Ebay Global Strategy Analysis Case Study Information Technology Essay

The name eBay is becoming increasingly popular and well-known with most everyone. Established in 1995, eBay started as a transaction where the items collected and hard to find. Since then, it has grown into a throne to which you can find any items. Based on E-commerce, eBay get profit by allowing people to conduct transactions and collect a small fee to list for auction, and a small commission when the transaction is successful. However, eBay creates the leading value-added services for regular users, including the contact online sales webpage of vendors. Approximately $ 225 million of net revenue in 1999 and it was grew up to $6 billion in 2006 which brings the net income of about $ 1.1 billion to eBay and of course it the net income will be increased day by day. Anytime there is a list of over 110 million items and more than 6 million items added each day. Thus eBay offers numerous opportunities for those who trade with the world.

eBay is very strong in E-commerce application. The core competency of eBay is in developing the web-based software which helps to create a safe, secure online marketplace. Therefore, eBay chooses the strategy is to allow clients of both buyers and sellers to innovate using the web-based software that it provides, regardless of whatever they want to buy or sell or wherever they buy or sell it. Moreover, by choosing this strategy, eBay created a very good value chain what provides only the tools to make transactions possible and letting users do the work of managing transactions. So it is very easy to see that eBay’s core is centralized, but because it should limit shipping of goods to shorter distances, conduct many transactions in local currencies, and list product descriptions in local languages, eBay has decentralized its value chain configuration by developing largely independent subsidiaries in other countries.

eBay’s value chain is virtual because it does not actually handle any of the products sold on its website and also needed very little virtually supervision. That’s why eBay can minimize it operation which can cut down a lot of expenses and get profit by just creating a safe and secure virtual community through which tangible products can be traded by users. The business activities not only occur within a company but eBay has created an ecosystem, a network linking business, or new commercial center dynamic but virtual. First of all, the buyers and the sellers don’t need to know each others but just based on the evaluation points after each of transaction. Secondly, eBay has established a separate “police force” to control the listing of goods to reduce to the lowest level of ability can be occur online scams. Thirdly, the payment can be done through PayPal and this is also one kind of virtual bank hence the clients are not required to have an account in a bank or a credit card.

eBay have created a new management model in the Internet era which is totally different than what is was ten years ago. The same with a lot of dot.com companies who face with many difficulties to survive in the economic slowdown period, eBay faced with more difficulties to find their own path in rife with flashy world of the Internet. Through the Web, clients can access eBay in a whole day to learn about all the trends, check for all listed items. Ten years ago, people usually only auction of luxury and expensive items such as paints, jewelry, it does not apply to regular items but today on eBay website, you can auction anything provided such as electronics, sporting goods, furniture , tickets, stamp, travel, toys etc. Meanwhile, it is also different than ten years before because as above mentioned, you don’t need to have a real account or credit card in the bank but just need to have an account on PayPal, an online bank which provides the financial service online securely, quickly and easily. Moreover, which the voice over internet protocol technology, we can use Skype which was acquired by eBay, to communicate online in very low cost or freely compare with the old fixed telephone or mobile/cell phones.

Of course, transactions on the Internet bring many potential risks then eBay also face a lot of challenges due to apply it e-commerce strategy. First of all, let see what are the challenges for eBay’s strategy then let discuss what implications to those challenges today and later on. Firstly, the eBay needs to support and develop the translation software for global trading community which helps clients including buyers and sellers in any country post their auction by their own language and just rely on the translation software. Therefore, eBay will need to continue to support and develop the translation software also need to update it steadily in order to provide better search function; more flexibility but more secure which can help the global functionality of eBay’s strategy. Secondly, because of many countries do not accept for exportation of things such as anthropological relics, historical artifacts, native fossils, animal or plants so eBay need to work very closely with local government in order to avoid any violations of local rules, also need to helps the buyers and sellers follow the local rules correctly. Thirdly, a lot of countries that clients in the developing countries where lacking of digital devices such as leased line to connect and access the internet, credit cards for the online payments etc thus eBay needs to find the solutions in order to be more flexibility but still in security besides PayPal, the online financial service. eBay may cooperate or invest to companies who can sell computer with internet access in those countries. Fourthly, people distrust on e-commerce especially in countries such as Japan, China, India, Russia so eBay need to cooperate or forming the partnership with local companies or use eBay brand to attract the people in those countries. Finally, with the pace of international expansion, eBay of course has to pay high price to acquire foreign operations therefore the high acquisitions costs may not be covered in the future. No matter what, eBay remains the number one brand on the auction on the Internet in the future.