Assignment #1

Case study: E Bay.com

Managerial Policy
Instructor: SIR Adnan Anwar

Submitted by: HIRA ISRAR()

RUTH PERVAIZ()
AYESHA ABDULLAH(62469)
BATOOL()
Introduction
In November 21st, 2000, The CEO of eBay.com had position as the world largest Person
to Person(P2P) trading business but its shares were 20% fallen down when e Bay shares was
downgraded from “buy to Neutral”. E Bay has announced to launch its new application interface
software. The company had great growth in earlier 1995. During the three months in September
2000 its worth was 1.4 US $billion and with 4320 categories. The company had 18.9 million user
at the end of period and closed competitor Yahoo & Amazon.com.
BACKGROUND
Pierre Omidyar was the founder of ebay.com. He interested in computers & wrote
programs. He initially developer of consumer application software such as MacDraw & software
subsidiary of Apple computer.
Ebay was launched on labor day 1st September, 1995 using a website that was hosted by
Omidyar’s. The site was launched at www.ebay.com this site was simple where buyer and seller
easily bid for them.
BUSINESS CONCEPT
Omidyar asked his friend to join the company as its first President in August 1996. He
managed distribution channel & consulting. The concept was P2P auctions on the internet , using
the internet buyer & seller could access a larger market which was important for those collectors
who could not find people with similar interest in their areas.

BASIC PROCESS
The ebay process was simple & easy to understand. Seller could list items for sale & pay
a small listing fee. Overtime ebay added service model to improve user experience & increase
loyalty & retention. Ebay tried to do some changes such as pricing, that disappointment therefore
ebay conduct the reviews from customer, buyers & sellers.

 VISSION BEHIND

Omidyar hoped that his auction community would reflect the values of honesty,
openness, equality, empowerment, trust, mutual respect and mutual responsibility. He had to
embrace by the company and its employees because everything that the company did such as
website, press releases & strategic partnerships, indirectly influenced the community. EBay
indicated its growth and profitability during the period from 1998 to 2000. EBay had never
planned to to develop business, but rather took opportunities and advantage. They focus on five
stratefies strengthening the eBay brand, expanding the user base, broadening the trading platform
by increasing product categories and promoting new ones, fostering community affinity &
enhancing sites features and functionality.

 EBAY EXPANDING WORLDWIDE

Over the time eBay started its expansion in the UK & Canada. eBay enrolled its services
out to Australia, Japan & France. The site later on renames withed www.ebay.de, which gave
German users access to eBay worldwide community of active buyers & sellers.

 COMPETITOR ANALYSIS

New competitors have entered in the on line auction. The first major competitor was On
sale, which was already an established B2C site. Yahoo!, Lycos, Excite, Microsoft MSN & many
sellers’ niche competitors followed. In April 1999, Amazon.com launched its auction site was
remarkably similar to eBay made it easy for buyer & sellers to move across to Amazon. Amazon
did not charge any fees for the first few months & offered additional services such as cross
promotion to relevant Amazon retail, credit card payments & buyer guarantees.
With the online auction market being so competitive, eBay found it difficult to increase its fees.
The only was o increase was to improve the traffic volume by deepening the penetration into the
north American market, expend internationally and raise the average price of goods sold. Late
1999, eBay launched ‘eBay: Go Local, ‘ with a campaign called ‘from our homepage to your
hometown’ where eBay toured 30 communities across the US and introduced the pilot site in Los
Angeles.
As of August 1999, eBay’s brand was recognized by 91 million US adults, compared to
118 million for Amazon.com. at the end of 2000 ebay had created a convenient, efficient and
entertaining marketplace where buyers & sellers could list, bid for and trade goods. It was the
intermediary and only provided the marketplace for buyers & seller to trade and did not take any
responsibility for the actual transaction. To attract and retain buyers & sellers eBay gave users
access to value added services that made the transaction simpler.
 Over the past five years, eBay had been an example of ecommerce success for internet and brick
and mortar company’s alike. It had transformed the auction business, which had allowed it to
become the world’s largest P2P on-line auction company, achieving a higher value than many
established Fortune 500 companies.

