Ebay Problem and Market Strategy Essay
810 WordsApr 11th, 20134 Pages
1. What is eBay’s problem?
2. Which marketing strategy was eBay following: market development or product development? Do you agree with it?
3. What decision-making process should CEO Donahoe utilize to make the decisions necessary to change the company’s product, customer approach, and business model?
Pierre Omidyar founded a sole proprietorship in September 1995 called Auction Web to allow people to buy and sell goods over the Internet. The new venture was based on the idea of developing a community-driven process, where an organic, evolving, self-organizing web of individual relationships, formed around shared interests, would handle tasks that other companies handle with customer service operations. By May 1996, Omidyar had added…show more content…
Competition had increased as rival web sites, particularly Amazon, now provided similar web services and eroded eBay’s competitive advantage. All this information is presented in the case exercise. These are symptoms of an underlying problem. Although PayPal was an example of vertical growth, the rest of the acquisitions were either horizontal growth or concentric diversification. A good argument can be made that although each of these acquisitions looked appealing, they were too many, too soon. Management appears to have been distracted by new business growth opportunities, took its eye off its core business, and was unable to integrate the new businesses with the old. Whitman and her team probably assumed that eBay’s lead in web auctions was sustainable without much reinvestment and thus wasted time and money on other ventures. This mistake has been made by many other companies, most notably by Sears, Roebuck when it acquired insurance and real estate businesses instead of investing in its retail stores.
2. Using a market development strategy, a company or business unit can (1) capture a larger share of an existing market for current products through market saturation and market penetration or (2) develop new uses and/or markets for current products. Using the product development strategy, a company or unit can (1) develop new products for existing markets or (2) develop new products for new markets. Aside from PayPal, eBay appeared to follow a
Value Chain is divided into primary activities and supportive activities to create the greatest possible value for eBay. Primary activities refer to inbound logistic, operations, outbound logistic, marketing and sales, and Service. Supportive activities refer to procurement, technology development, human resource management (HRM), and firm infrastructure. Primary activities are directly linked to create value by production or services. Supportive activities, on the other hand, build the necessary basis for primary activities. The final part of value chain is to achieve margin.
In inbound logistic, eBay have some technologies to support their goods and services. These technologies are important. As we know, eBay has many users in the world, so, eBay has a good quality of servers, database software and computer data systems to operate the daily works. Therefore, eBay uses servers to operate their data to assist the procedure to finish the final products.
In operations, due to the inbound logistic, eBay can run their working operations. According to the eBay website, eBay provides some series of internet tools to help users to trade easily. For example, eBay’s shipping center provides shipping calculator for buyers to automatically know the shipping cost for their specific location. eBay has PayPal system which can improve the transaction of users. It is very useful to make the shipping process faster and efficient for high numbers of sellers and buyers, and Paypal automatically generates the tracking information for the buyers. On the other hands, eBay provide Skype to let buyers and sellers to use VoIP service providers for communication in the world. And, “Bill Me Later” is an eBay service that provides convenient and secure payment method designed for purchasing on the web or over the phone.
In outbound logistic, that means the buyers and sellers can finalize their trading process, they need to be sent along the supply chain to...