Company Analysis: Value Proposition Of eBay

The secret that can be considered behind the success of E-bay is by increasing its customers ad their satisfaction. To spread the business globally, an e-business strategy has to be implemented which can address the management and adopt new market culture. The new process implementation will change the services offered from local market to global market. Strategic planning process will bring all these changes in the way services are offered and improves the market globally. The strategic planning process involves several phases as shown in the figure 1.1.

E bay is one of the leading websites in e business, when it comes to selling and buying of products online. At present the company operates its services through the world’s most popular website www.ebay.com for online selling, buying ad biding of products. In 1998, the revenue of e bay was $4.8 million in the US, in 2008 revenue increased to $ 5.5 billion revenue worldwide and sold $60 million merchandise. The page rank of e bay was rated the first in 2008 with 85.4 million visitors. Today, from 2009 reports, the figures appear very promising; they have increased to $24 million despite unfavorable economic conditions gaining 71%.

The core competence of E bay were the other online auction websites like Amazon, fixed price retailers, search engines and comparison shopping websites which were offering the services at fixed lower prices. These are attracting the consumers more and e-bay has started to revive their 3 year plan after the revenue fall in 2009 and trying to meet the consumers demand and achieve higher customer satisfaction.

1.3 Market analysis and trends:

Market Analysis is a major task that has to be performed before launching a new service or product. It is important to perform this to determine if they really require that new idea that company is going to implement. In the process of developing a new product or service the market needs should be very well understood and how the competitors service the same product/ service should be analyzed too. By conducting such type of market analysis, company can:

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Be fully prepared to enter a new market

Can launch a new product/Service

The main steps involved in performing market analysis are

Definition of the problem

Analysis of the current situation

acquire data that is relevant to the problem

study and understand the data

Get ideas and resolve the problem

Market analysis determines strengths, weaknesses, threats and opportunities of a company and one of the most common methods to achieve this is SWOT analysis. The major competitors for E bay are Amazon, online search engines, fixed price retailers. The results of SWOT analysis on E bay are given in table 1.3.1.

SWOT ANALYSIS FOR E bay

STRENGTHS

excellent service

refined technologies used

Largest market share in till 2008

Had very Good reputation

Good customer satisfaction

User friendly software

WEAKNESS

No proper marketing strategies

Lacked global presence

Missed its name in the list of all web directories

Lack of social sites usage

OPPORTUNITIES

Increase market shareholder

International demand for Ebay services will increase

Increase in number of business partners

THREATS

More number of competitors

Cost of software and hardware may increase

Price competition with present competitors

Table 1.3.1: SWOT analysis for Ebay

1.4 Evaluation of the business in terms of Porter’s business model:

The five forces business model by Michael E. Porter can be used by the company to analyze the competition in the market with respect to the profitability and attractiveness of the services in all the aspects. Figure 1.4.1 shows clearly about the five different competitive forces.

Figure 1.4.1: Porter’s five forces business model

Source: http://www.anythingresearch.com/Strategic-Planning/Porters-Five-Forces.htm

These five forces are very important in the implementation of new business plan by E bay as shown below:

Threat of Substitute products or services

Negatives: Every company website creates a substitute to the services offered by ebay and this way they can be a threat to eBay.

Positive: Good market environment can be established with internet and will lead to healthy competition. All firms need an improvement to survive in today’s market.

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Bargaining power of suppliers

Negative: Customers are given bargaining power than suppliers as they have multiple choices. But with internet, suppliers also have more access to many customers.

Bargaining power of buyers

Negative: The internet can reduce switching costs for E bay.

Positive: Improves bargaining power over traditional channels.

Rivalry among existing competitors

Negative: The increase in the number of competitors will be created by internet both nationally and internationally. It may also create competition in price among different companies offering similar service for cheaper rates.

Barriers to Entry

Positive: As E bay is an online business, there is no requirement of offices, sales staff rent for offices. All it requires is a hosting cost for website

1.5 Information and communication technology (ICT) challenges:

As E bay is going to spread globally, there is a possibility of some information and communication technology (ICT) challenges. Some of the major challenges are described in terms core business process and system including legacy systems, B2B system integration, and efficient use of ICT infrastructure, security and standards.

1.5.1 Core business process and systems including legacy systems:

As E bay is a online auction website, it deals with the customers private information, and the customers expect the company to keep their information very confidential. They have to use very effective CRM applications. The main challenge for CRM is that it should meet the concepts of Confidentiality, Availability and Integrity triangle. As E bay business is spreading globally, it is very crucial to consider business process and systems such as customer relationship management, supply chain management, and also knowledge management.

1.5.2 Efficient use of ICT infrastructure:

As The E bay business runs on its auctions via internet it is important to implement proper ICT infrastructure with right technologies such as disaster recovery plan(DRP) to make sure that their business keeps running without any system hurdles such as system failure or any other natural disasters. With the help of DRP the resumption of hardware, data, communications, applications and other it infrastructure can be planned and made safe. Apart from DRP E bay should also include Business continuity plan (BCP) to make sure that their business will never discontinue .Unlike DRP, BCP includes plans for non IT related aspects. Nowadays BCP is well supported by Virtualization which also provides effective and easily manageable disaster recovery (DR) solution. The infrastructure of virtualization along with Disk-to-Disk (D2D) backup helps to build DR infrastructure with very easier and cheaper methods than ever.

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1.5.3 B2B system integration:

“Business to Business e-commerce (B2B EC) also known as electronic B2B (eB2B) or simply B2B refers to transactions between the businesses conducted electronically over the internet, extranets, intranets or private networks”(Turban et al. 2008).The B2B system integration is classified into two types

Integration with the existing internal infrastructure and applications

Integration with business partner’s systems ( Turban et al. 2008)

Through e bay, customers can make reservations in one or more restaurants at a time and make a single payment for all the reservations with the help of these two types of integration systems. This makes transactions between E bay and customers very safe and secure.

1.5.4 Standards:

As e bay runs the business electronically, a high level of standard should be used to spread the business globally. At present E bay is not using any ISO (International Standard for Organisation) standard. The best suited ISO standard for E bay is ISO/TS 15000-5:2005ISO/TS-Electronic Business Extensible Markup Language (ebXML).This standard is employed in businesses that work in open area or worldwide and transmit/exchange information between organizations, government agencies and other business related firms. This standard will form the basis for standard development work of business analysts in E bay.

1.5.5 Security:

The major risks involved in any business would me information exchange and electronic transactions between organizations. To overcome such type of risks, it is advised that E bay should install use Firewalls, security socket layer (SSL), virtual private networks (VPN), Digital signatures etc while making any transactions.

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