBay (Financial analysis)
-Decrease in Growth rate is 

considered as weakness for

eBay Inc.-2009 [MR111037]
eBay.(Financial analysis)

-Decreased to almost double for

working capital is considered as
weakness for eBay (Financial
analysis)
-Declining in stock price started

from 2005 to 2008 can be 
considered as the weakness for
eBay.(Financial analysis)
Competitors - Several other online marketing

’ objective channels such as: (1) syndicated
and strategy store programs, (2) sponsored 
searches, (3) portal advertising, and
(4) e-mail campaigns Amazon.com,
2006, p. 37).(Page 269, Para1)
- Amazon has initiated alliances

Amazon with partners to gains sales by 
referring customers to Amazon.com
(Page 269, Para1)
- The success of Amazon is built

on similar customer-centric
entrepreneurial business models
that focus on customer-driven 
value creation. (Page 268, para1)
- EBay plans to expand the

Marketplaces segment by focusing
on customers to improve the 
buyer’s experience and reduce

eBay Inc.-2009 [MR111037]
seller costs by enhancing products

and services, improving online trust
and safety, enhancing customer
support, extending product
offerings geographically and into
eBay(Mark
etplaces) new categories, and developing
retention strategies. (Page 226,
Para8)
-In August 2009, eBay Inc. formed

a partnership with General Motors
enabling hundreds of GM dealers in 
California to help consumers
negotiate purchase of new GM cars
and trucks through the eBay online
marketplace. (Pg.263,para1)
-Acquired by eBay Inc. in 2005,

Shopping.com is an online
comparison shopping site that
offers comparisons on millions of 
products and product
reviews.(Page266, Para6)
-In, 2008, eBay launched an

advertising service that enables
third parties to advertise their eBay
listings and eBay stores on eBay 
Web sites.(Page 266, Para5)
Competitors However, Amazon’s strong growth

Capabilities and satisfied customer base pose 
the greatest threat to eBay (Page
267, Para6)
Amazon

eBay Inc.-2009 [MR111037]
-EBay’s global networked 

community of buyers and sellers
interact 24/7 in a secure and
trusted global marketplace (Page
eBay
264, para4)
(Marketpla
ces) - The Verified Rights Owner
Program enforces intellectual
property owners’ rights by allowing 
owners to request the removal of
listings that contain infringements.
This program protects
intellectual property and reduces
counterfeit trade.(Page 266,
Para2)
- EBay.com offers a sense of

community to buyers and sellers
that is sustained by 
Communications and high
transaction rates on a wide
selection of goods/services
(eBay.com, 2006).(Page 263,
para4)
-EBay offers millions of items for

trade through auction-style and
fixed-price trading in 39 markets 
and boasts 86.3 million active
global users as of 2008.(Page 264,
para3)
-In response to the weak economy,

eBay undertook a 10 percent
reduction in its workforce with the 
elimination of 1,000 jobs in 2008
and incurred $49,000 in
restructuring costs. In the same
year, eBay acquired Bill Me Later
and announced an anticipated
second acquisition of a vehicle
classified ad site, eBay
Motors(Page 269, para4)

eBay Inc.-2009 [MR111037]
Competitors
’ - No Data Available - -
Distribution -Nearly all of California’s 250 GM 
Channels
dealers took part in the program so
consumers could visit Web pages
like gm.ebay.com and
chevy.ebay.com to browse new
eBay
(market 2008 and 2009 GM vehicles, ask
places) dealers questions, and figure out
financing. (Pg.263,para1)
- EBay Inc. also offers online

classified advertisements to 
members in hundreds of cities and
regions of the world, such as the
Netherlands, Germany, and so
on. (Page 266, Para4)
- By 2009, eBay has attained

customized local sites across four
major areas of the world in the 
following regional markets; Asia
Pacific, Europe, North America and
Latin America (Page 265,Para1)
- EBay offers both “pre-trade” and

“post-trade” Value- Added Tools
and Services to facilitate faster and
safe trading and collections. 
Examples of value added service
tools include calculator, shipping
and UPS labels (Page 266, Para2)
Competitors - Amazon, a leading online retailer, 

Financial reported net revenues of $19.2
Position billion as of year end
2008. (Page 268, Para4)
Amazon

eBay Inc.-2009 [MR111037]
For the second quarter of 2009, 

eBay’s profit fell 29 percent and
revenue declined
4 percent as the company
continued its turnaround strategy in
eBay(Mark a harsh climate for consumer
etplace) spending.(page 263, para 2)
In 2008, eBay.com generated

approximately $59.7 billion in
gross merchandise revenues with 
consumer electronics accounting
for the largest percentage of trade at
$6.0 billion or 17 percent, as
indicated in Exhibit 1 (Page 263,
Para 4)
Total 12 20 4
3.3.3 Potential Entry of New Competitor
a) for Marketplaces Segment
Potential Entry of New Competitors Competitive Forces

NO Case facts Strong Moderate Weak
1 Competition is expected to increase in the future

because barriers to entry in this segment 
are low and new online sites can be launched at a
nominal cost (Page 268, Para2)
Total 1
b) for Communications Segment

eBay Inc.-2009 [MR111037]
N/A - - -
Total
c) for Payments Segment

N/A - - -
Total
3.3.4 Potential Development of Substitute Products
a) For Marketplaces Segment
Potential Development of Substitute Products Competitive Forces

1 Competitors include traditional

department, warehouse, discount, and
general merchandise stores, emerging 
online
retailers, online classified services, and
other offline and online home shopping
networks
such as Wal-Mart, Target, Sears, Macy’s,
J.C. Penney, Costco, Office Depot, Staples,
OfficeMax, Sam’s Club, Amazon.com,
Buy.com, AOL.com, Yahoo! Shopping,
MSN,
QVC, and Home Shopping Network.(Page

eBay Inc.-2009 [MR111037]
268, Para2)
Companies such as Google Base and 

Microsoft Live
2 Expo also offer similar online services and
classified ads. (Page 268, Para2)
However, Amazon’s strong growth and

3 satisfied customer base pose the greatest
threat to eBay (Page 267, Para6) 
Total 1 2
b) For Communications Segment

1 Traditional communications companies

offer bundled services, such as cable or
satellite television, along with internet and 
voice communications services (Page268,
para2)
2
The Communications
segment faces competition from local
telephone or cable companies and other 
VoIP
providers. Furthermore, eBay anticipates
the need for substantial resource
investments in
technology and marketing in order to
remain competitive. (Page 1, Para268)

eBay Inc.-2009 [MR111037]
Total 2
c) For Payments Segment

1 Other online payment services and offline
payment methods, such as 
cash, check, money order, and established
credit card merchants (Page 268, Para1)
2
The Payments segment
competes against other online payment 
services and offline payment methods, such
as
cash, check, money order, and established
credit card merchants (Page 268, Para 1)
Total 2
3.3.5 Bargaining Power of Suppliers

Bargaining Power of Suppliers Competitive Forces

1 Competition is expected to increase in the future 
because barriers to entry in this segment
are low (Page 268, Para2)
Total 1

eBay Inc.-2009 [MR111037]

N/A - - -
Total
c) For Payments Segment

N/A - - -
Total
3.3.6 Bargaining Power of Consumers
Bargaining Power of Consumers Competitive Analysis

1. Financial crisis, are expected to limit revenue

growth, particularly in the
Marketplaces segment, which is closely tied 
to consumer purchase patterns.(Page 269,
Para2)
Total 1

eBay Inc.-2009 [MR111037]

N/A - - -
Total
b) For Payments Segment

N/A - - -
Total
3.3.7 Conclusion of the Industry

a) For Marketplaces segment
Porter’s Five Forces Analysis Result
Competitive Forces
Key Variables Strong Moderate Weak
Rivalry Among Competitor 12 20 4
Potential Entry of New Competitor 1 N/A N/A
Potential Development of Substitute Products 1 2 N/A
Bargaining Power of Suppliers 1 N/A N/A
Bargaining Power of Consumers 1 N/A N/A
Total Result of Porters’ Five Forces 16 22 4
Vertical Analysis:
According to the case and above analysis, it can be concluded that competitive pressure to the
industry is moderate because 22 is the dominant number in this analysis. Therefore, it is
attractive for new entrant and new investors to enter in this industry. Besides that this
industry also having a large market size, fast growing in the market and it is not too many
eBay Inc.-2009 [MR111037]
large competitors in this industry. Thus if a firm can develop a business plan which makes
them diverse, customer oriental and unique, the potential of success is possible.
b) For Communications segment

Competitive Forces
Rivalry Among Competitor N/A N/A N/A
Potential Entry of New Competitor N/A N/A N/A
Potential Development of Substitute Products N/A 2 N/A
Bargaining Power of Suppliers N/A N/A N/A
Bargaining Power of Consumers N/A N/A N/A
Total Result of Porters’ Five Forces - 2 -
Vertical Analysis:
Because of lack of competitors information for this industry, I cannot analyse the forces of
this industry in details. But I concluded that the competitive pressure to the industry is
moderate.
c) For Payments segment

Competitive Forces
Rivalry Among Competitor N/A N/A N/A
Potential Entry of New Competitor N/A N/A N/A
Potential Development of Substitute Products N/A 2 N/A
Bargaining Power of Suppliers N/A N/A N/A
Bargaining Power of Consumers N/A N/A N/A

eBay Inc.-2009 [MR111037]
Total Result of Porters’ Five Forces - 2 -
Vertical Analysis:
As mentioned before, because of lack of competitors information for this industry, I cannot
analyse the forces of this industry in details. But I concluded that the competitive pressure to
the industry is moderate.
3.6 Defining the Key Success

*For defining the key success factor, I have found out only the key success factor for
marketplaces segment which is only involved Amazon as the main competitors. As a matter
of fact, because of lack of information based on the ase study given, I also did not provide
the key success factor for Communications segment as well as Payments segment.
a) for marketplaces Segment
Key Success Factor

NO Key Success Case Facts
Factor
1.
- The success of eBay and Amazon are built on similar
customer-centric entrepreneurial business models that
focus on customer-driven value creation.
Examination of the
strategies, business models, and customer benefits of
eBay and Amazon reveals a common
emphasis on relationship value and customer-focused
solutions (Page268, Para1)
Providing Value
to Customers
-EBay offers millions of items for trade through

auction-style and fixed-price trading in 39 markets and
boasts 86.3 million active global
-The key to success is eBay’s user support, such as

announcements, bulletin boards, customer support,
personal pages, and more.
-Amazon states
their success is based on: the ability to attract buyers
and sellers; the volume of transactions,
price, and selection of goods;(Page 269, Para1)
eBay Inc.-2009 [MR111037]
-In the Marketplaces platform, eBay.com, traditional

auction-style or fixed-price options are offered in 39
markets. Auction-style listing allows a seller to select a
minimum
price for opening bids that stay open for a period of
time. Alternatively, the fixed-price format
allows sellers to name a sale price upon listing instead
of waiting for the auction period to expire.(Page
265,Para 6)
- EBay has also expanded specific Customer Support

efforts, such as online self-help features
to increase efficiency of trades. EBay offers both “pre-
trade” and “post-trade” Value-
Added Tools and Services to facilitate faster and safe
trading and collections (Page 266, Para 2)
2.
- Buyers and sellers enjoy trading among a wide
selection of goods and services in a secure,
trusted, and efficient commerce environment (Page
265, Para5).
Providing Reliability &
To facilitate trading with unknown partners on the

Trustworthy
Internet, eBay Inc. provides a trusted

and safe trading environment by offering the following
services: Feedback Forum, Safe
Harbor Program, Verified Rights Owner Program,
Customer Support, Value-Added Tools
and Services, and Loyalty Programs.(Page 266, Para1)
- Amazon states
their success is based on: system reliability; delivery
and payment reliability (Page 266, Para1)

eBay Inc.-2009 [MR111037]
3.
EBay.com offers a sense of community to
buyers and sellers that is sustained by Communications
and high transaction rates on a wide
Friendly Interface
selection of goods/services (eBay.com, 2006).(Page
263, para4)
-Amazon states
their success is based on: customer service; Web
site convenience and accessibility; brand recognition,
community
cohesion, interaction, and size (Page 269, Para1)
-EBay’s popularity is due to the value

offered to its users. EBay provides a “faster, easier,
safer online commerce experience”
Brand Image &
4 (eBay, 2006, p. 7).(Page 263, para4)

Reputation
-Amazon states
their success is based on: customer service; brand
recognition; level of service fees; and quality of search
tools(Page 266, Para1)
- Amazon, a leading online retailer, reported net

Financial Position
revenues of $19.2 billion as of year end

5 2008. (Page 268, Para4)
-In 2008, eBay.com generated approximately $59.7

billion in gross merchandise revenues with consumer
electronics accounting for the largest percentage of
trade at $6.0 billion or 17 percent, as indicated in
Exhibit 1 (Page 263, Para 4)
*Based on the case study given, because of the general information provided for the PEST,
I have considered the PEST analysis is meant for Marketplaces segment, Communications
segment and Payments segment. As a matter of fact, most of the list of opportunities and

eBay Inc.-2009 [MR111037]
threats are coming from the marketplaces segment. In order to differentiate the segment, I
have provided another table for the list of opportunities and threats for Communications
and Payments segment. But for Pest analysis the results remains the same.
3.6 Opportunities and Threats

for Marketplaces segment
The List of Opportunities
No. Case Fact Prioritize
Opportunities Resulted from PEST Analysis and Competitive Analysis
1. Profitability is also affected by currency exchange rates (page 269, 3

Para3)
2. If the U.S. dollar weakens against foreign currencies, transactions 5

conducted in foreign currency denominations will increase and inflate
revenues, operating expenses, and net income (Page 269, Para3)
3. Buyers and sellers enjoy trading among a wide selection of goods and 2
services in a secure, trusted, and efficient commerce environment.(Page
265, Para5).
4. Online classifieds help people meet, share ideas, and offer 4

5. The need for substantial resource investments in technology and 1

marketing in order to remain competitive (Page 268, Para1)
6. Amazon achieved Low gross profit margins. Low in gross profit margin 6
can be considered as a weakness for Amazon (Financial analysis)
Opportunities Resulted from Industry Analysis (Porter’s 5 Forces)
N/A

eBay Inc.-2009 [MR111037]
The list of threats
Threats Resulted from PEST Analysis and Competitive Analysis
1 Legislation is in effect which requires collection of taxes beginning after 6

