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Management
eBay Inc.-2009
[MR111037]
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
eBay Inc.-2009
[MR111037]
eBay Inc.-2009
[MR111037]
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
2.2 Mission
The Original 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. (2007 Annual Report)
4
eBay Inc.-2009
[MR111037]
*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
Customers
Products and Services
Markets
Technology
Concern for Survival
Growth and Profits
Philosophy
Self-Concept
Not
Description
included
ecommerce franchise
Leader in the online
marketplace
Leading in e-commerce
-
Continuously
Investing
in
Marketplaces segment
Table 1: Analyzing the eBays 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.
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.
Key Variables
Evaluation
Acceptable
leading ecommerce
franchise
-
short.
Not mentioned
Not mentioned
Not mentioned
Inspiring
eBay Inc.-2009
[MR111037]
Not mentioned
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
Economic forces
-The resources of existing
competitor firms are larger and as a result, competitors could
weather an economic downturn (Page 268, Para2)
eBay Inc.-2009
[MR111037]
eBay Inc.-2009
[MR111037]
Technological forces
Online classifieds help people meet, share ideas, and offer
goods/services at a local city or regional level(Page 266, Para4)
12
Conclusion:
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-toconsumer, 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 (Page 267, Para6)
The summary of each category of segments comes as below:
eBay Inc.-2009
[MR111037]
eBay Inc.-2009
[MR111037]
Case Facts
Amazon
Competitor
s
Weakness
Opportunity Threat
Competitor
s objective
and
strategy
Amazon
10
eBay Inc.-2009
[MR111037]
- The success of Amazon is built
on similar customer-centric
entrepreneurial business models
that focus on customer-driven
value creation. (Page 268, para1
Competitor
s
Capabilities
Amazon
Competitor
s
Distribution
Channels
Competitor
s Financial
Position
No Data Available
Amazon
Total
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:
competitors; (3)Substitute Products; (4) Bargaining Power of suppliers; (5) Bargaining Power
of Buyers.
11
eBay Inc.-2009
[MR111037]
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,
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. EBays
Bill Me Later has significant exposure to consumers potential default on loans.
12
eBay Inc.-2009
[MR111037]
3- Communications: For the second quarter of 2009, eBay reported nice growth in Skype
business segments (Page 263, Para2)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. (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) EBays 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
Competitor
s strength
Amazon
13
Moderate
Weak
eBay Inc.-2009
[MR111037]
14
eBay Inc.-2009
Competitor
s
Weakness
[MR111037]
-Bay
compared
achieved
High
to
Amazon
gross
profit
for
eBay
(Financial
analysis)
eBay
(Market
place)
- For that
quarter, eBay reported
decline in their Marketplaces
business segment.(Page263,
Para2)
eBay Inc.-2009
[MR111037]
decline trend is considered as the
weakness of eBay (Financial
analysis)
-Decrease
in
Growth
rate
is
(Financial analysis)
-Decreased to almost double for
working capital is considered as
weakness for eBay (Financial
analysis)
Competitor
s objective
and
strategy
Amazon
16
eBay Inc.-2009
eBay(Mar
ketplaces)
[MR111037]
Competitor
s
17
eBay Inc.-2009
Capabilities
[MR111037]
the greatest threat to eBay (Page
267, Para6)
Amazon
eBay
(Marketpl
aces)
eBay Inc.-2009
[MR111037]
second acquisition of a vehicle
classified ad site, eBay
Motors(Page 269, para4)
Competitor
s
Distribution
Channels
eBay
(market
places)
No Data Available
19
eBay Inc.-2009
[MR111037]
Amazon
eBay(Mark
etplace)
Total
12
20
NO
1
Total
Competitive Forces
Strong Moderate Weak
Competitive Forces
eBay Inc.-2009
NO
[MR111037]
Case facts
N/A
Strong
Moderate
Weak
Total
NO
Competitive Forces
Strong Moderate Weak
N/A
Total
Competitive Forces
Strong
Moderate Weak
eBay Inc.-2009
[MR111037]
MSN,
QVC, and Home Shopping Network.
(Page 268, Para2)
Total
Competitive Forces
Strong
Moderate Weak
The Communications
segment faces competition from local
telephone or cable companies and other
VoIP
providers. Furthermore, eBay anticipates
22
eBay Inc.-2009
[MR111037]
Total
Competitive Forces
Strong
Moderate Weak
Total
NO
23
Competitive Forces
Stron Moderat Wea
g
e
k
eBay Inc.-2009
[MR111037]
NO
Competitive Forces
Stron Moderat Wea
g
e
k
-
N/A
Total
c) For Payments Segment
NO
Competitive Forces
Stron Moderat Wea
g
e
k
-
N/A
Total
NO
1.
