Question 1: How did eBay pursue international growth?
With exceeding 3.7 billion, more than a half of the world’s population, and Internet usage in the region rapidly growth at 406 percent, Asia became an attractive and lucrative marketplace for eBay to expand their business. Since 1995, eBay enjoyed strong revenue growth and was a dominant player in online auction industry. With previous experience of extending their business in Europe, North America, Latin America and failure in China and Japan, eBay was once again struggling to compete in the Asian market. From the beginning, there is no main aim for eBay to have a further plan about acquisition to expand and identify synergies within existing business line. But for taking advantage at the first move to a new market, eBay considered achieving diversification by acquisitions or mergers and joint venture. To compete effectively and create a global trading platform, eBay aimed to increase their market share thought acquisitions and partnerships in related and unrelated businesses in term of sharing tangible and intangible resources, building market power, leveraging core competencies and support activities. In charge of supporting business, PayPal was acquired in 2002. PayPal was considered the global leader in online payments enabled individual to securely send payment quickly and easily online. To meet higher standards, eBay and PayPal upgrade and create innovative services by increasing protection for buyers and sellers to shop with confidence. To minimize pressure of competition, eBay acquired a lot of competition to lead to consolidation and can force other players to merge. For instance, Skype – the world’ fastest-growing online communication was acquired by eBay in 2005; and by 2008, there are more than 405 million registered users. Another example for partnership, in 2006, eBay announced international cooperation with Google – the most successful and popular searching tool all over the world. EBay also announced an agreement to share service, advertising and online payments with Yahoo in an attempt to minimize the intense competition if rival Google. Not only that, eBay also introduced eBay Express and eBay Motors as a standard shopping center and an automobile marketplace in terms of making diversification work. For the most part, eBay was successful in expanding in Europe and Latin America and considered the leader of its markets, except for China and Japan where were not such quickly adapt successful. Once getting in, penetrating the local market should be planned carefully to avoid failure. Learn from history in China and Japan, understanding custom and nature of home-market demand are needed for strategically changes. In China, eBay’s failure was believed due to an inability to build a community effect the country, which begins with customer satisfaction. Meeting the local needs when enterprising to a new market is very important and plays an essential role in being successful in the local market. Another core element caused failure of eBay was that instead of using local management who understand the market needs better, eBay hired a foreigner manager who is stranger to the local business. Thus, if eBay want to once again struggling to compete in the Asian market, it should consider those above lesson to be adapted in South Korea successfully. Question 2: What source of competitive advantage does eBay have, and is that position supported by its resources and assets? a. Does eBay deal effectively with its external environment in Asia?
The first advantage of eBay is the financial support. EBay have never stopped rising revenue since its inception in 1995. Although there was the world economic crisis in 2008, eBay still gained 11 percent increase from interest rate in 2007, operating margin rates steady at 24 percent. In addition, to the numerous of dense acquisition, eBay create a solid financial and non financial foundation support with stability of all...
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