Business management - Essay Example

The case, “eBay in 2002: The Challenges of Sustained Growth” analyse the business environment and the company’s strategic objectives through a combination of industry analysis, competitive analysis and a SWOT analysis and aim at identifying issues which needs attention. The case analysis will also provide brief recommendations in terms of strategies and tactics, which the company can deploy in achieving its strategic goals. In crafting strategies, to gain and maintain a sustainable competitive position in an industry, it is imperative that companies assess the competitive forces at work within the industry in which it operates.

Porters Five Force Model can be a useful analytical tool in assessing the competitive forces operating in the online auction industry. The Five Force Model considers the competitive pressures arising from Threat of Substitutes; Rivalry among competing sellers in the industry; Substitutes potential of winning over industry customers; Supplier seller collaborations and bargaining as well as the Seller – Buyer collaborations and bargaining. For e-Bay the Threat of substitutes is coming from traditional models of auctioning, flea markets and classified ads.

The retail online stores operated by individual companies also pose substitute products for e-bays product offering. Direct marketing can also be perceived as a substitute. Thus, it can be noted that this competitive force is high in the industry. Threat of new entrants is very high in the e-commerce business-scape. The setting up costs is relatively low and legislature is not tedious. The readily available software makes the process of setting up e-commerce sites ever easier. Since eBay launched its auction site in 1995, the number of auction sites has grown over 2750 by 2001.

Thus, this competitive force too is high intensity within the e-commerce sphere. Rivalry among competitors – When rivalry among the competition is high in industries, the pressure on pricing