24
Competitive Analysis
Strong
Moderate Weak
eBay Inc.-2009
[MR111037]
Total
NO
Competitive Analysis
Strong
Moderate Weak
-
Total
b) For Payments Segment
NO
Competitive Analysis
Strong
Moderate Weak
-
Total
3.3.7 Conclusion of the Industry
Strong
Moderate
Weak
12
1
1
1
1
16
20
N/A
2
N/A
N/A
22
4
N/A
N/A
N/A
N/A
4
25
eBay Inc.-2009
[MR111037]
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 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.
Strong
Moderate
Weak
N/A
N/A
N/A
N/A
N/A
-
N/A
N/A
2
N/A
N/A
2
N/A
N/A
N/A
N/A
N/A
-
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
Porters Five Forces Analysis Result
Competitive Forces
Key Variables
Strong
Moderate
Weak
N/A
N/A
N/A
N/A
N/A
N/A
2
N/A
N/A
N/A
N/A
N/A
26
eBay Inc.-2009
[MR111037]
N/A
-
N/A
2
N/A
-
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
2.
27
Providing Reliability
to Customers
&
Providing Value
Case Facts
eBay Inc.-2009
[MR111037]
-Amazon states
their success is based on: customer service; Web
site convenience and accessibility; brand recognition,
community
-EBays 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)
Reputation
5
-Amazon states
their success is based on: customer service; brand
recognition; level of service fees; and quality of search
tools(Page 266, Para1)
Financial Position
Friendly Interface
3.
*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
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
28
eBay Inc.-2009
[MR111037]
Case Fact
Prioritiz
e
1.
2.
3.
Buyers and sellers enjoy trading among a wide selection of goods and
services in a secure, trusted, and efficient commerce environment.
(Page 265, Para5).
4.
5.
6.
N/A
Case Fact
Strategic Management/SEM II/ 2011/2012
Prioritiz
e
eBay Inc.-2009
[MR111037]
17
16
10
Dollar and the lingering weak economy with high unemployment (Page
274, Para1)
10
11
11
12
12
13
Amazon states their success is based on: the ability to attract buyers and
13
30
eBay Inc.-2009
14
[MR111037]
18
15
20
16
14
17
22
18
19
19
20
21
31
eBay Inc.-2009
[MR111037]
Para2)
21
5
However, Amazons strong growth and satisfied customer base pose the
greatest threat to eBay (Page 267, Para6)
22
15
Case Fact
Prioritiz
e
1.
2.
3.
Buyers and sellers enjoy trading among a wide selection of goods and
services in a secure, trusted, and efficient commerce environment.
(Page 265, Para5).
4.
5.
6.
32
eBay Inc.-2009
[MR111037]
N/A
Case Fact
Prioritiz
e
10
Dollar and the lingering weak economy with high unemployment (Page
274, Para1)
12
10
33
eBay Inc.-2009
11
[MR111037]
13
13
11
Case Fact
Prioritiz
e
1.
2.
3.
Buyers and sellers enjoy trading among a wide selection of goods and
services in a secure, trusted, and efficient commerce environment.
(Page 265, Para5).
4.
5.
6.
34
eBay Inc.-2009
[MR111037]
N/A
Case Fact
Prioritiz
e
35
eBay Inc.-2009
[MR111037]
Dollar and the lingering weak economy with high unemployment (Page
274, Para1)
10
10
11
13
13
12
11
* Because of the lack information given in the case study particularly for competitors
information I provided only EFE and CPM analysis for marketplaces segment.
Item
Weight
Rating
Opportunity
36
Weighted
score
eBay Inc.-2009
[MR111037]
0.09
0.36
0.08
0.32
0.07
0.21
0.07
0.21
0.06
0.18
37
eBay Inc.-2009
[MR111037]
Threat
0.08
0.32
0.08
0.32
0.07
0.21
Competition is intense in
communications services
and subject to rapid
technological Change(Page
268, Para2)
0.06
0.18
10
0.06
0.18
38
eBay Inc.-2009
[MR111037]
11
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)
0.06
0.18
12
Alternatively, financial
measures will be negatively
impacted by a rise in the
value of the U.S. dollar
(Page 269, Para3)
0.05
0.15
13
0.05
0.15
14
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)
0.05
0.15
15
Declining economic
environment (Page 268,
0.05
0.15
39
eBay Inc.-2009
[MR111037]
Para4)
Total
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
Weight
Amazon
Rating
Score
Rating
Score
0.90
0.90
0.84
0.84
0.18
0.54
0.54
0.14
0.42
0.42
0.10
0.20
0.20
0.30
0.28
2.90
2.90
Conclusion:
From the CPM analysis we can see that eBays 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.
