This evaluation of eBay provides an analysis of its strengths, weaknesses, opportunities, and threats. It discusses the company's internal analysis, future strategies, and resource-based view strategy. The evaluation also highlights the importance of the strategy process model in sustaining a competitive advantage.
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EVALUATION OF EBAY1 Evaluation of eBay Author’s Name Institutional Affiliation Date
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EVALUATION OF EBAY2 Evaluation of eBay Introduction eBay is a successful e-commerce company headquartered San Jose, California US. The company was founded in 1995 by Pierre Omidyar and operates on platforms such as Marketplace, Classifieds, Stubhub and Corporate (Johns, 2017, p.2). The company is a multi- dollar business with presence over thirty countries. eBay provides consumer-consumer sales via its platform. Also, this American MNC facilitates B2C (business-to-consumer) sales via its online platforms. Furthermore the company manages the eBay website where customers visit in order to make purchases (Johns, 2017, p.2). eBay gets revenue mainly from the final value of products sold by sellers and the revenue collected. The company has been able to register growing profit since its launch. In addition eBay Company runs an affiliate program known as eBay partner network. Internal analysis of eBay TWOs Matrix Threats Increase in competition from other online stores. Since the industry is growing drastically and many companies coming up each time offering customers exclusive products, eBay should come up with new strategies to remain competitive in the business. On the other hand eBay excels over Amazon because products which are not found in these websites can be found in eBay. Online security
EVALUATION OF EBAY3 Notably, customer’s physical address, phone numbers, details of the bank are saved online by the company. According toGhafir, Saleem, Hammoudeh, Faour, Prenosil, Jaf, Jabbar, and Baker (2018, p.2) organizations with online operations are facing cybersecurity challenges arising from hacking ,malware and other viruses. Hence,the vast information the company is storing is vulnerable online theft. Exchange rates eBay operates in various countries and the exchange has a huge impacts on its profits. The varying exchange rate is likely to affect the company and this should be treated as threat to its operations. Opportunities However, despite the company having some facing threats it still has opportunities to explore. These opportunities can help the company become the best retailer. The e-commerce corporation has the capability and advantage of becoming the leading retailer in a few years. Tontini (2016, p. 228) noted that e-commerce offers essential opportunities that can allow the business to maximize profits. As stated in the introduction, eBay offers consumer-to-consumer sales, which the company can explore to make more profits. The corporationhas strong CRM and IT systems in place to get the top position regarding sales made. Weaknesses High fees The structure of fees has risen drastically over the last few years. eBay receives money on goods , some adornment fees, listed goods and also PayPal transaction fees. Therefore, due to
EVALUATION OF EBAY4 this reason sellers do not make huge profits. This is likely to affect consumers as well because the retailers are likely to transfer the costs they incur on customers. Growth strategies The growth strategies of eBay are surrounded by uncertainty. It is the only online e- commerce company which does not tell about the growth of the company. Amazingly, the company senior manager is not sure if eBay will become a retailer in the next years or whether they will introduce new products (Silva, Moro, Rita, and Cortez, 2018, p.312). Therefore there is a high degree of uncertainty in the company and direction in which the company is moving to. Strengths The business model eBay is the only company which acts as the link between middleman, the seller and the buyer. According toHui, Saeedi, Shen, and Sundaresan (2016, p.3604) the company has been able to succeed in acting as a link with other stakeholders in the supply chain to generate significant revenues. The authors add that automation of activities have earned the company a good reputation that is good for business. The company has also been able to support consistency of quality and that is why customers have confidence in the company.The sellers bid their items in the website owned by the company where customers can access them and purchase. eBay are pioneers in online auctioning and this has served as a strength of the company and helped the company gain a competitive advantage over their competitors like Amazon and Flipkart. Cash flow
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EVALUATION OF EBAY6 Ansoff Matrix Retrieved from:https://www.mindtools.com/pages/article/newTMC_90.htm (Mindtools) Market development and market penetration- eBay has several opportunities to grow its brand. The emerging economies in Asia and Africa should be target markets for eBay (De, and Eeckhout, 2018, p.3). In this case, the company needs to focus on geographic. According to eBay developing countries are its the targets. In the current world eBay has expanded to the growing markets in Asia and Middle East. Expanding geographically is essential for the company in order to increase the profit margins and acquire new customers. Diversification- Some customers prefer to get the one of its kind experiences. It is therefore necessary for eBay company to cater for the customer needs, demands and expectation
EVALUATION OF EBAY7 by diversifying its product portfolio. For instance, going forward eBay aims to come up with a technology that helps customers design their own products in the way they like them to look like. By implementing the strategy customers will be more attracted to the company and connections to the company strengthen. Product development- Product development at eBay will depend on how it manages its supply chain logistics. eBay is mounting pressure to the supply management department to deliver goods to their customers in a short period of time. Delivering goods to customers in very little time will help the company stay ahead from rival companies. According to authorsWang, Wang, and Liu (2016, p.625)all e-commerce service provider are building networks to satisfy the customers by delivering goods as quickly as possible. In its efforts to develop new products, eBay has launched its smartphone application. The mobile application has helped customers purchase products anytime they want to and do not have any kind of problems in making purchases (Silva, Moro, Rita, and Cortez, 2018, p.311). Previously eBay customers would use tablets and laptops in purchasing by using the website but now customers prefer to shop from their phones and in their comfort. The introduction of the application has led to increased number of purchases and therefore growth in profits. Resource-based view strategy This model looks into resources of eBay that determine its failure or success in e- commerce. eBay’s resources are valuable, rare, imitable and substitutable. This is likely to affect its competitive advantage, but if it utilizes its human resource and physical resources it stands a change to remain competitive. Unfortunately, the VRIO analysis show below depicts the eBay’s
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EVALUATION OF EBAY8 resources to be imitable and easily substitutable, and this shows that the company is not able to sustain its competitive advantage in the event; it lags behind in service delivery. VRIO analysis Resources or capabilities ValuableRareImitableOrganizationimplication Brand image or equity YesYesYesYesCompetitive advantage Number of customers YesNoNoYesTemporary Advantage Technological innovation YesNoYesYesCompetitive advantage Product rangeYesYesYesYesCompetitive advantage Vargas-Hernández, and Garcia (2019, p.19) describes VRIO analysis is a toolthat examines a company internal sources and the capabilities to come out with the company’s source of competitive advantage. Value This is the first part of VRIO analysis. It is used to determine if a resource is adding value to the organization. If the resource adds value to the company it is considered as precious.
