Executive Summary

eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com,

an online auction and shopping website in which people and businesses buy and sell a broad
variety of goods and services worldwide. Founded in 1995, eBay is one of the notable success
stories of the dot-com bubble; it is now a multi-billion dollar business with operations localized
in over thirty countries.[3][4] eBay expanded from its original "set-time" auction format to include
"Buy It Now" standard shopping; shopping by UPC, ISBN, or other kind of SKU (via Half.com);
online classified advertisements (via Kijiji or eBay Classifieds); online event ticket trading
(via StubHub); online money transfers (via PayPal[5]) and other services. In August 2009, eBay
Inc. formed a partnership with General Motors enabling hundreds of GM dealers in California to
help consumers negotiate purchase of new GM cars and trucks through the eBay online
marketplace. Its marketplace transformed the Internet and the way many of us shop and do
business worldwide. eBays marketplace, or marketspace is an online virtual trading platform
for the sale of goods and services by a community of users that comprises individual buyers and
sellers, as well as small business owners. eBay also provides auctions where it determines the
price of items sold. VISSION MISSION.
With more than 97 million active users globally (as of Q2 2011), eBay is the world's largest
online marketplace, where practically anyone can buy and sell practically anything.
In the Business segments presented in the case first is the Marketplaces, Platforms, and services
which includes eBay.com, StudHub, Online Classifields, Online Advertising, Shopping.com, and
Rent.com. Through a trusted online community facilitating trading with unknown partners on the
Internet, eBay Inc. provides a trusted and safe trading environment by offering services which
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enables the consumers to be at ease in doing trading with eBay. The second segment is the
Payments which is composed by PayPal and Bill Me Later transaction services. These services is
available to any online or offline individual or business with an e-mail address and allows
members to transact online. The third segment is the Communications which is composed of
Skype, which was founded in 2003 and acquired by eBay in 2005. It is the worlds fastestgrowing Internet Communication software platform. Although there is a risk with Bill me Later
even though its accounts are funded by CIT Bank, it is responsible for all functions related to the
account. It initially funds consumers loans using cash from business activities and a line of
credit. So it must find potential consumers that will really pay credits, because Future
profitability depends on its consumers.
eBays Competitors includes: online and offline retailers, distributors, liquidators, import and
export companies, online and offline auctioneers, catalog and mail order companies, classifieds,
directories, search engines, products of search engines, virtually all online and offline commerce
participants (consumer to consumer, business to consumer and business to business), and online
and offline shopping channels and networks.
Its Economic Climate which composes of a weak global economic conditions, in addition to the
mortgage and worldwide credit related financial crisis, are expected to limit revenue growth,
particularly in the Marketplaces segment, which is closely tied to consumer purchase patterns.
eBay Inc has its own Political and Legal environments which includes Sales Tax and other Taxes,
Long tern Contractual Obligations, Pirated or Counterfeited items and Security Breach and
Identity Theft.

eBays challenges expansion of both in the United States and internationally has placed a
significant strain on management, operations, and financial resources. Particular areas that are
strained include Website Usability were in growth in the number of products and Web site
features has caused the site to become less user friendly, Website Stability were in increased
volume and greater complexity requires additional expensive investments in hardware, software
and personnel, Customer Account Billing were in transaction processing and revenue collection
becomes more difficult as the number of transactions increase and consumers default on loans
and lastly Customer Support were in it is challenges from greater trade activity and an increased
number of users and provide good after service.
eBays Future is anything but certain. It may need further analysis and needs a clear and well
clear strategic pla to achieve its mission and vision to become the worlds number one
marketplace.

