FACULTY OF COMMERCE

Corporate Financial Strategy

SUBMITTED TO:

Prof. Aamir Ilyas

SUBMITTED BY:

“BS. COMMERCE”

“G1F17BSCM0025”

AHMAD ALI BUTT

Submitted Date: 23/Jan/2021

 E.F.E (External Factor Evaluation Analysis)

Items Key external Weight Rating Weighted

factor
Opportunity
1 The need for substantial 0.09 4 0.36
resource investments in
technology and
marketing in order to
remain competitive.
2 Buyers and sellers enjoy 0.08 4 0.32
trading among a wide
selection of goods and
services in a secure,
trusted, and efficient
commerce environment.
3 Profitability is also 0.07 3 0.21
affected by currency
exchange rates.
4 Online classifieds help 0.07 3 0.21
people meet, share ideas,
and offer goods/services
at a local city or regional
level.
5 If the U.S. dollar 0.06 3 0.18
weakens against foreign
currencies, transactions
conducted in foreign
currency denominations
will increase and inflate
revenues, operating
expenses, and net
income.
Threats
6 In addition, tax 0.08 4 0.32
compliance will
increase costs.
7 Weak global economic 0.08 4 0.32
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.
8 The resources of 0.07 3 0.21
existing competitor
firms are larger and as
a result, competitors
could weather an
economic downturn.
9 Competition is intense 0.06 3 0.18
in communications
services and subject to
rapid technological
Change.
10 However, Amazon’s 0.06 3 0.18
strong growth and
satisfied customer base
pose the greatest threat
to eBay.
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.
12 Marketplaces: 0.05 3 0.15
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.
13 Declining economic 0.05 3 0.15
environment.
14 Dollar and the 0.05 3 0.15
lingering weak
economy with high
unemployment.
15 Alternatively, financial 0.05 3 0.15
measures will be
negatively impacted by
a rise in the value of
the U.S. dollar.
Total 1 3.27
 C.P.M (Competitive Profile Matrix Analysis)
eBay Amazon
Key Success Factors Weight
Rating Score Rating Score
Providing Value to 0.30 3 0.90 4 1.2
Consumers
Reliability & Trustworthy 0.28 3 0.84 4 1.12
Friendly Interface 0.18 4 0.72 4 0.72
Brand Image & Reputation 0.14 3 0.42 4 0.56
Financial Position 0.10 2 0.20 4 0.40
Total 1 3.08 4

I.F.E (Internal Factor Evaluation Analysis)

Items Key external Weight Rating Weighted
factor Score
Opportunity
1 eBay’s Marketplaces 0.10 4 0.40
platform brings buyers
and sellers together
through fully
automated online Web
sites.
2 In 2008, eBay.com 0.09 4 0.36
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.
3 eBay.com offers a 0.09 4 0.36
sense of community to
buyers and sellers that
is sustained by
Communications and
high transaction rates
on a wide\ selection of
goods/services.
4 In 2007, eBay sold 0.07 4 0.24
nearly $60 billion
goods, which equates
to worldwide eBay
users trading more than
$1,900 worth in goods
every second.
5 In August 2009, eBay 0.06 3 0.18
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.
6 The success of eBay is 0.07 3 0.21
built on similar
customer-centric
entrepreneurial
business models that
focus on customer-
driven value creation.
7 eBay provides the 0.06 3 0.18
virtual marketplace
auction where the
market determines the
price of items sold.
8 eBay compared to 0.06 3 0.18
Amazon 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 0.15
approximately 516,000
online storefronts were
listed in locations
across the globe.
Weaknesses
10 eBay’s Marketplaces 0.05 3 0.15
division reported $1.26
billion in revenue, a 14
percent year-over-year-
decline.
11 The German Federal 0.05 3 0.15
Supreme Court has also
ruled that eBay may
owe penalties from
illegal listings of
counterfeit and stolen
goods. These events
may also negatively
affect eBay’s
reputation.
12 eBay has recently been 0.05 2 0.10
involved in litigation
with 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.
13 Decreased to almost 0.04 2 0.08
double for working
capital is considered as
weakness for eBay.
14 Customer Support. 0.04 2 0.08
Customer support is
challenged from
greater trade activity
and an increased
number of users.
15 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
users.
16 eBay Revenue Growth 0.05 2 0.10
of rate has been
decreasing for the last
3 years. Therefore, this
decline trend led to
decreasing the growth
rate in 2009 by 4%.
This revenue decline
trend is considered as
the weakness of eBay.
17 Web Site Stability. 0.03 2 0.06
Increased volume and
greater complexity
require additional
expensive investments
in hardware, software,
and personnel.
Total 1 3.10

