Analyzing eBay's Operations Management: Decisions and Performance

This report provides an in-depth analysis of eBay's operations management, focusing on three key decision areas: design of goods and services, location strategy, and supply chain management. The report examines eBay's current activities in these areas, highlighting the strengths and weaknesses of the company. Regarding the design of goods and services, it discusses eBay's differentiation, low-cost, and quick response strategies, illustrating them with graphical analyses. The location strategy section emphasizes the importance of choosing the right location to minimize costs and maximize opportunities, considering factors like cost and communication. The supply chain management section outlines the steps to modernize and improve cost-effectiveness. Furthermore, the report includes a SWOT analysis, identifying eBay's strengths, such as its domination of online buying and selling, and weaknesses. The analysis also suggests ways to exploit both strengths and weaknesses to enhance overall performance. This document is contributed by a student and available on Desklib, a platform providing study tools and resources for students.

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Operation Management for Ebay Company
By
Student
Institution
Lecturer
Due date

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ABSTRACT
This report is aimed at highlighting the various Operating Management decision areas in the
eBay Company, the present activities that the eBay Company is performing in regard to those
areas of decision and the Strengths and Weaknesses that it faces. The report is also going to
dwell on how the Strengths and Weaknesses of the company have been exploited. The
research study was conducted through browsing. The findings will be indicated in the body of
the report.
Acknowledgement
I would like to acknowledge my family for the support they gave me throughout the research
period. They made sure that I had peace of mind and provided all the learning materials that I
needed. I would also like to thank all tutors in this school for always being there when I
needed them for consultation.

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Introduction
Operations management is a process that entails various management teams and goals. It is a
process that is carried out in all companies. Ebay is not exceptional. In case anyone is
wondering what operations management (OM) is, it is an area of management that involves
designing and controlling production process and redesigning the organization’s operations
when it comes to production of goods and services as reported by George, (2018). The report
is going to analyse three decisions of operations managements that apply to eBay companies
as well as the Strengths and Weaknesses that face those businesses.
Operating management of EBay Company
The three decision areas of eBay Companies that are going to be analyse on in this report are;
i. The design of goods and services.
ii. The location strategy.
iii. The supply chain management
Design of services of eBay.
Williamson & Yin,( 2014), updated a journal that stated that eBay’s product design had
various teams for the company’s products. Most of the people that use eBay for as a platform
of buying and selling goods and services are well aware of the design of its logo (Gilmour, et
al., 2013). It appears like this ‘ebay’. This logo is the one that makes eBay different from all
other browsers like the Etsy and Amazon. This decision area of designing goods and services
is useful based on the research in the market, the market trends as well as market prediction.
In all the fields of production businesses, there is a way to design goods and services. There
is a product strategy that is used in product selection as outlined by Neto, Bloemhof, and
Corbett, (2016). Product selection is the choosing of a good or a service to provide to buyers
or clients. The decision area is the basis upon which a company or a business exists and it

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being known to the society by the service that it offers. In this case study, eBay is well known
for the online buying and selling of goods (Ebay & introduction, 2014)
Through product decision, the society buys some inner satisfaction not just acquiring the
good or the service. There are three product strategies that were provided as outlined by
Williamson & Yin,( 2014). They are: differentiation, low costs and quick response.
Differentiation: It is the way that a service delivery is distinguished from the rest. It is the
uniqueness of a service provision and it should have a relevance on your customer. MaRS,
(2015), said that in order for a company to succeed with its differentiation plan, it needs to
comprehend the type of market it competes with. An example is, eBay competes with other
firms like Amazon. Ebay then has to make its services different from those of its competitors.
Since it is in an existing market, eBay needs to identify how it will position itself. Hoberg &
Phillips, (2016) gave the forms that service differentiation can take. They are as follows:
products attributes that is cheaper or powerful, appeal of distribution system, door to door
delivery or accessibility online. Thirdly, is the nature of service that the company offers
(warranty).With the named forms, customers will already be aware of the characteristics of
the differentiation of your good or service and your prosperity will depend on whether your
differentiation echoes with the customers.
Graphical analysis of differentiation of services offered by eBay.
P2
P1
D1 D2 Figure 1