Background/ History
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It all began with Pez Candy. One evening in September 1995, Pierre Omidyar, the founder of
eBay, and his wife were discussing their desire to contact other Pez collectors. To solve the
problem he created an online auction in the form of a sole proprietorship business. As a result,
eBay was created over the Labor Day weekend by Pierre, a computer programmer, who devised
a code that enabled and ran the eBay auction Web site from his home computer. Later in May
1996, eBay was incorporated in California and became public on September 24, 1998. The first
eBay auction was also conducted on Labor Day. As of 2008, eBay has a 14 percent share in the
global e-commerce with 86.3 million active users.
On Labor Day weekend in 1995, computer programmer Pierre Omidyar wrote the code for what
he called an "experiment": What would happen if everyone in the world had equal access to a
single global marketplace? Pierre tested his new auction website by posting a broken laser
pointer, which he was about to throw away. And to his surprise, a collector bought it for $14.83.
The sale of a broken laser pointer was the beginning of a radical transformation in commerce.
eBay is a remarkably efficient market created by connecting individuals who wouldn't otherwise
be connected. It was the world's first example of online social networking. While skeptics
questioned whether people would trust doing business with strangers online, Pierre firmly
believed that people are basically good, and that any issues would work themselves out by the
community. Since then, eBay has grown to have a presence in 39 markets (including partnerships
and investments) with more than 90 million eBay.com users worldwide, trading more than
$1,900 worth of goods each second. In 2002, the eBay community made it clear that they
preferred using PayPal as an online payment method. So eBay acquired PayPal, which brought
new efficiencies to e-commerce and redefined possibilities for eBay's future.

The company has since expanded by acquiring innovative businesses, such as Shopping.com,
StubHub, Bill Me Later and others, which have positioned the company as the global leader in ecommerce and payments.
Building on Pierre's entrepreneurial legacy, eBay continues to passionately believe in the
potential of technology to connect people around the world. Read more about our global
portfolio of businesses and how we continue to support entrepreneurship.
Founder Pierre Omidyar as part of a larger personal site that included, among other things,
Omidyar's own tongue-in-cheek tribute to the Ebola virus. One of the first items sold on eBay
was a broken laser pointerfor $14.83. Astonished, Omidyar contacted the winning bidder to ask
if he understood that the laser pointer was broken. In his responding email, the buyer explained:
"I'm a collector of broken laser pointers." The frequently repeated story that eBay was founded to
help Omidyar's fiance trade Pez candy dispensers was fabricated by a public relations manager
in 1997 to interest the media, which were not interested in the company's previous explanation
about wanting to create a "perfect market". This was revealed in Adam Cohen's 2002 book, The
Perfect Store, and confirmed by eBay. Chris Agarpao was hired as eBay's first employee
and Jeffrey Skoll was hired as the first president of the company in early 1996. In November
1996, eBay entered into its first third-party licensing deal, with a company called Electronic
Travel Auction to use SmartMarket Technology to sell plane tickets and other travel products.
Growth was phenomenal; in January 1997 the site hosted 2,000,000 auctions, compared with
250,000 during the whole of 1996. The company officially changed the name of its service from
AuctionWeb to eBay in September 1997. Originally, the site belonged to Echo Bay Technology
Group, Omidyar's consulting firm. Omidyar had tried to register the domain name echobay.com,

but found it already taken by the Echo Bay Mines, a gold mining company, so he shortened it to
his second choice, eBay.com.
In 1997, the company received $6.7 million in funding from the venture capital firm Benchmark
Capital. Meg Whitman was hired as eBay President and CEO in March 1998. At the time, the
company had 30 employees, half a million users and revenues of $4.7 million in the United
States. eBay went public on September 21, 1998, and both Omidyar and Skoll became instant
billionaires. eBay's target share price of $18 was all but ignored as the price went to $53.50 on
the first day of trading. As the company expanded product categories beyond collectibles into
almost any saleable item, business grew quickly. In February 2002, the company purchased
IBazar, a similar European auction web site founded in 1995 and then bought PayPal on October
14, 2002.
In early 2008, the company had expanded worldwide, counted hundreds of millions of registered
users, 15,000+ employees and revenues of almost $7.7 billion. After nearly ten years at eBay,
Whitman made the decision to enter politics. On January 23, 2008 the company announced that
Whitman would step down on March 31, 2008 and John Donahoe was selected to become
President and CEO. Whitman remained on the Board of Directors and continued to advise
Donahoe through 2008. eBay, being the first virtual online business community, empowers
entrepreneurial individuals to become e-commerce business owners, which offers a sense of
community to both buyers and sellers that is sustained by communication and high transaction
rates on a wide selection of products,goods and services. eBays success is sustain through
communications and trust.
Step 1: Vision Mission, Objectives and Strategies.