SWOT Matrix
 Strengths
eBay’s Marketplaces
platform brings buyers and
sellers together through fully
automated online Web sites.
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.
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.
In 2007, eBay sold nearly
$60 billion goods, which
equates to worldwide eBay
users trading more than
$1,900 worth in goods every
second.
In August 2009, eBay Inc.
formed a partnership with
General Motors enabling
hundreds of GM dealers in
California to help consumers increased number of users.
negotiate purchase of new
GM cars and trucks through
the eBay online
marketplace.
The success of eBay is built
on similar customer-centric
entrepreneurial business
models that focus on
customer driven value increased its fee structure for
creation.
customers and revenue from
Weakness
eBay’s Marketplaces
division reported $1.26
billion in revenue, a 14
percent year-over-year
decline.
The German Federal
Supreme Court has also
ruled that eBay may owe
penalties from illegal
listings of counterfeit and
stolen goods. These events
may also negatively affect
eBay’s reputation.
eBay has recently been
involved in litigation with
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.
Decreased to almost double
for working capital is
considered as weakness for
eBay.
Customer Support.
Customer support is
challenged from greater
trade activity and an
If revenue significantly
declines, eBay may not be
able to meet contractual
obligations. eBay recently
its Marketplaces business,
which may negatively
impact the number of new

Opportunity
The need for substantial
resource investments in
technology and marketing in
order to remain competitive.
Buyers and sellers enjoy
trading among a wide
selection of goods and
services in a secure, trusted,
and efficient commerce
environment.
Profitability is also affected
by currency exchange.
existing users.
eBay provides the virtual eBay Revenue Growth of
marketplace auction where rate has been decreasing for
the market determines the the last 3 years. Therefore,
price of items sold. this decline trend led to
decreasing the growth rate in
2009 by 4%. This revenue
decline trend is considered
as the weakness of eBay.
eBay compared to Amazon Web Site Stability.
achieved High gross profit Increased volume and
margins. High in gross profit greater complexity require
margin can be considered as additional expensive
a strength for eBay. investments in hardware,
software, and personnel.
As of December 2008,
approximately 516,000
online storefronts were
listed in locations across the
globe.
S-O W-O
With the High in gross profit Improve market services in
margin of eBay, this current markets can make
company should expand large number of potential
their market into global, new customers to subscribe. (W
and emerging market 2, W3, W6, O1, O2)
especially new market in
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)
With focus on customer- Strategic Alliance with
driven value creation, eBay courier companies and by
should continuously providing online banking
maintain simplicity of system can help eBay to
interaction with the online improve the efficiency of the
community’s capability and operation system and could
meet the demand in the help to give the best service
industry in order to be for customers satisfaction.
competitive. (S3, S4, S6, (W5, W6, W8,02,04)
O1, O2,04)
Inability of eBay to measure
illegal activity on site and
lacking of policing trade
eBay should be able to
provide system for online
verification of products.

Online classifieds help
people meet, share ideas,
and offer goods/services at a
local city or regional level.
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.
Threat
In addition, tax compliance
will increase costs.
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.
The resources of existing
competitor firms are larger
and as a result, competitors
could weather an economic
downturn.
Competition is intense in
communications services
and subject to rapid
technological Change.
However, Amazon’s strong
growth and satisfied
customer base pose the
(W2, W3, O1, O2)
S-T W-T
Through acquisition eBay should alliance with
strategy, eBay should be postal services (W5, W8,
able to expand in global T2, T3, T4, T5)
(global expansion). (S4, S5,
S9, T9)
eBay should reinforce With the issue of stolen
marketing and management goods and lacking in policy,
system. (S1, S2, S6, S8, S9, eBay should invest in
T2, T3, T4, T5, T9) customer service web
security. In addition, eBay
also should provide an
authentication consumers
identity in order to provide a
secure environment online
system. (W2, W3, W5, T2,
T5)
eBay should recover the
financial crisis of the
organizations by rearrange
the website policies and
features to make it user
friendly including wide
range of offering. (W1, W3,
W4, W6, W7, W8, T1, T2,
T 4, T6, T7, T8, T10)
eBay should be able to
develop its product as well
as its market (new and
emerging market) especially
in the high populated area
like China and India. (W7,
T2, T3, T5)
greatest threat to eBay.
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.
Alternatively, financial
measures will be negatively
impacted by a rise in the
value of the U.S. dollar.
Dollar and the lingering
weak economy with high
unemployment
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
Declining economic
environment