HND Business Strategy Case Study: Making eBay Work - Unit 7 Analysis

This assignment is a case study analyzing the business strategy of eBay. The case study examines eBay's business model, emphasizing its virtual market, transaction-based revenue, and reliance on customer feedback for product development and marketing. It explores eBay's management style, the role of technology, and its approach to competition and cooperation, including partnerships with companies like Skype, Google, and Baidu. The analysis highlights eBay's global presence, noting its success in the West and challenges in the East, particularly in China and Korea, where it faces competition from platforms like Taobao and GMarket. The case study also touches upon eBay's innovative marketing strategies and its efforts to adapt to the evolving e-commerce landscape, including the development of new features and services like eBay Express and eBayWiki.

Assignment Brief
BTEC Level 4-5 HNC/HND Diploma (QCF)
To be filled by the Student
Name of the Student : M. FAHAD RAHIM
Edexcel No JD63261: Registration No: COL/E-001780 Batch No:46
Unit Assessment Information
Qualification : Higher National Diploma in Business Management
Unit Code & Title : Unit 7 Business Strategy
Assessment Title & No’s : Business Strategy (Assignment 1 of 1)
Learning outcomes and grading opportunities:
LO 01: Understand the process of strategic planning
Learning Outcomes AC1.1 AC1.2 AC1.3
LO 02: Be able to formulate a new strategy
Learning Outcomes AC2.1 AC2.2 AC2.3 AC2.4
LO 03: Understand approaches to strategy evaluation
Learning Outcomes AC3.1 AC3.2
LO 04: Understand how to implement a chosen strategy
Learning Outcomes AC4.1 AC4.2 AC4.3
Merit and Distinction Descriptor
M1.1 M2.4 M3.4 D1.1 D2.2 D3.4
Assessor : Date Assessed:
Internal Verifier (IV): Date of IV:
Date Issued : 12/29/16 Date Due : 30/04/2017
Date of Submission: 20/05/2017

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Assignment Feedback
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Assessor signature Date
Student signature FAHAD RAHIM Date
Business Strategy Case Study
Making eBay work
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Source (An article of Jill Shepherd, Segal Graduate School of Business and Simon Fraser,
University of Canada)
(http://www.ebay.com/)
In 2013, there were more than 250 million eBayers worldwide. For around 1million people, eBay
was their primary source of income. A survivor of the dot.com bust of the late 1990’s, eBay
represents a new business model courtesy of the internet.
eBay’s Business Model
Value in eBay is created by providing a virtual worldwide market for buyers and sellers and
collecting a tax on transactions as they happen. The business model eBay relies on its customers
being the organization’s product development team, sales and marketing force, merchandising
department and the security department.
According to eBay managers, of key importance is listening to customers: keeping up with what
they want to sell, buy and how they want to do it. If customers speak, eBay listens. Technology
allows every move of every potential customer to be traced, yielding rich information.
Conventional companies might spend big money on getting to know their customers and
persuading them to provide feedback. For eBay such feedback is often free and offered without
the need for enticement.
eBay organizes voice of the customer groups which involve flying in a new group of about 10
sellers and buyers from around the country to its offices every few months to discuss the
company in depth. Teleconferences are held for new features and policies, however small a
change they involve.
Even workshops and classes are held to teach people how to make the most of the site.
Participants tend to double their sales after that. Others run their own websites to offering
advices on how to sell on eBay.
The company is governed from both outside and within. The eBay system has a source of
automatic control in the form of buyers and sellers rating each other on each transaction, creating
rules and norms. Both buyers and sellers build up reputation which are valuable, in return
encouraging further good behavior in themselves and others. Sales of illegal products are dealt
with by withdrawing what is on sale and invariably banning the seller.
eBay’s Management
Meg Whiteman’s, the CEO and president since 1998, style of management and past have heavily
influenced the management of eBay. With Meg’s experience as an ex- consultant, many major
roles in the senior managements including the head of the US business, head of international
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operations and vice president of consumer marketing in Proctor and Gamble, the eBay turned out
their operations in to data and metric driven. According to Meg, a business should be measured
unless you cannot control it.
Unlike a FMCG company, category managers in eBay can only indirectly control their products.