Vision Mission (based on the case)

We intend to achieve our mission of creating the worlds online marketplace by improving and
expanding across three main areas: categories, formats, and geographies (2005 annual report)
We intend to achieve our mission of creating the worlds leading e-commerce franchise by
building upon our core Marketplaces business and building our adjacent businesses. (2006
Annual report)
We intend to continue to work toward our mission of creating the worlds leading e-commerce
franchise by investing in our core Marketplaces segment and continuing to build our adjacent
Marketplaces businesses. (Based on 2007 Annual Report).
Objectives
Based on the Vision Mission eBays plan is to expand in main areas: categories, formats,
communications, services and marketplace (geography).
Strategies
The strategic statement that best describes eBays activities could be formulated as follows:
EBay allows customers to create individual auctions and online stores in order to sell used and
new products. This process is facilitated by the ability to create communities of interest,
providing secure transaction services and a peer review process in a global environment.
Therefore eBay sees itself as a facilitator for product-related transactions over the Internet. This
particular statement describes the companys main processes and shows the opportunities eBay
wants to pursue.
Step 2: Develop Vision and Mission statement for the organization
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Vision
We intend to achieve and provide the needs of consumers by providing quality products through
effective and efficient online service and become the worlds leading e-commerce industry in
order to ensure trust in the online community

Mission
We intend to dominate the online marketplace by expansions and improvements to offer a sense
of community to both buyers and sellers. And provide a safer online experience to ensure trust
and increase profitability.

Step 3: Organizations external Opportunities and Threats

Opportunities:
Acquisitions provide new business strategy opportunities

 Market development in new and emerging markets like China and India which they are
considered as the most populated area can be a huge opportunity
Market penetration/ Improve market services in current markets can make a large number
of potential customers to subscribers
Threats
Success attracts greater competition
Attacks by illegal practices might happened
Some cost like credit card charges cannot be easily controlled by eBay

Step 4: Competitive Profile Matrix

eBay

amazon.com

Yahoo

uBid

Key Factors

Weight

Rating

Score

Rating

Score

Rating

Score

Rating

score

.15

1.20

1.2

1.05

.75

Workforce

.05

.35

.25

.30

.25

Product Innovation

.20

1.80

1.40

1.60

1.20

After sales service

.05

.15

.40

.15

.15

Brand name

.15

10

1.50

10

1.50

1.35

.60

Customer service

.10

.60

.80

.60

.50

Accuracy of Billing

.10

.60

.70

.70

.70

Warranties

.10

.90

.80

.60

.50

Advertising

.10

.60

.60

.70

.30

TOTAL

1.00

66

7.90 67

7.05

43

4.95

Technology
Expertise
Skills and
Capabilities

Marketing

7.65 59

According to the constructed Competitive Profile Matrix the strong points and the weak points of
the organizations are as follows
Strong points

Expertise in technology
10

Workforce

Product Innovation

Brand Name

Accuracy of billing

Advertising

Weak points

After sales service

Customer service

Warranties

The identified weaknesses are due to activities eBay performs and have no immediate effect, as
they dont affect operations.

Step 5: External Factor Evaluation Matrix

Opportunities

Weight Rating Weighted Score

Acquisitions

.20

.80

Market Development

.15

.45
11

Market Penetration

.20

.80

Success attracts competition .15

.45

Illegal practices

.15

.45

Credit card charges

.15

.45

TOTAL

1.00

Threats

3.4

Total weighted score is 3.4 indicates that the business has a strong external ability to
respond to external factors of the organization.

