Globalization and Global Strategic Planning: eBay - Admission/Application Essay Example

The rise in the number of businesses that use eBay as a sales platform has resulted primarily from the ease with which products could be promoted through the portal and sold without any hassles (Ungson, 2011). eBay has also partnered with Skype (for better communications between vendors and customers) and PayPal (for secure online payments). However, Ireland (2011) contends that the partnership with Skype has proved detrimental to eBay’s expansion plans due to issues with bandwidth and communication quality in countries like China and India where Internet speeds tend to be less qualitative and of lower bandwidth (Tao, 2009).

eBay has faced major hurdles in its overseas expansions in Asia due to many other issues. The online retail market has very low barriers to entry. Regional players dominated local Asian markets much before eBay set foot due to this reason and had established a niche brand presence. A burgeoning young population with both access and knowledge of Internet implied highly competitive markets that was diverse and had a number of service providers. eBay also faces stiff competition from global rivals like Amazon and Yahoo that are currently in the process of expanding into the Asia-Pacific region.

Although Amazon intends to enter markets like India by 2012, it does not pose a significant competition in comparison to Yahoo!, as most of its sales are associated with brick-and-mortar outlets. In comparison, Yahoo! poses a much broader threat since it offers a wider variety of online sales through dedicated portals like Yahoo! Shopping, Yahoo! Autos, Yahoo! Real Estate etc (Ungson, 2011). Yahoo has especially been successful in its Asian ventures, as it has forged strategic partnerships with major retail sites in the Asian markets.

For instance, the company obtained a 10% share in GMarket – a major online auction site in South Korea (Ireland, 2011). In China, Yahoo! has a collaboration with ‘Taobao’ that controls over four-fifths of the Chinese online retail market. (Ireland, 2011) Such alliances by other rivals have made it difficult for eBay to penetrate these lucrative markets through traditional approaches. While the Internet market in Asia has surged by nearly 450% over the past 6 years, eBay has faced immense challenges to its entry strategy in this geographical sector (Horn, 2010).

In fact, eBay’s approach has not yielded the required results in developed Asian economies like Japan and South Korea. For example, the company was forced to pull out of Japan in 2000 due to negative profits and immense competition with Yahoo! Acquisitions in the Chinese market such as Eachnet have also not proved successful due to issues with efficient management and governance (Horn, 2010). The tie-up was not sufficiently strong to compete with the overwhelming market power of Taobao. Moon (2010) further notes that another main reason for the lack of successful penetration by eBay in the Chinese market was due to the use of foreign managers to run local operations.

Reasons included a lack of understanding of the local culture and market dynamics, which were instrumental in inhibiting the development of a community perception, which is essential for success in such emerging markets. As eBay began to realize the