Executive Summary

eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com,

an online auction and shopping website in which people and businesses buy and sell a broad

variety of goods and services worldwide. Founded in 1995, eBay is one of the notable success

stories of the dot-com bubble; it is now a multi-billion dollar business with operations localized

in over thirty countries.[3][4] eBay expanded from its original "set-time" auction format to include

"Buy It Now" standard shopping; shopping by UPC, ISBN, or other kind of SKU (via Half.com);

online classified advertisements (via Kijiji or eBay Classifieds); online event ticket trading

(via StubHub); online money transfers (via PayPal[5]) and other services. In August 2009, eBay

Inc. formed a partnership with General Motors enabling hundreds of GM dealers in California to

help consumers negotiate purchase of new GM cars and trucks through the eBay online

marketplace. Its marketplace transformed the Internet and the way many of us shop and do

business worldwide. eBay’s marketplace, or “marketspace” is an online virtual trading platform

for the sale of goods and services by a community of users that comprises individual buyers and

sellers, as well as small business owners. eBay also provides auctions where it determines the

price of items sold. VISSION MISSION.

With more than 97 million active users globally (as of Q2 2011), eBay is the world's largest

online marketplace, where practically anyone can buy and sell practically anything.

In the Business segments presented in the case first is the Marketplaces, Platforms, and services

which includes eBay.com, StudHub, Online Classifields, Online Advertising, Shopping.com, and

Rent.com. Through a trusted online community facilitating trading with unknown partners on the

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Internet, eBay Inc. provides a trusted and safe trading environment by offering services which

enables the consumers to be at ease in doing trading with eBay. The second segment is the

Payments which is composed by PayPal and Bill Me Later transaction services. These services is

available to any online or offline individual or business with an e-mail address and allows

members to transact online. The third segment is the Communications which is composed of

Skype, which was founded in 2003 and acquired by eBay in 2005. It is the world’s fastest-

growing Internet Communication software platform. Although there is a risk with Bill me Later

even though its accounts are funded by CIT Bank, it is responsible for all functions related to the

account. It initially funds consumers’ loans using cash from business activities and a line of

credit. So it must find potential consumers that will really pay credits, because Future

profitability depends on its consumers.

eBay’s Competitors includes: online and offline retailers, distributors, liquidators, import and

export companies, online and offline auctioneers, catalog and mail order companies, classifieds,

directories, search engines, products of search engines, virtually all online and offline commerce

participants (consumer to consumer, business to consumer and business to business), and online

and offline shopping channels and networks.

Its Economic Climate which composes of a weak global economic conditions, in addition to the

mortgage and worldwide credit related financial crisis, are expected to limit revenue growth,

particularly in the Marketplaces segment, which is closely tied to consumer purchase patterns.

eBay Inc has its own Political and Legal environments which includes Sales Tax and other

Taxes, Long tern Contractual Obligations, Pirated or Counterfeited items and Security Breach

and Identity Theft.

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eBay’s challenges expansion of both in the United States and internationally has placed a

significant strain on management, operations, and financial resources. Particular areas that are

strained include Website Usability were in growth in the number of products and Web site

features has caused the site to become less user friendly, Website Stability were in increased

volume and greater complexity requires additional expensive investments in hardware, software

and personnel, Customer Account Billing were in transaction processing and revenue collection

becomes more difficult as the number of transactions increase and consumers default on loans

and lastly Customer Support were in it is challenges from greater trade activity and an increased

number of users and provide good after service.

eBay’s Future is anything but certain. It may need further analysis and needs a clear and well

clear strategic pla to achieve its mission and vision to become the world’s number one

marketplace.

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Background/ History

It all began with Pez Candy. One evening in September 1995, Pierre Omidyar, the founder of

eBay, and his wife were discussing their desire to contact other Pez collectors. To solve the

problem he created an online auction in the form of a sole proprietorship business. As a result,

eBay was created over the Labor Day weekend by Pierre, a computer programmer, who devised

a code that enabled and ran the eBay auction Web site from his home computer. Later in May

1996, eBay was incorporated in California and became public on September 24, 1998. The first

eBay auction was also conducted on Labor Day. As of 2008, eBay has a 14 percent share in the

global e-commerce with 86.3 million active users.