December 31, 2010. This new legislation may cause a reduction in trading
activity that would negatively affect several business segments (Page 269,
Para 6)
2 In addition, tax compliance will increase costs. (Page 269, Para 6) 1
3 Legislation has also been proposed to prohibit sharing of certain 17

information over the Internet, (Page 270, Para2)
4 The resources of existing competitor firms are larger and as a result, 3

competitors could weather an economic downturn (Page 268, Para2)
5 The company continued its turnaround strategy in a harsh climate for 16

consumer spending (Page 263, Para2)
6 Weak global economic conditions, in addition to the mortgage and 2

worldwide credit related financial crisis, are expected to limit revenue
growth, particularly in the Marketplaces segment, which is closely tied to
consumer purchase patterns (Page 269, Para2)
7 Alternatively, financial measures will be negatively impacted by a rise in 7

the value of the U.S. dollar (Page 269, Para3)
8 Declining economic environment (Page 268, Para4) 10
9 Dollar and the lingering weak economy with high unemployment (Page 8
274, Para1)
10 The revenue drop was attributable to the impact of the stronger. 11
11 Competition is intense in communications services and subject to rapid 4

technological
12 Breaches in data security are on the rise (Page 270, Para3) 12
13 Amazon states their success is based on: the ability to attract buyers and 13
sellers; the volume of transactions, price, and selection of goods; customer
eBay Inc.-2009 [MR111037]
service; brand recognition, community cohesion, interaction, and size;

system reliability; delivery and payment reliability; Web site convenience
and accessibility; level of service fees; and quality of search tools (eBay,
2006).(Page 269,Para1)
14 Several other online marketing channels such as: (1) syndicated store 18
programs, (2) sponsored searches, (3) portal advertising, and (4) e-mail
campaigns Amazon.com, 2006, p. 37).(Page 269, Para1)
15 Amazon has initiated alliances with partners to gains sales by referring 20

customers to Amazon.com (Page 269, Para1)
16 The success of Amazon is built on similar customer-centric entrepreneurial 14

business models that focus on customer-driven value creation. (Page
268, para1)
17 Amazon, a leading online retailer, reported net revenues of $19.2 billion as 22

of year end 2008. (Page 268, Para4)
Threats Resulted from Industry Analysis (Porter’s 5 Forces)
18 Marketplaces: Competition is expected to increase in the future because 9

barriers to entry in this segment
are low and new online sites can be launched at a nominal cost (Page 268,
Para2)
19 Competitors include traditional 19

department, warehouse, discount, and general merchandise stores,
emerging online
retailers, online classified services, and other offline and online home
shopping networks
such as Wal-Mart, Target, Sears, Macy’s, J.C. Penney, Costco, Office
Depot, Staples,
OfficeMax, Sam’s Club, Amazon.com, Buy.com, AOL.com, Yahoo!
Shopping, MSN,
QVC, and Home Shopping Network.(Page 268, Para2)
20 Companies such as Google Base and Microsoft Live 21

Expo also offer similar online services and classified ads. (Page 268, Para2)
21 5
However, Amazon’s strong growth and satisfied customer base pose the
greatest threat to eBay (Page 267, Para6)

eBay Inc.-2009 [MR111037]
22 Marketplaces segment, which is closely tied to consumer purchase 15

patterns.(Page 269, Para2)
b) Opportunities and Threats for Communications segments

Opportunities Resulted from PEST Analysis

Para3)

265, Para5).


N/A
The list of threats
Threats Resulted from PEST Analysis

eBay Inc.-2009 [MR111037]
Para 6)





274, Para1)

technological
12 Other online payment services and offline payment methods, such as 13

cash, check, money order, and established credit card merchants (Page 268,
Para1)
13 The Payments segment 11

competes against other online payment services and offline payment
methods, such as
cash, check, money order, and established credit card merchants (Page 268,
Para 1)
eBay Inc.-2009 [MR111037]
c) Opportunities and Threats for Payments segments

Opportunities Resulted from PEST Analysis

Para3)

265, Para5).


N/A

eBay Inc.-2009 [MR111037]
The list of threats
Threats Resulted from PEST Analysis

Para 6)





274, Para1)

technological

eBay Inc.-2009 [MR111037]
12 Traditional communications companies offer bundled services, such as 12

cable or
satellite television, along with internet and voice communications services
(Page268, para2)
13 The Communications segment faces competition from local telephone or 11
cable companies and other VoIP providers. Furthermore, eBay anticipates
the need for substantial resource investments in technology and marketing
in order to remain competitive. (Page 1, Para268)
* Because of the lack information given in the case study particularly for competitors
information I provided only EFE and CPM analysis for marketplaces segment.
3.7 The External Evaluation Factor (EFE)

Item Key external factor Weight Rating Weighted

score
Opportunity
1 The need for substantial

resource investments in
technology and marketing in
order to remain competitive 0.09 4 0.36
(Page 268, Para1)
2 Buyers and sellers enjoy

trading among a wide
selection of goods and
services in a secure, trusted,
and efficient commerce 0.08 4 0.32
environment.(Page 265,
Para5).

eBay Inc.-2009 [MR111037]
3 Profitability is also affected 0.07 3 0.21

by currency exchange rates
(page 269, Para3)
4 Online classifieds help 0.07 3 0.21

people meet, share ideas, and
offer goods/services at a local
city or regional level(Page
266, Para4)
If the U.S. dollar weakens

against foreign currencies,
5 transactions conducted in 0.06 3 0.18
foreign currency
denominations will increase
and inflate revenues,
operating expenses, and net
Threat
6 In addition, tax compliance

will increase costs. (Page
269, Para 6)
0.08 4 0.32
7 Weak global economic

conditions, in addition to
the mortgage and worldwide
0.08 4 0.32
credit related financial
crisis, are expected to limit
revenue growth, particularly
eBay Inc.-2009 [MR111037]
in the Marketplaces
segment, which is closely
tied to consumer purchase
patterns (Page 269, Para2)
8 The resources of existing

competitor firms are larger
and as a result, competitors
could weather an economic
downturn (Page 268, 0.07 3 0.21
Para2)
9 Competition is intense in 0.06 3 0.18

communications services
and subject to rapid
technological Change(Page
268, Para2)
10 However, Amazon’s strong 0.06 3 0.18

growth and satisfied
customer base pose the
greatest threat to eBay (Page
267, Para6)
11 Legislation is in effect 0.06 3 0.18

which requires collection of
taxes beginning after
December 31, 2010. This
new legislation may cause a
reduction in trading activity
that would negatively affect
several business segments
(Page 269, Para 6)

eBay Inc.-2009 [MR111037]
12 Alternatively, financial 0.05 3 0.15

measures will be negatively
impacted by a rise in the
value of the U.S. dollar
(Page 269, Para3)
13 Dollar and the lingering 0.05 3 0.15

weak economy with high
unemployment (Page 274,
Para1)
14 Marketplaces: Competition 0.05 3 0.15

is expected to increase in the
future because barriers to
entry in this segment are low
and new online sites can be
launched at a nominal cost
(Page 268, Para2)
15 Declining economic 0.05 3 0.15

environment (Page 268,
Para4)
Total 1 3.27
Conclusion
Based on External Factor Evaluation Analysis, eBay achieved 3.27 for marketplaces segment
which shows that the company is fairly stabil towards the opportunities and threats in its
industries. As a matter of fact, we can clearly see that eBay external strategies have fairly
success in taking advantage of existing opportunities and at the same time struggle to reduce
the threats since there is not too many large company involved in the industry.

eBay Inc.-2009 [MR111037]
3.8 Competitive Profile Matrix Analysis
*For CPM analysis, I have only considered Amazon as the only one competitor in the
marketplace segment since there is lack of data given based on the case study.
Key SUCCESS eBay Amazon

FACTORS Weight Rating Score Rating Score
Providing Value 3 0.90 3 0.90
to Consumers 0.30
Reliability & 3 0.84 3 0.84
Trustworthy 0.28
Friendly 0.18 3 0.54 3 0.54
Interface
Brand Image & 0.14 3 0.42 3 0.42
Reputation
Financial 0.10 2 0.20 2 0.20
Position
Total 1 2.90 2.90
Conclusion:
From the CPM analysis we can see that eBay’s CPM value is 2.90 which is the same
to its competitor, Amazon. On the other hand, because of the lack information about the
competitors, I am going to focus only on Amazon as the main competitor for the
internal analysis since it is the major treat for eBay in this industry.

eBay Inc.-2009 [MR111037]
4.0 Internal Analysis
4.1 Cultural Analysis

*Based on the case study given, the cultural analysis factor provided in the case is a very
general statement for eBay without mentioning specifically for which segment. So because
of lack of data I did not separate them into different segment.
Case Facts
S W
Segment eBay Amazon
EBay transformed the Internet and the way
many of us shop and do business worldwide N/A 
Marketplaces (Page 264,para3)
-The success of eBay is built on similar - The success 

customer-centric entrepreneurial of Amazon is
business models that focus on customer- built on
driven value creation (Page 268, Para1) similar
customer-
centric
entrepreneurial
business
models that
focus on
customer-
driven value
creation (Page
268, para1)
Communications
-EBay, the first virtual online business
community, empowers entrepreneurial N/A
individuals to become e-commerce business 
owners.(Page 2
63, Para4)

eBay Inc.-2009 [MR111037]
Payments
N/A N/A
4.2 Management Functions
S W
Case Facts
Functions Segment eBay Amazon
-EBay plans to expand

Marketplaces the Marketplaces segment
by focusing on customers
to Improve the buyer’s
experience and reduce N/A
seller costs by enhancing

products and services,
improving online trust
and safety, enhancing
customer support,
Planning extending product
offerings geographically
and into new categories,
and developing retention
strategies. (Page 226,
Para8)
Communications EBay also that quarter N/A

announced they would 
spin off and make an
initial public offering of
their Skype business
segment in the beginning
of year 2010.
(Pg.263,para2)
- Registered subscribers
are expected to reach
500 million by 2012 and N/A 
revenues are anticipated
to double
by 2011.(Page 267,
Para4)
EBay Inc. plans to

eBay Inc.-2009 [MR111037]
implement a customer
management program
that emphasizes 
acquiring new users and N/A
upgrading current Skype
users to premium
products (Page 267,
Para5)
- Future plans
include expanding
Skype’s desktop product N/A 
to mobile user devices
and other Web-based
devices. Plans include
also offering solutions to
a more diverse business
user and enhancing
the Skype’s current
platform for greater
revenues because the
worldwide
communications
market is expected to
grow by 5.5 percent
annually with U.S. Web
conferencing
expected to grow 14.1
percent from 2008
through 2011 (eBay.com
2009).(Page 267, Para5)
EBay’s management
seeks to become the
Payments number-one online N/A 
payment solution. EBay
plans to focus on
improving the customer
experience, enhancing
security, expanding
product
offerings, enhancing
buyer and seller
protection programs,
adding innovative
features, and
expanding its sales

eBay Inc.-2009 [MR111037]
channels (Page
267,Para2)
-Expansion
into international markets
and more currencies is N/A 
expected to improve the
ease and efficiency
of cross-border
transactions (Page 267,
Para2)
-In August 2009, eBay -Amazon has 

Inc. formed a initiated alliances
partnership with with partners to
Marketplaces General Motors enabling gains sales by
hundreds of referring customers
GM dealers in California to Amazon.com
to help consumers (Page 269, Para1)
negotiate purchase of new
Organising GM cars and trucks
through the eBay online
marketplace.
(Pg.263,para1)
EBay has also expanded

specific Customer
Support efforts, such as N/A 
to increase efficiency of
trades(Page 266, Para2)
-In, 2008, eBay launched

an advertising service that
enables third parties
to advertise their eBay N/A 
listings and eBay stores
on eBay Web sites.(Page
266, Para5)
- Acquired by eBay Inc.

in 2005, Shopping.com is 
an online comparison
shopping

eBay Inc.-2009 [MR111037]
site that offers N/A

comparisons on millions
of products and product
reviews.(Page266, Para6)
-Rent.com, acquired by
eBay in 2005, (Page 266, N/A 
Para7)
Communications -E-commerce is
supported by eBay’s
proprietary N/A 
Skype VoIP technology,
which allows free
telephone calls using a
broadband Internet
connection to any
telephone number.(Page
263, para4)
-The Communications
segment is composed of
Skype, which was N/A 
founded in 2003 and
acquired by eBay in
2005.
- As of December 2008,
Skype had acquired
370 million users, a 51 N/A 
percent growth over the
same time a year ago.

eBay Inc.-2009 [MR111037]
-
PayPal was founded in N/A 
Payments December 1998 and
acquired by eBay Inc. in
2002 (Page 266, Para 9)
Bill Me Later, acquired

by eBay Inc. in 2008,
offers consumers instant N/A 
credit at the point
of sale through over 1000
online U.S. merchants
(Page 267, Para1)
Marketplaces N/A N/A
Motivating
N/A N/A
Communications
Payments N/A N/A
As of December 31,
2008, eBay Inc. N/A

Staffing Marketplaces employed approximately
16,200 people. (Page264,
Para3)

eBay Inc.-2009 [MR111037]
Communications
N/A N/A
Payments N/A N/A
-EBay’s global
networked community of
Marketplaces buyers and sellers interact
24/7 in a secure and N/A 
Controlling trusted global
marketplace (Page 264,
para4)
- EBay recently adopted a N/A 

policy that no
longer permits sellers to
leave negative feedback
(Page 266, Para2)
- Web Site Stability. N/A 

Increased volume and
greater complexity
requires additional
expensive investments in
hardware, software, and
personnel(Page 270,
Para4)
- The SafeHarbor
Program provides
guidelines for resolving
disputes among parties.
Complaints are

eBay Inc.-2009 [MR111037]
investigated and
offenders
may receive warnings N/A 
that are posted to users.
Violators may be
suspended from either
bidding on or listing
items for sale.(Page 22,
Para2)
The Verified Rights

Owner Program enforces
intellectual property
owners’ rights by
allowing owners to N/A
request the removal of
listings that contain
infringements. This
program protects 
intellectual property
and reduces counterfeit
trade.(Page 266, Para2)

For that
quarter, eBay reported N/A 
offset decline in their
Marketplaces business
segment (Page 263,
Para2)
- EBay has recently been

involved in litigation with
Tiffany & Co., Rolex, N/A 
Louis Vuitton, Christian
Dior, L’Oréal, and
Lancôme for a lack of
policing trade and
infringement on
trademarks and
copyrights for the sale
of “not for resale” and
counterfeit items on
eBay’s Web
sites. (Page 269, Para8)

eBay Inc.-2009 [MR111037]
- Prohibit sharing of
certain information over
the Internet, such as
comments provided by
customers in eBay’s 
Feedback Forum. This
limitation would N/A
adversely affect eBay’s
ability to provide a
reliable and secure
community that shares
purchase information and
aspects of trades with
other members of eBay’s
Marketplaces
segment.(Page 270,
Para2)
For the second quarter of

Communications 2009, eBay reported
nice growth in Skype N/A 
business segments (Page
263, Para2)
Payments - For the second quarter

of 2009, eBay reported N/A 
nice growth in both their
PayPal (Page 263, Para2)
-Although Bill Me Later

accounts are funded by
CIT Bank, Bill Me Later 

eBay Inc.-2009 [MR111037]
is responsible N/A
for all functions related
to the account.
-As of October 2008

certain transactions on
eBay.com purchased
using PayPal are N/A 
protected for the full
purchase price in the
event that the buyer does
not receive the
goods. This may result in
greater losses and write-
offs incurred by eBay
Inc.(Page 270, Para2)
4.3 Marketing Strategy
Case Facts S W
Factors Segment eBay Amazon
-The success of eBay is built
on similar customer-centric N/A
Marketplaces entrepreneurial business
models that focus on 
customer-driven value
creation (Page 268, Para1)
Marketing
Strategy - EBay Inc. also offers online
classified advertisements to N/A 
members in hundreds of cities
and regions of the world,
such as the Netherlands,
Germany, and so on. (Page
266, Para4)

eBay Inc.-2009 [MR111037]
Communications N/A N/A
Additional revenues N/A 

Payments are also earned from
advertising and revenue-
sharing contracts with third
parties that provide
transaction services to eBay
and PayPal account users.(Page
264, para1)
Promotion -Facilitate trading with -Amazon has