EVALUATION OF EBAY9 Brand image The brand is the main source of competitive advantage of eBay Company and that is portrayed by the company’s efforts to focus on the brand image it portrays. The brand has also helped in gaining of trust from all levels of customers because eBay sells best quality products to their customers. Rarity Products which can be sold by very few business units are referred to as rare products. These products therefore have temporary competitive advantage to the company. Large customer base eBay deals in many unique products. Hence, the company has a huge customer base in different countries hence providing a competitive advantage in the e-commerce company. Imitation A product is considered costly to copy if the other organization imitates, substitute or buys at a reasonable price rate. The process of copying can occur in two ways, such as copying and duplicating. For the e-commerce business imitating of products is very easy and can be done in a short period of time. Technological innovation- Advancing in technology and new innovations have helped eBay Company to launch various products to their customers (Neto, Bloemhof, and Corbett, 2016, p.371).Looking at dresses the company provides very fashionable dresses which are liked by their customers. Furthermore the company invests in research and development so that its
EVALUATION OF EBAY10 products are different from other online retailers and makes it difficult from other companies in copying of their style. Organization When a product is not organized in a certain manner it does not give a competitive advantage to the company. A company should know how to organize the product or else the selling rate will come down. Product range- eBay Company has huge range of products from electronic gadgets to home appliances. Therefore customers can purchase anything from their website. Furthermore the prices of their products is lesser compared to other e-commerce companies. For this case the company has managed to build a high level of trust from customers and loyalty which helps in retaining a large number of customers (Neto et al., 2016, p.371).. Reflection This assignment has enabled me to understand Strategy Process Model. When giving an analysis of eBay I was able to learn how organizations put efforts to develop strategies that can make it competitive. To sustain a competitive advantage, I discovered that eBay applies this model. Organization success only comes when right strategies are employed to steer an organization to the right direction. eBay has been able to grow only and sustain competition from other online giants such as Amazon and Walmart. This has left me thinking has strategy process model, help organizations make right decisions that are needed to help the company grow. Indeed, I am no longer in doubt that for companies to success, they have to consistently follow the strategy process model.
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EVALUATION OF EBAY11 Despite e-commerce providing a platform for corporations such as eBay to make profits, it presents numerous challenges. These challenges require that organizations conform to strategic process model. It is only by doing so that an organization can develop a vision, identify opportunities, develop future strategies and make strategic decisions that are essential to the business. Thus, this module has changed my perspective. Through it, I have believed that organizations do not just come up with strategies blindly, but evaluate every idea and see opportunities to exploit in order to make profits. Conclusion In conclusion eBay Company provides various kind of products to customers. Through their website customers gain access to a range of products provided by sellers. Some people do not prefer online retailing and opt to go to a brick and mortar store because they need to feel the product well and evaluate it keenly before purchasing. Besides, some people do not prefer online retailing because they need the human interaction during purchase. eBay has various strengths and weaknesses which have an impact to its growth.
EVALUATION OF EBAY13 Tontini, G., 2016. Identifying opportunities for improvement in online shopping sites.Journal of Retailing and Consumer Services,31, pp.228-238. Vargas-Hernández, J.G. and Garcia, F.C., 2019. The Link between a Firm´ s Internal Characteristics and Performance: GPTW & VRIO Dimension Analysis.REBRAE,12(1), pp.19- 30. Wang, W.T., Wang, Y.S. and Liu, E.R., 2016. The stickiness intention of group-buying websites: The integration of the commitment–trust theory and e-commerce success model.Information & Management,53(5), pp.625-642.