40
eBay Inc.-2009
[MR111037]
41
eBay
S
Amazon
eBay Inc.-2009
Marketplaces
[MR111037]
N/A
- The success
of Amazon is
built on
similar
customercentric
entrepreneuria
l
business
models that
focus on
customerdriven value
creation
(Page 268,
para1)
Communications
-EBay, the first virtual online business
community, empowers entrepreneurial
individuals to become e-commerce business
owners.(Page 2
63, Para4)
N/A
Payments
N/A
N/A
Functions
42
Segment
Case Facts
eBay
S W
Amazon
eBay Inc.-2009
[MR111037]
Planning
Marketplaces
Communications
43
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
users to premium
products (Page 267,
Para5)
- Future plans
include expanding
Skypes 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 Skypes 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)
Payments
44
EBays management
seeks to become the
number-one online
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
N/A
N/A
eBay Inc.-2009
[MR111037]
channels (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)
Marketplaces
Organising
N/A
-Amazon has
initiated alliances
with partners to
gains sales by
referring
customers to
Amazon.com
(Page 269, Para1)
N/A
N/A
eBay Inc.-2009
[MR111037]
on eBay Web sites.(Page
266, Para5)
- 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)
-Rent.com, acquired by
eBay in 2005, (Page 266,
Para7)
Communications
-E-commerce is
supported by eBays
proprietary
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
46
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
founded in 2003 and
acquired by eBay in
2005.
- As of December 2008,
Skype had acquired
370 million users, a 51
percent growth over the
same time a year ago.
Payments
N/A
N/A
N/A
Motivating
Marketplaces
N/A
N/A
N/A
N/A
Communications
47
eBay Inc.-2009
[MR111037]
Payments
N/A
Marketplaces
As of December 31,
2008, eBay Inc.
employed approximately
16,200 people.
(Page264, Para3)
N/A
N/A
Communications
N/A
N/A
N/A
N/A
-EBays global
networked community of
buyers and sellers
interact 24/7 in a secure
and trusted global
marketplace (Page 264,
para4)
N/A
Staffing
Payments
Marketplaces
Controlling
48
N/A
N/A
eBay Inc.-2009
[MR111037]
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
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)
N/A
N/A
For that
quarter, eBay reported
49
N/A
eBay Inc.-2009
[MR111037]
offset decline in their
Marketplaces business
segment (Page 263,
Para2)
- EBay has recently been
involved in litigation
with Tiffany & Co.,
Rolex, Louis Vuitton,
Christian Dior, LOral,
and Lancme for a lack
of policing trade and
infringement on
trademarks and
copyrights for the sale
of not for resale and
counterfeit items on
eBays Web
sites. (Page 269, Para8)
- Prohibit sharing of
certain information over
the Internet, such as
comments provided by
customers in eBays
Feedback Forum. This
limitation would
adversely affect eBays
ability to provide a
reliable and secure
community that shares
purchase information
and aspects of trades
with other members of
eBays Marketplaces
segment.(Page 270,
Para2)
50
N/A
N/A
eBay Inc.-2009
[MR111037]
Communications
Payments
51
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
Factors
Segment
Marketplaces
Marketing
Case Facts
eBay
S
Amazon
N/A
Strategy
Communication
s
Payments
Promotion
Programs
Marketplaces
52
N/A
N/A
N/A
Additional revenues
are also earned from
advertising and revenuesharing contracts with third
parties that provide
transaction services to eBay
and PayPal account users.(Page
264, para1)
N/A
-Amazon has
initiated
alliances with
partners to
gains sales by
referring
eBay Inc.-2009
[MR111037]
Forum, Safe Harbor Program,
Verified Rights Owner
Program, Customer Support,
Value-Added Tools
and Services, and Loyalty
Programs.(Page 266, Para1)
customers to
Amazon.com
through
several other
online
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)
N/A
-Nearly all of Californias 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)
N/A
-Loyalty Programs that provide
cash back buyer rewards
coupons were selectively
53
N/A
eBay Inc.-2009
[MR111037]
N/A
N/A
Payments
N/A
N/A
Product and
Service
Planning
Marketplaces
N/A
- EBays
Marketplaces division reported
$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
increased number of users.
(Page 270, Para4)
54
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
Communication
s
N/A
Payments
-PayPal is a recognized
global leader in online payment
solutions
(Page 266, Para9)
-EBays Payments segment is
composed of PayPal and Bill
Me Later transaction services.
(Page 266, Para9)
-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)
55
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
Pricing
Marketplaces
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
Communications
N/A
N/A
Payments
-International business
processing accounted for 45
percent of PayPals 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
over to a reduction in PayPal
revenues (Page 269, Para7)
57
N/A
N/A
eBay Inc.-2009
[MR111037]
Marketplaces
Distribution
N/A
N/A
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
America (Page 265,Para1)
N/A
Communication
s
Payments
59
N/A
N/A
eBay Inc.-2009
[MR111037]
Marketplaces
N/A
N/A
N/A
N/A
N/A
N/A
Marketing
Research
Communications
Payments
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.
