Strategic Management of eBay - Case Study Example

Strategic Management of eBay Introduction eBay is accompany that started as the world marketplace with its positioning statement that has a meaning to a lot of things about the company’s identity. It allow trade to be carried out both in the local, regional and in the international level that carries a diverse and personate groups of communities and many small businesses. eBay offers a conducive platform in which various items can be traded on daily basis. eBay was established with an objective of developing work ethics and a culture that is a fun, open environment that can be trusted and can be able to keep the organization focused on its main objectives and priorities. Market capitalization of the eBay company had surpassed even that of the Amazon. Com Company and this make to be the most valuable internet retailer in the whole world. Over the time eBay company has been focused to achieve excellence on the part of the strategic management of the company so that they can improve the company’s strategy of sustaining the growth of the company and performance of the business as the work to expand from online auctioneering and to become the largest mall in the world (Ballow, Burgman & Molnar, 2004). This paper seeks to analyze the strategic issues of the eBay company whose competitive advantage is mainly dependent on its pure role of strategy which makes it to have a sustained growth and competitive edge over other competing retailers. Main Strategic Issues of the eBay Company eBay company has incredibly amazing values that is mainly focused on the trading of the millions of dollars based on trust and faith of the members of the community. Its values are based on believe that people are basically good and that they have something to contribute. They also believe that open and honest environment can bring out the best in the people making them to respect and recognize everyone as an individual. These values therefore means that the whole strategy is based on the trust to build e-loyalty that will see to it that there is long term profitability and even open communication among the members of the company. Corporate Strategy of the eBay Company Foundation of the eBay company is based on the idea that possibly anything that can be traded can also be facilitated by this internet retailer and that this auction platform can provide a good ground to implement the concept of the e-commerce (Hendricks, Onur & Wiseman, 2012). The company practically helps people to trade anything and conduct comers through the internet all over the world through the eBay business model. This model has proved to be very effective and efficient in terms of conducting transactions that involve a lot of people who prefer to carry out business through the internet so that they can be able to enjoy work at the comfort of their homes as they buy things online. Up to date eBay users can freely bid anything ranging from the office equipment to real estate top to even cars. A major strategy that has been used by the eBay is establishing a strong customer base that will attract new users (Weiss, Capozzi & Prusak, 2004). eBay has established strong relationship with over 60 websites, this will give eBay company an opportunity to access the largest user base on the internet. The second strategy that is used by the eBay company is to concentrate on the local and international businesses for example it has established over 50 U.S markets where they distinct regional flavors that gives the user the convenience to shop locally for items that are difficult to ship such as the automobiles (Bodily & Venkataraman, 2004). The company has tried to broaden the platforms for trading for example a case where the competitors had tried to enter the online auction market, eBay Company would have the first advantage of entry even though not all of its competitors were small startups. The company also extended its core business activities into other areas that were attractive and introduced higher prices for the its products, a move that drastically improved the company’s profit margin as they use a very minimal infrastructure and operating expenditures. The only thing that the company had to do was to develop a new skill that was set up to overcome any unforeseen obstacles (Onur & Tomak, 2009). To do this effectively eBay company decided to make several acquisitions beginning with the establishment of the auction house Butterfields and the marriage between the offline and online auction houses that helped to revolutionized the way that fine antiques any the collectibles were sold and bought, allowing all the user to bid for most items that were on the offline auction house floors. The company believes that to maintain a strong affinity with the community that it should foster and establish direct relationships with both the buyers and sellers that have the same interest so that they can be made to be loyal. Most importantly the company must continuously enhance site functionality and even the features through provision of reliable and straight forward methods for the user to manage any process on their own. Sellers therefore only need to do very little task of just writing a compelling description of the items that is to be auctioned through provision of a suitable photographs then decide how many days should be taken by the action. Implication of Strategic Decisions on Technology Technology became the most important factor to be considered by the eBay company that would help to provide a good platform for the online venue for both the buyers and sellers. Technology provides a very good source of the competitive advantage over other competitors in the market places (Hendricks Onur & Wiseman, 2012). The main focus of the eBay as far as technology is concerned is to use online option to help in innovation that will reduce the costs, protect and maintain its competitive advantage. Most of the innovations were tilted towards internet marketing activities, building customer relationship management, lean manufacturing and any other development touching on the technology. With the growth and development of the digital information and communication technologies over many years that have create great opportunities for the companies to offshore clerical jobs and high paying professional jobs. Technologies