Programs unknown partners on the initiated 
Marketplaces Internet, eBay Inc. provides a alliances with
trusted and safe trading partners to
environment by offering the gains sales by
following services: Feedback referring
Forum, Safe Harbor Program, customers to
Verified Rights Owner Amazon.com
Program, Customer Support, through
Value-Added Tools several other
and Services, and Loyalty online
Programs.(Page 266, Para1) marketing
channels such
as: (1)
syndicated
store
programs, (2)
sponsored
searches, (3)
portal
advertising, and
(4) e-mail
campaigns
(Amazon.com,
2006, p.
37).(Page 269,
Para1)

eBay Inc.-2009 [MR111037]
-Nearly all of California’s 250 

GM dealers took part N/A
in the program so consumers
could visit Web pages like
gm.ebay.com and
chevy.ebay.com (Page 263
Para1)
-Loyalty Programs that provide 

cash back buyer rewards N/A
coupons were selectively
distributed to recognize large
buyers to sustain customer
loyalty.(Page 266, Para2)

- The key to success is eBay’s

user support, such as N/A
announcements,
bulletin boards, customer support,
personal pages, and more (Page
265, Para5)
Communications N/A N/A
Payments N/A N/A

- The Marketplaces platform is N/A
Marketplaces the core online commerce
Product and platform
Service eBay.com. (Page 265, Para6)
Planning
- Web Site Usability. Growth in 
the number of products and
Web site features has caused N/A

eBay Inc.-2009 [MR111037]
the site to become less user-

friendly.(Page 270, Para4)
- EBay’s 
Marketplaces division reported N/A
$1.26 billion in revenue, a 14
percent year-over-year
decline(Page 274, Para1)
- Customer Support. Customer

support is challenged from 
greater trade activity and an N/A
increased number of
-EBay, the first virtual online

business community, 
Communications empowers entrepreneurial N/A
individuals to become e-
commerce business
owners(Pg.263,para4)
-Skype is the world’s fastest-

growing Internet
communication
software platform.(Page 267,
Para3)
-Skype allows buyer/seller 

communications 24/7 in a N/A
secure and trusted community
that is supported by free
unlimited Internet voice and
video
communication (Page 267,
Para3)

eBay Inc.-2009 [MR111037]
-PayPal is a recognized
Payments global leader in online payment 
solutions N/A
(Page 266, Para9)
-EBay’s Payments segment is

composed of PayPal and Bill N/A 
Me Later transaction services.
(Page 266, Para9)
-PayPal is available to any

online or offline individual or 
business with an e-mail N/A
address and allows members to
securely send and receive
payments online securely
without
sharing sensitive financial
information.(Page 266, Para10)
-If credit availability is further 

reduced, Bill Me Later may not N/A
be able to extend credit to
customers (Page 269, Para5)
- For the quarter ending July

30, 2009, eBay’s Payments
division reported $669.3
million in
revenue, an increase of 11 N/A 
percent year over year. The
growth was driven by
continued
momentum in PayPal Merchant
Services and the contribution
made by Bill Me Later (Page
274,Para1)

eBay Inc.-2009 [MR111037]
-EBay provides the virtual

Pricing Marketplaces marketplace auction where the N/A 
market determines the price of
items sold (Page 264, Para3)
-In the Marketplaces platform,

eBay.com, traditional auction-
style or fixed-price options are
offered in 39 markets. Auction- 
style listing allows a seller to N/A
select a minimum
price for opening bids that stay
open for a period of time.
Alternatively, the fixed-price
format
allows sellers to name a sale
price upon listing instead of
waiting for the auction period
to expire.(Page 265,Para 6)
-If revenue significantly

declines, eBay may not be able N/A
to meet 
contractual obligations. EBay
recently increased its fee
structure for its Marketplaces
business, which may negatively
impact the number of new
customers and revenue from
existing
Communications -Communications fees are 

assessed either N/A
on a subscription basis or per
minute charge for “SkypeOut
minutes.”(Page 264, Para1)

eBay Inc.-2009 [MR111037]
-International business 
Payments processing accounted for 45 N/A
percent of PayPal’s total
revenues for
2008. Higher fees earned on
international transactions
have provided eBay with
higher revenues
and gross margins in
comparison to revenues from
domestic transactions (Page
266, Para9)
- Any reduction in trading spill N/A 

over to a reduction in PayPal
revenues (Page 269, Para7)
-Nearly all of California’s 250

GM dealers took part
Marketplaces in the program so consumers
could visit Web pages like N/A 
gm.ebay.com and
chevy.ebay.com
to browse new 2008 and 2009
GM vehicles, ask dealers
questions, and figure out
financing. (Pg.263,para1)
Distribution
classified advertisements to N/A
members in hundreds of cities 
and regions of the world,
such as the Netherlands,
Germany, and so on. (Page
266, Para4)
Shopping.com N/A
is available in the United 
States, the United Kingdom,
France, Germany, and
eBay Inc.-2009 [MR111037]
Australia.(Page 266, Para6)

N/A
-This program marked a shift
for San Jose, California-based 
eBay, since most of the
vehicles sold on eBay
Motors—a site that sells
various types of vehicles and
auto parts—
had historically been used.
(Pg.263,para1) N/A
- By 2009, eBay has attained 

customized local sites across
four major areas of the
world in the following regional
markets; Asia Pacific, Europe,
North America and Latin
America (Page 265,Para1)
N/A
EBay offers both “pre-trade”
and “post-trade” Value-
Added Tools and Services to
facilitate faster and safe trading 
and collections. Examples of
value added service tools
include calculator, shipping and
UPS labels (Page 266, Para2)
N/A

-In August 2009, eBay Inc.
formed a partnership with
General Motors enabling
hundreds of
GM dealers in California to
help consumers negotiate
purchase of new GM cars
and trucks

eBay Inc.-2009 [MR111037]
-Skype is available in 28
languages in over 225 countries N/A
Communications (eBay, 2006).(Page 263, page4) 
Retailers that offer the Bill Me

Later service N/A
Payments include: Borders, Continental 
Airlines, Fujitsu, JetBlue,
Overstock, QVC, Toshiba,
Toys “R” Us, and
Walmart.com (Page 267, Para
1)
Marketplaces N/A N/A
Marketing
Research
Communications
N/A N/A
Payments
N/A N/A

eBay Inc.-2009 [MR111037]
4.4 Financial Analysis
4.4.1 Financial Ratio

Because of lack of the needed information for its competitor, Amazon about financial
statements, only eBay Inc. has been analyzed in financial terms. These ratios come from the
exhibit given in this case and again this financial analysis has only considered eBay based on
their financial position from year to year because of the lack of data from its competitor,
Amazon.
*Because of lack of data, this financial analysis covered for all three segments in eBay Corp;
Marketplaces segment; Communications segment; and Payments segment.
a) Growth of the revenue:
Company’s Revenue by Segments S W

Segment Year 2006 Year 2007 Year 2008 Year 2009

(Millions) (Millions) (Millions) (Millions)
Marketplaces 4,334,290 5,363,891 5,586,751 - - -
Communicati 194,921 381,822 550,841 - - -

ons
Payments 1,440,530 1,926,616 2,403,669 - - -
Total net 5,969,741 7,672,329 8,541,261 8,199,611 eBay Revenue

Revenue Growth of
Revenue 29% 11% -4% rate has been
Growth decreasing for
Percentage the last 3
years.
Therefore,
this decline
trend lead to
decreasing the
growth rate in

eBay Inc.-2009 [MR111037]
2009 by 4%.
This revenue
decline trend
is considered
as the
weakness of
eBay
b) eBay Stock Price:

Company’s Share Price in Millions
S W
Year Year Year Year Year 
2004 2005 2006 2007 2008
Declining in
stock price
$ 58.17 $43.22 $30.07 $33.19 $13.96 started from
2005 to 2008
can be
considered as
the weakness
for eBay
c) eBay Liquidity Ratio

Current Ratio S W
Year 2007 Year 2008 
2.30 1.70 Decreased in Current Ratio is
the weakness for eBay
Quick Ratio
Year 2007 Year 2008 
1.17 0.71 Decrease in Quick Ration is
the weakness for eBay

eBay Inc.-2009 [MR111037]
d) eBay Leverages Ratio

Debt to Equity Ratio S W
Year 2007 Year 2008 
0.41 0.47 Increased in Debt to equity
Ratio is the weakness for
eBay
Debt Ratio
Year 2007 Year 2008 
0.24 0.29 eBay Debt Ratio is increased
and it is considered as the
weakness for eBay
e) Profitability Ratio
Return on Assets (ROA) S W
Year 2007 Year 2008 - 
2.27% 11.41% - Increased in

ROA is
considered a
strength for
eBay
Return on Equity (ROE) S W
Year 2007 Year 2008 - 
3.0% 16.1% - Increased in
ROE is
considered as
a strength for
eBay

eBay Inc.-2009 [MR111037]
*In terms of the gross Profits margins this financial analysis can be compared with
Amazon since there is an information given in the case study given:
Gross Profit Margin (%) S W
Year 2006 Year 2007 Year 2008 - -
eBay Amazon eBay Amazon eBay Amazon 
78.9% 22.9% 77% 22.6% 74% 22.3% eBay compared to

Amazon achieved
High gross profit
margins .High in
gross profit
margin can be
considered as a
strength for eBay
Gross Profit Growth Rate (%)

Year 2005- 2006 Year 2006 to 2007 Year 2007 to 2008 S W
eBay Amazon eBay Amazon eBay Amazon 
- - 25% 37% 7% 27% Decrease in Growth

rate is considered as
weakness for eBay
f) Working Capital
Company’s Working Capital S W
Year 2007 Year 2008 
Decreased to almost double for

4,022,926 2,581,503
working capital is considered as
weakness for eBay

eBay Inc.-2009 [MR111037]
Finance / Accounting Audit Checklist

1. eBay Revenue Growth of rate has been decreasing for the last 3 years. Therefore, this
decline trend lead to decreasing the growth rate in 2009 by 4%. This revenue decline
trend is considered as the weakness of eBay
2. Declining in stock price started from 2005 to 2008 can be considered as the weakness for
eBay
3. Decreased in Current Ratio is the weakness for eBay
4. eBay Debt Ratio is increased and it is considered as the weakness for eBay
5. Increased in Debt to equity Ratio is the weakness for eBay
7. Increased in ROA is considered a strength for eBay
8. Increased in ROE is considered as a strength for eBay
9. eBay compared to Amazon achieved High gross profit margins .High in gross profit
margin can be considered as a strength for eBay
10. Decrease in Growth rate is considered as weakness for eBay
11. Decreased to almost double for working capital is considered as weakness for eBay

eBay Inc.-2009 [MR111037]
4.5 Production/Operation
Case Facts
Decision
Strength Weakness
Area Segment eBay Amazon
-In 2008, eBay.com Amazon, a
generated leading
approximately online
Marketplaces $59.7 billion in retailer, 
Process
gross merchandise reported net
revenues revenues of
with consumer $19.2 billion
electronics as of year end
accounting for the 2008. (Page
largest percentage 268, Para4)
of trade at $6.0
billion
or 17 percent, as
indicated in
Exhibit 1(Page
264,Para2)
-EBay’s
marketplace, or
“marketspace,” is N/A
an online virtual
trading platform 
for the sale of
goods and services
by a community of
users that
comprises
individual buyers
and sellers,
as well as small
business owners
(Page 264,Para3)

eBay Inc.-2009 [MR111037]
-EBay’s
Marketplaces 
platform
brings buyers and
sellers together
through fully
automated online
Web sites 24/7
(Page 265, Para5)
-Feedback Forum
provides feedback, 
comments, and
ratings on other
users that can
be viewed by
potential users
when considering a
purchase.(Page
266, Para2)
Revenue is earned
from advertisers
and retailers who 
pay a fee for
directing shoppers
to their own sites
(Page 266, Para6)
- The Marketplaces
segment generates
revenues from
listings and fees 
paid by sellers
(Page 264,Para1) N/A

eBay Inc.-2009 [MR111037]
- Rent.com lists
apartment
availability,
rental costs, virtual
tours, roommate N/A
searches, and more. 
Revenue is earned
from landlords
who pay a fee for
renters who find
apartments through
Rent.com.(Page
266, Para7)
- StubHub is a
leading U.S. ticket
marketplace that
allows users to buy N/A
and sell tickets 
to sporting, events,
theater, and other
entertainment
events (Page
266,Page3)
-Skype revenue is
Communicati earned through
ons premium services
such as 
making/receiving N/A
domestic
or international
calls to and from
landline and mobile
phones, voicemail,
call forwarding,
and
personalization,
such as ringtones.

eBay Inc.-2009 [MR111037]
-EBay’s prior 
expenditures were N/A
focused on
traditional wired
routes; however, 50
percent of
expenditures
are now in the
wireless
telecommunication
s sector.(Page 267,
Para 5)
-EBay’s e-
commerce platform
also provides full
support for the
buying process
(registration,
bidding,
management of
outbids, item
listing, and
transaction close),
community
bulletins, chat, a
proprietary product
search engine,
purchase protection
programs, customer
support, value
added services for
auction users, a
personal home
page that includes
tailored
information, and
fully automated
merchant services.
EBay’s success is
sustained through
Communications
and trust (eBay
2006).(Page
263,para4)

eBay Inc.-2009 [MR111037]
-The
Communications N/A 
segment generates
usage revenues
from Skype VoIP
for connection to
traditional fixed
and mobile
telephones
under eBay’s
subsidiary Skype
Technologies S.A
(Page 264,Para1)
-Skype
headquarters are N/A 
located in
Luxembourg, with
global offices in
Europe,
the United States,
and Asia(Page 267,
Para 3)

eBay Inc.-2009 [MR111037]
N/A
Payments - The 
Payments segment
revenues are
generated from
fees paid by
merchants for
payment
processing
services through
PayPal and Bill Me
Later
(Page 264,Para1)
-PayPal is accepted
both online and N/A
offline in 190 
markets worldwide
and processes
payments in 19
currencies (Page
266, Para10)
-When a consumer
makes a purchase
on credit, CIT
Bank initiates a
consumer loan at
the point of sale.
Bill N/A
Me Later then 
purchases the
consumer’s loan
from CIT Bank.
Bill Me Later earns
revenues
from interest on the
outstanding
balances, late fees,
and transaction
fees.(Page 267,
Para1)

eBay Inc.-2009 [MR111037]
-Bill Me Later
initially funds
consumers’ loans
using cash from
business activities N/A 
and a line of credit.
As a result of the
global financial
crisis, eBay’s
available line of
credit was
reduced (Page
269, Para5)
-Customer Account
Billing.
Transaction- N/A
processing and 
revenue collection
becomes more
difficult as the
number of
transactions
increase and
consumers
default on
loans.(Page 270,
Para4)
Capacity
Marketplaces - EBay offers N/A 
millions of items
for trade through
auction-style and
fixed-price trading
in 39 markets and
boasts 86.3 million

eBay Inc.-2009 [MR111037]
active global
users as of
2008.(Page 264,
para3)
- In 2007, eBay
sold nearly $60
billion goods,
which equates to N/A 
worldwide
eBay users
trading more than
$1,900 worth in
goods every
second.(Page 264,
Para3)
Listings of items
for sale have N/A
exceeded 
140.0 million per
day.
(Page 265, Para5)
Rent.com, acquired
by eBay in 2005, is N/A 
the most visited
online apartment
listing service
with over 20,000
listings in the
United States (Page
266, Para7)
As
of December 2008,
approximately
516,000 online N/A 
storefronts were
listed in locations
across the globe
(Page 265, Para5)