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When some improvement is done on service delivery system to customers of eBay, the
number of customers increases and the demand for eBay services shifts from D1 to D2 and
the price of services of selling and buying goods also increases from P1 to P2.
Low cost: This is when a company offers a low price to increase demand as well as profits.
Lowering the prices of a good or a product is a strategy that can be adopted by any company
that is not making profits so as to increase the sales. Low cost strategy can also be adopted by
a company that is facing high competition so that it can draw as many customers as possible.
Graphical representation of demand when cost is lowered.
Price of P1 Demand curve
Services
P2
Q1 Q2
Quantity of goods
Figure 2
It is clear from the diagram as cost of service is lowered from P1 to P2 quantity of demand
for services from eBay company increases from Q1 to Q2.
Quick response: Adoption of quick response strategy by businesses is a priority. It entails
all businesses; local to international businesses. Customers’ online expressions should be

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taken with a lot of seriousness and gratitude. Therefore, the customer care channel should
handle clients criticism just the way they handle client appreciation. The customer reviews
should be responded in an appropriate language and not rudeness. The negative views from
customers should be looked into with immediate effect. For instance, in the case of eBay,
browsing may be slow and the customer may be in very bad need to do an online order. The
customer’s case should be looked into with immediate effect before they shift to an
alternative online selling and buying company. Even though, it does not mean that positive
responses should be ignored. This is because the person is a loyal customer so they should be
thanked and encouraged to continue using the online shop company and they can also be
informed on discounts on various products and special offers. This makes the customer feel
appreciated and valued. When the customer feels valued, it is a secondary benefit therefore
the company’s sales increases resulting to more profit gain.
Location strategy
Locating a business in the right place is a very important component in its success (Kale,
2014). A company may incur some unnecessary costs when it is located in the wrong place. It
may lack customers, transportation of raw materials to the location may be very costly and
labour costs may be high because of inaccessibility of the area (Reference for Business,
2018). while choosing an appropriate location, the company should consider its needs and
objectives. It should then locate to a place where those needs and objectives will be favoured.
This implies maximization of opportunity and minimization of costs and risks. For example,
if eBay desires to become the World’s most preferred online selling and buying platform, it
should consider locating to a place where it can serve its global customers. Its subsidiaries
should also be aimed at serving the customers around the globe. In order to achieve this, a
company’s managers and executives need to include a location strategy within the overall
corporate strategy.

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For a company to come up with a good location strategy, it should consider factors like cost.
Costs of buying land, office equipment, wages and infrastructure. Each company’s main aim
is to cut cost but they should also consider what is going to happen in the future. Costs may
be low but expected to rise in future. Communication is a factor that should be considered
when designing a location strategy (Snijkers, [2013). The company should be able to
communicate to the headquarters without any obstacles. These barriers are cultural and
language barriers. In most cases, engineering is tribal. This means that an engineer from the
home community will be chosen over another who is not from the home tribe even when the
latter is more qualified.
Compatibility of language on the other hand is very important when it comes to production
site selection. The engineers working on the project should be familiar with the home-office
language of the natives of that particular area. If eBay is interested in establishing a company
in India, then the engineers should be able to speak and understand Hindi.
Supply Chain Management
Supply chain management determines the best plans to modernize the cost effective and gain
trusted trading partners (Kettering UNIVERSITY, 2016). There are three main steps to guide
whenever designing a Supply Chain. The first is to start from a wider view then zoom in. In
my case study, Ebay should first look at what customers from further areas are complaining
about before dealing with the customers within the location of the company. Second is
gathering of data. It is good for the company to be on the watch-out when it comes to the
vendors that are working in the supply chain area (Lee & Katzorke, 2010). If a vendor is
underperforming, then quick action should be taken before it becomes a major problem. For
example, Kimberly is a supply chain vendor who works for eBay. She sells eBay services to
the customers willing to get their products from online shops. She does not have etiquette and
most managers are complaining that she has an attitude. The eBay Supply chain Manager

