Ebays Expanding Internationally - Case Study Example

eBay has grown to become the world’s leading online marketplace.

The global reach that eBay has attained has not been achieved by another online auction site. The users of eBay manifest diverse preferences and needs based on how and why they utilize the service. eBay offers a broad range of products, globally expanding and generating a community for all clients to join eBay.  The potential rationale for eBay's international expansion hinges on the desire to increase its: number of registered users, user activity, PayPal transactions, user gross merchandise volume, and a number of listings. eBay’s global presence seeks to take advantage of the growing online shopping usage. Like the general industry, eBay’s business model is increasingly dependent on technology and expansion into international markets (Hitt, Ireland, and Robert 235).

# 2. International arenas for eBay: France and Japan

The CAGE Distance framework highlights cultural, administrative, Geographic, and economic differentials or distances between countries that ought to be addressed when coming up with international strategies. CAGE framework can also be employed to dissect patterns of trade, information, capital, and people flows.  In terms of cultural distance, there is “wide” cultural distance owing to different languages, diverse ethnicities (absence of connective ethnic and social networks), diverse values, norms, and dispositions. Nevertheless, the problem of absence of trust is not prominent to the extent of holding eBay’s (Hitt, Ireland, and Robert 236).  Although the countries do not have a common currency, eBay can capitalize on its standing as a multinational to enter the markets.

Regarding the geographic distance, both France and Japan are far-off from the parent company’s location; nevertheless, the rise of globalization and the advancement of ICT has facilitated trounced of geographical distance. The factor on economic distance centers on aspects such as income/wealth disparities and differences in aspects such as cost/quality of financial resources, infrastructure, human resources, knowledge, or information. The internet has become an integral component in commerce allowing cross-border data flows, which also underpin global economic integration and international trade. Hence, Japan and France can remain desirable markets for eBay.  Moreover, Japan and France do not manifest any significant restrictions on the Internet by their respective governments in a manner that minimizes the capability of businesses in employing the Internet as a place for international commerce.

# 3. Alternative vehicles that eBay has used to pursue international expansion

Several components can be cited as contributing to eBay’s strategic plan for growth. In its expansion efforts, eBay employs an investment and acquisition strategy. In the international arena, companies usually encounter s strategic dilemma in choosing between global integration and national responsiveness. eBay is a very diverse entity and the services that the company avail is appealing to individual customers, as well as large corporate customers.  EBay holds significant power within the online auction industry (Hitt, Ireland, and Robert 235). eBay’s corporate strategy centers on diversifying business to products offered, as well as customer base and global reach. eBay keeps on changing, adapting, and highlighting fresh ways to master its environment.  eBay should rethink its strategy to ensure that it is capital efficient.

#4. Whether eBay should acquire rival Bazar in France

The acquisition of iBazar and entry into the Japanese market mirrors eBay’s increasing ambition to extend its dominance of the U.S. internet-auction market internationally. eBay Japan was anticipated to be a critical positioning strategy, but the market entry for the firm failed.  eBay was late to enter the Japanese market as it entered when companies such as Yahoo/Softbank had attained significant momentum via its internet portal. The inability to understand the Japanese shopping service made the firm face minimal growth and minimal sales. Although eBay continues to render its services available to the Japanese market, the abandonment of the market saw eBay lose one of its largest online business ventures.  eBay acquired iBazar, a renowned European trading site, and invested heavily in the growth of its operations. The move to acquire Bazar will redefine European online trading as a pioneer in online-auction trading within Europe (Dutta 684).  The acquisition of iBazar coupled with eBay’s present strength within key European markets will firmly solidify eBay’s position within Europe, and considerably strength eBay’s global marketplace.

In conclusion, eBay should continue employing aggressive acquisition strategies in its expansion efforts.

Withdrawal from Japan would minimize eBay’s footprint, which can be detrimental in the long term.  eBay needs to continue spotlighting fresh ways to expand and enhance its market share and stay clear of its competitors.  In pursuing new markets, eBay should be aware that such a strategy would not necessarily yield overnight results but has the capability of delivering long-term gains. Read More