BCO111 Foundation Business Management: Ebay Strategic Analysis Report

This report provides a comprehensive strategic analysis of Ebay, a multinational e-commerce company. It begins with an introduction to strategic management and then proceeds to analyze Ebay's external environment using PEST analysis, examining political, economic, social, and technological factors. Following this, the report applies Porter's Five Forces to assess the competitive landscape, evaluating the threat of new entrants, bargaining power of buyers and suppliers, threat of competitors, and threat of substitutes. A SWOT analysis then assesses Ebay's internal strengths and weaknesses, along with external opportunities and threats. Finally, based on these analyses, the report offers recommendations for how Ebay could be led in a new direction, including adopting cost leadership strategies and exploring new business ventures. The report concludes with a summary of the key findings and references used.

Strategic Management

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Contents
Introduction.................................................................................................................................................2
PEST Analysis.............................................................................................................................................2
Porters Five Forces......................................................................................................................................4
SWOT Analysis...........................................................................................................................................5
Recommendations.......................................................................................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................8

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Introduction
Strategic management is the procedure of implementing the strategies at the organization. In this
process, analyzing, summarizing and evaluating the business environment has been done in order
to generate the strategies. It is required for the company to analyze the internal and external
environment before implementing it to the business (Ansoff, et. al, 2018). In this paper, the
discussion is based on the topic of strategic management. In order to analyze the business
environment, Ebay has been selected as an organization.
ebay Inc. is multinational e-xc c commerce of America which is based in San Jose, California,
that provides the services to consumer-to-consumer (C2C) and business-to-consumer (B2C) sales
through its website. ebay has been established by Pierre Omidyar in the year 1995, and it also
became a notable achievement story of the dot-com bubble. It operates the business in 30
countries and as it is an online shopping website in which it sells a wide range of goods and
services to consumers in all over the world (ebay, 2019).
PEST Analysis
Political:
ebay operates the business in worldwide due to which it has to adopted all the rules and guideline
of all countries in order to operates the business effectively. Nowadays, internet makes its own
space in the life of people. Internet is the major part for every business as well and it is also
found that the internet becomes the issue for the society as it affects their personal life (B2U,
2019). Privacy, Spam, Truth and the others are the legal regulation that government has been

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developed for ecommerce companies. There are many frauds have been happened due to internet
that is why; the government implements new rules and regulation for cyberspace that helps to
protect the people and companies from frauds (Burns-Millyard, 2018). It is important for every
company to implement all laws and regulation while operating the business in the market.
Economic
United States is highly developed mixed economy and it is the world largest economy in terms of
nominal GDP and net wealth. The company has been affected due to fluctuation of economy. It
is observed that demand of consumers has been increases or decreases according to the
fluctuation of economy that affects the company. As the GDP of US is $21.439 trillion which
depicts that the willingness of the consumers has been increases (The Balance, 2018).
Social
Social is a major factors for ecommerce companies as the demand of consumers are the main
source to earns the profit. The demand of consumers has been fluctuated due to which the chance
for facing the loss is high as ebay sells the consumers goods in all over the world. Although,
ebay always provides the new products in the market but as the demand of consumers has been
fluctuated due to which the company faces the challenges in changing the product in very short
period of time.
Technology
Technology is a major factor that affects the company as ebay always operates the business
through internet. The new inventions and innovations affect the business in both the aspects
weather it is negative and positive. It has been seen that United States of America is a global

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leader in science and technology which is beneficial for the company. The science and
technology activity of US is declining as compare to the other nations (Science Daily, 2018). The
advance technology helps the company to operate smoothly and effectively in the market.
Porters Five Forces
The threat of new entrants
The threat degree level of new entrants is high as there are many e-commerce companies can
enter the market. Nowadays, internet is main source to interact with the people due to which all
types of companies develop their own sites to promote their product and services and also
deliver the online services due to which the risk of new entrants for e-commerce company is high
(Dobbs, 2014).
Bargaining Power of Buyers
Bargaining power of buyers is high as there are numerous online websites from which the
consumers purchase the goods and services. As there are several e-commerce businesses in the
market that delivers the online delivers to customers due to which the consumers have many
options to purchase the goods and services. The large number of options increases the bargaining
power of buyers as they can easily switch to the other companies to get the services in low
prices.
Bargaining Power of Suppliers
Bargaining power of suppliers is moderate as there are many brands that offer the dissimilar
products and services to ecommerce websites in order to sell them. It has been found that
nowadays company opens their own websites due to which the company faces the challenges