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should inform Kimberly that customers have been complaining about her attitude and that she
should change. She should also be warned that she will be penalized for the same if she does
not change. Third and last is creating and using case studies. It is something like reducing
transit cost to show the effects of an efficient supply chain (Florida Tech, 2018).
The eBay Company is also faced with various strengths and weaknesses. According to
Denardis, (2013), eBay SWOT Analysis contained the following strengths and weaknesses.
Strengths
One strength that eBay has is the domination of online buying and selling. Following
research, eBay has one of the largest shares of the market. The eBay Company is well known
for continuously providing online buying and selling services, thus leaving no space for its
rivals (Prince, 2010). Its rivals are the likes of Amazon, Etsy and Bonanza. As a matter of
fact, I can ascertain that eBay is the most renowned online selling and buying company. In
this smartphone era, there is just a few who can say that they haven’t downloaded the eBay
App. You possibly cannot compare eBay with Etsy because eBay has already dominated all
over worldwide, go to every country and you will hear of eBay. Anyone can bear witness that
whenever you are with friends and you ask for any online shop, they all say `search for
eBay’. Ebay is way ahead of all its competitors and that is for sure. Despite its rivals striving
to be on its level, it still holds the majority shares.
Another strength that eBay is superior to other competitors this is because of the huge
investments it has done to its management to a greater extent that no other e-commerce
company can beat it in online buying and selling. In addition, the mass of customers creates
an ever bigger market for its services. Consumers flock eBay because of the varieties of
goods it offers on its online shops. The other strength is the growing number of online
shoppers this is due to its payment method PayPal which is accepted in most countries
(Wetheril & Cattermole, 2016).

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Moreover, the fact of eBay becoming a retailer made it easier for it to access a big online
marketplace in the world. Another one is its ability to acquire more companies which it can
offer its services to and also its continuity in getting mergers from other companies. Lastly,
its opening of other online stores in different countries around the world has increased its
sales (Chiarini, 2015).
Weaknesses
One weakness that eBay has is high fees. EBay fees payment has rapidly rising of recent. The
high fee mostly comes from payment of PayPal for its transactions, fees on listed goods and
sold goods. This has reduced the company’s profits to the point of those small sellers end up
making losses in their sales. Another weakness is the lack of plan for the growth strategy,
eBay has not unveiled any of the market strategy of recent years. Top management is not sure
whether it should invest more on getting other more products or start manufacturing their
own products for selling to its customers. This has posed a big and dangerous position in
terms of success for the business. This has resulted to uncertainty about the future of eBay
depending too much on products from manufacturers.
Another weakness of eBay is limited success of its Social networks. Ebay has recorded
failure when it comes to social networks. Ebay needs to emulate other online firms like
Facebook, Twitter, Whatsapp, Instagram and Snapchat and use them to advertise its products
and services (Korba, et al., 2007).
What eBay has done to exploit its weaknesses and Strengths
Weaknesses-: EBay has worked with the IT department and directors. It is aimed at helping
them comprehend their needs and employ services through eBay Cloud in 2017.
Strengths-: Ebay and its partners are anticipating for business and they are ready to start
competing more than before. It is a new tactic for eBay, who dismissed partnership with IT
departments which had requested for big discounts, assistance and access to technical

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information (Gundersen, 2014). Apparently, CIOs should grab the new opportunity of low
pricing while they still can and aim some long-term savings through contracts with other
companies.
Conclusion
Operations management involves various teams and various goals. Thereby, the named
decision areas should be followed and changed to suit the company’s production process as
well as its operations. The eBay Company should also work towards minimizing the
weaknesses and maximizing the strengths.
Recommendations
 Ebay should exercise the three production strategies named under the design of
products. The strategies are product differentiation, lowering costs and rapid response
to customer reviews.
 It is advisable that eBay designs a location strategy keenly. A location may not be
costly in present time but the likelihood of increased costs in future should be taken
into account. (Stock & Stowasser, 2017)
 On strengths and weaknesses of eBay, the strengths should outdo the weaknesses. It
should be aimed that the strength part outdoes the weakness part. This should be
through more advertising, more partnership. It should also be characterized by good
relations with customers, like giving them some discounts. For example, eBay can
reduce the cost of shipment or provide free information for its customers.
 Ebay should partner up with other social networks like Facebook to up its game. For
example, it should integrate eBay with Facebook so that it can gain more popularity.
This will definitely increase its sales.

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