eBay Inc.-2009 [MR111037]
-As of
2008, eBay has a 
Communicati 14 percent share of N/A
ons global e-commerce
with 86.3 million
active users.(Page
263, para 3)
-EBay’s
proprietary Skype
technology has N/A 
been downloaded
more than a billion
times.(Page 267,
Para3)
-Skype had 
approximately N/A
405.3 million
registered users
worldwide. (Page
267, para3)
-Interestingly,
nearly 11 million
Skype downloads N/A 
are to mobile
devices.(Page 267,
Para3)
- In 2008, Skype
users logged
approximately 16 
billion minutes in
a single quarter,
an increase of 54 N/A
percent from the
prior year. Large
volumes are also
easily supported by
Skype
software.(Page
267, Para4)

eBay Inc.-2009 [MR111037]
- At any given
point in time there N/A 
may be 300,000
simultaneous calls
and over 100,000
information
queries per
second. Overall,
Skype accounted
for 6 percent of
international
worldwide calling
minutes in 2007.
Business calls
represent 30
percent of current
Skype usage and
25 percent of calls
also use video
technology.(Page
267, Para4)
-Skype contributed 
$170.0 million in N/A
revenue for the
quarter,
representing 25
percent
year-over-year
growth. Skype
added 37.3 million
registered users
during the quarter
and
ended the period
with more than
480.5 million
registered
users(Page 274,
Para1)
-PayPal is a 
Payments recognized
global leader in N/A
online payment
solutions with 70
million active

eBay Inc.-2009 [MR111037]
accounts (Page
266, Para9)
-PayPal earned
approximately 
$30.4 billion of net
total payment N/A
revenues directly
from eBay.com
transactions, which
represented
approximately
51 percent of
PayPal’s net Total
Payment Volume
during 2008 (Page
264, para2)
N/A N/A
Marketplaces
Communicati
ons N/A N/A
Inventory
Payments
N/A
N/A
eBay undertook a
10 percent
Workforce reduction in its N/A 
Marketplaces workforce with the
elimination of
1,000 jobs in 2008

eBay Inc.-2009 [MR111037]
and incurred
$49,000 in
restructuring
costs (Page 269,
Para4)
Communicati N/A N/A

ons
N/A
Payments
N/A
- -
- -
-EBay.com offers
a sense of
Marketplaces community to
buyers and sellers N/A

that is sustained by
Communications
and high
transaction rates on
a wide
selection of
goods/services
(eBay.com, 2006).
Quality (Page 263, para4)
-EBay’s popularity
is due to the value 
offered to its users. N/A
EBay provides a
“faster, easier,
safer online
commerce
experience”
(eBay, 2006, p.
7).(Page 263,
para4)
eBay Inc.-2009 [MR111037]
-In June 2008,

eBay Inc. was
found liable for N/A 
damages in the
million Euro
payable to the
Louis Vuitton and
Christian Dior
firms. (Page 269,
Para8)
The German
Federal Supreme
Court has also N/A 
ruled that eBay
may owe penalties
from illegal listings
of counterfeit and
stolen goods. These
events may also
negatively affect
eBay’s reputation.
(Page 270, Para1)
- The potential
also exists for
N/A
Communicati Skype technology 
ons to become
obsolete. (Page
268, Para2)
PayPal also reports
Payments a very low
N/A
percentage of 0.33 
percent loss from
fraud.(Page 266,
Para10)

eBay Inc.-2009 [MR111037]
4.6 Research & Development (R&D)

Case Facts
Strength Weakness
eBay Amazon
- -
N/A N/A
4.7 Management Information Systems Audit

Case Facts
Segment Strength Weakness
eBay Amazon
Marketplaces Information is
N/A 
recorded up to
12 months and
provides color-coded
star ratings(Page 266,
Para2)
N/A N/A
Communications
Payments N/A N/A

eBay Inc.-2009 [MR111037]
4.8 Value Chain Analysis (VCA)

a) Marketplaces Segment
Case Facts Strength Weakness

Variables
eBay
In August 2009, eBay Inc. formed a partnership with 

General Motors enabling hundreds of
GM dealers in California to help consumers negotiate
Inbound purchase of new GM cars and trucks
Logistics through the eBay online marketplace. (Page
263,para1)
EBay’s marketplace, or “marketspace,” is an online

virtual trading platform for the sale of 
goods and services by a community of users that
comprises individual buyers and sellers,
as well as small business owners (Page 264,Para3)
EBay’s Marketplaces platform

brings buyers and sellers together through fully 
automated online Web sites 24/7 (Page 265, Para5)
Feedback Forum provides feedback, comments, and

ratings on other users that can 
be viewed by potential users when considering a
Process
purchase.(Page 266, Para2)
Revenue is earned from advertisers and retailers who 

pay a fee for directing shoppers to their own sites
(Page 266, Para6)
The Marketplaces segment generates revenues from 

listings and fees paid by sellers (Page 264,Para1)
Rent.com lists apartment availability,

rental costs, virtual tours, roommate searches, and 
more. Revenue is earned from landlords
who pay a fee for renters who find apartments through
Rent.com.(Page 266, Para7)

eBay Inc.-2009 [MR111037]
StubHub is a leading U.S. ticket marketplace that

allows users to buy and sell tickets 
to sporting, events, theater, and other entertainment
events (Page 266,Page3)
The success of eBay is built on similar customer-

centric entrepreneurial business models that focus on 
customer-driven value creation (Page 268, Para1)
EBay Inc. also offers online classified advertisements

to members in hundreds of cities and regions of the 
world, such as the Netherlands, Germany, and so
on. (Page 266, Para4)
Nearly all of California’s 250 GM dealers took part

in the program so consumers could visit Web pages 
like gm.ebay.com and chevy.ebay.com (Page 263
Para1)
Outbound
Logistics Loyalty Programs that provide cash back buyer
rewards coupons were selectively 
distributed to recognize large buyers to sustain customer
The key to success is eBay’s user support, such as 

announcements, bulletin boards, customer support,
personal pages, and more (Page 265, Para5)
EBay provides the virtual marketplace auction where

the market determines the price of items sold (Page 
264, Para3)
Facilitate trading with unknown partners on the

Internet, eBay Inc. provides a trusted and safe trading 
Marketing
environment by offering the following services:
& Sales
Feedback Forum, Safe Harbor Program, Verified
Rights Owner Program, Customer Support, Value-
Added Tools and Services, and Loyalty

eBay Inc.-2009 [MR111037]
Programs.(Page 266, Para1)
- Web Site Usability. Growth in the number of 

products and Web site features has caused the site to
become less user-friendly.(Page 270, Para4)
- EBay’s
Marketplaces division reported $1.26 billion in 
revenue, a 14 percent year-over-year decline(Page
274, Para1)
Nearly all of California’s 250 GM dealers took part

in the program so consumers could visit Web pages
like gm.ebay.com and chevy.ebay.com 
to browse new 2008 and 2009 GM vehicles, ask
dealers questions, and figure out financing.
(Pg.263,para1)
EBay Inc. also offers online classified advertisements

to members in hundreds of cities 
and regions of the world, such as the Netherlands,
Germany, and so on. (Page 266, Para4)
If revenue significantly declines, eBay may not be

able to meet contractual obligations. EBay recently
increased its fee structure for its Marketplaces 
business, which may negatively impact the number of
Service new customers and revenue from existing
Customer Support. Customer support is challenged 

from greater trade activity and an
increased number of users.(Page 270, Para4)
EBay.com offers a sense of community to buyers

and sellers that is sustained by Communications and
high transaction rates on a wide 
selection of goods/services (eBay.com, 2006).
(Page 263, para4)

eBay Inc.-2009 [MR111037]
*For the supporting activities, there have already covered in management function,
Management Information System and Research & Development as well as in financial analysis.
b) Communications Segment

Variables
eBay
Inbound N/A - -
Logistics
Skype revenue is earned through premium services

such as making/receiving domestic
or international calls to and from landline and mobile 
phones, voicemail, call forwarding,
and personalization, such as ringtones
EBay’s prior
expenditures were focused on traditional wired routes; 
however, 50 percent of expenditures
are now in the wireless telecommunications
sector.(Page 267, Para 5)
EBay’s e-commerce platform also provides full

support for the buying process (registration, bidding,
Process
management of outbids, item listing, and transaction
close), community bulletins, chat, a proprietary 
product search engine, purchase protection programs,
customer support, value added services for auction
users, a personal home page that includes tailored
information, and fully automated merchant services.
EBay’s success is
sustained through Communications and trust (eBay
2006).(Page 263,para4)
The Communications segment generates

usage revenues from Skype VoIP for connection to
traditional fixed and mobile telephones 
under eBay’s subsidiary Skype Technologies S.A
(Page 264,Para1)

eBay Inc.-2009 [MR111037]
EBay, the first virtual online business community,

empowers entrepreneurial individuals to become e- 
commerce business owners(Pg.263,para4)
Skype allows buyer/seller communications 24/7 in a

secure and trusted community that is supported by 
Outbound free unlimited Internet voice and video
Logistics communication (Page 267, Para3)
Communications fees are assessed either

on a subscription basis or per minute charge for 
“SkypeOut minutes.”(Page 264, Para1)
Skype is the world’s fastest-growing Internet 

communication
Marketing
software platform.(Page 267, Para3)
& Sales
Skype is available in 28 languages in over 225 

countries (eBay, 2006).(Page 263, page4
Interestingly, nearly 11 million 

Service Skype downloads are to mobile devices.(Page 267,
Para3)
Management Information System and Research & Development as well as in financial
analysis.

eBay Inc.-2009 [MR111037]
C) Payments Segment

Variables
eBay

Although Bill Me Later accounts are funded by CIT
Bank, Bill Me Later is responsible
Inbound
for all functions related to the account
Logistics
The
Payments segment revenues are generated from fees
paid by merchants for payment processing 
services through PayPal and Bill Me Later
(Page 264,Para1)
Bill Me Later initially funds consumers’ loans using

cash from business activities and a line of credit. As a 
Process
result of the global financial
crisis, eBay’s available line of credit was reduced
(Page 269, Para5)
Customer Account Billing. Transaction-processing

and revenue collection
becomes more difficult as the number of transactions 
increase and consumers
default on loans.(Page 270, Para4)
PayPal is available to any online or offline individual

or business with an e-mail 
address and allows members to securely send and
receive payments online securely without
Outbound
sharing sensitive financial information.(Page 266,
Logistics
Para10)
If credit availability is further reduced, Bill Me Later

may not be able to extend credit to customers (Page 
269, Para5)

eBay Inc.-2009 [MR111037]
Additional revenues
are also earned from advertising and revenue-sharing 
contracts with third parties that provide
transaction services to eBay and PayPal account
users.(Page 264, para1)
PayPal is a recognized 
global leader in online payment solutions
(Page 266, Para9)
For the quarter ending July 30, 2009, eBay’s

Payments division reported $669.3 million in
revenue, an increase of 11 percent year over year. The 
growth was driven by continued
momentum in PayPal Merchant Services and the
Marketing
contribution made by Bill Me Later (Page 274,Para1)
& Sales
Any reduction in trading spill over to a reduction in PayPal 

revenues (Page 269, Para7)
International business processing accounted for 45

percent of PayPal’s total revenues for
2008. Higher fees earned on international 
transactions have provided eBay with higher
revenues
and gross margins in comparison to revenues from
domestic transactions (Page 266, Para9)
EBay’s Payments segment is composed of PayPal 

and Bill Me Later transaction services. (Page 266,
Para9)
Retailers that offer the Bill Me Later service

include: Borders, Continental Airlines, Fujitsu,
Service
JetBlue, Overstock, QVC, Toshiba, Toys “R” Us, and 
Walmart.com (Page 267, Para 1)
PayPal is accepted both online and offline in 190 

markets worldwide and processes payments in 19
currencies (Page 266, Para10)

eBay Inc.-2009 [MR111037]
Management Information System and Research & Development as well as in financial
analysis.
*Based on the case study given, as a matter of fact, in order to differentiate the segment, I
have provided another table for the list of strengths and weaknesses for Marketplaces
segment, Communications segment and Payments segment. But, because of the financial
analysis is the analysis based on eBay as a whole, therefore, the list of the strengths and
weaknesses for financial analysis are the same for Marketplaces segment,
Communications segment and Payments segment.
4.9 Strengths and Weaknesses

Strengths List:
NO Case Fact Prioritize
Strengths Resulted from Cultural Functions
1. EBay transformed the Internet and the way many of us shop and 11
do business worldwide (Page 264,para3)
2. The success of eBay is built on similar customer-centric 6

entrepreneurial business models that focus on customer-driven value
Strengths Resulted from Management Functions
3. EBay plans to expand the Marketplaces segment by focusing on 35

customers to Improve the buyer’s experience and reduce seller costs by
eBay Inc.-2009 [MR111037]
enhancing products and services, improving online trust and safety,

enhancing customer support, extending product offerings
geographically and into new categories, and developing retention
strategies. (Page 226, Para8)
4. In August 2009, eBay Inc. formed a partnership with General Motors 5

enabling hundreds of GM dealers in California to help consumers
negotiate purchase of new GM cars and trucks through the eBay online
5. EBay has also expanded specific Customer Support efforts, such as 38

online self-help features to increase efficiency of trades(Page 266,
Para2)
6. In, 2008, eBay launched an advertising service that enables third 37

parties to advertise their eBay listings and eBay stores on eBay Web
sites.(Page 266, Para5)
7. Acquired by eBay Inc. in 2005, Shopping.com is an online 39

comparison shopping site that offers comparisons on millions of
products and product reviews.(Page266, Para6)
8. Rent.com, acquired by eBay in 2005, (Page 266, Para7) 19

9. As of December 31, 2008, eBay Inc. employed approximately 16,200 40
people. (Page264, Para3)
10. The SafeHarbor Program provides guidelines for resolving disputes 20

among parties. Complaints are investigated and offenders may receive
warnings that are posted to users. Violators may be suspended from
either bidding on or listing items for sale.(Page 22, Para2)
11. The Verified Rights Owner Program enforces intellectual property 21

owners’ rights by allowing owners to request the removal of listings
that contain infringements. This program protects intellectual
property and reduces counterfeit trade.(Page 266, Para2)
Strengths Resulted from Marketing Strategy Function
12. EBay Inc. also offers online classified advertisements to members in 33

hundreds of cities and regions of the world, such as the Netherlands,
Germany, and so on. (Page 266, Para4)
13. Facilitate trading with unknown partners on the Internet, eBay Inc. 23
provides a trusted and safe trading environment by offering the
following services: Feedback Forum, Safe Harbor Program, Verified
Rights Owner Program, Customer Support, Value-Added Tools and

eBay Inc.-2009 [MR111037]
Services, and Loyalty Programs.(Page 266, Para1)
14. Nearly all of California’s 250 GM dealers took part in the program so 22
consumers could visit Web pages like gm.ebay.com and
chevy.ebay.com to browse new 2008 and 2009 GM vehicles, ask
dealers questions, and figure out financing. (Page 263 Para1)
15. Loyalty Programs that provide cash back buyer rewards coupons were 24
selectively distributed to recognize large buyers to sustain customer
16. The key to success is eBay’s user support, such as announcements, 10

bulletin boards, customer support, personal pages, and more (Page 265,
Para5)
17. The Marketplaces platform is the core online commerce platform 34

eBay.com. (Page 265, Para6)
18. EBay provides the virtual marketplace auction where the market 7
determines the price of items sold (Page 264, Para3)
19. In the Marketplaces platform, eBay.com, traditional auction-style or 41

fixed-price options are offered in 39 markets. Auction-style listing
allows a seller to select a minimum price for opening bids that stay
open for a period of time. Alternatively, the fixed-price format allows
sellers to name a sale price upon listing instead of waiting for the
auction period to expire.(Page 265,Para 6)
20. Shopping.com is available in the United States, the United Kingdom, 31