On Labor Day weekend in 1995, computer programmer Pierre Omidyar wrote the code for what

he called an "experiment": What would happen if everyone in the world had equal access to a

single global marketplace? Pierre tested his new auction website by posting a broken laser

pointer, which he was about to throw away. And to his surprise, a collector bought it for $14.83.

The sale of a broken laser pointer was the beginning of a radical transformation in commerce.

eBay is a remarkably efficient market created by connecting individuals who wouldn't otherwise

be connected. It was the world's first example of online social networking. While skeptics

questioned whether people would trust doing business with strangers online, Pierre firmly

believed that people are basically good, and that any issues would work themselves out by the

community. Since then, eBay has grown to have a presence in 39 markets (including partnerships

and investments) with more than 90 million eBay.com users worldwide, trading more than

$1,900 worth of goods each second. In 2002, the eBay community made it clear that they

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preferred using PayPal as an online payment method. So eBay acquired PayPal, which brought

new efficiencies to e-commerce and redefined possibilities for eBay's future.

The company has since expanded by acquiring innovative businesses, such as Shopping.com,

StubHub, Bill Me Later and others, which have positioned the company as the global leader in e-

commerce and payments.

Building on Pierre's entrepreneurial legacy, eBay continues to passionately believe in the

potential of technology to connect people around the world. Read more about our global

portfolio of businesses and how we continue to support entrepreneurship.

Founder Pierre Omidyar as part of a larger personal site that included, among other things,

Omidyar's own tongue-in-cheek tribute to the Ebola virus. One of the first items sold on eBay

was a broken laser pointerfor $14.83. Astonished, Omidyar contacted the winning bidder to ask

if he understood that the laser pointer was broken. In his responding email, the buyer explained:

"I'm a collector of broken laser pointers." The frequently repeated story that eBay was founded to

help Omidyar's fiancée trade Pez candy dispensers was fabricated by a public relations manager

in 1997 to interest the media, which were not interested in the company's previous explanation

about wanting to create a "perfect market". This was revealed in Adam Cohen's 2002 book, The

Perfect Store, and confirmed by eBay. Chris Agarpao was hired as eBay's first employee

and Jeffrey Skoll was hired as the first president of the company in early 1996. In November

1996, eBay entered into its first third-party licensing deal, with a company called Electronic

Travel Auction to use SmartMarket Technology to sell plane tickets and other travel products.

Growth was phenomenal; in January 1997 the site hosted 2,000,000 auctions, compared with

250,000 during the whole of 1996. The company officially changed the name of its service from

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AuctionWeb to eBay in September 1997. Originally, the site belonged to Echo Bay Technology

Group, Omidyar's consulting firm. Omidyar had tried to register the domain name echobay.com,

but found it already taken by the Echo Bay Mines, a gold mining company, so he shortened it to

his second choice, eBay.com.

In 1997, the company received $6.7 million in funding from the venture capital firm Benchmark

Capital. Meg Whitman was hired as eBay President and CEO in March 1998. At the time, the

company had 30 employees, half a million users and revenues of $4.7 million in the United

States. eBay went public on September 21, 1998, and both Omidyar and Skoll became instant

billionaires. eBay's target share price of $18 was all but ignored as the price went to $53.50 on

the first day of trading. As the company expanded product categories beyond collectibles into

almost any saleable item, business grew quickly. In February 2002, the company purchased

IBazar, a similar European auction web site founded in 1995 and then bought PayPal on October

14, 2002.

In early 2008, the company had expanded worldwide, counted hundreds of millions of registered

users, 15,000+ employees and revenues of almost $7.7 billion. After nearly ten years at eBay,

Whitman made the decision to enter politics. On January 23, 2008 the company announced that

Whitman would step down on March 31, 2008 and John Donahoe was selected to become

President and CEO. Whitman remained on the Board of Directors and continued to advise

Donahoe through 2008. eBay, being the first virtual online business community, empowers

entrepreneurial individuals to become e-commerce business owners, which offers a sense of

community to both buyers and sellers that is sustained by communication and high transaction

rates on a wide selection of products,goods and services. eBay’s success is sustain through

communications and trust.

