eBay

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Content

Introduction

Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. How great was the degree of relatedness between the different business?How strong was the potential for synergies between them? Where there any businesses in the portfolio that eBay should not have entered?

Q2.Evaluate the strategic arguments in favour and against the Skype acquisition. Do you agree with the people who say that eBay paid too much for Skype?

Conclusion

Bibliography

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Introduction

eBay

Skype

PayPal

Baazee

Offline auction houses

Gumtree

Craiglist.com

eBay’s growth strategy through acquisitions

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Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. Theory:• Our definition Diversification strategy it is a strategy that takes an organization

away from its existing markets and existing product and services and brings into new one, which provide reducing risk of investing in different industries.

• There are two level of diversification:Business-level: on this level organization trying compete in their particular markets.Corporate-level: organization involved in few different industries with different success

factors

Degree of relatedness between the different business depends on the similarities in industries success factors such as: Customer, Channel, Input ,Process, Market knowledge (Haberberg 2008)

Synergy refers to the benefits that might be gained where activities or process complement each other such that their combined effect is greater than the sum of the parts (Jonhson 2005)

(2+2=5) Portfolio the range of products, services, or brand offered by diversified corporation

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Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype.

Corporate level (Synergy of eBay and PayPal)

Business level (acquisition of new markets and their relatedness, ex: Baazee.com and EachNet)

eBay

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Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. How great was the degree of relatedness between the different business?

Theory Application

Category of success factor Online auction listing online shopping

Classifieds Ads

Customer (brand –building and customer relationship by building loyalty)

Sellers & buyers around the globe

Sellers & buyers around the globe

Sellers & buyers in the global market

Channel (building loyalty and relation, carrying out negotiations with dealers and retailers,)

Negotiation between seller and buyer (bidding)

Negotiations between (eBay and PayPal, Postal services)

Newspaper, magazines, internet, eBay.com

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Theory Application

Category of success factor

Online auction listing online shopping

Classifieds Ads

Input (finance, supplier, managing knowledge)

Fees, sellers, user id/ profiles

Fees (cash/card), sellers, user id/ profiles

Fees, seller’s ads.

Process (technical aspects, patents & trademarks)

IT applications and software

IT applications and software

developing their brand and products

Market knowledge (data collection and understanding the market )

Profiles (seller and buyer, and product)

Profiles (seller and buyer, and product)

developing their brand and products

Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. How great was the degree of relatedness between the different business?

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Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. How great was the degree of relatedness between the different business?

eBay businesses

Technologies

Customers

Brand & Reputation

Success factors of eBay business

Conclusion: The degree of relatedness between the different business are HIGH, as they encompass same success factors.

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Forms of Synergies eBay + PayPal

Sharing tangible resources Working in internet and using the same IT resources.

Pooling negotiation power Development and betterment of businesses.

Coordinating strategies A common goal to generate revenue.

Creating combine businesses Payments made safer and easier, increasing customer base.

Sharing intangible resources Reputation of both brands, managing talents, customer loyalty and security.

Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. How strong was the potential for synergies between them?

Conclusion: Based on the above table, the potential for synergy between eBay and PayPal was strong and successful as a result it simplified global payments in ecommerce increasing customer base.

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1998 1999 2000 2001 2002 2003 20040

50010001500200025003000

eBay's Growth Profit

Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. Were there any business in the portfolio that eBay should not have entered?

* All figures in $ million

Conclusion: NO there were no such business in the portfolio that eBay shouldn’t have entered, as during its expansion and diversification the growth profit of the company were constantly increasing.

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Q1.Asses eBay’s expansion and diversification strategy before the addition of Skype. Were there any business in the portfolio that eBay should not have entered?

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Conclusion

eBay's expansion and diversification strategy was highly successful because:

• The businesses it acquired have simmilar success factors, so they are related to each other.

• Sinergy affect (PayPay and Skype) was strong and successful .

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Bibliography

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Conclusion

• For a company to be successful it is vital for it to recognize and understand the segment where the company is operating.

• With knowing the needs and the wants of its customers in particular segment, companies could sustain its competitive advantages.

Bibliography

Haberberg A and Rieple A.,(2008), Strategic Management, Oxford university Press NY

Henry, A. (2008), Understanding Strategic Management, Oxford university Press Inc., NY, p. 127

Henry A., (2005) ‘A Demographic and Psychographic Profile of Heavy Internet Users and Users by Type of Internet Usage’, Journal of Advertising Research, 1(45) , p93-123, 31p

Johnson G., Whittington R., Scholes K. ‘Exploring Strategy Text & Cases’, Prentice Hall Press, Martin G, (2011)‘The importance of marketing segmentation’ , Kaplan University: USA, 4 (6), p.57

Porter, M. E., (2001),’ Strategy and the Internet’, Harvard Business Review

investor.ebayinc.com (Accessed: 13 October 2011)

www.ebay.com (Accessed: 13 October 2011)

http://www.ebayinc.com/who (Accessed: 13 October 2011)

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AQ&

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THANK YOU