Introduction
Ebay is an established brand in the area of electronic commerce and is recognized as the global marketplace for the buying and selling of any goods. The current paper provides a strategic analysis of Ebay.
Vision and Mission of Ebay
The mission of Ebay is to provide a global online marketplace that allows anybody to buy or sell anything and thus enables economic opportunity around the world . The company provides an online trading platform that connects buyers and sellers across the different parts of the world. The mission of the company is to ensure a safe platform for the users and protects their interests such as copyrights.
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The value statements of Ebay include five ‘who we are’ statements that can be considered as the vision of the company. The company provides global commerce leadership by providing a robust platform to allow merchants of all sizes to compete and win . The company provides new and innovative methods such as mobiles for customers to shop and pay. The company wants to innovate in the field of technology for next generation of commerce . Ebay aspires for a superior customer experience by empowering users to buy and sell anything, anytime and anywhere.
Ebay business is based on the informal community of more than 200 million buyers and sellers that exchange goods and services worth 50 billion dollars in a year . Ebay has a set of ethical principles that guide the customers and the employees of Ebay towards ethical practices. The company culture is based on the existence of trust among the community and has been essentially an informal structure. However with time and with the increasing size of the organization, the company had to establish certain formal mechanisms to ensure some level of uniformity and control in the organization. Ebay is today a decentralized formal structure organization. Decentralized structure makes decision making faster and increases morality within the organization.
Competitive Environment of Ebay
The competitive environment of Ebay includes the competition from the local online retailers and companies such as Amazon and Alibaba.com. The company has been facing intense competition from retailer Amazon.com which is also an auction website. Google is a high competitive threat for Ebay as the search engine may allow its users to buy products directly from the search engine page and thus competes directly with Ebay . The customer base for Amazon has increased to 240 million for Amazon in comparison with 149 million for Ebay. Alibaba is an emerging competitive threat for Ebay as the company holds the record for highest revenue in ecommerce that surpasses the combined revenue for both Amazon and Ebay in 2013. The growth and expansion strategies of Alibaba including its expansion in the emerging markets of Asia and its IPO in USA are a high competitive threat for Ebay. AliPay services of Alibaba.com offer online payment system to customers similar to Paisa Pay service launched by Ebay for its customers. Ebay is experiencing increased growth for its online payment system PayPal, though the growth of its ecommerce segment has significantly declined with respect to the previous years. Some of the emerging competitors of Ebay include Bonanzle.com, ebid.net, epier.com, ioffer,com and wigix.com .
Corporate culture, processes and systems
The corporate culture of Ebay incudes respect and equality for all employees of the organization. Ebay believes that all employees have the capability to contribute towards the organizational growth and development. The organization encourages employees to treat others in the way they themselves want to be treated by others. Ebay has a firm belief that all people are generally good and an honest and open work environment brings in the best in people .
Ebay has implemented Digital Services Efficiency (DSE) at all levels in the organization that is a miles per gallon measurement of technical infrastructure that makes end to end connection between what the customer do and the business metrics including cost, performance, environmental impact and revenue Such a measurement ensures overall systems performance at Ebay . The two goals of DSE for Ebay include providing information to product developers about the costs of programming and operational decisions and behavioral and cultural change in the organization with increased efficiency of processes ..
Strategic fit between Ebay and the competitive environment
In order to determine the strategic fit between Ebay and its competitive environment, two strategic analysis tools shall be used – PEST Analysis and SWOT Analysis.
PEST Analysis
PEST analysis includes the analysis of the political, economic, socio-cultural and technological factors in the external business environment that have an impact on the operations of Ebay. The political factors include the political stability of the various countries of operations and the rules and regulations that govern the conduct of businesses in the respective countries of operations. Ebay needs to conform to various rules that have been set by the government bodies for regulations such as tax structure and business formalities.
Economic factors include the impact of economy such as inflation, GDP, currency rate fluctuations and level of infrastructure development. The higher inflation in countries tend to discourage people from spending money and thus sales tend to decline. The sales of used goods tend to increase as an impact of the higher inflation levels and economic recession. The devaluation of the currency rates in the operating countries reduces the profits of the company as the currency needs to be converted into USD for financial calculations.
The socio-cultural environment includes the impact of the socio-cultural factors such as the social preferences of the customers that have a substantial impact on the business operations. The business environment such as USA and UK involve higher use of ecommerce and acceptance of technology. For example, as an impact of the economic recession, some of the consumers have become price sensitive and tend to use the services of companies that are available at cheaper prices. The cultural and religious factors also determine the use of ecommerce websites in society.
The technological factors include the developments in the field of technology development. Ecommerce is a highly technology intensive industry and the competitors compete with each other on the basis of technological superiority. The technological advancement is a short term source of competitive advantage for Ebay and other players in the industry as it soon imitated by other players. The availability of a sound IT infrastructure is essential for the survival and growth of Ebay in the ecommerce segment.
SWOT Analysis of Ebay
SWOT analysis involves the analysis of the internal strengths and weaknesses and external opportunities and threats.
Strengths of Ebay include the following:
High brand reputation: Ebay has an established brand name and a high brand recognition among the target consumers in different parts of the world.
Large customer base: Ebay has a large number of registered consumers on the website that trade daily on the website by buying and selling products and services.
Sound business model: Ebay has a robust business model as it charges a fixed fees for product listing on the website and also charges variable fees on the basis of the final selling price of the products sold on the website. Such a commission structure is a source of ensured income for the company.
Acquisition of PayPal: The acquisition of PayPal is a strategic decision of Ebay and is a strength for the company as online payments are an emerging business segment in the future.
The weaknesses of Ebay include:
High listing fees: The high listing fees for auction of products on the website turns down certain visitors as competitors such as Alibaba allow free listing on their websites.
Security concerns: Ebay has been criticized for lack of security in the online transaction system that compromises the personal details of the users on the website and exposes their data to hackers.
Opportunities for Ebay:
Emerging markets: The emerging markets of Asia such as India provide attractive growth opportunities for the company as these are experiencing higher economic growth and have a growing customer base with higher purchasing power.
Growing smartphone users: The number of smartphone users is increasing in various parts of the world thus increasing the growth of mobile based commerce.
Threats for Ebay:
Rising competition: The rising competition from local retailers and companies such as Google, Amazon and Alibaba are a source of concern for the company.
Online security issues: Ebay needs to improve its IT infrastructure so as to provide a safer transaction environment to its customers.
Recommended possible future strategic options and decisions
On the basis of the strategic analysis, the following are recommended for Ebay:
Expansion in emerging markets: Ebay should focus its expansion and growth on the emerging markets of Asia such as India that offer higher growth opportunities.
Technology Development: Ebay needs to strengthen the security of its IT infrastructure and provide a better and safe browsing experience to website users.
Product Diversification: Ebay can invest in future technologies such as mobile wallets and online payments systems for future growth and development.
Bibliography
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