EBay Case Analysis
Step One: Read.
Step 2: Dupont Ratio and Financial Analysis
Two year Financial Ratio
2002: 1,468,458/386,224= 3.8
Total Debt Ratio
Total ass. Total equity/ Total ass.
Asset Utilization, or turnover ratios
Total Asset Turnover
Sales/ total assets
Return on assets= net income/ total assets
Price earnings ratio= price per share/ earnings per share
Du Pont Ratio
ROE= (Net Profit/ Sales) X (Sales/ Assets) X (Assets/ Equity) o
2002 ROE= (48,294/1213000) X (1,213,000/ 4,124,444) X (4,124,444/ 3,556,473) .03918 X .2941 X 1.160 o
Step 3: External Environment
The changing lifestyles of people can help eBay penetrate the market even further and broaden their Customer base 2.
Look for acquisitions or partnerships of other online auction sites 3.
Keep expanding internationally
Expand Community Services
Increasing use of the internet
Continual growth of Amazon.com
Thievery within their own site
1/3 of internet users already registered on eBay
EBay should keep a close eye on threats to their company and do what they can to make them opportunities for change. 2.
Move forward to create more Internet users.
Step 4: Porter's 5 forces Analysis
Specialized auction sites could slowly dwindle down EBay's market share
Already established auction sites could expand into other segments of online auction market 2.
EBay will always have suppliers because the consumer is the supplier. EBay needs to protect itself against thievery, so the consumer has a good experience and creates a relationship with EBay.
Suppliers could go to other auction site if they have bad experience 3.
EBay will always have buyers because the buyers are the suppliers and consumers, again EBay must protect itself against thievery to keep their image high.
Buyers could go to other auction site if they have bad experience 4.
Flea market is the only threat of a substitute, but they do not have near the quantity or variety of products. 5.
Overstock.com, Webidz.com, Amazon.com, Epier.com, Auction.com
Amazon and Overstock are biggest competitors
We feel that EBay biggest threat is their security issues, but they are the best choice for online auction sites.
Corporate level strategy
EBay's corporate level strategy was to become a diversified business. They wanted to diversify not only the products they offered but also their customer base and global reach. By using the eBay service you can find virtually anything you are looking for.
Business Level Strategy
EBay competes in the online auction industry using a broad differentiation strategy. Although they may not be the most inexpensive online auction site, they have the largest variety of products offered. They also appeal to a larger group of consumers that include individual sellers, small entrepreneurs, and corporations all over the world. EBay achieves broad differentiation through their strong eBay community, a global reach not matched by any competitor, and a category span of 27,000. These aspects of the eBay service among others set their company apart from the rest. Customers see the value in using the eBay service. This is why eBay has become so successful.
Comments: EBay has done really well with there strategies and pushing forward, they have definitely captured the market for what they are doing.
EBay is the leading provider of online auction and customer-to-customer trading in the world. They have many competencies, core competencies, and distinctive competencies that set them...
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