Implementation of Strategic Change at eBay - Essay Example

Question 3 What factors should management take into account when planning for the implementation of strategic change at eBay? Your answer should address organisational and human resource implications. (750 words) (25%) The factors that management should take into account at eBay when planning to implement strategic change include how to cope with further expansion of the business whilst having contingency plans in case future performance fails to match the rapid expansion of the past decade. From the very simple concept of setting of establishing an on-line market where people pay eBay fees whilst buying and selling the company made $ 778.22 million in profits in 2004 with the United States still representing 58 % of it core sales (Yahoo! Finance Company Profile). Management will also need to take into account threats and competition to its position as the world’s largest on-line auction and one of the world’s largest e-trading companies. Expansion is a major factor that the eBay management should think about implementing to ensure continued success. Well thought out expansion plans could literally give eBay the chance to make money from millions of self -employed on-line traders, sellers and buyers. Sellers can be doing eBay as a hobby or as a full time job whilst for buyers eBay is a global market place where you can buy just about anything you can imagine and even more. The expansion of eBay into countries such as China and India has a great deal of strategic significance when planning to implement the changes that are needed to go with them. Given the high cost of implementing expansion it is critical that the operational and administrative sections of the company are operationally efficient and cost effective. Arranging partnerships with other companies can possibly reduce the costs of expansion and modernisation. Such deals should always be considered when implementing changes. Management should consider the impact of millions of new customers on the speed and performance of the eBay web-sites and the ability of its Paypal payments system to deal with increased transactions. Internet security is certainly a major issue for eBay management to consider is that its web-sites can be susceptible to the risk of fraud, theft and being damaged by computer viruses and hackers. Therefore eBay needs to implement strategies to buy computer systems that can cope with millions of transaction everyday and prove relatively immune from viruses and hackers. It would be useful for eBay management to have strategies to prevent eBay being used for illegal money laundering, which has the possibility of eBay becoming involved in Police investigations. Having a secure payments system is vital not only to prevent fraud yet also to maintain the confidence of traders, buyers and sellers that their transactions are secure and guaranteed. If the traders, buyers and sellers lost faith in eBay’s security that would seriously dent its profits. Therefore eBay needs computer technicians and security experts to keep it systems running effectively and securely as the costs of any system down time are harmful for profits and its good reputation. Technicians and web page designers are also useful in not only keep the computer systems operating but also making the sites attractive to look at and making sure eBay always come when people use search engines such as Google and Yahoo to find items to buy on-line. The key to success is that the computer systems used by eBay are straight forward to use for traders, buyers and sellers, with the eBay charges seemingly reasonable when the service provided is considered. The organisation of eBay thus needs to include employees proficient in Information Technology and financial skills to ensure efficient operations with little or no disruption to the company and its users. The company also needs employees that can check that its traders, buyers and sellers are complying not only with eBay regulations but also with trading and copyright laws etc. To a certain extent eBay prefers to remain uninvolved in disputes between traders, buyers and sellers yet it does have grievance and disciplinary procedures for traders, buyers or sellers that break its regulations. The eBay management should be aware of trends in advertising or the market that can affect the implementation of strategic change for the better or for worse. For instance research showed eBay management that on-line advertising provided by AOL was not cost effective so it was ended. On the other hand selling advertising on its own pages not only increased revenues as sellers paid extra fees to advertise their goods it had the knock on effect of increasing profits from the rise in the total number of sales (Bowman, CNET Newscom, 25 July 2003). Recently eBay has offered sellers advice on setting up their own on-line stores that link with the items they sell on eBay. Sellers are interested in this because it offers them sales outside of eBay whilst eBay is getting paid for providing advice and getting advertised on extra sites (Konrad, USA Today.com). Question 4 Make recommendations on a performance management system for eBay, which integrates organisational and individual performance. (750 words) (25%) The management of eBay could take positive and proactive steps to ensure its continued success by introducing an effective performance management system that integrates organisational and individual performance. As eBay operates on a non stop global basis it needs to recruit and retain highly effective and skilled staff. To assist in the recruitment and retention of its best staff it is recommended that eBay introduces a system of performance related pay and staff bonuses. Performance related pay thus provides incentives to provide a highly professional standard of work for the company and ensure high quality services to the traders, buyers and sellers that use eBay. For a company with such a global outreach and multimillion dollars profits its workforce is surprisingly small with only 8,100 employees (Yahoo! Finance Company Profile). Performance related pay can be highly rewarding for employees that help increase profits and offering staff bonuses plus operating staff suggestion schemes can provide effective incentives that improve productivity and efficiency. For instance staff suggestion schemes mean that the company’s experts in advertising, information technology or security can find ways of reducing unnecessary costs or raising revenues that allow the company to continue expanding. The management at eBay could also consider offering graduated levels of performance bonuses to increase incentives even further. Staff should also be offered bonuses for preventing loses to the company for instance by preventing the company web-sites from crashing and lowering the risk of fraud. Rewards for excellent levels of customer service provision can also be used as an incentive for staff to improve of eBay members still further working on the proviso that happy members will buy and trade more thus raising revenue from fees. Not only does the provision of performance related pay and bonuses increase the incentives for eBay employees it also increases job satisfaction which in turn leads to them improving customer services. It has been assumed in business circles that satisfied customers spend more, so if eBay has satisfied staff it has satisfied customers and greater profits. Providing performance related pay also provides staff with greater senses of empowerment and responsibility (Shaw & Iwens, 2002, p. 125). For performance related pay to work eBay needs a practical system of bench marking that is adaptable and acceptable both to management and staff alike. The best method for meaningful bench marking is to lay down performance criteria for all staff and management to perform against. The better the individual performance the higher the bonus is for that individual (Dickson and Hawcock, 1999, p. 29). Bibliography Bowman L M, ‘Ebay doubles income and revenue’ CNET Newscom, 25 July 2003 Dickson T & Hawcock N (1999) Financial Times Mastering Marketing – Your Single-Source Guide to Becoming a Master of Marketing, Pearson Education Limited, London and Pennsylvania Konrad ‘eBay encourages sellers to build Web sites’ USAtoday.com 6/23/2005 Shaw C and Ivens J (2002) Building Great Customer Experiences, Palgrave, Basingstoke and New York Yahoo! Finance Company Profile eBay Inc Read More