60
eBay Inc.-2009
[MR111037]
Segment
(Millions)
(Millions)
Marketplaces
4,334,290
5,363,891
Communicati
194,921
ons
Payments
Total net
Year 2009
5,586,751
(Millions)
-
381,822
550,841
1,440,530
1,926,616
2,403,669
5,969,741
7,672,329
8,541,261
8,199,611
Revenue
Revenue
eBay Revenue
Growth of
29%
11%
-4%
Growth
decreasing for
Percentage
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
Year
Year
Year
Year
2004
2005
2006
2007
2008
61
eBay Inc.-2009
[MR111037]
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
Year 2007
Year 2008
2.30
1.70
Quick Ratio
Year 2007
Year 2008
0.71
1.17
Year 2007
Year 2008
0.41
0.47
Debt Ratio
Year 2007
Year 2008
0.24
0.29
e) Profitability Ratio
Return on Assets (ROA)
Year 2007
62
Year 2008
S
-
[MR111037]
eBay Inc.-2009
11.41%
2.27%
Increased in
ROA is
considered a
strength for
16.1%
eBay
S
Increased in
ROE is
considered as
a strength for
eBay
*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 (%)
Year 2006
eBay
Year 2007
Amazon
eBay
Amazon
Year 2008
eBay
Amazo
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
eBay
Amazon
eBay
Amazon
eBay
Amazo
25%
37%
7%
27%
n
Decrease in Growth
rate is considered as
weakness for eBay
63
eBay Inc.-2009
[MR111037]
f) Working Capital
Companys Working Capital
Year 2007
Year 2008
4,022,926
2,581,503
eBay Inc.-2009
[MR111037]
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
4.5 Production/Operation
Case Facts
Decision
Area
Segment
Process
Marketplaces
65
eBay
-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
264,Para2)
Amazon
Amazon, a
leading
online
retailer,
reported net
revenues of
$19.2 billion
as of year
end
2008. (Page
268, Para4)
Strengt
h
Weakness
eBay Inc.-2009
[MR111037]
-EBays
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)
N/A
-EBays
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
66
eBay Inc.-2009
[MR111037]
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)
- Rent.com lists
apartment
availability,
rental costs, virtual
tours, roommate
searches, and
more. Revenue is
earned from
67
N/A
N/A
eBay Inc.-2009
[MR111037]
landlords
who pay a fee for
renters who find
apartments
through Rent.com.
(Page 266, Para7)
N/A
- 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)
Communicati
ons
-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.
N/A
-EBays prior
expenditures were
focused on
traditional wired
68
N/A
eBay Inc.-2009
[MR111037]
routes; however,
50 percent of
expenditures
are now in the
wireless
telecommunication
s sector.(Page 267,
Para 5)
-EBays ecommerce
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.
EBays success is
sustained through
Communications
and trust (eBay
69
eBay Inc.-2009
[MR111037]
2006).(Page
263,para4)
N/A
-The
Communications
segment generates
usage revenues
from Skype VoIP
for connection to
traditional fixed
and mobile
telephones
under eBays
subsidiary Skype
Technologies S.A
(Page 264,Para1)
N/A
-Skype
headquarters are
located in
Luxembourg, with
global offices in
Europe,
the United States,
and Asia(Page
267, Para 3)
70
eBay Inc.-2009
[MR111037]
N/A
Payments
-PayPal is
accepted both
online and 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
Me Later then
purchases the
consumers loan
from CIT Bank.
Bill Me Later
earns revenues
from interest on
the outstanding
balances, late fees,
and transaction
71
- The
Payments segment
revenues are
generated from
fees paid by
merchants for
payment
processing
services through
PayPal and Bill
Me Later
(Page 264,Para1)
N/A
N/A
eBay Inc.-2009
[MR111037]
fees.(Page 267,
Para1)
-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, eBays
available line of
credit was
reduced (Page
269, Para5)
-Customer
Account Billing.
Transactionprocessing and
revenue collection
becomes more
difficult as the
number of
transactions
increase and
consumers
default on loans.
(Page 270, Para4)
72
N/A
N/A
eBay Inc.-2009
[MR111037]
Capacity
Marketplaces
- 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 2007, eBay
sold nearly $60
billion goods,
which equates to
73
N/A
N/A
eBay Inc.-2009
[MR111037]
worldwide
eBay users
trading more
than $1,900
worth in goods
every second.
(Page 264, Para3)
Listings of items
for sale have
exceeded
140.0 million per
day.