France, Germany, and Australia.(Page 266, Para6)
21. This program marked a shift for San Jose, California-based eBay, 32
since most of the vehicles sold on eBay Motors—a site that sells
various types of vehicles and auto parts— had historically been used.
(Pg.263,para1)
22. By 2009, eBay has attained customized local sites across four major 42
areas of the world in the following regional markets; Asia Pacific,
Europe, North America and Latin America (Page 265,Para1)
23. EBay offers both “pre-trade” and “post-trade” Value-Added Tools and 27
Services to facilitate faster and safe trading and collections. Examples
of value added service tools include calculator, shipping and UPS
labels (Page 266, Para2)
Strengths Resulted from Financial Analysis

eBay Inc.-2009 [MR111037]
24. Increased in ROA is considered a strength for eBay 25

25. Increased in ROE is considered as a strength for eBay 26
26. eBay compared to Amazon achieved High gross profit margins. 8
High in gross profit margin can be considered as a strength for
eBay.
Strengths Resulted from Production / Process Functions
27. In 2008, eBay.com generated approximately $59.7 billion in gross 2

merchandise revenues with consumer electronics accounting for the
largest percentage of trade at $6.0 billion or 17 percent, as
indicated in Exhibit 1(Page 264,Para2)
28. EBay’s marketplace, or “marketspace,” is an online virtual trading 36

platform for the sale of goods and services by a community of users
that comprises individual buyers and sellers, as well as small business
owners (Page 264,Para3)
29. Feedback Forum provides feedback, comments, and ratings on other 18

users that can be viewed by potential users when considering a
purchase.(Page 266, Para2)
30. Revenue is earned from advertisers and retailers who pay a fee for 28
directing shoppers to their own sites (Page 266, Para6)
31. The Marketplaces segment generates revenues from listings and fees 29
paid by sellers (Page 264,Para1)
32. Rent.com lists apartment availability, rental costs, virtual tours, 17
roommate searches, and more. Revenue is earned from landlords
who pay a fee for renters who find apartments through Rent.com.(Page
266, Para7)
33. StubHub is a leading U.S. ticket marketplace that allows users to buy 30
and sell tickets to sporting, events, theater, and other entertainment
events (Page 266,Page3)
34. EBay’s Marketplaces platform brings buyers and sellers together 1

through fully automated online Web sites 24/7 (Page 265, Para5)
35. EBay offers millions of items for trade through auction-style and fixed- 12
price trading in 39 markets and boasts 86.3 million active global
36. In 2007, eBay sold nearly $60 billion goods, which equates to 4
worldwide eBay users trading more than $1,900 worth in goods
eBay Inc.-2009 [MR111037]
every second.(Page 264, Para3)
37. Listings of items for sale have exceeded 140.0 million per day. 13
(Page 265, Para5)
38. Rent.com, acquired by eBay in 2005, is the most visited online 14

apartment listing service with over 20,000 listings in the United States
(Page 266, Para7)
39. As of December 2008, approximately 516,000 online storefronts 9

were listed in locations across the globe (Page 265, Para5)
40. EBay.com offers a sense of community to buyers and sellers that is 3

sustained by Communications and high transaction rates on a wide\
selection of goods/services (eBay.com, 2006). (Page 263, para4)
41. EBay’s popularity is due to the value offered to its users. EBay 15
provides a “faster, easier, safer online commerce experience”
(eBay, 2006, p. 7).(Page 263, para4)
Strengths Resulted from Management Information System (MIS) Functions
42. Information is recorded up to 12 months and provides color-coded star 16

ratings(Page 266, Para2)

eBay Inc.-2009 [MR111037]
Weaknesses List:
NO Case Facts Prioritize
Weaknesses Resulted from Management Functions
1. EBay recently adopted a policy that no longer permits sellers to leave 11

negative feedback (Page 266, Para2)
2. Web Site Stability. Increased volume and greater complexity requires 8

additional expensive investments in hardware, software, and
personnel(Page 270, Para4)
3. For that quarter, eBay reported offset decline in their Marketplaces 13

business segment (Page 263, Para2)
4. EBay has recently been involved in litigation with Tiffany & Co., Rolex, 3
Louis Vuitton, Christian Dior, L’Oréal, and Lancôme for a lack of
policing trade and infringement on trademarks and copyrights for the
sale of “not for resale” and counterfeit items on eBay’s Websites. (Page
269, Para8)
5. Prohibit sharing of certain information over the Internet, such as 12

comments provided by customers in eBay’s Feedback Forum. This
limitation would adversely affect eBay’s ability to provide a reliable and
secure community that shares purchase information and aspects of trades
with other members of eBay’s Marketplaces segment.(Page 270, Para2)
Weaknesses Resulted from Marketing Strategy Functions
6. Web Site Usability. Growth in the number of products and Web site 14
features has caused the site to become less user-friendly.(Page 270, Para4)
7. EBay’s Marketplaces division reported $1.26 billion in revenue, a 14 1

percent year-over-year decline(Page 274, Para1)
8. Customer Support. Customer support is challenged from greater trade 5

activity and an increased number of users.(Page 270, Para4)
9. If revenue significantly declines, eBay may not be able to meet contractual 6

obligations. EBay recently increased its fee structure for its
Marketplaces business, which may negatively impact the number of new
customers and revenue from existing users.(Page 269, Para7)

eBay Inc.-2009 [MR111037]
Weaknesses Resulted from Financial Analysis
10. eBay Revenue Growth of rate has been decreasing for the last 3 years. 7
Therefore, this decline trend lead to decreasing the growth rate in 2009 by
4%. This revenue decline trend is considered as the weakness of eBay
11. Declining in stock price started from 2005 to 2008 can be considered as the 15
weakness for eBay
12. Decreased in Current Ratio is the weakness for eBay 16
13. eBay Debt Ratio is increased and it is considered as the weakness for eBay 17
14. Increased in Debt to equity Ratio is the weakness for eBay 18
15. eBay Debt Ratio is increased and it is considered as the weakness for eBay 19
16. Decrease in Growth rate is considered as weakness for eBay 20
17. Decreased to almost double for working capital is considered as weakness 4
for eBay
Weaknesses Resulted from Production / Process Functions
18. eBay undertook a 10 percent reduction in its workforce with the 9

elimination of 1,000 jobs in 2008 and incurred $49,000 in restructuring
costs (Page 269, Para4)
19. In June 2008, eBay Inc. was found liable for damages in the amount of 10
(Page 269, Para8)
20. The German Federal Supreme Court has also ruled that eBay may owe 2
penalties from illegal listings of counterfeit and stolen goods. These
events may also negatively affect eBay’s reputation. (Page 270, Para1)
Weaknesses Resulted from Research & Development Functions
N/A
Weaknesses Resulted from Management Information System (MIS) Functions
N/A

eBay Inc.-2009 [MR111037]
b) Strengths and Weaknesses for Communications segments
Strengths List:
1. EBay, the first virtual online business community, empowers

entrepreneurial individuals to become e-commerce business
owners.(Page 2
63, Para4)
2. EBay also that quarter

announced they would spin off and make an initial public
offering of their Skype business
segment in the beginning of year 2010. (Pg.263,para2)
3. Registered subscribers
are expected to reach 500 million by 2012 and revenues are
anticipated to double
by 2011.(Page 267, Para4)
4. EBay Inc. plans to implement a customer management program

that emphasizes
acquiring new users and upgrading current Skype users to
premium products (Page 267, Para5)
5. Future plans include expanding Skype’s desktop product to

mobile user devices and other Web-based devices. Plans include
also offering solutions to a more diverse business user and
enhancing
the Skype’s current platform for greater revenues because the
worldwide communications market is expected to grow by 5.5
percent annually with U.S. Web conferencing expected to grow
14.1 percent from 2008 through 2011 (eBay.com 2009).(Page
267, Para5
6. E-commerce is supported by eBay’s proprietary
Skype VoIP technology, which allows free telephone calls
using a broadband Internet connection to any telephone
number.(Page 263, para4)
7. The Communications segment is composed of Skype, which was
founded in 2003 and
acquired by eBay in 2005.
8. As of December 2008, Skype had acquired

eBay Inc.-2009 [MR111037]
370 million users, a 51 percent growth over the same time a

year ago.
9. For the second quarter of 2009, eBay reported nice growth in
Skype business segments (Page 263, Para2)
10. EBay, the first virtual online business community, empowers

entrepreneurial individuals to become e-commerce business
owners(Pg.263,para4)
11. Skype is the world’s fastest-growing Internet communication

software platform.(Page 267, Para3)
12. Skype allows buyer/seller communications 24/7 in a

secure and trusted community that is supported by free unlimited
Internet voice and video communication (Page 267, Para3)
13. Communications fees are assessed either

on a subscription basis or per minute charge for “SkypeOut
minutes.”(Page 264, Para1)
14. Skype is available in 28 languages in over 225 countries (eBay,

2006).(Page 263, page4)

17. eBay compared to Amazon achieved High gross profit
margins. High in gross profit margin can be considered as a
strength for eBay.

18. Skype revenue is earned through premium services such as
making/receiving domestic or international calls to and from
landline and mobile phones, voicemail, call forwarding, and
personalization, such as ringtones.
19. EBay’s prior expenditures were focused on traditional wired
routes; however, 50 percent of expenditures are now in the
wireless telecommunications sector.(Page 267, Para 5)
20. EBay’s e-commerce platform also provides full support for the
buying process (registration, bidding, management of outbids,
item listing, and transaction close), community bulletins, chat, a
eBay Inc.-2009 [MR111037]
proprietary product search engine, purchase protection programs,

customer support, value added services for auction users, a
personal home page that includes tailored information, and fully
automated merchant services. EBay’s success is
sustained through Communications and trust (eBay 2006).(Page
263,para4)
21. -The Communications segment generates

usage revenues from Skype VoIP for connection to traditional
fixed and mobile telephones
under eBay’s subsidiary Skype Technologies S.A (Page
264,Para1)
22. Skype headquarters are located in Luxembourg, with global

offices in Europe, the United States, and Asia(Page 267, Para 3)
23. As of 2008, eBay has a 14 percent share of global e-commerce

with 86.3 million active users.(Page 263, para 3)
24. EBay’s proprietary Skype technology has been downloaded

more than a billion times.(Page 267, Para3)
25. Skype had approximately 405.3 million registered users

worldwide. (Page 267, para3)
26. Interestingly, nearly 11 million

Skype downloads are to mobile devices.(Page 267, Para3)
27. In 2008, Skype users logged approximately 16 billion minutes

in a single quarter, an increase of 54 percent from the prior year.
Large volumes are also easily supported by Skype
software.(Page 267, Para4)
28. At any given point in time there may be 300,000 simultaneous
calls and over 100,000 information queries per second.
Overall, Skype accounted for 6 percent of international
worldwide calling minutes in 2007. Business calls represent 30
percent of current Skype usage and 25 percent of calls also use
video technology.(Page 267, Para4)
29. Skype contributed $170.0 million in revenue for the quarter,

representing 25 percent year-over-year growth. Skype added
37.3 million registered users during the quarter and ended the
period with more than 480.5 million registered users(Page 274,
Para1)

eBay Inc.-2009 [MR111037]
Strengths Resulted from Research & Development Functions
N/A
N/A
Weaknesses List:
NO Case Fact Prioritize
N/A
N/A
1. eBay Revenue Growth of rate has been decreasing for the last 3 years.
Therefore, this decline trend lead to decreasing the growth rate in 2009 by
4%. This revenue decline trend is considered as the weakness of eBay
2. Declining in stock price started from 2005 to 2008 can be considered as the
weakness for eBay
8. Decreased to almost double for working capital is considered as weakness
for eBay
9. The potential also exists for Skype technology to become obsolete. (Page
268, Para2)

eBay Inc.-2009 [MR111037]
N/A
N/A
c) Strengths and Weaknesses for Payments segment
Strengths List:
N/A
1.
EBay’s management seeks to become the number-one online
plans to focus on improving the customer experience, enhancing
security, expanding product
offerings, enhancing buyer and seller protection programs,
adding innovative features, and
expanding its sales channels (Page 267,Para2)
2. Expansion into international markets and more currencies is

expected to improve the ease and efficiency
of cross-border transactions (Page 267, Para2)
3. PayPal was founded in December 1998 and acquired by eBay
Inc. in 2002 (Page 266, Para 9)
4. Bill Me Later, acquired by eBay Inc. in 2008, offers consumers

instant credit at the point of sale through over 1000 online U.S.
merchants (Page 267, Para1)
5. For the second quarter of 2009, eBay reported nice growth in
both their PayPal (Page 263, Para2)

eBay Inc.-2009 [MR111037]
6. Additional revenues are also earned from advertising and

revenue-sharing contracts with third parties that provide
transaction services to eBay and PayPal account users.(Page 264,
para1)
7. PayPal is a recognized global leader in online payment solutions

(Page 266, Para9)
8. EBay’s Payments segment is composed of PayPal and Bill Me

Later transaction services. (Page 266, Para9)
9. PayPal is available to any online or offline individual or business
with an e-mail address and allows members to securely send and
receive payments online securely without sharing sensitive
financial information.(Page 266, Para10)
10. International business processing accounted for 45 percent of

PayPal’s total revenues for 2008. Higher fees earned on
international transactions have provided eBay with higher
revenues
and gross margins in comparison to revenues from domestic
transactions (Page 266, Para9)
11. Retailers that offer the Bill Me Later service

include: Borders, Continental Airlines, Fujitsu, JetBlue,
Overstock, QVC, Toshiba, Toys “R” Us, and Walmart.com
(Page 267, Para 1)

14. eBay compared to Amazon achieved High gross profit
margins. High in gross profit margin can be considered as a
strength for eBay.