They have no stock to reorder once levels of goods run low. They provide tools to buy and sell
more effectively. Those will be different marketing and merchandising schemes such as
enhancing the presentation of their users’ products and giving them tools to buy and sell better.
Over and above this unusual existence, the work environment can be tough and ultra-
competitive, say ex eBayers. Changes often come only after PowerPoint slides are exchanged
and refined at a low level, eventually presented at a senior level and after the change has been
approved in a sign-off procedure which includes every department.
In time eBay has upgraded its ability to ensure the technology does not rule. Until the late 1990s,
the site was plagued with outages, including one in 1999 which shut the site down for 22 hours
courtesy of software problems and no backup systems.
Former Gateway Inc. Chief Information Officer Maynard Webb, who joined as president of
eBay’s technology unit, quickly took action to upgrade the systems and it is being continuously
upgraded.
In 2005, Chris Corrida was appointed Senior Vice President and Chief Technology Officer. He is
one of the leading technology platform experts in the corporate world.
After noticing a few car sales, eBay created a separate site called eBay motors in 1999, with
special features such as vehicle inspections and shipping. Some four years later, eBay expects to
gross some $1 billion worth of auto parts, many of which are sold by professional dealers.
Competition and Cooperation
As the internet, has become a more competitive arena eBay has not stood still. In 2005, it bought
Skype, the internet telephony organization surrounded by much debate in the press as the logic of
the $2.6 billion deal. With Skype, eBay argues it can create an unparalleled e-commerce engine
pointing to the 2002 purchase of online payment system PayPal, which spurred on the business at
that time.
In 2006, it also announced a deal with Google. eBay is one of Google’s biggest advert
customers. This deal was after eBay signed an advertising deal with Yahoo, which made some
think eBay was teaming up with Yahoo! against Google’s dominance. But in the interconnected
world, competition and cooperation is a new game.
eBay also formed a partnership between BaiduInc, a Chinese web portal bought by eBay in 2002
and eBay Eachnet. Baidu promotes PayPal Beibao as the preferred payment method on Baidu
whilst Eachnet uses Baidu as its exclusive search provider. The development of a co-branded
toolbar is set to cement the partnership. The West Yahoo! And eBay are partnering against
Google, but the East Yahoo! Is a rival.
Despite eBay being the internet auction phenomenon, it does not do as well in the East as the
West. It pulled out of Japan, is suffering in Taiwan and lags behind a rival in China. In Korea,
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GMarket, partly owned by Yahoo! Is more or less equal in size to eBay’s internet Auction.
GMarket offers less emphasis on open auctions than eBay, although eBay now does have eBay
Express where new products from multiple sellers can be purchased in one transaction backed as
ever by customer support including live chat.
Innovative marketing that makes the experience fun for shoppers and help sellers improve their
performance is perhaps another way GMarket differentiates itself from eBay. GMarket has itself
attracted imitators.
In 2006, eBay created eBayWiki hosted by Jotsppot, along with eBay blogs. Alibaba.com is one
of the e-commerce giants in China and this has been a very tough rivalry to eBay. Recently they
are going to launch a new American shopping website to rival to eBay. Alibaba operates China's
most popular online shopping platform, Taobao, which is estimated to hold more than 90 percent
of the online market for consumer-to-consumer transactions.
Task 01 (Covers LO 01 and AC 1.1, 1.2, 1.3)
1.1 Assess how business missions, visions, objectives, goals and core competencies of eBay
explain its strategic planning process. (AC 1.1)
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1.2 According to the given scenario analyze the factors that have to be considered when
formulating strategic plans by eBay (AC 1.2)
1.3 Critically evaluate the effectiveness of techniques that can be used when developing
strategic business plans by eBay mentioned in task 1.2 (AC 1.3)
Learners are encouraged to concentrate on D2.2 in order to achieve distinction grade
descriptors when addressing the above tasks.