have become too common that it is now seen to be used by many white collar workers and as a result telecommunication costs have sharply gone down (Hasker & Sickles, 2010). The main targets of service delivery has therefore become jobs in the computer programming with the core functions such as the processing and billing and for the case of the customer services like call centers. Some companies have also tried to offshore medical work, architectural services and even financial advice. India in most cases has become the destinations for these kinds of jobs this is because it has a booming IT and business outsourcing sector with a lot of cheap and qualified labor force. Implication of Strategic Decision on Leadership Human Resource Management Employees are a very important resource for the company that the organization should carefully manage their recruitment and training and even their training as the company work towards rewarding and remuneration (Berry, 2006). One of the key objectives of the eBay company should be to drive a lot of the force towards establishing this strategy of human resource management that will see to it that the company has a large number of employees who are trusted among other traders. For the company to successfully manage the operations of the industry there must be a proper human resource strategy that will ensure that the company goals and objective are achieved. The human resource personnel must therefore understand that those factors that affect the activities of the HR are never static and hence they should work to ensure that they put a good strategy that will maximize recruitment and retention of the employees while at the same time tries to minimize issues of the employees SWOT Analysis Analysis of the SWOT for the eBay company is done so that it can get to finer and intricate details that is to be adopted by the eBay company within a short span of time so as to achieve greater profit margins and also can maintain the customer base the cannot be easily beaten by the competitors (Hagiu, 2014). The strength of the eBay company is as follows: one the company is the leading global brand for online auction making the eBay company to be a giant marketplace that is used by a lot of people to buy and sell almost anything to one another. The company also enjoys the advantage of the customer relationship management where every customer and sellers has to register with the company then the data is collected by the company on individual basis. Weaknesses of the eBay Company Fraud has become a major challenge for the company that it is working very hard to overcome (Cartwright & Oliver, 2000). However the system of the company models does not easily leave itself vulnerable to most of the fraudulent acts, the company often deal with such acts very quickly. Some of the fraudulent activities may include selling of the counterfeit goods to the unsuspected eBay and in some cases it might even include theft and redistribution of the stolen goods. It is very important to note that theft is not the problem of the eBay as the company but the problem with the individuals. As with many industries a adopting the use of technologies, breakdown of the system could in most cases disturbs business activities of the eBay company. Over the past period of time both eBay and its payment brand pay pal faced numerous breakdowns and outages. Opportunities of the eBay Company Acquisition is one of the strategies that has provide numerous business opportunities to the eBay company with the latest venture is to enter into agreement to purchase online telephone Skype technologies (Bohrer & Dib, 2014). The eBay company has been buying up firms for example the payment system pay pal so that it can increase the percentage of the services that it offers to its customers and be able to maintain the growth of the profit margins. Market development that is characterized with new and emerging markets also provides business opportunity for the company as many countries like the India join the market niche. As aspiring consumers become richer they expand their business segments to many parts of the world including developing nations and this creates an opportunity in the current market. Some of the western countries like the USA are still having many consumers that have the potentials to purchase but have not yet discovered the benefit of the online auctioning. Threats of the eBay Company The success of many internet brands always attracts competition in the market places (Wongtada & Chaisuwan, 2011). Global competitor that compete in their domestic markets may be found of the cultural experience that in one way or the other give them a competitive advantage over the eBay company for example Yahoo company dominates most of the Japanese markets. Another threat of the company is attack of the brands of the company by the unscrupulous individuals for example some of the e-mails are sent to unsuspecting eBayers who pretend to have come from the eBay company creating additional cost that cannot be controlled by the company. Other costs for example the delivery charges can also not be controlled by the eBay company since it the fuel prices were to go up then the cost will be automatically be passed on to the consumers in terms of the delivery of the items and the postal charges. This could eventually make the overall cost to be expensive for the auctioned items. Pest Analysis Political factors: various aspects of the politics have great impacts almost in al parts of the world. They may range from the government directives and even the institutional policies. For the case of the eBay Company there is one big threat of politics or the legal environment this is mainly seen as a threat because political factors involve government regulations that define terms and conditions that any business must operate within. Therefore it is very important to consider this factor since many countries are still restrained by some of these policies which are put to defend domestic manufacturers and producers. Economic environment may include the nature of the economy in which various companies compete. Some of these economic factors are like company directives, restrictions that are put in the budgets and even the income generation measures of the organization. The main challenge for the eBay Company as far as the