(Page 265, Para5)
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)
Communicati
ons
74
As
of December 2008,
approximately
516,000 online
storefronts were
listed in locations
across the globe
(Page 265, Para5)
-As of
2008, eBay has a
14 percent share of
global ecommerce with
86.3 million
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
active users.(Page
263, para 3)
-EBays
proprietary Skype
technology has
been downloaded
more than a billion
times.(Page 267,
Para3)
N/A
-Skype had
approximately
405.3 million
registered users
worldwide. (Page
267, para3)
-Interestingly,
nearly 11 million
Skype downloads
are to mobile
devices.(Page 267,
Para3)
- 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)
75
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
- 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)
N/A
-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)
76
N/A
eBay Inc.-2009
[MR111037]
Payments
-PayPal is a
recognized
global leader in
online payment
solutions with 70
million active
accounts (Page
266, Para9)
-PayPal earned
approximately
$30.4 billion of net
total payment
revenues directly
from eBay.com
transactions, which
represented
approximately
51 percent of
PayPals net Total
Payment Volume
during 2008 (Page
264, para2)
N/A
N/A
Inventory
N/A
N/A
Marketplaces
Communicati
ons
77
N/A
N/A
eBay Inc.-2009
[MR111037]
Payments
N/A
N/A
Marketplaces
Workforce
Communicati
ons
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 (Page 269,
Para4)
N/A
N/A
N/A
N/A
Payments
Quality
Marketplaces
78
N/A
-EBay.com offers
a sense of
community to
buyers and sellers
that is sustained by
Communications
and high
transaction rates
N/A
eBay Inc.-2009
[MR111037]
on a wide
selection of
goods/services
(eBay.com, 2006).
(Page 263, para4)
-EBays 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)
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
79
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
negatively affect
eBays reputation.
(Page 270, Para1)
Communicati
ons
Payments
- The potential
also exists for
Skype technology
to become
obsolete. (Page
268, Para2)
PayPal also reports
a very low
percentage of 0.33
percent loss from
fraud.(Page 266,
Para10)
N/A
N/A
Amazon
N/A
N/A
80
Information is
recorded up to
12 months and
provides color-coded
star ratings(Page 266,
Para2)
Strength
Amazon
N/A
Weakness
Weakness
eBay Inc.-2009
[MR111037]
N/A
N/A
N/A
N/A
Communication
s
Payments
Inbound
Logistics
Strength
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 GM cars and trucks
through the eBay online marketplace. (Page
263,para1)
Process
EBays marketplace, or marketspace, is an online
virtual trading platform for the sale of
goods and services by a community of users that
81
Weakness
eBay Inc.-2009
[MR111037]
Outbound
Logistics
The success of eBay is built on similar customercentric 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)
82
eBay Inc.-2009
[MR111037]
eBay Inc.-2009
[MR111037]
Service
*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
84
Case Facts
Strength
Weakness
eBay Inc.-2009
[MR111037]
eBay
Inbound
Logistics
N/A
EBays prior
expenditures were focused on traditional wired routes;
however, 50 percent of expenditures
are now in the wireless telecommunications sector.
(Page 267, Para 5)
Process
85
eBay Inc.-2009
[MR111037]
Outbound
Logistics
Service
*For the supporting activities, there have already covered in management function,
Management Information System and Research & Development as well as in financial
analysis.
86
eBay Inc.-2009
[MR111037]
C) Payments Segment
Case Facts
Variables
Strength
Weakness
eBay
Inbound
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)
Process
87
eBay Inc.-2009
Outbound
Logistics
[MR111037]
88
eBay Inc.-2009
[MR111037]
Service
*For the supporting activities, there have already covered in management function,
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,
NO
Case Fact
89
Prioritize
eBay Inc.-2009
[MR111037]
1.
EBay transformed the Internet and the way many of us shop and
do business worldwide (Page 264,para3)
11
2.
3.
35
4.
5.
38
6.
37
7.
39
8.
19
9.
40
20
90
eBay Inc.-2009
[MR111037]
21
33
13. Facilitate trading with unknown partners on the 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)
23
14. Nearly all of Californias 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. (Page 263 Para1)
22
15. Loyalty Programs that provide cash back buyer rewards coupons
were selectively distributed to recognize large buyers to sustain customer
24
10
bulletin boards, customer support, personal pages, and more (Page 265,
Para5)
34
18. EBay provides the virtual marketplace auction where the market
41
eBay Inc.-2009
[MR111037]
27
24.
25
25.
26
26.
36
18
92
eBay Inc.-2009
[MR111037]
28
29
33. 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)
30
35. 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)
12
36. In 2007, eBay sold nearly $60 billion goods, which equates to
worldwide eBay users trading more than $1,900 worth in goods
every second.(Page 264, Para3)
37. Listings of items for sale have exceeded 140.0 million per day.
(Page 265, Para5)
13
14
17
15
eBay Inc.-2009
[MR111037]
16
Weaknesses List:
N
O
Case Facts
Prioritiz
e
1.
11
2.
3.
13
94
eBay Inc.-2009
[MR111037]
4.
EBay has recently been involved in litigation with Tiffany & Co., Rolex,
Louis Vuitton, Christian Dior, LOral, and Lancme for a lack of
policing trade and infringement on trademarks and copyrights for
the sale of not for resale and counterfeit items on eBays Websites.
(Page 269, Para8)
5.
12
6.
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)
14
7.
8.
9.
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
Declining in stock price started from 2005 to 2008 can be considered as 15
11.
12.
13.
16
eBay Inc.-2009
[MR111037]
14.
15.
16.
17.
eBay
Decrease in Growth rate is considered as weakness for eBay
20
Decreased to almost double for working capital is considered as 4
weakness for eBay
Weaknesses Resulted from Production / Process Functions
18.