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related to switching with the other supplier (Lasserre, 2017). The switching fee of the suppliers
affects the ecommerce company in terms of inventory.
The threat of competitors
The threat level of competitors is also high as there are many firms in the market that deliver the
similar facilities to customers through internet. There are various competitors who provide the
similar services to buyers such as Amazon, Flipkart and the others. These are the top main
competitors that provide online goods to consumers. It has been found that e-commerce
companies offer the similar services to consumers and nowadays, normal store also open their
websites to deliver the online services to customers due to which the risk degree of competitors
is high.
The threat of substitute
The threat level of substitute is high as there are many products provided by the e-commerce
company can also provide by physical stores. The customers can also easily interact in the
physical stores with the shopkeepers due to which these stores can easily replace the product of
ecommerce website. As the product of the company can easily replace due to which the threat of
substitute is high and also affects the ecommerce industry.
SWOT Analysis
Strength
The main strength of the business is its high brand value in the market. Nowadays, internet is
necessary factor for people and ebay uses this to operate the business. Internet operation is the
strength of the company. The other strength for the company is its operation from consumers to

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consumers, and business to consumers as it supports to make the high revenue. The financial
situation of the company is also strong.
Weaknesses
Weaknesses of eBay are the changing of demand of consumers as their choices have been
fluctuated in the market. It has been found that the company face the issues while collecting the
raw material from the different suppliers.
Opportunities
It has been found that business has the opportunity to enlarge the business in different fields such
as it has to provide the searching facilities as Google and it can also provide the ride services
through online (Mind Tools, 2018).
Threat
ebay has high degree of threat of competitors in the market as there are several ecommerce firms
in the market that delivers the similar services to buyers such as Amazon and the others. The
other threat for the company is the substitute product as the physical stores also delivers the
similar services to users.
Recommendations
From the above discussion, it is observed that the company have high threat of competitors due
to which they faces the challenges that is why; it is suggested that the business has to follow the
porters generic strategies in order to gain the competitive advantage in the market. The business

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has to adopt the cost leadership strategy to develop the price leader in the market to attain the
competitive advantage (Rothaermel, 2015).
The other suggestion for the company is that it has the opportunity to increase the business in
different fields. It has been found that the company has countless competitors in the market that
offer same kind of services to customers due to which it is suggested that it has to provide the
different services with the existing services such as searching services as Google.
Conclusion
From the above analysis, it is observed that eBay operates the business efficiently in the industry.
It is observed that the company has high value of goodwill in the market but it face the high
competition as challenge and also have high threat of substitute. The social factor has been
affected the business due to changing the demand of consumers. It is commended that the firm
has to adopt the porter’s generic strategy to attain the high success in the business or to reduce
the challenges. At the end, it is concluded that the company gain the high advantage while
growing the business in new streams.

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References
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., and Ansoff, R. (2018) Implanting
strategic management. Springer.
B2U. (2019) Scanning the Environment: PESTEL Analysis. [online] Available from:
https://www.business-to-you.com/scanning-the-environment-pestel-analysis/ [Accessed
11/04/19].
Burns-Millyard, K. (2018) Internet Businesses Rules & Regulations. [online] Available from:
https://smallbusiness.chron.com/internet-businesses-rules-regulations-2642.html [Accessed
12/12/19].
Dobbs, M. E. (2014) Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
ebay. (2019) Who We Are. [online] Available from: https://www.ebayinc.com/company/who-
we-are/ [Accessed 12/12/19].
Lasserre, P. (2017) Global strategic management. Macmillan International Higher
Education.
Mind Tools. (2018) SWOT Analysis. [online] Available from:
https://www.mindtools.com/pages/article/newTMC_05.htm [Accessed 12/12/19].
Rothaermel, F.T. (2015) Strategic management. McGraw-Hill Education,.
Science Daily. (2018) Report shows United States leads in science and technology as China
rapidly advances. [online] Available from:
https://www.sciencedaily.com/releases/2018/01/180 124113951.htm [Accessed 12/12/19].

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The Balance. (2018) US Economy Fast Facts and Summary. [online] Available from:
https://www.thebalance.com/us-economy-facts-4067797 [Accessed 12/12/19].