15. The Payments segment revenues are generated from fees paid
by merchants for payment processing services through PayPal
and Bill Me Later (Page 264,Para1)
16. PayPal is accepted both online and offline in 190 markets worldwide
and processes payments in 19 currencies (Page 266, Para10)
17. When a consumer makes a purchase on credit, CIT Bank
initiates a consumer loan at the point of sale. Bill Me Later then

eBay Inc.-2009 [MR111037]
purchases the consumer’s loan from CIT Bank. Bill Me Later

earns revenues from interest on the outstanding balances, late
fees, and transaction fees.(Page 267, Para1)
18. PayPal is a recognized global leader in online payment solutions

with 70 million active accounts (Page 266, Para9)
19. PayPal earned approximately $30.4 billion of net total payment

revenues directly from eBay.com transactions, which
represented approximately 51 percent of PayPal’s net Total
Payment Volume during 2008 (Page 264, para2)
20. PayPal also reports a very low percentage of 0.33 percent loss
from fraud.(Page 266, Para10)
Strengths Resulted from Research & Development Functions
N/A
N/A
Weaknesses List:
NO Case Facts
1. Although Bill Me Later accounts are funded by CIT Bank, Bill Me Later is
responsible for all functions related to the account.
2. As of October 2008 certain transactions on eBay.com purchased using PayPal are

protected for the full purchase price in the event that the buyer does not receive
the goods. This may result in greater losses and write-offs incurred by eBay
Inc.(Page 270, Para2)
3. If credit availability is further reduced, Bill Me Later may not be able to extend
credit to customers (Page 269, Para5)
4. For the quarter ending July 30, 2009, eBay’s Payments division reported $669.3
million in revenue, an increase of 11 percent year over year. The growth was
eBay Inc.-2009 [MR111037]
driven by continued momentum in PayPal Merchant Services and the contribution

made by Bill Me Later (Page 274,Para1)
5. Any reduction in trading spill over to a reduction in PayPal revenues (Page 269, Para7)
6. eBay Revenue Growth of rate has been decreasing for the last 3 years. Therefore,
this decline trend lead to decreasing the growth rate in 2009 by 4%. This revenue
decline trend is considered as the weakness of eBay
7. Declining in stock price started from 2005 to 2008 can be considered as the
weakness for eBay
13. Decreased to almost double for working capital is considered as weakness for
eBay
14.
Bill Me Later initially funds consumers’ loans using cash from business activities
and a line of credit. As a result of the global financial
crisis, eBay’s available line of credit was reduced (Page 269, Para5)
15. Customer Account Billing. Transaction-processing and revenue collection

becomes more difficult as the number of transactions increase and consumers
default on loans.(Page 270, Para4)
N/A
N/A

eBay Inc.-2009 [MR111037]
4.9.1 Internal Factor Evaluation (IFE) Matrix
a) For Marketplaces segment
Item Key external factor Weight Rating Weighted

score
Strengths
1 EBay’s Marketplaces
platform brings buyers and
sellers together through fully 0.10 4 0.40
automated online Web sites
24/7 (Page 265, Para5)
2 In 2008, eBay.com
generated approximately
$59.7 billion in gross
merchandise revenues with
consumer electronics
0.09 4 0.40
accounting for the largest
percentage of trade at $6.0
billion or 17 percent, as
indicated in Exhibit 1(Page
264,Para2)
3 EBay.com offers a sense of

community to buyers and
sellers that is sustained by
Communications and high
0.09 4 0.36
transaction rates on a wide\
(eBay.com, 2006). (Page
263, para4)
4 In 2007, eBay sold nearly

$60 billion goods, which
equates to worldwide eBay 0.07 4 0.24
users trading more than
$1,900 worth in goods
every second.(Page 264,

eBay Inc.-2009 [MR111037]
Para3)
5 In August 2009, eBay Inc.

formed a partnership with
General Motors enabling
hundreds of GM dealers in
California to help consumers 0.06 3 0.21
negotiate purchase of new
GM cars and trucks through
the eBay online
6 The success of eBay is built

entrepreneurial business
models that focus on 0.07 3 0.21
7 EBay provides the virtual

marketplace auction where
the market determines the 0.06 3 0.18
price of items sold (Page 264,
Para3)
8 eBay compared to Amazon 0.06 3 0.18

achieved High gross profit
margins. High in gross profit
margin can be considered as
a strength for eBay.
9 As of December 2008, 0.05 3 0.18

approximately 516,000
online storefronts were
listed in locations across the
globe (Page 265, Para5)
Weaknesses
1 EBay’s Marketplaces
0.05 2 0.10
billion in revenue, a 14

eBay Inc.-2009 [MR111037]
2 The German Federal

Supreme Court has also
ruled that eBay may owe
penalties from illegal
listings of counterfeit and
0.05 2 0.10
stolen goods. These events
may also negatively affect
eBay’s reputation. (Page
270, Para1)
3 EBay has recently been 0.05 2 0.10

Tiffany & Co., Rolex, Louis
Vuitton, Christian Dior,
L’Oréal, and Lancôme for a
lack of policing trade and
infringement on
trademarks and
copyrights for the sale of
“not for resale” and
counterfeit items on eBay’s
Websites. (Page 269, Para8)
4 Decreased to almost double 0.04 2 0.08

for working capital is
considered as weakness for
eBay
5 Customer Support. 0.04 2

Customer support is 0.08
challenged from greater
trade activity and an
increased number of

eBay Inc.-2009 [MR111037]
6 If revenue significantly 0.04 2 0.08

declines, eBay may not be
able to meet contractual
obligations. EBay recently
increased its fee structure
for its Marketplaces
business, which may
negatively impact the
number of new customers
and revenue from existing
7 eBay Revenue Growth of 0.05 2 0.10

rate has been decreasing for
the last 3 years. Therefore,
this decline trend lead to
decreasing the growth rate
in 2009 by 4%. This revenue
decline trend is considered
as the weakness of eBay
8 Web Site Stability. Increased 0.03 2 0.06

volume and greater
complexity requires
additional expensive
investments in hardware,
software, and
personnel(Page 270, Para4)
Total 1 3.10
Conclusion
IFE matrix shows the information related to strategy formulation EBay. EBay achieved an
overall of 3.10 total weighted score. 3.10 indicates that the business of eBay on this
marketplaces segment is strong because of eBay has an ability to respond to internal factors
of the organisation.

eBay Inc.-2009 [MR111037]
5.0 Existing Objectives and Strategies
*Because of lack of data, I found out that the information for strategic objectives and
financial objectives for Marketplaces segment and Payments segment are too general
without any specific target or objectives. I provided the strategic objectives and financial
objective for communication segment base on the case study given.
a) Strategic Objective:
No. Segment Goals Objectives Case Facts Remarks
1) To expand 1) EBay plans to expand

the N/A the Marketplaces Product
Development
1. Market Marketpla segment by focusing on
places ces customers by
Unsuccess
segment enhancing products
ful
by and services, (Page266,
focusing Para8)
on
customer
2) To 2) Improving online trust

enhance and safety, enhancing Product
Development
online customer support,
trust and extending product
Unsuccess
safety and offerings geographically
ful
develop and into new categories,
new and developing
products retention
strategies.(Page266,
Para8)
1) Increase 1)Increase 1)Registered subscribers (Market
Penetration)
2. Commu Registere Registered are expected to reach 500
Successful
nication d subscribers to million by 2012 (Page267,
s subscribe 500 million by Para4)
rs. 2012.

eBay Inc.-2009 [MR111037]
2) Increase 2) Increase the 2) The worldwide

the grow of grow of communications Market
Penetration
worldwide worldwide market is expected to grow
Un-
communicati communications by 5.5 percent annually
successful
ons market. market to 5.5 (Page 267, Para5)
percent
annually.
3)Increase 3) Increase the Product

development
the grow of grow of U.S 3)U.S. Web conferencing
U.S Web Web expected to grow 14.1 Unsuccess
Conferencing conferencing to percent from 2008 through ful
. 14.1 percent 2011 (Page 267, Para5)
from 2008
through 2011.
1) To be 1) Global expansion is to
3 Paymen integrate N/A be gained by Forward
Integration
ts PayPal integrating PayPal
with with eBay.com listings
Unsuccess
eBay.com and other Marketplaces
ful
listings businesses. (Page 267,
and other Para2)
Marketpl
aces
businesse
s
2) To N/A 2) Expansion into

expand international markets Market
Development
into and more currencies is
internatio expected to improve the
Successful
nal ease and efficiency of
market cross-border
transactions (Page 267,
Para2)

eBay Inc.-2009 [MR111037]
b) Financial Objective:
No. Segment Goals Objectives Case Facts Remarks
1) To improve
1. Marketplaces 1) To reduce N/A the buyer’s By enhancing
Product and
seller experience and services
cost. reduce seller (Product
costs(Page266, Development)
Para8) Unsuccessful
Increase - Increase 1) Revenues

By raising the
2. Communications Revenue revenue to are anticipated total registers
double by 2011 to double subscribers to
by 2011 (Page 500 million by
2012
267, Para4) (Market
Penetration)
Unsuccessful
3) Increased By integrating
PayPal with
3 Payments Increase N/A revenues eBay.com
Revenue are to be listings and
gained by other
Marketplaces
integrating segment
PayPal (Forward
with Integration)
eBay.com
Unsuccessful
listings
and other
Marketplac
es
businesses.
(Page 267,
Para2)

eBay Inc.-2009 [MR111037]
5.3 Strategies
5.3.1 Strategies in Action
The Type of The Title of Segment Case Facts
Strategies Strategies
- In August 2009, eBay Inc. formed
Marketplaces a partnership with General Motors
Forward enabling hundreds of
Integration GM dealers in California to help
consumers negotiate purchase of
new GM cars and trucks
marketplace. (Page 263,para1)
N/A
Integration Communications
N/A
Payments
Marketplaces N/A
Back ward
Integration
N/A
Communications
Because Bill Me Later is not a

Payments chartered financial institution, an
arrangement with CIT Bank allows
Bill Me Later to extend credit to
customers
(Page 267, Para1)
-Acquired by eBay Inc. in 2005,

Marketplaces Shopping.com is an online
Horizontal comparison shopping site that offers
Integration comparisons on millions of products
and product reviews. Shopping.com
is available in the United States, the
United Kingdom, France, Germany,
and Australia (Page 266, Para6)
- Rent.com, acquired by eBay in

2005, Rent.com lists apartment
eBay Inc.-2009 [MR111037]
availability,
rental costs, virtual tours, roommate
searches, and more. (Page 266,
Para7
-The Communications segment is

Communications composed of Skype, which was
founded in 2003 and
acquired by eBay in 2005. Skype is
the world’s fastest-growing Internet
communication
software platform. As of 2008,
Skype had approximately 405.3
million registered users
worldwide. (Page 267,Para3)
-Bill Me Later, acquired by eBay
Payments Inc. in 2008, offers consumers
instant credit at the point
of sale through over 1000 online
U.S. merchants (Page 267, Para1)
- PayPal was founded in December

1998 and acquired by eBay Inc. in
2002. PayPal is a recognized
global leader in online payment
solutions with 70 million active
accounts (Page 266, Para9)
Marketplaces -EBay provides the virtual

marketplace auction where the
Product market determines the price of items
Development sold (Page 264,Para3)
- In, 2008, eBay launched an

advertising service that enables third
Intensive parties to advertise their eBay
listings and eBay stores on eBay
- StubHub is a leading U.S. ticket

marketplace that allows users to buy
and sell tickets
to sporting, events, theater, and other
entertainment events (Page
266,Page3)

eBay Inc.-2009 [MR111037]
- Rent.com lists apartment

availability,
rental costs, virtual tours, roommate
searches, and more. Revenue is
earned from landlords
who pay a fee for renters who find
apartments through Rent.com.(Page
266, Para7)
E-commerce is supported by
Communications eBay’s proprietary
Skype VoIP technology, which
allows free telephone calls using a
broadband Internet connection
to any telephone number.(Page 263,
para4)
-EBay’s Payments segment is

Payments composed of PayPal and Bill Me
Later transaction services. (Page
266, Para9)
Marketplaces - By 2009, eBay has attained

Market customized local sites across four
Development major areas of the
world in the following regional
markets; Asia Pacific, Europe, North
America and Latin America (Page
265,Para1)
- Global expansion and increased

revenues are to be gained by
integrating PayPal with eBay.com
listings and other Marketplaces
businesses. Expansion
into international markets and
more currencies is expected to
improve the ease and efficiency
of cross-border transactions and
grow both the Marketplaces and
Payments segments.(Page 267,
Para2)

eBay Inc.-2009 [MR111037]
-offering solutions to a more diverse

Communications business user and enhancing
the Skype’s current platform for
greater revenues because the
worldwide communications
market is expected to grow by 5.5
percent annually with U.S. Web
conferencing
expected to grow 14.1 percent from
2008 through 2011 (eBay.com
2009).(Page 267, Para5)
Global expansion and increased

revenues are to be gained by
Payments integrating PayPal with eBay.com
listings and other Marketplaces
businesses. (Page 267, Para2).
Expansion
into international markets and more
currencies is expected to improve
the ease and efficiency
of cross-border transactions (Page
267, Para2)
EBay offers millions of items for

Marketplaces trade through
Marketing auction-style and fixed-price trading
Penetration in 39 markets and boasts 86.3
million active global
users as of 2008.(Page264, Para3)
- EBay has also expanded specific

to increase efficiency of trades(Page
266, Para2)
-As of December 2008,

approximately 516,000 online
storefronts were listed in locations
across the globe (Page 265, Para5)
- 57 percent of Marketplaces
revenue,
however, came from markets outside

eBay Inc.-2009 [MR111037]
of the United States(Page 274,

Para1)

classified advertisements to
members in hundreds of cities and
regions of the world, such as the
Netherlands, Germany, and so on.
(Page 266, Para4)
- In, 2008, eBay launched an

advertising service that enables third
parties to advertise their eBay
listings and eBay stores on eBay
- By 2009, eBay has attained

customized local sites across four
major areas of the world in the
following regional markets; Asia
Pacific, Europe, North America and
Latin America (Page 265,Para1)
EBay’s global networked

community of buyers and sellers
interact 24/7 in a secure and
trusted global marketplace (Page
264, para4)
- Shopping.com
is available in the United States, the
United Kingdom, France, Germany,
and Australia.(Page 266, Para6)
-Rent.com, acquired by eBay in

2005, is the most visited online
apartment listing service
with over 20,000 listings in the
United States (Page 266, Para7)
EBay also that quarter

Communications announced they would spin off and
make an initial public offering of
segment in the beginning of year

eBay Inc.-2009 [MR111037]
2010. (Pg.263,para2)
- Registered subscribers
are expected to reach 500 million
by 2012 and revenues are
anticipated to double
by 2011.(Page 267, Para4)
- EBay Inc. plans to implement a

customer management program that
emphasizes
acquiring new users and upgrading
current Skype users to premium
products (Page 267, Para5)
- Skype is available in 28 languages

in over 225 countries (eBay,
2006).(Page 263, page4)
- Skype headquarters are located in

Luxembourg, with global offices in
Europe,
the United States, and Asia(Page
267, Para 3)
- Skype had approximately 405.3

million registered users
worldwide. (Page 267, para3)
- Skype contributed $170.0 million

in revenue for the quarter,
representing 25 percent
year-over-year growth. Skype added
37.3 million registered users during
the quarter and
ended the period with more than
480.5 million registered users(Page
274, Para1)
-PayPal is accepted both online and

Payments offline in 190 markets worldwide
and processes payments in 19
currencies (Page 266, Para10)

eBay Inc.-2009 [MR111037]
-EBay Inc.’s Marketplaces platforms

Marketplaces and services segment includes
Related eBay.com, StubHub,
Diversification Online Classifieds, Online
Advertising, Shopping.com, and
Rent.com.(Page 265, Para4)
Diversification EBay Inc. also offers online

classified advertisements to
members in hundreds of cities
and regions of the world, such as the
Netherlands, Germany, and so on
(Page 266, Para4)
EBay has also expanded specific

to increase efficiency of trades(Page
266, Para2)
- EBay Inc. provides a trusted

and safe trading environment by
offering the following services:
Feedback Forum, Safe
Harbor Program, Verified Rights
Owner Program, Customer Support,
Value-Added Tools
and Services, and Loyalty Programs
EBay’s e-commerce platform also