economic environment is concerned is the degree of piracy. Social factors which include the culture of the society and in some cases it may include attitude and the values especially the change in the lifestyle of the people, change in the consumption patterns, attitude towards work and even to some great extent in the education and health. These external social factors may affect the way the company provides solution to the problems so that they can meet the demands of the customers since customers can decide to work with one vendor that serves all their interests. Technological issues: the most important technological issue for the computer industries is the speed and the rate of adoption of the newly introduced technology that can greatly affect the effectiveness of the organization (Resnick, Zeckhauser, Swanson & Lockwood, 2006). The Porter’s Five Forces Model The most important tool that can be selected as a way to be used to analyze the situation of the company as far as control recline is concerned is the porter’s five forces model (Black, 2005). This is mainly because it helps the company to understand its string points against its competitors in the market places. According to this model, competition in the industry can be as a result of five forces that are combined together for example the competition rivalry within the organization, possible entry of new competitors in the market, possible growth of the alternative products, and bargaining powers of both the suppliers and the customers. For the rivalry against its existing competitors, there are many players like the Yahoo, Google and many other companies that offer cost and competitive benefits Threats of new entrance into the market: eBay Company has the obligation to do better so that they can beat their competitor through producing using the most recent technology and then put their prices in a way that they will compete favorably. Bargaining power of the buyers: for many computer industries, customer bargaining power has been very soaring this is mainly because of the very little reliability on the brand in the market places and also due to the products of many producers look alike. Bargaining powers of the suppliers: because of the fact that there are very few vendors who are capable of supplying the major components of the computer, the bargaining power of the trader in the computer industry has also elevated. Availability of substitute products in the market places has greatly impacted on the sale and productivity of the computer elements. They have the oligopoly kind of the market structure since most of the producer of the computer parts produces similar products. Value Chain Analysis of the eBay Company The value chain of the eBay company consist of the systematic approach that is mainly used by the company managers to examine the growth and development of the strong competitive advantage through considering conducting series of activities that will help to create and build value (Bland, Black & Lawrimore, 2007). They contribute greatly to the total value that is delivered to the consumers by the company. The value chain of the eBay company splits the company into two namely; the primary activities and the support activities. Primary activities are composed of the inbound and outbound logistics, sales and marketing and even the operation services. Primary Activities that are done by the eBay Company Inbound logistics: The Company offers online platforms for both the buyers and the sellers where the sellers will give the lists of all the items with every description that include the photographs, the period on which the auction was conducted and even the potential buyer who could bid the item on sale for affixed period of time. In addition the seller also gives specifications of the conditions of the auction and even the time that the auction would be expected to close. Bidding in most cases became active at the time when the auction was nearing the close time where it was known driven by the snipping programs that are automated that could allow most buyers to make their bids before the auction period is closed thereby creating extremely interesting and even evolving environment. For the case of the outbound logistics, eBay Company operated on the online auction site that they only needed to establish how goods could be sent along the supply chain from the wholesaler to retailer and eventually to the consumers. Sales and Marketing The main challenge the eBay company faces is how to establish trust among various traders who might get it difficult to interact again in the course of conducting their businesses. This forced the company to develop feedback systems that could help to develop reputation of the company and that could also allow the community members to use a number of methods to make their transactions secure (Vragov, 2005). The purchases that were mostly done by the eBay company were protected by the insurance policies as part of the set standards for the eBay services. Sales that were conducted outside the eBay market place were done by the eBay as an enterprise since the company did not receive fees for any transaction that was conducted off-site. The company also had believed that the off-site transactions contributed greatly in depriving the participants of the services of the eBay in case there was any problem. In terms of the services that company offered to the communities helped to remove the community to the analogous to real trading practices of the modern society in which a lot of the people interacted under a set of shared rules and expectations, this included services such as the installation services, after sale services and even the training of the worker. Support Activities One of the key support activities was how to do the procurement; this function was to see to it that all the purchases of both goods and services and even the purchase of the materials at a more secure and at the lowest price possible of the highest quality of the products (Roth & Ockenfels, 2002). To do this effectively and efficiently, eBay decided to provide for a very good platform for the business to take place and not taking any responsive possession of any item that was being sold thus reducing the cost of the inventory management. Recommendations Competition with other companies; the magnitude of the competition