19.
In 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. (Page 269, Para8)
10
20.
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 eBays reputation. (Page 270, Para1)
N/A
Weaknesses Resulted from Management Information System (MIS) Functions
N/A
NO
Case Facts
Strengths Resulted from Cultural Functions
1.
96
Prioritiz
e
eBay Inc.-2009
[MR111037]
2.
3.
Registered subscribers
are expected to reach 500 million by 2012 and revenues are
anticipated to double
by 2011.(Page 267, Para4)
4.
5.
6.
7.
8.
9.
10.
97
eBay Inc.-2009
[MR111037]
owners(Pg.263,para4)
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
98
eBay Inc.-2009
21.
22.
23.
24.
25.
26.
27.
28.
29.
99
[MR111037]
eBay Inc.-2009
[MR111037]
N/A
Weaknesses List:
N
O
Case Fact
Weaknesses Resulted from Management Functions
N/A
Weaknesses Resulted from Marketing Strategy Functions
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
2.
3.
4.
5.
6.
eBay
Increased in Debt to equity Ratio is the weakness for eBay
eBay Debt Ratio is increased and it is considered as the weakness for
7.
8.
eBay
Decrease in Growth rate is considered as weakness for eBay
Decreased to almost double for working capital is considered as
weakness for eBay
Weaknesses Resulted from Production / Process Functions
9.
The potential also exists for Skype technology to become obsolete. (Page
268, Para2)
Weaknesses Resulted from Research & Development Functions
100
Prioritiz
e
eBay Inc.-2009
[MR111037]
N/A
Weaknesses Resulted from Management Information System (MIS) Functions
N/A
c) Strengths and Weaknesses for Payments segment
Strengths List:
NO
Case Facts
Strengths Resulted from Cultural Functions
N/A
Strengths Resulted from Management Functions
1.
EBays management seeks to become the number-one online
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 channels (Page 267,Para2)
2.
3.
4.
5.
101
Prioritiz
e
eBay Inc.-2009
[MR111037]
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
102
eBay Inc.-2009
[MR111037]
17.
18.
19.
20.
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.
103
eBay Inc.-2009
[MR111037]
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, eBays 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
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)
Weaknesses Resulted from Financial Analysis
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%.
7.
8.
9.
10.
11.
12.
13.
eBay Debt Ratio is increased and it is considered as the weakness for eBay
Increased in Debt to equity Ratio is the weakness for eBay
eBay Debt Ratio is increased and it is considered as the weakness for eBay
Decrease in Growth rate is considered as weakness for eBay
Decreased to almost double for working capital is considered as weakness for
eBay
Weaknesses Resulted from Production / Process Functions
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, eBays available line of credit was reduced (Page 269, Para5)
15.
N/A
Weaknesses Resulted from Management Information System (MIS) Functions
N/A
104
eBay Inc.-2009
[MR111037]
Item
Weight
Rating
Weighted
score
Strengths
1
105
EBays Marketplaces
platform brings buyers and
sellers together through
fully automated online Web
sites 24/7 (Page 265, Para5)
0.10
0.40
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 264,Para2)
0.09
0.40
0.09
0.36
0.07
0.24
eBay Inc.-2009
[MR111037]
0.06
0.21
0.07
0.21
0.06
0.18
0.06
0.18
As of December 2008,
approximately 516,000
online storefronts were
listed in locations across
the globe (Page 265, Para5)
0.05
0.18
0.10
Weaknesses
106
EBays Marketplaces
division reported $1.26
billion in revenue, a 14
0.05
eBay Inc.-2009
[MR111037]
percent year-over-year
decline(Page 274, Para1)
2
0.05
0.10
0.05
0.10
0.04
0.08
Customer Support.
Customer support is
challenged from greater
trade activity and an
increased number of users.
(Page 270, Para4)
0.04
107
0.08
eBay Inc.-2009
[MR111037]
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 new customers
and revenue from existing
users.(Page 269, Para7)
0.04
0.08
0.05
0.10
0.03
0.06
Total
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.
108
eBay Inc.-2009
[MR111037]
1.
Segmen
t
Goals
1) To expand
the
Market
Marketpla
places
ces
segment
by
focusing
on
customer
Objectives
N/A
2) To
enhance
online
trust and
safety
and
develop
new
products
2.
Commu
nication
s
109
1) Increase
Registere
d
subscribe
rs.
1)Increase
Registered
subscribers to
500 million by
2012.
Case Facts
1) EBay plans to expand
the Marketplaces
segment by focusing on
customers by
enhancing products
and services, (Page266,
Para8)
Remarks
Product
Development
Unsuccess
ful
Product
Development
Unsuccess
ful
(Market
Penetration)
Successfu
l
eBay Inc.-2009
Paymen
ts
110
[MR111037]
2) Increase
the grow of
worldwide
communicati
ons market.
2) Increase the
grow of
worldwide
communications
market to 5.5
percent
annually.