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Step 1: Vision Mission, Objectives and Strategies.

Vision Mission (based on the case)

We intend to achieve our mission of creating the world’s online marketplace by improving and

expanding across three main areas: categories, formats, and geographies (2005 annual report)

We intend to achieve our mission of creating the world’s leading e-commerce franchise by

building upon our core Marketplaces business and building our adjacent businesses. (2006

Annual report)

We intend to continue to work toward our mission of creating the world’s leading e-commerce

franchise by investing in our core Marketplaces segment and continuing to build our adjacent

Marketplaces businesses. (Based on 2007 Annual Report).

Objectives

Based on the Vision Mission eBay’s plan is to expand in main areas: categories, formats,

communications, services and marketplace (geography).

Strategies

The strategic statement that best describes eBay’s activities could be formulated as follows:

“EBay allows customers to create individual auctions and online stores in order to sell used and

new products. This process is facilitated by the ability to create communities of interest,

providing secure transaction services and a peer review process in a global environment.”

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Therefore eBay sees itself as a facilitator for product-related transactions over the Internet. This

particular statement describes the company’s main processes and shows the opportunities eBay

wants to pursue.

Step 2: Develop Vision and Mission statement for the organization

Vision

We intend to achieve and provide the needs of consumers by providing quality products through

effective and efficient online service and become the world’s leading e-commerce industry in

order to ensure trust in the online community

Mission

We intend to dominate the online marketplace by expansions and improvements to offer a sense

of community to both buyers and sellers. And provide a safer online experience to ensure trust

and increase profitability.

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Step 3: Organization’s external Opportunities and Threats

Opportunities:

Acquisitions provide new business strategy opportunities

Market development in new and emerging markets like China and India which they are

considered as the most populated area can be a huge opportunity

Market penetration/ Improve market services in current markets can make a large number

of potential customers to subscribers

Threats

Success attracts greater competition

Attacks by illegal practices might happened

Some cost like credit card charges cannot be easily controlled by eBay

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Step 4: Competitive Profile Matrix

eBay amazon.com Yahoo uBid

Key Factors Weight Rating Score Rating Score Rating Score Rating score

Technology

Expertise .15 8 1.20 8 1.2 7 1.05 5 .75

Skills and Capabilities

Workforce .05 7 .35 5 .25 6 .30 5 .25

Product Innovation .20 9 1.80 7 1.40 8 1.60 6 1.20

After sales service .05 3 .15 8 .40 3 .15 3 .15

Marketing

Brand name .15 10 1.50 10 1.50 9 1.35 4 .60

Customer service .10 6 .60 8 .80 6 .60 5 .50

Accuracy of Billing .10 9 .60 7 .70 7 .70 7 .70

Warranties .10 6 .90 8 .80 6 .60 5 .50

Advertising .10 8 .60 6 .60 7 .70 3 .30

TOTAL 1.00 66 7.90 67 7.65 59 7.05 43 4.95

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According to the constructed Competitive Profile Matrix the strong points and the weak points of

the organizations are as follows

Strong points

Expertise in technology

Workforce

Product Innovation

Brand Name

Accuracy of billing

Advertising

Weak points

After sales service

Customer service

Warranties

The identified weaknesses are due to activities eBay performs and have no immediate effect, as

they don’t affect operations.

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Step 5: External Factor Evaluation Matrix

Opportunities Weight Rating Weighted Score

Acquisitions .20 4 .80

Market Development .15 3 .45

Market Penetration .20 4 .80

Threats

Success attracts competition .15 3 .45

Illegal practices .15 3 .45

Credit card charges .15 3 .45

TOTAL 1.00 3.4

Total weighted score is 3.4 indicates that the business has a strong external ability to

respond to external factors of the organization.

