Ebay in China - Case Study

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21/11/2011

E-Bay Strategy In China Alliance or Acquisition? Case Study Strategic Management

Gabriela Šalamonová Barbora Jandová Pierrick Boissel Julien Meunier Alexandre Godet

SUMMARY

I. The Input Stage
     CAGE VRIO Analysis CPM matrix EFE matrix IFE matrix

II. The Matching Stage
   BCG matrix SPACE matrix GSM matrix

III. The Decision Stage
  Matrix Analysis QSPM matrix

IV. Questions
    Assessment of eBay´s choice of market entry strategy for China, listing both the advantages and disadvantages of its acquisition strategy Assessment of the potential benefits and risks of eBay´ s joint venture with Tom Online Assessment of both companies: eBay and Tom Online, decisions on their respective percentage of stake Strategic recommendation on International Commercial Strategy for eBay

I- The input stage
 C.A.G.E. analysis Cultural with … Different attitudes in life Different sales practise To prefer local companies Different language, ethnicities, religions, social norms Best deal is the lowest price Administrative and political Differences in political system Corruption Market Access restrictions Time zone is different Differences in costs and quality of resources Currency problem Imbalanced economic development Differences with payment system Geographic Big distance between China and USA Economic Differences in consumer incomes

Distance most affects industries or product …

Distance between two countries increases

Auction-selling format is not usual for them, because there the prices went up and they used to deal the lowest price Customer confidence have only local and wellknown companies In China, people want to pay by cash a face to face

In China are different government restrictions Different ways of functioning market

It can leads to For which communication demand varies misunderstanding by income People in China don’t have Credit Cards, so prefer to pay by cash The company have to adjust to local currency

This C.A.G.E. analysis provides us information about differences that can create distance between two countries seeking to do business together. Expanding to China can cause some issues with the different culture and political system. In China are different government restrictions like USA and they can significantly affect the economics. In China can be complicated persuade people to trust international companies, and overcome government regulations and currency problem. For the eBay can be useful adjust more for the local environment, and provide good customer services to attract new customers. But on the other side here can be problems with the system of auction, because Chinese people like face to face purchases and they are used to see the prices decreasing instead of increasing.



VRIO model

After analyzing the external analysis of eBay, the next step is to focus internally at eBay's core competencies in order to determine whether those strengths provide them with competitive advantages. In order to define these core competencies as competitive advantages or disadvantages, a VRIO analysis must be used. This technique measures each capability against whether it creates value for the company, it is rare in the industry, it is costly to imitate and if it is exploited by the organization. Which competenci es are likely to contribute to added value in terms of customer needs ✗ ✓ ✗ ✓ ✓ ✓ ✓ ✓

Resources / Capabilities

Which competenci es are likely to contribute to cost reduction ✗ ✗ ✓ ✓ ✓ ✓ ✓ ✗

Valuabl e

Rar e

Costl y to Imitat e

Exploited by organizatio ns

Competitive implications

Brand image Customer service Location Product diversificati on Information system Distribution Purchase protection Marketing

✓ ✓ ✗ ✓ ✓ ✓ ✓ ✓

✓ ✗ ✗ ✓ ✗ ✗ ✓ ✗

✗ ✗ ✗ ✗ ✗ ✗ ✗ ✗

✓ ✗ ✗ ✓ ✓ ✓ ✓ ✓

Temporary advantage Parity Disadvanta ge Temporary advantage Parity Parity Temporary advantage Parity

According to our VRIO analysis the...
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