3)Increase
the grow of
U.S Web
Conferencing
.
3) Increase the
grow of U.S
Web
conferencing to
14.1 percent
from 2008
through 2011.
1) To be
integrate
PayPal
with
eBay.com
listings
and other
Marketpl
aces
businesse
s
N/A
2) The worldwide
communications
market is expected to grow
by 5.5 percent annually
(Page 267, Para5)
1) Global expansion is to
be gained by
integrating PayPal
with eBay.com listings
and other Marketplaces
businesses. (Page 267,
Para2)
Market
Penetration
Unsuccessful
Product
development
Unsuccess
ful
Forward
Integration
Unsuccess
ful
eBay Inc.-2009
[MR111037]
2) To
expand
into
internatio
nal
market
N/A
2) Expansion into
international markets
and more currencies is
expected to improve the
ease and efficiency of
cross-border
transactions (Page 267,
Para2)
Market
Development
Successfu
l
b) Financial Objective:
No
.
Segment
1.
2.
Marketplaces
Communication
s
Goals
1) To reduce
seller
cost.
Increase
Revenue
Objectives
N/A
- Increase
revenue to
double by 2011
Case Facts
Remarks
1) To improve
By enhancing
the buyers
Product and
experience and
services
reduce seller
(Product
Development)
costs(Page266
Unsuccessfu
, Para8)
l
1) Revenues
By raising the
are anticipated
total registers
to double
subscribers to
500 million by
by 2011 (Page
2012
267, Para4)
(Market
Penetration)
Unsuccessfu
l
Payments
111
Increase
Revenue
N/A
3) Increased
revenues
are to be
gained by
integrating
PayPal
By integrating
PayPal with
eBay.com
listings and
other
Marketplaces
segment
(Forward
eBay Inc.-2009
[MR111037]
Integration)
with
eBay.com
Unsuccessfu
listings
l
and other
Marketplac
es
businesses.
(Page 267,
Para2)
5.3 Strategies
5.3.1 Strategies in Action
The Type of
Strategies
The Title of
Strategies
Segment
Marketplaces
Forward
Integration
Case Facts
- 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. (Page 263,para1)
N/A
Integration
Communication
s
N/A
Payments
112
eBay Inc.-2009
[MR111037]
Marketplaces
N/A
Back ward
Integration
N/A
Communication
s
Payments
Marketplaces
Horizontal
Integration
Communication
s
113
eBay Inc.-2009
[MR111037]
Payments
Marketplaces
Product
Development
Intensive
114
eBay Inc.-2009
[MR111037]
Communication
s
Payments
Marketplaces
Market
Development
E-commerce is supported by
eBays proprietary
Skype VoIP technology, which
allows free telephone calls using a
broadband Internet connection
to any telephone number.(Page 263,
para4)
-EBays Payments segment is
composed of PayPal and Bill Me
Later transaction services. (Page
266, Para9)
- 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)
Communication
s
115
eBay Inc.-2009
[MR111037]
percent annually with U.S. Web
conferencing
expected to grow 14.1 percent from
2008 through 2011 (eBay.com
2009).(Page 267, Para5)
Payments
Marketplaces
Marketing
Penetration
116
eBay Inc.-2009
[MR111037]
Communication
117
eBay Inc.-2009
[MR111037]
s
118
eBay Inc.-2009
[MR111037]
Payments
Marketplaces
Related
Diversification
Diversification
Communication
119
eBay Inc.-2009
[MR111037]
s
Payments
Not Related
Diversification
Marketplaces
N/A
Communication
s
EBays 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
Defensive
Marketplaces
Retrenchment
120
eBay Inc.-2009
[MR111037]
N/A
Communication
s
Payments
Divestiture
Marketplaces
N/A
Communication
s
N/A
Payments
N/A
Liquidation
Marketplaces
N/A
Communication
s
N/A
Payments
No.
1.
121
Segment
Marketplaces
Case Facts
BLS
Cost Leadership
Strategies
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
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
period of time.
Alternatively, the fixedprice 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)
122
eBay Inc.-2009
2.
[MR111037]
Communications
Payments
EBays management
seeks to become the
number-one online
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
channels (Page
267,Para2)
Focus strategies
Focus Strategies
eBay Inc.-2009
124
[MR111037]
eBay Inc.-2009
[MR111037]
Strength
1) EBays Marketplaces
platform brings buyers
and sellers together
through fully
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 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 transaction rates
on a wide\ selection of
goods/services
(eBay.com, 2006).
(Page 263, para4)
4) In 2007, eBay sold
nearly $60 billion
goods, which equates
to worldwide eBay
users trading more
than $1,900 worth in
goods every second.
