Report Case Study : eBay
Group 6-Tut1BA10 Members:
Lê Huy Thắng 1004000075 Phạm Quang Hiếu 1004000024 Nông Hải Âu Trần Văn Thắng Lưu Tiến Linh 0907010020 1004000076 1004000041
CASE STUDY: eBay
Question 1: Macro-environment forces: Five-forces model Assumption: all arguments are equally important. Elements Arguments rapid industry growth recent entry of new competitors (especially fixed Rivalry (high) price/online retailers) users have low switching costs eBay's dominant market share only minimal product differentiation relatively few entry barriers, except for marketing/brand image New entrants (moderate) low capital requirements to enter the industry high profit levels eBay's dominance/brand image discourages many new firms readily available substitutes: garage sales, flea markets…. not as convenient as online auctions Substitutes (moderate) product variety: low customers' low switching costs to substitutes ability to purchase quicker from physical retailers items are readily available from many suppliers Suppliers (moderate) low switching costs to different suppliers substitute suppliers are readily available good relationship with suppliers help reduce cost Buyers (weak for individuals, individuals buy in small quantities individuals have little negotiation power against large Mark (-) (+) (+) (+) (+) (+) (+) (+) (-)
(-) (-) (+) (+) (-) (-) (+) (+) (-) (-)
moderate for power buyers)
companies groups make up a large percentage of companies' sales switching costs for buyers are relatively low (+) (+)
Question 2: Online auction industry driving forces: 1. The growth of the Internet during 1990s The Internet ganered widespread use as a part of daily life. 2. Changes in lifestyle. Increase in the business-to-consummer E-commerce Conclusion: Driving forces are collectively acting to cause the demand for the industry’s product to increase. Driving forces are acting to make competition more intense The combined impacts of the driving forces will lower industry profitablity
Question 3: Theory: Using Strategic Group Maps to Assess the Market Positions of Key Competitors (Strategic management textbook, P.82) Completing a strategic group map of 5 companies: eBay (E), Amazon Auctions (A), Yahoo Auction (Y), uBid (U) and Overstock (O). Based on the guidelines how to choose appropriate variables in mapping the positions of strategic group (P.82, Strategic Management textbook), brand awareness and product categories are chosen as two variables.
The KSFs in online retailing: "generate traffic to the site in the form of both new & returning customer"(C - 288) => the number of users: an indicator to the success of an online retailing. With a broad product categorie, higher chance for the company to serve more kinds of users. The size of circles standing for each company is determined by the sales revenue of each (in 2004) eBay: 3.2 billion (C – 288) Amazon: 2 bil (C – 305) Yahoo Auction: 320 mil (Pai – Ling Yin (2010)) uBid : 87 mil (uBid (2009). UBid : Wikis) Overstock: 540 mil (C – 308)
In group map, eBay is in good position. Reasons: broad range of products (C – 299), stably increasing sales revenue (C – 286, 287), large number of users (Exhibit 1, C – 287), good reputation ( C – 297), As seen from the group map, Amazon be the closest competitor of eBay. Question 4: Theory: KFSs and three questions help indentify an industry’s key success factors( Strategic management textbook, P.88, 89) Information: C - 288 in case study and other sources 1. Which attributes are considered as the crucial ones on customers’ mind? Brand name: more well-known brand, higher reliability be considered by customers. Wide product categories: Provide customers various choices for purchasing decision, price and quality comparisons. Technology based market: convenience, reliability, low cost, security.
2. What are the resources and competitive capabilities...