Step 6: Organizations Strengths and Weaknesses

Strengths
eBay is the leading global brand for online auctions
The company takes advantage of the benefits of Customer Relation Management
(companys interactions with customers, clients and sales prospects)
eBay has become a generic term for online auctions
Weaknesses
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 Open to fraudulent activities

System breakdowns could affects trading activities

Step 7: Internal Factor Evaluation Matrix

Internal Strengths

Weight Rating Weighted Score

eBay Global Brand for auction

.20

.60

Customer Relation Management

.20

.60

Generic Brand

.30

1.20

Fraudulent activities

.20

.60

System Breakdown in trading activities

.10

.20

TOTAL

1.00

Weaknesses

3.20
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 Total weighted score is 3.2 indicates that the business has a strong internal ability to
respond to internal factors of the organization.

Step 8: SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, QSPM Matrix
SWOT Matrix

Strengths
Leading Global Brand
for auctions
Customer Relations
Management

Weaknesses
Fraudulent Activities
System Breakdown
on trading activities

Known Generic Brand

for e-commerce
Opportunities
Acquisitions provide
new business
strategic
opportunities
Market Development
Market Penetration/
Diversification

SO

WO
Global Expansions

Online Banking

Maintain simplicity of
interaction with the
online communitys
capability

Diversify products
Systems for Online
verification of
products
Strategic alliance
with courier
companies
Penetration of all
types of market

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Threats

ST

Attracts competition
Illegal Practices
Credit Card charges
not controllable by
eBay

WT
Acquisition strategy
global expansion

Alliance to postal
services

Use online security

options for verification
and authentication

Authentication of
consumers identity

Reinforce marketing
management and
systems

The analysis shows using this strategic process, it shows competitive industry data and identifies
key areas for improvement and develops a strategic plan to success, by utilizing the Strengths
and the Opportunities mentioned in the matrix to be in action and also maintain the standard of
the firm. And also by turning the weaknesses into opportunities that may help in future decisions
of the organization

SPACE MATRIX
Factors determining environment and stability
Technological change

Many

0 1 2 3 4 5 6 Few

Rate of inflation

High

0 1 2 3 4 5 6 Low

Demand variability

Large

0 1 2 3 4 5 6 Small

Price range of products

Wide

0 1 2 3 4 5 6 Narrow

Barriers to market

Few

0 1 2 3 4 5 6 Many

Competitiveness

High

0 1 2 3 4 5 6 Low

Price elasticity of demand elastic 0 1 2 3 4 5 6 inelastic

Average is 3 score is -3.0

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Industry Strength
Growth

Low

0 1 2 3 4 5 6 High

Profit

Low

0 1 2 3 4 5 6 High

Financial stable

Low

0 1 2 3 4 5 6 High

Technological

Simple

0 1 2 3 4 5 6 Complex

Resourcefulness Inefficient 0 1 2 3 4 5 6 Efficient

Capital

High

0 1 2 3 4 5 6 Low

Entry to market

Easy

0 1 2 3 4 5 6 Difficult

productivity

low

0 1 2 3 4 5 6 High

Average 4.25, score is 4.3

Competitive Advantage
Market share

Small

0 1 2 3 4 5 6 Large

Product quality

Inferior

0 1 2 3 4 5 6 Superior

Product life cycle

Late

0 1 2 3 4 5 6 Early

Product replacement

variable

0 1 2 3 4 5 6 Fixed

Customer loyalty

Variable

0 1 2 3 4 5 6 High

Competitors capacity Low

0 1 2 3 4 5 6 High

Technology

Low

0 1 2 3 4 5 6 High

Vertical integration

Low

0 1 2 3 4 5 6 High

Average 4 score -1.9

Financial Strength
ROI

Low

0 1 2 3 4 5 6 High

Leverage

Not balance 0 1 2 3 4 5 6 Balanced

Liquidity

Not balance 0 1 2 3 4 5 6 Balanced

Capital

High

0 1 2 3 4 5 6 Low
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Cash flows

Low

0 1 2 3 4 5 6 High

Exit to market Difficult

0 1 2 3 4 5 6 Easy

risks

0 1 2 3 4 5 6 few

Much

Average 3.80 score 3.9

Aggressiveness eBay has a competitive advantage and is in the financial position to

protect it
Competitiveness competitive advantage exists, but eBay still has to improve its
situation in penetrating and emerging markets and enhance more on e-retailing
The main markets of eBay are online auctions and e-retailing, the company has a strong
position to enhance its situation there.