(Page 264, Para3)
2)
3)
4)
5)
6)
7)
SWOT
MATRIX
125
Weakness
1) EBays Marketplaces division
reported $1.26 billion in revenue, a
14 percent year-over-year
decline(Page 274, Para1)
eBay Inc.-2009
[MR111037]
Product Development
126
eBay Inc.-2009
[MR111037]
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
Decreased in Current Ratio is the weakness for eBay
Decreased to almost double for working capital is considered as weakness for eBay
3.33
FP Average
Industry Position (IP)
However, Amazons strong growth and satisfied customer base pose the greatest
threat to eBay (Page 267, Para6)
Competition is expected to increase in the future because barriers to entry in this
segment are low (Page 268, Para2)
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
127
eBay Inc.-2009
[MR111037]
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
success is possible
IP Average
-5
-4
-3
-6
-3
-4.2
SP Average
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
GM cars and trucks through the eBay online marketplace. (Pg.263,para1)
-2
-1
-2
Loyalty Programs that provide cash back buyer rewards coupons were selectively
-2
128
-5
eBay Inc.-2009
[MR111037]
-2.0
CP Average
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:
129
-5
[MR111037]
eBay Inc.-2009
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.
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
I
2.0
II
III
3.0
2.0
1.0
THE EFE TOTAL
WEIGTHED SCORES
EFE : 3.27
IFE: 3.10
130
eBay Inc.-2009
[MR111037]
appropriate for this division.
Marketplaces
2008
$5,586,751
Payments
$1,440,530 34%
$1,926,616 25%
$2,403,669
Communication
s
Total Net
Revenues
$194,921
$381,822
$550,841
96%
$5,969,741 29%
44%
$7,672,329 11%
$8,541,261
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, eBays 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,
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)
131
eBay Inc.-2009
[MR111037]
QUADRANT II
QUADRANT I
Pos
QUADRANT III
QUADRANT IV
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
132
eBay Inc.-2009
[MR111037]
Product
Market
Market
Related
Unrelated
Development
Development
Penetration
Diversificatio
Diversificatio
(PD)
(MD)
(MP)
Swot
Matrix
SPACE
Matrix
BCG
N/A
N/A
N/A
N/A
N/A
Matrix
IE Matrix
Grand
Strategy
Total
133
eBay Inc.-2009
[MR111037]
Market
Development
Key Factors
Opportunities
The need for substantial
resource investments in
technology and marketing
in order to remain
competitive (Page 268,
Para1)
Buyers and sellers enjoy
trading among a wide
selection of goods and
services in a secure, trusted,
and efficient commerce
environment.(Page 265,
Para5).
Penetration
Weight
AS
TAS
AS
TAS
0.15
0.6
0.45
0.10
0.40
0.30
0.09
0.09
0.27
0.08
0.24
0.08
0.07
0.07
0.21
eBay Inc.-2009
[MR111037]
0.12
0.12
0.24
0.10
0.30
0.40
0.12
0.36
0.24
0.10
0.36
0.20
0.14
0.21
0.30
0.45
0.07
1.00
Strengths
EBays Marketplaces
platform brings buyers and
sellers together through fully
automated online Web sites
135
0.15
eBay Inc.-2009
[MR111037]
0.12
0.24
0.36
0.12
0.36
0.12
0.09
0.18
0.27
0.09
0.27
0.09
Weaknesses
EBays Marketplaces
division reported $1.26
billion in revenue, a 14
percent year-over-year
decline(Page 274, Para1)
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
eBays reputation. (Page
270, Para1)
136
0.10
0.10
0.20
0.10
0.40
0.10
eBay Inc.-2009
[MR111037]
0.09
0.27
0.09
0.08
0.08
0.24
0.06
0.12
0.18
4.9
4.68
eBay Inc.-2009
[MR111037]
No.
1.
138
Segment
Market
places
Objectives
(New)
Goals (New)
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.
Develop new
market with new
product in China
and India (the
highest
population) in
order to adopt
into different
culture demand.
N o f r a u d u l e n t activities
may happened through
authentication and
verifications.
Introduce
zero fraud by
introducing web
security system
for fraudulent
activities that
may happened
through
authentication
and verifications.
Remarks
Product
Development
& Market
Development
Product
Development
eBay Inc.-2009
[MR111037]
No.
1.
Segment
Marketplaces
Enforce the
marketing
department to
improve
advertising by
global branding.
Goals
Objectives
Increase revenue in
marketplace segment by
30% annually
Increase working
capital to $
5,000,000.00 by 2012
eBay Inc.-2009
[MR111037]
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:
Highlight major problems and issues, and recommend areas where improvements and
"Quick Wins" can be made.
140
eBay Inc.-2009
[MR111037]
Inbound Logistics and The process (Production) remains the same in this case.
Case Facts
Variables
Inbound
Logistics
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
GM cars and trucks
through the eBay online marketplace. (Page 263,para1)
Process
EBays 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 Inc.-2009
[MR111037]
142
eBay Inc.-2009
[MR111037]
Increase revenue and long term profit by satisfying the needs of the
customers.
Develop new market with new product in China and India (the highest
population) in order to adopt into different culture demand.
Marketing &
Sales
Service
143