Task 02 (Covers LO 02 and AC 2.1, 2.2, 2.3)
2.1 Analyze the strategic positioning of eBay by carrying out an organizational audit using
benchmarking, SWOT analysis and value chain analysis. Do an analysis for Demographic and
cultural influences eBay finds in East (AC 2.1)
2.2 Carry out an environmental audit for eBay with use of appropriate theoretical frameworks to
understand how it influence the organizational activities (AC 2.2)
2.3 According to the given scenario assess the significance of stakeholder analysis for the
formulated strategies by eBay using stakeholder mapping and stakeholder significance grid (AC
2.3)
2.4 According to the given scenario, alibaba.com is putting an intense pressure on eBaye
specially in the East. Present a new strategy for eBay to capture the market in China (AC 2.4)
Learners are encouraged to concentrate on M 1.1 and D1.1 in order to achieve distinction
and merit grade descriptors when addressing the above tasks
Task 03 (Covers LO 03 and AC 3.1, 3.2)
3.1 Analyze the appropriateness of alternative strategies relating to market entry, substantive
growth, limited growth or retrenchment for eBay (AC 3.1)
3.2 Justify the selected strategy for eBay (AC 3.2)
Learners are encouraged to concentrate on M 2.4 and D3.3 in order to achieve distinction
and merit grade descriptors when addressing the above tasks
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Task 04 (Covers LO 04 and AC 4.1, 4.2, 4.3)
4.1 According to the given case assess the roles responsibilities of personnel who are in charge
with strategy implementation in eBay (AC 4.1)
4.2 Analyze the estimated resource requirements for implementing the new strategy identified in
task 3.1 for eBay (AC 4.2)
4.3 Evaluate the contribution of SMART targets to the achievement of strategy implementation
in eBay with appropriate research (AC 4.3)
Learners are encouraged to concentrate on M 3.4 in order to achieve merit grade
descriptors when addressing the above tasks
Assessment Criteria - Pass
Outcome/ Criteria Evidence Achieved Feedback
1.Understand the process of strategic planning
1.1 Assess how business
missions, visions,
objectives, goals and core
competencies
inform strategic planning
Assess the vision, mission,
objectives goals and core
competencies of eBay and
explain their strategic
planning process
1.2 Analyze the factors that
have to be considered
when formulating strategic
plans
Analyze the factors that have
to be considered when
formulating strategic plans
by eBay
Planning systems and
issues..
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1.3 Evaluate the
effectiveness of techniques
used
when developing, strategic
business plans
Critically evaluate the
effectiveness of techniques
that can be used when
developing strategic business
plans by eBay mentioned in
task 1.2
2. Be able to formulate a new strategy
2.1 Analyze the strategic
positioning of a given
organization by carrying out
an organizational audit
Analyze the strategic
positioning of eBay using
SWOT, Benchmarking and
Value Chain analysis. Do a
external audit for East using
demographic and cultural
influences
2.2 Carry out an
environmental audit for a
given organization
Carry out an environmental
audit for eBay
Using PESTEL and Porter’s
five forces analysis
2.3 Assess the significance
of stakeholder analysis
when formulating new
strategy
Assess the significance of
stakeholders using
stakeholder grid and
mapping
2.4 Present a new strategy
for a given organization
Present a new strategy for
eBay to overcome the rivalry
of alibaba.com
3. Understand approaches to strategy evaluation
3.1 Analyze the
appropriateness of
alternative strategies relating
to market entry, substantive
growth, limited growth or
retrenchment for a given
organization
Analyze the appropriateness
of alternative strategies
relating to market entry,
substantive growth, limited
growth or retrenchment for
eBay
3.2 Justify the selection of a
strategy
Justify the selected strategy
for eBay
4. Understand how to implement a chosen strategy.
4.1 Assess the roles and
responsibilities of personnel
Assess the roles
responsibilities of personnel
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who are charged with
strategy implementation
who are charged with
strategy implementation in
eBay
4.2 Analyze the estimated
resource requirements for
implementing a new
strategy for a given
organization
Analyze the estimated
resource requirements for
implementing the new
strategy identified in task 3.1
4.3 Evaluate the
contribution of SMART
targets to the achievement of
strategy implementation in a
given organization.
Evaluate the contribution of
SMART targets to the
achievement of strategy
implementation in eBay with
appropriate research
Assessment Criteria - Merit
Grade Description
(Merit)
Possible evidence Achieve
d
Feedback
M1. Identify and apply
strategies to find
appropriate solutions.
M1.1- Effective judgments have
been made
M2.Select/design and
apply appropriate
methods/techniques.
M2.4- The selection of methods
and techniques/sources has been
justified
M3. Present and
communicate appropriate
M3.4- Communication has taken
place in familiar and
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