Step 6: Organization’s Strengths and Weaknesses

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Strengths

eBay is the leading global brand for online auctions

The company takes advantage of the benefits of Customer Relation Management

(company’s interactions with customers, clients and sales prospects)

eBay has become a generic term for online auctions

Weaknesses

Open to fraudulent activities

System breakdowns could affects trading activities

Step 7: Internal Factor Evaluation Matrix13

Internal Strengths Weight Rating Weighted Score

eBay Global Brand for auction .20 3 .60

Customer Relation Management .20 3 .60

Generic Brand .30 4 1.20

Weaknesses

Fraudulent activities .20 3 .60

System Breakdown in trading activities .10 2 .20

TOTAL 1.00 3.20

Total weighted score is 3.2 indicates that the business has a strong internal ability to

respond to internal factors of the organization.

Step 8: SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, QSPM Matrix

SWOT Matrix Strengths

Leading Global Brand for auctions

Weaknesses

Fraudulent Activities

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Customer Relations Management

Known Generic Brand for e-commerce

System Breakdown on trading activities

Opportunities

Acquisitions provide new business strategic opportunities

Market Development

Market Penetration/ Diversification

SO

Global Expansions

Maintain simplicity of interaction with the online community’s capability

WO

Online Banking

Diversify products

Systems for Online verification of products

Strategic alliance with courier companies

Penetration of all types of market

Threats

Attracts competition

Illegal Practices

Credit Card charges not controllable by eBay

ST

Acquisition strategy – global expansion

Use online security options for verification and authentication

Reinforce marketing management and systems

WT

Alliance to postal services

Authentication of consumers identity

The analysis shows using this strategic process, it shows competitive industry data and identifies

key areas for improvement and develops a strategic plan to success, by utilizing the Strengths

and the Opportunities mentioned in the matrix to be in action and also maintain the standard of

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the firm. And also by turning the weaknesses into opportunities that may help in future decisions

of the organization

SPACE MATRIX

Factors determining environment and stability

Technological change Many 0 1 2 3 4 5 6 Few

Rate of inflation High 0 1 2 3 4 5 6 Low

Demand variability Large 0 1 2 3 4 5 6 Small

Price range of products Wide 0 1 2 3 4 5 6 Narrow

Barriers to market Few 0 1 2 3 4 5 6 Many

Competitiveness High 0 1 2 3 4 5 6 Low

Price elasticity of demand elastic 0 1 2 3 4 5 6 inelastic

Average is 3 – score is -3.0

Industry Strength

Growth Low 0 1 2 3 4 5 6 High

Profit Low 0 1 2 3 4 5 6 High

Financial stable Low 0 1 2 3 4 5 6 High

Technological Simple 0 1 2 3 4 5 6 Complex

Resourcefulness Inefficient 0 1 2 3 4 5 6 Efficient

Capital High 0 1 2 3 4 5 6 Low

Entry to market Easy 0 1 2 3 4 5 6 Difficult

productivity low 0 1 2 3 4 5 6 High

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Average 4.25, score is 4.3

Competitive Advantage

Market share Small 0 1 2 3 4 5 6 Large

Product quality Inferior 0 1 2 3 4 5 6 Superior

Product life cycle Late 0 1 2 3 4 5 6 Early

Product replacement variable 0 1 2 3 4 5 6 Fixed

Customer loyalty Variable 0 1 2 3 4 5 6 High

Competitors capacity Low 0 1 2 3 4 5 6 High

Technology Low 0 1 2 3 4 5 6 High

Vertical integration Low 0 1 2 3 4 5 6 High

Average 4 – score -1.9

Financial Strength

ROI Low 0 1 2 3 4 5 6 High

Leverage Not balance 0 1 2 3 4 5 6 Balanced

Liquidity Not balance 0 1 2 3 4 5 6 Balanced

Capital High 0 1 2 3 4 5 6 Low

Cash flows Low 0 1 2 3 4 5 6 High

Exit to market Difficult 0 1 2 3 4 5 6 Easy

risks Much 0 1 2 3 4 5 6 few

Average 3.80 score 3.9

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Aggressiveness – eBay has a competitive advantage and is in the financial position to

protect it

Competitiveness – competitive advantage exists, but eBay still has to improve its

situation in penetrating and emerging markets and enhance more on e-retailing

The main markets of eBay are online auctions and e-retailing, the company has a strong

position to enhance its situation there.