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BCG Matrix
STARS
eBay

QUESTION MARKS
Live Auctions

Amazon.com
Classified Advertisements
Amazon Auctions
CASH COWS
Flea Markets

DOGS
Yahoo

uBid

Putting together eBay and its competition, the online auction industry shows different
company types.
eBay, Amazon.com, Classified Ads and Amazon auctions as a dominated market share
and growth
Flea Markets and uBid as has dominated a high market share but a little growth
Live auctions as to low market share which only caters the wealthy people but high
growth
Yahoo as otherwise liquidate but delivers cash

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IE Matrix
4

GROW & BUILD

Market Penetration
Acquisitions
Market Development
HOLD & MAINTAIN
Market Penetration
Product Development
Customer Relations
Generic Brand
Global Brand
HARVEST OR DIGEST
Illegal Practices
System Breakdown
Fraudulent Activities

These are the current position of the divisions for the future for the better results. Based
on the Internal and External Factors that affects the organization. It gives us the clearing
view what to strategically do in the future.
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QSPM Matrix
Key Factors
Internal Strengths

Market Development
Weight Attractive
Score

Total
Attractive

Market Penetration
Attractive
Score

Total
Attractive
Score

Score
eBay Global Brand for

.20

.60

.60

.20

.60

.60

.30

1.20

1.20

Fraudulent activities

.20

.60

.80

System Breakdown in

.10

.20

.30

auction
Customer Relation
Management
Generic Brand
Internal Weaknesses

trading activities
TOTAL

1.00

3.20

3.50

External
Opportunities
Acquisitions

.20

.80

.60

Market Development

.15

.45

.60

Market Penetration

.20

.80

.60

External Threats

20

Success attracts

.15

.45

.30

Illegal practices

.15

.45

.60

Credit card charges

.15

.45

.30

TOTAL

1.00

competition

Total Sum of Attractiveness Score

3.4

6.60

6.50

Compared strategies are close to each other. Therefore the organization must averagely
hold and maintain and enhance more on market development and market penetration to
achieve success.

Conclusions
Strategic actions:
Maintain global growth initiative

Acquisitions (develop new markets)

New markets

New products

Adopt into different cultures

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 Technological development

Rapid application development

Selling new applications/programs

Creating standards for the industry

Programme interface and developers programme

Security

Back up systems

Online verifications

Enhance trustee services

Online banking improvements

Enhance after sales services

Reinforcing the Marketing department

Improve image through advertising

Global branding to make eBay a generic brand

Recommendations

I choose Maintaining global growth initiative as a strategy to motivate consumers, by making

Acquisitions (develop new markets), new products and adopt into different cultures. It has an
advantage of a wide range of promotion because it will encourage consumers to do e-retailing
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and also catch the attention of consumers. And it can also provide convenience for the
consumers because they are introduced to new products.

Moreover, the following recommendations are advance;

a.

eBay must develop their strategies to ensure great demand, high profit return
and to meet their target market, put up securities to ensure no fraudulent
activities may happened through authentication and verifications

b.

eBay must reinforce the marketing department to improve image in through

advertising and by global branding to make eBay a generic brand for
consumers.

Bibliography
http://www.ebayinc.com/who
http://en.wikipedia.org/wiki/EBay
http://www.ebayinc.com/history
http://digitalenterprise.org/cases/ebay.html
https://mm.jpmorgan.com/stp/t/c.do?i=6D588-517&u=a_p*d_301789.pdf*h_2kkrp0e4
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en.wikipedia.org
http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method
http://www.ebayinc.com
http://www.valuebasedmanagement.net/methods_bcgmatrix.html
http://www.kulzick.com/stu/IEmatrix.htm
http://www.mba-tutorials.com/?s=Internal+External+matrix
www.google.com

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