PESTEL & ENVIRONMENT ANALYSIS

eBay Inc. PESTEL analysis is a strategic tool to analyze the macro environment of the
organization. PESTEL stands for - Political, Economic, Social, Technological, Environmental &
Legal factors that impact the macro environment of eBay Inc..Changes in the macro-environment
factors can have a direct impact on not only the eBay Inc. but also can impact other players in the
Specialty Retail, Other. The macro-environment factors can impact the Porter Five Forces that
shape strategy and competitive landscape. They can impact individual firm’s competitive
advantage or overall profitability levels of the Services industry.

 POLITICAL FACTORS

Political factors play a significant role in determining the factors that can impact eBay Inc.'s long
term profitability in a certain country or market. eBay Inc. is operating in Specialty Retail, Other
in more than dozen countries and expose itself to different types of political environment and
political system risks. 

 Political stability and importance of Specialty Retail, Other sector in the country's
economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Services sector.
 Bureaucracy and interference in Specialty Retail, Other industry by government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Services
  ECONOMIC FACTORS

The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign
exchange rate and economic cycle determine the aggregate demand and aggregate investment in
an economy. While micro environment factors such as competition norms impact the
competitive advantage of the firm. EBay Inc. can use country’s economic factor such as growth
rate, inflation & industry’s economic indicators such as Specialty Retail, Other industry growth
rate, consumer spending etc. to forecast the growth trajectory of not only --sectoryname-- sector
but also that of the organization. Economic factors that eBay Inc. should consider while
conducting PESTEL analysis is -

 Type of economic system in countries of operation – what type of economic system there
is and how stable it is.
 Government intervention in the free market and related Services
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does eBay Inc. needs to raise capital in local market?
 Infrastructure quality in Specialty Retail, Other industry
 Comparative advantages of host country and Services sector in the particular country.  
 Skill level of workforce in Specialty Retail, Other industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)

 SOCIAL FACTORS

Society’s culture and way of doing things impact the culture of an organization in an
environment. Shared beliefs and attitudes of the population play a great role in how marketers at
eBay Inc. will understand the customers of a given market and how they design the marketing
message for Specialty Retail, Other industry consumers. Social factors that leadership of eBay
Inc. should analyze for PESTEL analysis are -  
  Demographics and skill level of the population
 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the eBay Inc. ’s industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society. Some societies encourage
entrepreneurship while some don’t.

 TECHNOLOGICAL FACTORS

Technology is fast disrupting various industries across the board. Transportation industry is a
good case to illustrate this point. Over the last 5 years the industry has been transforming really
fast, not even giving chance to the established players to cope with the changes. Taxi industry is
now dominated by players like Uber and Lyft. Car industry is fast moving toward automation led
by technology firm such as Google & manufacturing is disrupted by Tesla, which has stated an
electronic car revolution.A firm should not only do technological analysis of the industry but
also the speed at which technology disrupts that industry. Slow speed will give more time while
fast speed of technological disruption may give a firm little time to cope and be profitable.
Technology analysis involves understanding the following impacts -

 Recent technological developments by eBay Inc. competitors

 Technology's impact on product offering
 Impact on cost structure in Specialty Retail, Other industry
 Impact on value chain structure in Services sector
 Rate of technological diffusion
Environmental Factors that Impact eBay Inc.

Different markets have different norms or environmental standards which can impact the
profitability of an organization in those markets. Even within a country often states can have
different environmental laws and liability laws. For example in United States – Texas and
Florida have different liability clauses in case of mishaps or environmental disaster. Similarly a
lot of European countries give healthy tax breaks to companies that operate in the renewable
sector.Before entering new markets or starting a new business in existing market the firm should
carefully evaluate the environmental standards that are required to operate in those markets.
Some of the environmental factors that a firm should consider beforehand are -

 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Specialty Retail, Other industry
 Recycling
 Waste management in Services sector
 Attitudes toward “green” or ecological products
Legal Factors that Impact eBay Inc.

In number of countries, the legal framework and institutions are not robust enough to protect the
intellectual property rights of an organization. A firm should carefully evaluate before entering
such markets as it can lead to theft of organization’s secret sauce thus the overall competitive
edge. Some of the legal factors that eBay Inc. leadership should consider while entering a new
market are -

 Anti-trust law in Specialty Retail, Other industry and overall in the country.
 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce