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STRATEGIC MANAGEMENT PROJECT

On
eBAY.inc

By
MEENAKSHI
MBA HR
C-08
A0102314120
MBA-HR BATCH 2014-16
Department of Human Resources
AMITY BUSINESS SCHOOL
AMITY UNIVERSITY UTTAR PRADESH
SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA

I.

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 eBays
subsidiary Skype Technologies S.A. Corporate revenues are earned primarily from three business
segments:
(1) Market places,
(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.
II.

COMPANY PROFILE

VISION STATEMENT
Become the worlds largest person to person trading company.

MISSION STATEMENT

We intend to continue to work toward our mission of creating the worlds leading ecommerce
franchise by investing in our core Marketplaces segment and continuing to build our adjacent
Marketplaces businesses.
Mission Components
Customers
Products and Services
Markets
Technology
Concern for Survival
Growth and Profits
Philosophy

Included

Not included

Description
ecommerce franchise
Leader in the online
marketplace
Leading in e-commerce
-

Self-Concept

Continuously

Investing

in

Marketplaces segment

Concern for Public Image


Concern for Employees

Therefore, there are only 4 components out of 9 general components of mission statements and
in this analysis the mission provided by eBay has lacking of 5 components. Based on table, the 5
missing components are; customers, Concern for Survival growth and profits, Philosophy,
Concern for Public Image as well as the Concern for Employees.
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.
PRODUCTS AND SERVICES:

Key products and services:


Online services for the sale of goods and services
Online communication services
Online payment and transactional credit services
Online classifieds
Advertising

Global commerce platform and payment leader.

The world's largest online marketplaces

PayPal - flexible and innovative payment solutions

eBay Enterprise - exceptional, engaging shopping experiences online and offline.

OBJECTIVE

The objective of eBay was to develop the work ethics and culture of eBay as a fun, open
and trusting environment and to keep the organization focused on the big picture
objectives and key priorities.

This fundamental belief created a completely new kind of marketplace, forever


transforming ecommerce.

In a letter to users, founder Omidyar characterized eBay as a grand experiment


creating an open market that encourages honest dealingsto make it easier to conduct
business with strangers over the Net.

The overall eBay aims are to increase the gross merchandise volume and net revenues
from the eBay marketplace.

ORGANISATIONAL STRUCTURE
SR. VICE
PRESIDENT &
FINANCIAL
OFFICER: Gary F
SR. VICE
PRESEDIENT HR: J
effery S. Skoll

FOUNDER &
CHAIRMAN OF THE
BOARD: Pierre
Omidyar

PRESIDENT&CEO:
Devin Wenig

SR. VICE
PRESIDENT, LEGAL
AFFAIR: Michael
Jacobson
CHIEF TECH.
OFFICER: Steven P.
Westley

SR. VICE
PRESIDENT,
CORPORATE
COMM.: Michael K.
Wilson

III.

UNDERSTANDING OF THE PROBLEMPRESIDENT


PAYPAL: Scott
Thompson

A. INDUSTRY ANALYSIS

EXTERNAL FACTOR ANALYSIS

1. PORTERS FIVE FORCES ANALYSIS

ANALYSIS:

Industry Trend:
1) Mobile more sales will occur using mobile devices and companies need to make sure that
their sites are updated to be mobile
2) Free and faster shipping- this is the trend and companies need to keep up to compete.
3) Business without borders companies will need to go global to continue to grow.
4) Content marketing is essential - marketing through content on websites emphasizing product
information to engage customers
5) Growth of guided discovery more online businesses will engineer the right mix of guided
discovery to provide relevant suggestions to help consumers make purchases.
6) Consumer driven demand and personalization businesses will empower customers to
personalize, design or modify products that they want to purchase. This will increase efficiency
and benefits both consumers and businesses

7) Its still about the brand- businesses will go back to the basics of building a brand.

Supplier: Low supplier power because a large base of supplier in existence. The ease of
being supplier is high. Switch cost is high because the feedback and custom system.
Buyer: high buyer power because they can compare the price with others easily.
Secondly, people can buy goods from somewhere else very easy, low cost of switching.
Thirdly, compose price among sellers with eBay.
Rivalry: high because the similar large scale in operation and infrastructure among major
competitors. Second, large competitors like amazon has in place logistic & supply chain
(warehouse/ inventory management) make it hard for ebay to catch up. Third, ebay cant
enter some international markets such as china & japan due to the strong market power
from local competitor/market leader.
19% in e-commercial market and 2% in global retail.
Substitutes: very high because a great number of alternative options: groupon (group
buy); flash sells; retail (Walmart); classify fields (gifts).
New entrance: middle because easy to enter which is for easy and economies of scale is
high, brand equity, customer service, feedback system, in place by the existing major players
which are for high

2. PEST ANALYSIS:

Political, Legal , and governmental forces


OPPORTUNIT

THREA

-Legislation is in effect which requires collection of taxes


beginning .This new legislation may cause a reduction in
trading activity that would negatively affect several business
segments.

-In addition, tax compliance will increase costs.

-Legislation has also been proposed to prohibit sharing of


certain information over the Internet

Economic forces

-The resources of existing competitor firms are larger and as a


result, competitors could weather an economic downturn

-The company continued its turnaround strategy in a harsh


climate for consumer spending
-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

-Profitability is also affected by currency exchange rates

-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

-Alternatively, financial measures will be negatively impacted


by a rise in the value of the U.S. dollar

-Declining economic environment

- The revenue drop was attributable to the impact of the


stronger.
-Dollar and the lingering weak economy with high
unemployment

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.


Breaches in data security are on the rise

Technological forces
Online classifieds help people meet, share ideas, and offer
goods/services at a local city or regional level

Competition is intense in communications services and


subject to rapid technological
Change
- The need for substantial resource investments in
Technology and marketing in order to remain competitive.

B. 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 mailorder 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,
Amazons strong growth and satisfied customer base pose the greatest threat to eBay
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. Pay me later is funded by CIT Bank and Bill Me Later is responsible for all functions
related to the account. Additional revenues are also earned from advertising and revenue-sharing
contracts with third parties that provide transaction services to eBay and PayPal account users.
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. The Payments segment competes against other online payment services and offline
payment methods, such as cash, check, money order, and established credit card merchants
3- Communications: Communications segments competitors have larger amount of resources
compare to Skype. The Communications segment faces competition from local telephone or
cable companies and other VoIP providers. Traditional Communications companies offer bundled
services, such as cable or satellite television, along with internet and voice Communications
services.

SWOT ANALYSIS
STRENGTH:
Economic Scale
The huge user base brings eBay economic scale. For example, eBay made heavy investment to
establish its IT system and gain customer relationship knowledge.
Diversity in Products
The huge user bases also diversified the products sold on eBay.
Strength in Technology
Innovative technology such as its payment system - Paypal

Brand Reputation
EBays successful operation and its globalization have already gained it critical reputation.
Users Data Base
The giant user base and large volume of transactions give eBay huge data base.

WEAKNESS:

Inability to measure illegal activity on site


The hugest online auction market, large number of customers, and lots of categories of goods are
eBays core competencies. However, these core competencies are also eBays weakness. People
can easy to join eBay, and eBay did not check their customers very seriously. EBay is very
difficult to manage their customers because all of It is easy to get two, three, even more ID in
eBay. So it is hard to controlling fake or illegal auctions. eBay has taken many precautions to
prevent illegal activity on their site.
Technology malfunctions
As with many technology companies, systems breakdowns could disturb the trading activities of
eBay. In the past both eBay and its payment brand Papal have encountered shut downs and
outages. As technology improves such a weakness is less and less of an issue.
Cost of shipping
Another problem with eBay is shipping cost. One is the price and other is the delivery time.
Sellers would increase the cost of shipping as much as twice the price of the product. It is also
expanding on foreign countries in which can be threatened by local competitors. Delivery time is
a crucial factor for any of the online company includes eBay. Different delivery time cost
different but will all affect the satisfaction of the customers.
High fee
eBays fees for the sellers has risen significantly over the years. The firm receives fees on listed
goods, sold goods, some adornment fees and PayPal transaction fees. The sellers often make zero
profit on their low price products sold on eBay due to its high fees. The mode of eBay fee system
is that when new business consortium is going to come in, start an alternative to eBay, and put
eBay out of business with a year. They will do this by allowing sellers to list for free. Since the
site takes a percentage of every sale, it is to their interest to list as many lots as possible. No
Further growth strategy

eBay hasnt unveiled any plans on how the business is going to sustain its growth. Firms top
management team is unsure whether eBay should become a retailer or to introduce new products
and services and how to do that: developing its own products or acquiring new business. As a
result, there is high uncertainty over eBays future and business direction.
Inability to penetrate some foreign markets
Penetration in foreign markets is crucial to the success of online auctions. EBay has done an
outstanding job of penetration in foreign markets. However, they have been unable to take over
one of the most crucial foreign markets, like Japan. Japan is one foreign market that is on the
rise. They are becoming more prosperous and use of the internet is growing. If eBay is not able
to gain ground in this market it could hurt its foreign market standing.
Lack of in-depth descriptions for products
eBay is regarded as lack of in-depth descriptions for product. But its competitor amazon has
these outstanding features. Amazon boasts in-depth product descriptions for all merchandise sold
on their site. The lack of description in products could be a factor in the amount of counterfeit
and wrongly identified products that are sold to customers.
CONCLUSION
To tackle on their weakness, eBay should consider:
Make it more difficult for scammers to be able to take peoples money. The fact that they do not
have much protection amongst scammers on their website hurts them because consumers do not
believe that it is are liable website.
Technology malfunctions are always going to be a factor when dealing with websites and online
shopping. eBay must take measures to keep malfunctions as low as possible to retain happy
customers and to keep hackers out of personal PayPal and eBay accounts.
The recommendation is to control the price of shipping. A lot of sellers on eBay charge whatever
they want for shipping while others do not even charge for it.
Revise and adjust the fee system. And all the fees and details should be shown explicitly on the
'Preview Listing' page.

OPPORTUNITIES

Mobile usage
Mobile usage is expected to grow over the forthcoming years. The increase in mobile usage will
present eBay with an opportunity to boost the number of users it has, as well as its revenues and

profits. It is predicted that future Internet usage will be boosted by factors such as the adoption of
broadband technology. The NFC payment system presents an opportunity for the payment
processing arm of the company to attract customers in using the system for eBays purchase as
well as others.
International expansion
eBay has already had some success in its international expansion efforts. Revenues derived from
international activities currently account for around 30% of the companys overall revenues.
New markets
eBay could seek to diversify into new markets in which it does not operate at present. The
company could look to diversify into markets where it can leverage the technological know-how
and brand name it possesses to its benefit. Diversification into other markets will give the
company the opportunity to generate increased revenues and profits.
Market penetration
eBay could also choose to penetrate the market to a greater depth in order to generate revenues
and profits in the future. Although eBay has around 160 million registered users at present, there
are many millions more Internet users in the world that could potentially become eBay users.
This represents a very large untapped market for the company. eBay should look to pursue a
business strategy that will allow it to capture as much of these potential eBay users as possible.
Increase services portfolio thru acquisition.
Changing lifestyles (people are using the internet more and more to pay bills, talk to family and
shop. EBay can use this opportunity for continued market penetration and expansion.
To capital their opportunities, they should:
EBay can capitalize on the trend of NFC by enabling the process payment system in EBays
exchange and earned service fees as it did with Paypal.
The company could look to further its international expansion efforts in order to capture a
leading share in markets that at present are untapped but have a high potential to generate
revenues in the future.
EBay should consider the retail markets. EBay has an access to hugest online marketplace in the
world and is well placed to take an advantage of that by becoming a retailer. The company has its
IT and CRM systems in place already and could easily stake out a market share from Amazon
and other online retailers.

THREATS

There are several threats that eBay faces. These threats include online security, competition from
Amazon, exchange rates and regional low cost online retailers.
Online Security - PayPal stores customer information and that makes it a target for online thefts.
The more customers PayPal has the more attractive it is to identity thieves.
Regional Low Cost Retailers they can outperform eBay in providing faster and cheaper
shipping and better knowledge about the home market.
Increasing competition from Amazon Amazons online marketplace has significantly
increased and is just behind eBays
Exchange rates Part of eBays revenue comes from foreign operations. These profits if sent
back to the US need to be converted to dollars and may be affected by exchange rates.

IV.

ANALYSIS OF CURRENT STRATEGIES

1. CORPORATE LEVEL STRATEGIES

Strategic
Alliances

UPS: improve
delivery quality
Microsoft:
expand online
presence

Internatio
nal
Strategy

Registered
members: > 150
countries
Rely on local
sites

ANALYSIS:
Strategic Alliance:
Burger King entered a strategic alliance with eBay where Burger King Customers can earn
points that can be used to bid for items on eBay.
EBay and Microsoft made a strategic alliance to expand their global online presence.
International Strategy:
eBays platform was the premier segment website in more than 18 countries and has 114 million
registered members from more than 150 countries extended its operations to other countries, and
rely on local sites that served Australia austral, Belgium, Canada, France, Germany, India,
Ireland, Italy, south Korea, Singapore, Spain, Sweden, Switzerland, Taiwan, and the united
kingdom. In addition, eBay had built a presence in Latin America, China and India.

2. INTEGRATION STRATEGIES

Horizontal
Integration
:

Vertical
Integration
:

Paypal
Shoppin
g.com
Where,
Inc

Craigsli
st
StubHu
b
Bill Me
Later

Diversifica
tion:
-

Skype
Meetup

Acquisitions can be categorized into three groups: horizontal integration, vertical


integration, and corporate diversification.
Acquisitions that helps eBay expands its business into areas that are at different points on
the same production path can be counted as vertical integration.
Horizontal integration includes the acquisition of additional business activities that are at
the same level of the value chain in similar or different industries.
Finally, diversification is for acquisitions that help eBay branching into new business
opportunities instead of just expanding its existing business.

V.

RECOMMENDATIONS AND IMPLEMENTATION

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.
A special reward is provided for the staff who achieved high performance in work and
complete attendance monthly.
PROPOSED STRATEGIES
1.
2.
3.
4.
5.
6.

Market penetration
Market Development
Product Development
Diversification
Acquisitions
Alliances

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
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 customers needs.
3. The Marketing manager must attract more and more customers to buy the firms 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.