Communications provides full support for the buying
process (registration, bidding,
management of outbids, item listing,
and transaction close), community
bulletins chat, a proprietary product
search engine, purchase protection
programs, customer support, value
added services for auction users, a
personal home page that includes
tailored information, and fully
automated merchant services(Page
263,para4)

eBay Inc.-2009 [MR111037]
N/A
Payments
Marketplaces N/A
Not Related
Diversification Communications EBay’s prior
expenditures were focused on
traditional wired routes; however, 50
percent of expenditures
are now in the wireless
telecommunications sector.(Page
267, Para 5)
Payments
N/A
- eBay undertook a 10 percent

Defensive Marketplaces reduction in its workforce with the
Retrenchment and incurred $49,000 in
restructuring
costs and announced an anticipated
second acquisition of a vehicle
classified ad site, eBay Motors.
(Page 269, Para4)
N/A
Communications
eBay undertook a 10 percent

Payments reduction in its workforce with the
and incurred $49,000 in
restructuring
costs. In the same year, eBay
acquired Bill Me Later (Page 269,
Para4)
N/A
Divestiture Marketplaces
N/A
Communications
eBay Inc.-2009 [MR111037]
N/A
Payments
N/A
Liquidation Marketplaces
N/A
Communications
N/A
Payments
5.3.1 Generic Strategies (Business Level Strategies )
No. Case Facts BLS

Segment
EBay plans to expand
the Marketplaces
1. Marketplaces segment by focusing on Cost Leadership
customers to Strategies
improve the buyer’s
experience and reduce
seller costs by
enhancing products and
services,
improving online trust
and safety, enhancing
customer support,
extending product
offerings geographically
and into new categories,
and developing retention
strategies. (Page 226,
Para8)
In the Marketplaces
platform, eBay.com,
traditional auction-style
or fixed-price options
are offered in 39
markets. Auction-style
listing allows a seller to
select a minimum
price for opening bids
that stay open for a
eBay Inc.-2009 [MR111037]
period of time.
Alternatively, the fixed-
price format
allows sellers to name a
sale price upon listing
instead of waiting for
the auction period to
expire.(Page 265,Para 6)
EBay provides the

virtual marketplace
auction where the
market determines the
price of items sold
(Page 264, Para3)
EBay also that quarter Focus strategies

2. Communications announced they would
spin off and make an
initial public offering of
segment in the
beginning of year 2010.
(Pg.263,para2)
EBay’s management
3 Payments seeks to become the Focus Strategies
number-one online
plans to focus on
improving the customer
experience, enhancing
security, expanding
product
offerings, enhancing
buyer and seller
protection programs,
adding innovative
features, and
expanding its sales
channels (Page
267,Para2)

eBay Inc.-2009 [MR111037]
6.0 Strategy Formulation Tools

6.1 SWOT Analysis
*Based on the case study given, in order to make analysis using

SWOT, I need information from EFE matrix and IFE matrix.
Because of lack of data from EFE matrix for communications
segment and payments segment, I only provided SWOT analysis for
marketplaces segment.

eBay Inc.-2009 [MR111037]
Strength Weakness
1) EBay’s Marketplaces 1) EBay’s Marketplaces division reported
platform brings buyers $1.26 billion in revenue, a 14 percent
and sellers together year-over-year decline(Page 274,
through fully Para1)
automated online Web
sites 24/7 (Page 265, 2) The German Federal Supreme Court
Para5) has also ruled that eBay may owe
penalties from illegal listings of
2) In 2008, eBay.com counterfeit and stolen goods. These
generated events may also negatively affect
approximately $59.7 eBay’s reputation. (Page 270, Para1)
billion in gross
merchandise revenues 3) EBay has recently been involved in
with consumer litigation with Tiffany & Co., Rolex,
electronics accounting Louis Vuitton, Christian Dior,
for the largest L’Oréal, and Lancôme for a lack of
SWOT percentage of trade at policing trade and infringement on
$6.0 billion or 17 trademarks and copyrights for the
MATRIX percent, as indicated sale of “not for resale” and
in Exhibit 1(Page counterfeit items on eBay’s Websites.
264,Para2) (Page 269, Para8)
3) EBay.com offers a 4) Decreased to almost double for

sense of community to working capital is considered as
buyers and sellers that weakness for eBay
is sustained by
Communications and 5) Customer Support. Customer support
high transaction rates is challenged from greater trade
on a wide\ selection of activity and an increased number of
goods/services users.(Page 270, Para4)
(eBay.com, 2006).
(Page 263, para4) 6) If revenue significantly declines, eBay
may not be able to meet contractual
4) In 2007, eBay sold obligations. EBay recently increased
nearly $60 billion its fee structure for its Marketplaces
goods, which equates business, which may negatively impact
to worldwide eBay the number of new customers and
users trading more revenue from existing users.(Page 269,
than $1,900 worth in Para7)
goods every
second.(Page 264, 7) eBay Revenue Growth of rate has been
Para3) decreasing for the last 3 years.
Therefore, this decline trend lead to
5) In August 2009, eBay decreasing the growth rate in 2009 by
Inc. formed a 4%. This revenue decline trend is
partnership with considered as the weakness of eBay
General Motors

eBay Inc.-2009 [MR111037]
enabling hundreds of 8) Web Site Stability. Increased volume

GM dealers in and greater complexity requires
California to help additional expensive investments in
consumers negotiate hardware, software, and
purchase of new GM personnel(Page 270, Para4)
cars and trucks through
the eBay online
marketplace.
(Pg.263,para1)
6) The success of eBay is

built on similar
customer-centric
entrepreneurial
business models that
focus on customer-
driven value creation
(Page 268, Para1)
7) EBay provides the

virtual marketplace
auction where the
market determines
the price of items sold
(Page 264, Para3)
8) eBay compared to
Amazon achieved High
gross profit margins.
High in gross profit
margin can be
considered as a
strength for eBay.
9) As of December 2008,
approximately
516,000 online
storefronts were listed
in locations across the

eBay Inc.-2009 [MR111037]
Opportunity SO WO
1. The need for 1. With the High in gross 1. Improve market services in current
substantial resource profit margin of eBay, markets can make large number of
investments in this company should potential customers to subscribe.(W
technology and expand their market 2,W3,W6,O1,O2)
marketing in order into global, new and
to remain emerging market 2. Strategic Alliance with courier
competitive (Page especially new market companies and by providing online
268, Para1) in China and India banking system can help eBay to
which they are improve the efficiency of the operation
2. Buyers and sellers considered as the most system and could help to give the best
enjoy trading populated area and it is service for customers satisfaction.
among a wide a huge opportunity for (W5,W6, W8,02,04)
selection of goods eBay. (global
and services in a expansion) 3. Inability of eBay to measure illegal
secure, trusted, and (S2,S4,S8,S9,O1,O5) activity on site and lacking of policing
efficient commerce trade eBay should be able to provide
environment.(Page system for online verification of
265, Para5). 2. With focus on products.(W2,W3,O1,O2)
3. Profitability is also creation, eBay should
affected by continuously maintain
currency exchange simplicity of interaction
rates (page 269, with the online
Para3) community’s capability
and meet the demand in
4. Online classifieds the industry in order to
help people meet, be competitive.
share ideas, and (S3,S4,S6,O1,O2,04)
offer goods/services
at a local city or
regional level(Page
266, Para4)
5. If the U.S. dollar

weakens against
foreign currencies,
transactions
conducted in
foreign currency
denominations will
increase and inflate
revenues, operating
expenses, and net
income (Page 269,
Para3)

eBay Inc.-2009 [MR111037]
Threat ST WT
1. In addition, tax
compliance will
increase costs. 1. Through acquisition 1. eBay should alliance with postal
(Page 269, Para 6) strategy, eBay should services (W5,W8,T2,T3,T4,T5)
be able to expand in
2. Weak global global (global 2. With the issue of stolen goods and
economic expansion). lacking in policy, eBay should
conditions, in (S4,S5,S9,T9) invest in customer service web
addition to the security. In addition, eBay also
mortgage and 2. eBay should reinforce should provide an authentication
worldwide credit marketing and consumers identity in order to
related financial management system. provide a secure environment
crisis, are expected (S1,S2,S6,S8,S9,T2,T3 online system.
to limit revenue ,T4,T5,T9) (W2,W3, W5,T2,T5)
growth, particularly
in the Marketplaces 3. EBay should recover the financial
segment, which is crisis of the organizations by
closely tied to rearrange the website policies and
consumer purchase features to make it user friendly
patterns (Page 269, including wide range of offering.
Para2) (W1,W3,W4,W6,W7,W8,T1,T2,T
4,T6,T7,T8,T10)
3. The resources of
existing competitor 4. eBay should be able to develop its
firms are larger and product as well as its market (new
as a result, and emerging market) especially in
competitors could the high populated area like China
weather an and India.(W7,T2,T3T5)
economic
downturn (Page
268, Para2)
4. Competition is
intense in
communications
services and subject
to rapid
technological
Change(Page 268,
Para2)
5. However,
Amazon’s strong

eBay Inc.-2009 [MR111037]
customer base pose

the greatest threat to
eBay (Page 267,
Para6)
6. Legislation is in
effect which
requires collection
of taxes beginning
after December 31,
2010. This new
legislation may
cause a reduction in
trading activity that
would negatively
affect several
business segments
(Page 269, Para 6)
7. Alternatively,
financial measures
will be negatively
impacted by a rise
in the value of the
U.S. dollar (Page
269, Para3)
8. Dollar and the

lingering weak
economy with high
unemployment
(Page 274, Para1)
9. Marketplaces:
Competition is
expected to increase
in the future
because barriers to
entry in this
segment are low
and new online sites
can be launched at a
nominal cost (Page
268, Para2)
10. Declining economic

environment (Page
268, Para4)

eBay Inc.-2009 [MR111037]
Strategies driven from SWOT analysis:
The chosen quadrant : SO
Result Strategy
1. With the High in gross profit margin of
eBay, this company should expand their
market into global as well as focus for  Market Development
new product offering , into new  Market Penetration
emerging market especially in new  Product Development
market of China and India which they
are considered as the most populated
area and it is a huge opportunity for
eBay. (global expansion)
(S2,S4,S8,S9,O1,O5)
2. With focus on customer-driven value

creation, eBay should continuously  Product Development
maintain simplicity of interaction with
the online community’s capability and
meet the demand in the industry in order
to be competitive. (S3,S4,S6,O1,O2,04)
Conclusion of SWOT analyis:
Selected Corporate level strategies:
1. Product Development
2. Market Penetration
3. Market development
Selected Business Level strategies:
With maintain simplicity of interaction with the online community’s capability and meet the
demand in the industry in order to be competitive. (S3,S4,S6,O1,O2,04) : Differentiation
Strategies

eBay Inc.-2009 [MR111037]
6.2 SPACE Analysis
*Due to the lack of information SPACE analysis showed below is the SPACE analysis for eBay
marketplaces segment.
For Marketplaces segment
Financial Position (FP)
EBay’s 3
Marketplaces division reported $1.26 billion in revenue, a 14 percent year-over-year
eBay Revenue Growth of rate has been decreasing for the last 3 years. Therefore, this 2
decline trend lead to decreasing the growth rate in 2009 by 4%. This revenue decline
trend is considered as the weakness of eBay
Decreased in Current Ratio is the weakness for eBay 2
Increased in ROA is considered a strength for eBay 5
Decreased to almost double for working capital is considered as weakness for eBay 2
In 2008, eBay.com generated approximately $59.7 billion in gross merchandise 6

revenues
with consumer electronics accounting for the largest percentage of trade at $6.0
billion
or 17 percent, as indicated in Exhibit 1(Page 264,Para2)
FP Average 3.33
Industry Position (IP)
However, Amazon’s strong growth and satisfied customer base pose the greatest 3
threat to eBay (Page 267, Para6)
Competition is expected to increase in the future because barriers to entry in this 4
segment are low (Page 268, Para2)
It is attractive for new entrant and new investors to enter in this industry. Besides that 5
this industry also having a large market size, fast growing in the market and it is not
too many large competitors in this industry. Thus if a firm can develop a business
plan which makes them diverse, customer oriental and unique, the potential of

eBay Inc.-2009 [MR111037]
success is possible
IP Average 4
Stability Position (SP)
In addition, tax compliance will increase costs. (Page 269, Para 6) -5

The company continued its turnaround strategy in a harsh climate for consumer -4
spending (Page 263, Para2)
Weak global economic conditions, in addition to the mortgage and worldwide credit -6
related financial crisis, are expected to limit revenue growth, particularly in the
Marketplaces segment, which is closely tied to consumer purchase patterns (Page
269, Para2)
-If the U.S. dollar weakens against foreign currencies, transactions conducted in -3
foreign currency denominations will increase and inflate revenues, operating
expenses, and net income (Page 269, Para3)
The need for substantial resource investments in -3

technology and marketing in order to remain competitive (Page 268, Para1)
SP Average -4.2
Competitive Position (CP)
In August 2009, eBay Inc. formed a partnership with General Motors enabling
hundreds of GM dealers in California to help consumers negotiate purchase of new -2
GM cars and trucks through the eBay online marketplace. (Pg.263,para1)
Acquired by eBay Inc. in 2005, Shopping.com is an online comparison shopping -1

site that offers comparisons on millions of products and product reviews.(Page266,
Para6)
The success of eBay is built on similar customer-centric entrepreneurial business -2

models that focus on customer-driven value creation (Page 268, Para1)
EBay has recently been involved in litigation with Tiffany & Co., Rolex, Louis -5
Vuitton, Christian Dior, L’Oréal, and Lancôme for a lack of policing trade and
infringement on trademarks and copyrights for the sale of “not for resale” and
counterfeit items on eBay’s Web
sites. (Page 269, Para8)
Loyalty Programs that provide cash back buyer rewards coupons were selectively -2
distributed to recognize large buyers to sustain customer loyalty.(Page 266, Para2)
If revenue significantly declines, eBay may not be able to meet -5

contractual obligations. EBay recently increased its fee structure for its
Marketplaces business, which may negatively impact the number of new customers

eBay Inc.-2009 [MR111037]

CP Average -2.0
Conclusion
X= IP + CP = (4) + (-2.0) = 2.0

Y = FP + SP = (3.33) + (-4.2) = -0.9
Coordinate : (x, y)= (2, -0.9)
FP
CP IP
SP
COMPETITIVE PROFILE:
1. Product Development
2. Market Development
3. Market Penetration
Conclusion:
This quadrant, shows that eBay with major competitive advantages in a high growth
industry. Therefore, the chosen strategies are related to the focus on eBay growth
potential in highly competitive industry position. eBay then should pursue strategy of:
Product Development, Market Development as well as Market Penetration.

eBay Inc.-2009 [MR111037]
6.3 BCG Analysis

*As a matter of fact, in order for implementing BCG analysis, the information related to
competitors is needed. But, due to the lack of information the BCG analysis cannot be
proceeded.
6.4 IE Analysis
*As a matter of fact, eBay consisted of three segments. But due to the lack of information,
I only can focused on the position of eBay based on Marketplaces segments.
THE IFE TOTAL WEIGTHED SCORES
4.0 3.0 2.0
I II III
3.0
2.0
1.0
THE EFE TOTAL
WEIGTHED SCORES
EFE : 3.27 FALLS INTO CELL II: Grow & Build
IFE: 3.10 Therefore intensive Market Penetration, Market
Development and Product Development can be most
appropriate for this division.