BCG Matrix

STARS

eBay

QUESTION MARKS

Live Auctions

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Amazon.com

Classified Advertisements

Amazon Auctions

CASH COWS

Flea Markets

uBid

DOGS

Yahoo

Putting together eBay and it’s competition, the online auction industry shows different

company types.

eBay, Amazon.com, Classified Ads and Amazon auctions as a dominated market share

and growth

Flea Markets and uBid as has dominated a high market share but a little growth

Live auctions as to low market share which only caters the wealthy people but high

growth

Yahoo as otherwise liquidate but delivers cash

IE Matrix

4 3 2 1

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GROW & BUILD

Market Penetration

Acquisitions

Market Development

HOLD & MAINTAIN

Market Penetration

Product Development

Customer Relations

Generic Brand

Global Brand

HARVEST OR DIGEST

Illegal Practices

System Breakdown

Fraudulent Activities

These are the current position of the divisions for the future for the better results. Based

on the Internal and External Factors that affects the organization. It gives us the clearing

view what to strategically do in the future.

QSPM Matrix

Key Factors Market Development Market Penetration

Internal Strengths Weight Attractive Total Attractive Total 20

Score Attractive

Score

Score Attractive Score

eBay Global Brand for

auction

.20 3 .60 3 .60

Customer Relation

Management

.20 3 .60 3 .60

Generic Brand .30 4 1.20 4 1.20

Internal Weaknesses

Fraudulent activities .20 3 .60 4 .80

System Breakdown in

trading activities

.10 2 .20 3 .30

TOTAL 1.00 3.20 3.50

External

Opportunities

Acquisitions .20 4 .80 3 .60

Market Development .15 3 .45 4 .60

Market Penetration .20 4 .80 3 .60

External Threats

Success attracts .15 3 .45 2 .3021

competition

Illegal practices .15 3 .45 4 .60

Credit card charges .15 3 .45 2 .30

TOTAL 1.00 3.4 3

Total Sum of Attractiveness Score 6.60 6.50

Compared strategies are close to each other. Therefore the organization must averagely

hold and maintain and enhance more on market development and market penetration to

achieve success.

Conclusions

Strategic actions:

Maintain global growth initiative

Acquisitions (develop new markets)

New markets

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New products

Adopt into different cultures

Technological development

Rapid application development

Selling new applications/programs

Creating standards for the industry

Programme interface and developers programme

Security

Back up systems

Online verifications

Enhance trustee services

Online banking improvements

Enhance after sales services

Reinforcing the Marketing department

Improve image through advertising

Global branding to make eBay a generic brand

Recommendations

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I choose Maintaining global growth initiative as a strategy to motivate consumers, by making

Acquisitions (develop new markets), new products and adopt into different cultures. It has an

advantage of a wide range of promotion because it will encourage consumers to do e-retailing

and also catch the attention of consumers. And it can also provide convenience for the

consumers because they are introduced to new products.

Moreover, the following recommendations are advance;

a. eBay must develop their strategies to ensure great demand, high profit return

and to meet their target market, put up securities to ensure no fraudulent

activities may happened through authentication and verifications

b. eBay must reinforce the marketing department to improve image in through

advertising and by global branding to make eBay a generic brand for

consumers.

Bibliography

http://www.ebayinc.com/who

http://en.wikipedia.org/wiki/EBay

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http://www.ebayinc.com/history

http://digitalenterprise.org/cases/ebay.html

https://mm.jpmorgan.com/stp/t/c.do?i=6D588-517&u=a_p*d_301789.pdf*h_2kkrp0e4

en.wikipedia.org

http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

http://www.ebayinc.com

http://www.valuebasedmanagement.net/methods_bcgmatrix.html

http://www.kulzick.com/stu/IEmatrix.htm

http://www.mba-tutorials.com/?s=Internal+External+matrix

www.google.com

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