Ebay Strategy Report

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December 15, 2010

December 15, 2010

Table of content
1.Executive summary2
2.Strategic review3
a)A strategic analysis of the organisation3
i.Environmental analysis3
ii.Resources and competence analysis4
iii.Culture, stakeholder analysis and ethical issues5
b)Recommendation for future development7
i.TOWS matrix7
ii.The best option - global expansion11
Appendix 1:PESTEL analysis13
Appendix 2: Porter’s five forces model15

1. Executive summary
The following analysis has focused on strategic analysis, including environmental, resources and culture analysis and generates strategic choices based on these analyses. First, the report starts with PESTEL analysis to how macro environments impacts on eBay. It found that globalisation, consumer buying patterns and increase of the number of internet shoppers have positive impacts on eBay. However, e-commerce tax would impact on eBay negatively due to may impact on the price of services. The report shows the Porter’s five forces whether the industry has a high barrier entry. It found that eBay is on strong competitive position. Finally, the report explains where the industry currently sits in terms of its life cycle. Second, the report uses the resources/competence matrix to find out the eBay’s core competences. The report found some significant competences for eBay to be more competitive. Good financial performance, core tech patents and Paypal will help eBay to be more competitive than other competitors. Third, culture of eBay is unusual which means that communication between employees is free and it encourages exchanging the ideas and experiences. Also eBay launched the eco-friendly packaging which can protect environment.

The report generates strategic recommendation to increase the performance of eBay by analysing these details. The report uses the TOWS matrix and generated 3 possible options which are global expansion, physical eBay store and alliance with postal services. The report chose the global expansion as a best option for eBay.

The topics mentioned above will be discussed in detail in order to complete the analysis for better performance of future eBay.

2. Strategic review
a) A strategic analysis of the organisation
i. Environmental analysis
The report will state the key points from PESTEL analysis attached in appendix 1. Globalisation will positively affect eBay’s business as it will be able to expand internationally and find new markets. Consumer might develop completely different buying patterns meaning that they might start buying everything online and getting it delivered. The number of Internet shoppers within the last 12 months reached 31 million in 2010 (Office for National Statistics, 2010). These evidences can be opportunities for eBay. Economic situations have a direct impact on eBay’s performance. Another Wall Street crash would probably devastating effects on eBay while a second boom e-commerce would make eBay’s profit rocket. E-commerce Tax on e-commerce transactions will affect the prices of services which need to be charged in order to make up for the increase in costs for the company (Tax gets real for eBayers, 2005). These may threat eBay’s future.

The report suggests the key competitive forces from Porter’s five forces attached in appendix 2. Industry rivalry is medium as industry is growing and has low switching costs. Threat of the new entrants is medium as business setting costs are low and high costs for marketing and band awareness. Threat of substitute products is high as there are many substitutes, offering attractive prices as well as low switching costs. Supplier power is medium as few substitutes exist for Power sellers. Buyer power is high as they are sensitive with price and few buyers purchase small number of quantities. Overall, it shows that eBay is on strong competitive position.

Online retail still grows but the growth...
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