Business Strategy

Business Strategy
Case Analysis- Making eBay Work
Bangalore Management Academy

Submitted By :-

Akhilesh Gupta

Santosh Kumar Patel

Prabina Mohanty

Shuvabrata Mukherjee

Submitted To: Mr. Nirmalya B. Biswas

 Business Strategy

Introduction:

eBay is an online auction and selling web portal. Found in the year 1995, it established and grew
further by grossing millions of registered users who have been in trade of services and goods. It
works on a worldwide basis where people as well as businesses buy and sell services and goods
online. These dealers do not really have to meet each other but can operate from separate
geographic locations. The future EBay is guaranteed to do well maintain the same phase as they
follow the terms of Meg Whitman, present CEO.

Analysis of Strategic Capability

SWOT Analysis of eBay:

Strength
 Widely held market
 The largest online auction web portal
 Wide variety of products
 Effective leadership
 No direct competition virtually
 Solid hold of online payment with the
help of PayPal.
 B2B and B2C operations
 Good CRM, connection of sellers with
buyers
Weakness
 Revenues related to advertising
 Fluctuations in exchange rate
 Development in technology
 Fraudulent issues- especially in C2C
 Problems in shipping cost
 Only online availability of services

Opportunities Threats
 Additional expansion into international  Deceitful practices- viruses & spams
market  High competition due to supernormal
 Expand into other online services profits
 Divestment in Skype  Online security
 Mergers and acquisitions  Limited entry barriers

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The eBay Value chain Model:

The use of value chain model against eBay produces result that is different from standard model.
E-Bay has distinctive value creating models as it is separate from other service providers.

Legal
Financial
HR

Margins
Research & developement

Marketing Auction
Conversion from passage to sellers Method
& buyers Fee Peer analysis

Strategic Ability and Competitive Advantage

Resources Competencies
Tangible  Training and development
 Internet for managing companies
 Superior technology and up network
gradation  Securing payment options
 Organization is data and metric through PayPal
driven  Largest advertising
Threshold  Interaction with customers & customer of Google
Capabilities feedback  Marketing & promoting for
increasing revenue
Intangible  Expanding market globally
 Tie up with big internet players with more than 200 million
 Integration of buyers & sellers people.

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 Key employees (Ms. Mec &

Mr. Chris)
Tangible:  Reach to customers
Capability for  The best technology  First mover advantage in
Competitive Intangible internet as well as online
Advantage  First online auction website payment system.
 Efficient higher management

Capabilities that provided eBay with competitive advantage:

Power of the product

eBay offers a large variety of products, so has a core and numerous transactions between the
channels from where they buy and sell their offerings.

Internet Auction:

eBay provided internet auction with live chat facilities. These auctions drive a respective number
of dealers towards their products, especially for second-hand products. To offer a list of products
for deal for a particular figure of days is the basic idea behind the auction-style schedule. This
also allow the seller to create reserve price and bidding in this type of auction is known as ‘proxy
bidding’.

Effective network:

They have an effective networking and customer relationship applications which helps them to
collect the necessary feedback from customers.

Best offers at fixed charge:

Fixed price format was a non-competitive advantage until it improvised with the best offer that
included the fixed price format. They offer this type of service, so that the customer can get

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special kind of product which they can’t get from the auction-style listing. The only back-log for
this offer is that it is not available for all kind of products.

The additional advantage of eBay’s:

 PayPal.com –It has introduced a very convenient service for the customers by providing
the online payment service, online payment can be made through credit cards and bank
accounts.
 Skype – eBay in 2005 bought Skype which provides people to communicate in faster way
with the help of unlimited video and voice chat.
 Shopping.com – EBay’s business was mainly focused on the selling and purchasing
which helped them to grow a good customer base in many places like US, Germany, UK
and this site was owned by them in august 2005.
 Online Classifieds – Local level trading is made easier by this site. This made EBay own
a small venture in craigslist as well.

Managing Capabilities

New Entrants in the marketplace

In any business there are two major components which are demand side and supply side. If the
company has strong muscle power in these two aspects then it gains, sustainable competitive
advantage.

 eBay has strong roots which are horizontally and vertically spread over the world, as it
represent a novel business model with the help of the internet in the past 20 years.
 It existed as strong brand in the mind of sellers and buyers.
 It has the technology which allow each stir of possible client to be tracked, taking out
valuable info database, where it costs a huge sum for the rival companies to obtain the
same.
 e bay has intellectual property Chris Corrado who is amongst the top technology
platform expert in the business world.

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The changing nature of eBay:

eBay had many strategic coalitions with one of the giants of internet businesses such as Google
and Yahoo. It can diversify its business here by using new resources with the help of these
companies. eBay had to develop new competences because there was a huge competition from
others such as GMarket.

As eBay has a large loyal community it tried to extend itself to come up with some of new
concepts such as blogs and wiki to differentiate itself from other competitors.

eBay should divest itself from the countries which it does not have a reasonable market and it
should look forward more to invest more in countries which it has huge business so that it can
solely concentrate more to generate appropriate revenues and to try to cater more towards
customer new needs from those countries.

The eBay’s business model can be imitated by having a different format so therefore eBay
should use its strategic abilities to adapt to the wants of the shifting situation. It should always
strive to upgrade its resources every now and then because it is imitable.

Recommendations

 e Bay can make a deal with Google in the east as it is not doing well in China, Korea,
and Taiwan in which GMarket, partly owned by Yahoo is a rival, by doing this e bay
can have competitive advantage over GMarket.
 e Bay can increase switching costs

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 It can lock its buyers and suppliers with period based schemes, so that the buyers and
suppliers can’t immediately switch to new entrants.
 Make strategic alliances in the areas where it is not enough stronger.

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