among the industries may have a greater effect on the ability of the company to recruit competent and highly qualified workers especially when the industry giants know that the candidate seek them out. This makes it unnecessary to spend money on the advertisement that is aimed at informing the candidates on the recruitment date since the candidates can be able to visit the websites of the company at their own wish and time (Roth & Ockenfels, 2002). For the small companies, it might be very difficult since they may not have the same branding power or the reputation of the company might still be low disadvantaging them from actively seeking qualified candidates for very important position. It is therefore recommended for the human resource personnel to mainly focus on materials for recruitment that will ensure fair allocation of jobs to be able to promote reputation of the company and attract applicant that are competent. Next important factor is labor compensation; the amount of the labor that is available will be a motivating factor towards the amount of the compensation that businesses will offer to enable the company attracts qualified employees. In cases where the market is very saturated and the level of unemployment is also relatively higher than the available job opportunities, then the amount of the compensation that the business must offer will be relatively lower than when there are shortages of the candidates and the company must compete with other companies for the available number of the employees. This will force the human resource personnel to continuously evaluate and review the compensation structure following the industry and location salaries (Wintr, 2008). This kind of strategy will ensure that the wages of the worker remain competitive enough that they are capable of attracting and retaining very important staff member while at the same time it remains low enough for the company to retain its financial competitiveness. The HR personnel must also ensure that the internal structure for compensation remains fair considering experience abs specialization when awarding compensation Model of the Business: eBay Company must have a unique content that is provided freely to all its audience that is disseminated all over through its print media and online channels. For the video content to be produced effectively and efficiently there is need to be a producer, the person who will report and even the cameraperson that will be commenting on the events and document. For the investment, eBay Company should have a new financial and operational base that that had not been part of the culture of the company (Friesen, 2001). Investors therefore should ensure that the eBay company has put a system in place that will support the strategy and to ensure that there is rapid growth of the company. Continued growth means that there is greater attention towards labor standards for example making the internship program formal and also to ensure that the employees are provided with performance review. Conclusion In conclusion, the strategy of the eBay company that provides a safe places for trading in the internet has greatly made the eBay community as a whole to flourish not only through the provision of the efficient media for people to sell and buy items from or to a big group of people but also through the provision of the forum for both the buyers and sellers that can help them develop good reputation. Through its very many segments, eBay Company should give its customers a wide spectrum of solutions as far as their services are concerned so that it can widen its scope of distributions to global markets. Some of the solutions that it gives to its customers may range from a series of configured IT and even networking and storage of the products through embracing infrastructure technology that is done through consultation and applications. For the dell company to carry out its business effectively, it must develop a well framed business strategies and plans. Economists have created a very contentious argument on whether western nations can retain their comparative advantage in some high technological fields. For the diehards of the internet, they argue that the cheapness and abundance of the labor in third world countries has contributed negatively on the comparative advantage of the western nations. In a competitive international economy they argue that companies that are driven by the profit motives may not allow the opportunity that may reduce cost to pass. This makes the rich nations to lose their comparative advantage in a few areas since free trade enacts unequal distribution of costs and associated benefits. Companies and the shareholders in the company gain while the workers in these fields are faced by lower wages and some of them may even face unemployment. For the case of the rich nations their income from the exports are threatened as the imposed competition forces the commodity prices down. It is therefore important to note that a country can be worse off if the forces in the trade bring the domestic prices down for the products in which it has a comparative advantage. Global trade demand a critical and fundamental rethink of the policy of the free trade agreement because benefits from comparative advantage can only hold if capital and workers are the only factors of production that are bound to nations. It is also clear that if the company obtains worker from outside their country, it may ignore and violates the conditions that are necessary for a mutual beneficial free trade therefore real solutions will only come up when the policy makers and the economist sit down and agree to end the confusion that exists between the free flow of goods and the free flow of the factors of production. Bibliography "eBay - if you cant beat it, join it", 2005, Strategic Direction, vol. 21, no. 6, pp. 11-13. "eBay and Google march on", 2004, Strategic Direction, vol. 20, no. 2, pp. 16-19. Ballow, J.J., Burgman, R. & Molnar, M.J. 2004, "Managing for shareholder value: intangibles, future value and investment decisions", The Journal of business strategy, vol. 25, no. 3, pp. 26-34. Berry, L.L. 2006, "Creating New Markets through Service Innovation", MIT Sloan Management Review, vol. 47, no. 2, pp. 56. Black, G.S. 2005, "Is eBay for everyone? 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