The Challenges Facing eBay in 2008: Time for a Change in Strategy Free essay! Download now
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The Challenges Facing eBay in 2008: Time for a Change in Strategy
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| Words: 1689 | Submitted: 08-Aug-2011
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DescriptionThis a case study of ebay's strategy
EBay in 2008 announced that its long-time president and CEO, Meg Whitman was to retire and pass on her responsibility to a new president and CEO, John Donahue. After the CEO transition, Donahue faced several significant challenges, including much slower growth in eBay's core online auction business, what to do to make the recent acquisition of Skype profitable, declining numbers of auction customers (chiefly due to increasing competition from Amazon's then new and popular auction site), and weaknesses in key economies across the globe.
Competitive advantage is important role in developing sustain strategies. Using porter’s five forces, this paper analyses the five factors which affect eBay strategies. These factors are major in helping the company to identify the key issues and ways of coping with complexity and change. To determine how profitable and the position of eBay in the current market, a strategic group map, weighted competitive strength assessment and financial ratios analysis were conducted. The three analyses reveal that the company is still in good standing even though there is immerse competition which results in profit margin declines. Finally this analysis looks into problems that top management of eBay is facing. With acquisition of other companies that support the company’s core business and adjusting the current strategy to encompass the company’s globalization efforts in good time the company will have good returns.
What does a five-force analysis reveal about the nature and strength of the various competitive pressures eBay faces? Are the competitive pressures facing eBay and other online auction companies conducive to earning good profits? Why or why not?
Porters Five Forces
There are five factors which affect eBay strategies and helping the company to identify the key issues and ways of coping with complexity and change of potential entrants, competitors, buyers, substitutes and suppliers.
EBay is currently in an industry that takes little resources to launch. EBay does not sell, or ship any of the items themselves, they simply act as a platform. This platform could easily be re-created, and would require a limited amount of resources to become successful. Furthermore, with industries as innovative as eBay, companies have to be able to retain new customers, which, judging by the decreasing numbers of active eBay users from 2007 to 2008, could serve as a potential risk to eBay.
Power of buyers:
If buyers are unhappy with the progress of auctions, and feel that they can get an item sooner, rather than waiting for an auction to end and fighting with several other bidders, eBay is potentially losing several customers. The majorities of eBay’s customers tend to be looking for collectors items or ...
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