eBay Inc.-2009 [MR111037]
6.5 Grand Strategy Matrix
*Due to the fact that this matrix needs the resulted from CPM analysis, I only analysed
Grand Strategy Matrix for Marketplaces segment. Grand Strategy Matrix for
Communications segment and Payment segment cannot be done in this analysis.
Net Revenue by Segments

2006 2007 2008
Marketplaces $4,334,290 24% $5,363,891 4% $5,586,751
Payments $1,440,530 34% $1,926,616 25% $2,403,669
Communications $194,921 96% $381,822 44% $550,841
Total Net $5,969,741 29% $7,672,329 11% $8,541,261

Revenues
In this situation, I only consider the latest growth rate of revenue in 2007 to 2008 for eBay.
As a matter of fact, because of lack of information related to the industry growth rate for each
segment, eBay’s growth rate will be used for this analysis. From table above, we can see that
the growth rate of revenue for eBay annually higher than 5 percent. So, therefore the growth
rate for eBay, as a whole, is in the Rapid growth. But, the growth rate of eBay in
Marketplaces segment is 4%. This situation can be considered as slow growth rate. As
mentioned before, CPM analysis will be used in this analysis. Due to the lack of information,
only CPM for marketplaces segment is provided in this analysis where the value is (CPM:
eBay = 2.9, Amazon = 2.9)

eBay Inc.-2009 [MR111037]
RAPID MARKET GROWTH
QUADRANT II QUADRANT I
Pos
QUADRANT III QUADRANT IV
SLOW MARKET GROWTH
MARKETPLACES
SEGMENT
eBay for Marketplaces segment falls to Quadrant IV. Based on the growth revenue rate for
Marketplaces segment, it has been proved that the percentage is 4percent which is less that
5percent. Therefore the growth rate for marketplaces segment is the slow growth rate. In
addition, based on the CPM analysis, It has been proved eBay possess a strong competitive
position in the industry especially from Amazon. Therefore, eBay falls to fourth quadrant
which means that strong competitive position with a slow growth industry. Thus the
strategies that suit for eBay are :
1)Related Diversification
2) Unrelated Diversification
3) Joint Ventures

eBay Inc.-2009 [MR111037]
6.6 Wrap Up Process
Methods Product Market Market Related Unrelated

Development Development Penetration Diversification Diversification
(PD) (MD) (MP)
Swot    - -
Matrix
SPACE    - -
Matrix
BCG N/A N/A N/A N/A N/A
Matrix
IE Matrix   
Grand - - -  
Strategy
Total 3 3 3 1 1

eBay Inc.-2009 [MR111037]
6.7 The Qualitative Strategic Planning Matrix (QSPM)

* Because of lack of information from the EFE of communications segment and
payments segment, the qualitative strategic planning matrix here is only for Marketplaces
segment.
Strategic Alternatives
Product Market
Development Penetration
Key Factors Weight AS TAS AS TAS

Opportunities
The need for substantial
resource investments in
technology and marketing in
order to remain 0.15 4 0.6 3 0.45
competitive (Page 268,
Para1)
Buyers and sellers enjoy

trading among a wide
selection of goods and
services in a secure, trusted,
0.10 4 0.40 3 0.30
and efficient commerce
environment.(Page 265,
Para5).
Profitability is also affected

by currency exchange rates 0.09 1 0.09 3 0.27
(page 269, Para3)
Online classifieds help
people meet, share ideas, and
offer goods/services at a local
0.08 3 0.24 1 0.08
city or regional level(Page
266, Para4)
If the U.S. dollar weakens

against foreign currencies,
transactions conducted in 0.07 1 0.07 3 0.21
foreign currency
denominations will increase

eBay Inc.-2009 [MR111037]
and inflate revenues,

operating expenses, and net
Threats
In addition, tax compliance
will increase costs. (Page 0.12 1 0.12 2 0.24
269, Para 6)
Weak global economic

conditions, in addition to the
mortgage and worldwide
credit related financial crisis,
are expected to limit revenue
growth, particularly in the 0.10 3 0.30 4 0.40
Marketplaces segment, which
is closely tied to consumer
purchase patterns (Page 269,
Para2)
Competition is intense in
communications services and 0.12 3 0.36 2 0.24
subject to rapid technological
However, Amazon’s strong
customer base pose the 0.10 3 0.36 2 0.20
greatest threat to eBay (Page
267, Para6)
Marketplaces: Competition is
expected to increase in the
future because barriers to
entry in this segment are low 0.07 2 0.14 3 0.21
and new online sites can be
launched at a nominal cost
(Page 268, Para2)
1.00
Strengths
EBay’s Marketplaces
platform brings buyers and
sellers together through fully 0.15 2 0.30 3 0.45
automated online Web sites
24/7 (Page 265, Para5)

eBay Inc.-2009 [MR111037]
As of December 2008,
approximately 516,000
online storefronts were 0.12 2 0.24 3 0.36
listed in locations across the
EBay.com offers a sense of
community to buyers and
sellers that is sustained by
Communications and high 0.12 3 0.36 1 0.12
transaction rates on a wide\
(eBay.com, 2006). (Page
263, para4)
In 2007, eBay sold nearly
$60 billion goods, which
equates to worldwide eBay 0.09 2 0.18 3 0.27
users trading more than
$1,900 worth in goods every
second.(Page 264, Para3)
The success of eBay is built
entrepreneurial business 0.09 3 0.27 1 0.09
models that focus on
Weaknesses
EBay’s Marketplaces
billion in revenue, a 14 0.10 1 0.10 2 0.20
The German Federal
Supreme Court has also ruled
that eBay may owe penalties
from illegal listings of 0.10 3 0.40 1 0.10
counterfeit and stolen goods.
These events may also
negatively affect eBay’s
reputation. (Page 270, Para1)
EBay has recently been
Tiffany & Co., Rolex, Louis 0.09 2 0.27 1 0.09
Vuitton, Christian Dior,
L’Oréal, and Lancôme for a
lack of policing trade and
infringement on
trademarks and copyrights
for the sale of “not for
resale” and counterfeit items
on eBay’s Websites. (Page
269, Para8)
eBay Inc.-2009 [MR111037]
If revenue significantly
declines, eBay may not be
able to meet contractual
obligations. EBay recently
increased its fee structure 0.08 1 0.08 3 0.24
for its Marketplaces business,
which may negatively impact
the number of new customers
eBay Revenue Growth of rate
has been decreasing for the
last 3 years. Therefore, this
decline trend lead to 0.06 2 0.12 3 0.18
decreasing the growth rate in
2009 by 4%. This revenue
decline trend is considered as
the weakness of eBay
Total 4.9 4.68
Based on the QSPM analysis:

QSPM Outcome:
1. Product Development :4.9
2.Market Penetration : 4.68
Corporate Level Strategies
PD :
-With focus on customer-driven value creation, eBay should continuously maintain

simplicity of interaction with the online community’s capability and meet the demand in the
industry in order to be competitive. (S3,S4,S6,O1,O2,04)
-With the High in gross profit margin of eBay, this company should expand their market
into global as well as focus for new product offering , into new emerging market
especially in new market of China and India which they are considered as the most populated
area and it is a huge opportunity for eBay. (global expansion) (S2,S4,S8,S9,O1,O5)
Business Level Strategies: Differentiation Strategies

-With maintain simplicity of interaction with the online community’s capability and meet the
demand in the industry in order to be competitive. (S3,S4,S6,O1,O2,04) : Differentiation
Strategies

eBay Inc.-2009 [MR111037]
7.0 The New Strategies

*This new strategies is focused on Marketplaces segment. Because of lack of
information from communications segment and Payments segment of eBay, the analysis
for this new strategies cannot be completed. As a matter of fact, each analysis for each
segment or division cannot be combined into one analysis. This matter is impossible to
be done because each division represent different product category as well as different
strategies. Therefore, in this situation, due to the lack of information I provided only the
new strategies for eBay in marketplaces segment.
Objectives
No. Segment Goals (New) Remarks
(New)
Maintaining global Develop new
growth initiative as a market with new Product
1. Market strategy to motivate product in China Development&
places consumers through and India (the Market
acquisitions, new market highest Development
and new products in order population) in
to adopt into different order to adopt
culture demand. into different
culture demand.
N o f r a u d u l e n t activities Introduce
may happened through “zero fraud” by Product
authentication and introducing web Development
verifications. security system
for fraudulent
activities that
may happened
through
authentication
and verifications.
Going to make eBay as Enforce the
generic brand for consumers marketing
department to
improve
advertising by
global branding.

eBay Inc.-2009 [MR111037]
No. Segment Goals Objectives
.Increase revenue and Increase revenue in

1. Marketplaces long term profit by marketplace segment by
satisfying the needs of 30% annually
the customers.
Increase working Achieved the working

capital to $ capital to $ 5,000,000.00
5,000,000.00 by 2012 by 2012
New Policy for New strategies:

 The manager should monitor the eBay progression of growth every week.
 Technical Department should make a corrective action immediately, and improve
after sale services.
 10 days training provided for current staff, 15 days for new staff per year. Training
can help the organization to increase efficiency as well as increase the level of
motivation of the employees.
 Special rewards is provided for the staff who achieved high performance in work and
complete attendance monthly.
Marketing Department
Company Objective: Ensure the effectiveness of virtual marketing through online

advertising as well as other media.
Supporting Policies:
1. Management is concerned with all those activities which are essential to determine and
satisfy the needs of customers so as to achieve the objectives of business

eBay Inc.-2009 [MR111037]
2. The marketing manager must scientifically study the demands of customers before
offering them any goods or services. Selling the goods or services is not that important,
as the satisfaction of the customer’s needs.
3. The Marketing manager must attract more and more customers to buy the firm’s products
and services.
4. The marketing department provides quality products to customers at reasonable prices
and thus creates its impact on the customers.
Reorganise:
Roles of Key Players for eBay organisation.
Project Manager
The Project Manager has the ability to provide resources as needed for the project and has
final say on determining the membership of the Project Team. The project manager also
should be able to organise efficiently partnership as well as the acquisition process.
Project Administrator
The Project Administrator is the leader in the effort to define, understand and measure the
process. He/she serves on the Project Team and is available to dedicate 20-30% of his or her
time to the reorganising effort.
Project Team
The Project Team is composed of managers and employees from each of the potentially
affected functional/divisional areas.
The roles of the Project Team in simplifying the processes include:
 Participate in the creation of the "As-Is" Process Model.
 Highlight major problems and issues, and recommend areas where improvements and
"Quick Wins" can be made.
 Assist in addressing the immediate workload distribution problems.
 Participate in the recommendations on how work should be completed.

eBay Inc.-2009 [MR111037]
7.1 Value Chain

For Marketplaces segment
 Inbound Logistics and The process (Production) remains the same in this case.
Case Facts
Variables
eBay
In August 2009, eBay Inc. formed a partnership with General Motors

enabling hundreds of
GM dealers in California to help consumers negotiate purchase of new
Inbound
GM cars and trucks
Logistics
through the eBay online marketplace. (Page 263,para1)
EBay’s marketplace, or “marketspace,” is an online virtual trading

platform for the sale of
goods and services by a community of users that comprises individual
buyers and sellers,
as well as small business owners (Page 264,Para3)
EBay’s Marketplaces platform

brings buyers and sellers together through fully automated online Web
sites 24/7 (Page 265, Para5)
Feedback Forum provides feedback, comments, and ratings on other users

that can
Process be viewed by potential users when considering a purchase.(Page 266,
Para2)
Revenue is earned from advertisers and retailers who pay a fee for
directing shoppers to their own sites (Page 266, Para6)
The Marketplaces segment generates revenues from listings and fees

paid by sellers (Page 264,Para1)
Rent.com lists apartment availability,

rental costs, virtual tours, roommate searches, and more. Revenue is
earned from landlords
who pay a fee for renters who find apartments through Rent.com.(Page
266, Para7)
eBay Inc.-2009 [MR111037]
StubHub is a leading U.S. ticket marketplace that allows users to buy and
sell tickets
to sporting, events, theater, and other entertainment events (Page
266,Page3)
Generic brand for consumers
Outbound
Logistics
Increase revenue and long term profit by satisfying the needs of the
customers.
Increase working capital to $ 5,000,000.00 by 2012
Develop new market with new product in China and India (the highest
population) in order to adopt into different culture demand.
Marketing & Enforce the marketing department to improve advertising by global

Sales branding.
Maintaining global growth initiative as a strategy to motivate

consumers through acquisitions, new market and new products
in order to adopt into different culture demand.

eBay Inc.-2009 [MR111037]
I n t r o d u c e “zero Fraud ” by web security system for fraudulent

Service
activities that may happened through authentication and verifications.
N o f r a u d u l e n t activities may happened through authentication and

verifications.

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Strategic

NAZIFA BTE ABD. GHANI

Associated Professor Dr. Mas Bambang Baroto

International Business School

1.0 Executive Summary .......................................................................................................................... 4

5.3 Strategies ...................................................................................................................................... 109

3 Strategic Management/SEM II/ 2011/2012

1.0 Executive Summary

To be guided, this analysis addresses the following segment:

1) Vision and Mission Analysis for eBay

2) External Environment Analysis

3) Internal Environment Analysis using value Chain analysis

4) Defining the Existing Objectives and the existing Strategies of eBay

5) Strategy Formulation Process with strategic tools

6) Implement New set Strategy

7) Implement new set of marketing and financial

4 Strategic Management/SEM II/ 2011/2012

2.0 Vision and Mission Analysis

The Original Mission Statement:

Mission Components Included Not included Description

Concern for Public Image ● -

5 Strategic Management/SEM II/ 2011/2012

Mission Statement Evaluation

Identify the utility of the firm’s products - Not mentioned

Reveal that the firm is socially responsible - Not mentioned

Reveal that the firm is environmentally - Not mentioned

Include Nine Component 4 out of 9 Unacceptable

3.1 PEST Analysis

6 Strategic Management/SEM II/ 2011/2012

Political, Legal , and governmental forces

-Legislation is in effect which requires collection of taxes

-Legislation has also been proposed to prohibit sharing of certain

-The resources of existing 

-The company continued its turnaround strategy in a harsh 

-Weak global economic conditions, in addition to the mortgage

-Profitability is also affected by currency exchange rates (page

-If the U.S. dollar weakens against foreign currencies,

7 Strategic Management/SEM II/ 2011/2012

-Alternatively, financial measures will be negatively impacted

-Declining economic environment (Page 268, Para4) 

-Dollar and the lingering weak economy with high

Social , Cultural , and Demographic forces

-Buyers and sellers enjoy trading among a wide selection of 

Online classifieds help people meet, share ideas, and offer

Competition is intense in communications services and subject

- The need for substantial resource investments in

8 Strategic Management/SEM II/ 2011/2012

3.2 Competitive Analysis

The summary of each category of segments comes as below:

1- Market place: competitors in this field includes traditional department, warehouse,

9 Strategic Management/SEM II/ 2011/2012

transaction services to eBay and PayPal account users.(Page 264,Para1) PayPal is a

3- Communications: Communications segment’s competitors have larger amount of

*Because of lack of data for Communications segment’s competitors and Payments

Competitive Analysis for Marketplaces segment

Key Case Facts Opportunity Threat

Competitors Amazon achieved Low gross profit √

- Amazon has initiated alliances

- The success of Amazon is built

Competitors However, Amazon’s strong growth

11 Strategic Management/SEM II/ 2011/2012

3.3 Industry Analysis

3.3.1 The Description of The Industry