Strategic evaluation of eBay

In a league by itself Case Study – i In a league by itself – Case Study – FT 06 Group 1 – 2006

Agenda 1/3 A B C ‣ Online auctions ‣ Key success factors ‣ eBay Characteristics of the Online auction Positioning of eBay Industry industry and its competitors Changing forces of the Online auctions vs. e- Strategic group map macro-environment tailing Competitive forces eBay In a league by itself – Case Study – FT 06 Group 1 – 2006 2

Agenda 2/3 ‣ Internal Analysis ‣ Value chain analysis ‣ Strategic actions Strategic statement Value chain model Now what? SWOT Implications of the Competencies strategic statement TOWS-Matrix Differences between Evaluation of the eBay and amazon.com Competitive strength strategy assessment Implications Action groups Issues to address Activity system In a league by itself – Case Study – FT 06 Group 1 – 2006 3

Agenda 3/3 ‣ Competitive approach Porter’s generic strategies SPACE Miles/ Snow Warfare Justiﬁcation Ansoff-Matrix In a league by itself – Case Study – FT 06 Group 1 – 2006 4

Online auctions Characteristics of the industry Implications of industry characteristics Changing forces of the macro-environment Competitive forces In a league by itself – Case Study – FT 06 Group 1 – 2006 5

Online auctions Characteristics of the industry The current characteristics of the online auction industry include market data and descriptive factors of the industry ‣ Market data ‣ General factors • • Market size: 665m internet users in Economies of scale: trafﬁc and 2002, expected to be 1bn in 2005 subscriber base are important • • e-Commerce: $170bn in 1999 to Product innovation: short product life $6,79tn in 2004 cycle demands expenditures for R+D • • Online retail: annual growth at 19% to Vertical integration: changing customer reach a volume of $230bn in 2008, structure (from B2C to B2B), use of 57,5 of that will be online auctions physical stores, development and sale of underlying systems • Low CAPEX requirements The online auctions industry has been growing enormous over the last years – companies have to be able to keep up In a league by itself – Case Study – FT 06 Group 1 – 2006 6

Online auctions Implications of industry characteristics What are the implications from industry characteristics for companies competing in this industry? ‣ Market size ‣ Vertical integration • • Global market To keep a competitive advantage companies have to consider vertical • Opportunities for a large number of integration up- as well as down-stream competitors ‣ Product Innovation ‣ Market growth • Product life cycles are very short - • Fast growing market companies have to keep track with • Companies have to keep up with the competitors and meet the needs of the speed of the growing market customers ‣ Capacity & Economies of scale ‣ CAPEX • • Subscriber base is important - Very low, so entry barriers for new companies have to generate trafﬁc in players in the market are low order to get customers In a league by itself – Case Study – FT 06 Group 1 – 2006 7

Online auctions Changing forces of the macro-environment Driving forces with the biggest inﬂuence within an industry and their implications for competing companies ‣ Emerging internet technology ‣ Long-term industry growth applications • Industry is still in the growing phase, • companies have to adjust to Market is based on internet technological development technology, hence it must be a core competency of competing companies ‣ Marketing innovation ‣ Globalization • Large market, fast growth and a huge • subscriber base ask for differentiating Large base of suppliers and customers the company from its competitors throughout the world In a league by itself – Case Study – FT 06 Group 1 – 2006 8

Online auctions Changing forces of the macro-environment Driving forces with the biggest influence within an industry and their implications for competing companies ‣ Diffusion of technology among ‣ Changing societal concerns, competitive companies attitudes, and lifestyles • • Low CAPEX and low barriers of entry Customers get used to use the make it difficult to differentiate from Internet, more and more competitors the competitors, only technology will try to get into this market (R+D) can be used as a differentiating factor ‣ Regulatory influences • Young environment, still in its growing phase, so future regulations are uncertain, only few regulations in place yet In a league by itself – Case Study – FT 06 Group 1 – 2006 9

Online auctions Competitive Forces The Five Forces Model of Competition is a key tool for diagnosing the competitive environment Substitute products Industry Suppliers Buyers rivalry Potential new entrants Source: Thompson, Strickland, Gamble (2005) In a league by itself – Case Study – FT 06 Group 1 – 2006 10

Online auctions / Competitive forces 1/4 Industry rivalry How strong are competitive pressures stemming from the efforts of rivals to gain market positions?* ‣ The online auction market changed ‣ B2B / B2C / P2P a lot since its beginnings ‣ New entrants over the past years ‣ More and more competitors from (search engines, etc.) different backgrounds entered the market ‣ Pure markets of auctions vs. e-tailing *Source: Thompson, Strickland, Gamble (2005) Competition increased as more players entered to take the opportunities of the fast growing market In a league by itself – Case Study – FT 06 Group 1 – 2006 11

Online auctions / Competitive forces 2/4 Potential new entrants How strong are the competitive pressures associated with the entry threat of new rivals?* ‣ Technological barriers of entry do ‣ Traditional retailers and e-tailers not exist are in a similar market to online auctions ‣ Trafﬁc generation is important ‣ Customers have to be gained from trafﬁc ‣ Customer base retention is important *Source: Thompson, Strickland, Gamble (2005) With new entrants from traditional industries the market for online auctions changes In a league by itself – Case Study – FT 06 Group 1 – 2006 12

Online auctions / Competitive forces 3/4 Substitute products How strong are competitive pressures coming from the attempts of companies outside the industry to win buyers over?* ‣ Increasing number of ﬁxed price ‣ Traditional retailing sales over online auction sites ‣ e-tailing ‣ Search engines and price- comparison websites moving into online retailing and auctions ‣ Traditional auctions *Source: Thompson, Strickland, Gamble (2005) The fast growing nature of the market lead to companies differing their products slightly to take part in the market In a league by itself – Case Study – FT 06 Group 1 – 2006 13

Online auctions / Competitive forces 4/4 Suppliers / Buyers How strong are the competitive pressures stemming from supplier/ buyer bargaining power and seller-supplier collaboration?* ‣ Suppliers ‣ Similar pressures • • Casual sellers Diverse customer base • • Hobbyists and Collectors Shift from North America to Asia- Paciﬁc and Eastern Europe • Power and corporate sellers • Fraud ‣ Buyers • Quality checks are difﬁcult • Bargain hunters • Hobbyists and Collectors • Professional buyers *Source: Thompson, Strickland, Gamble (2005) Especially in the case of online auctions suppliers and buyers and their pressure on the companies are very similar In a league by itself – Case Study – FT 06 Group 1 – 2006 14

A Key success factors Online auction industry B C Online auctions vs. e-tailing eBay In a league by itself – Case Study – FT 06 Group 1 – 2006 15

Key success factors Online auction industry The key success factors include product attributes, competencies, competitive capabilities that have impact on future competitiveness ‣ Technology ‣ Marketing • • Expertise in technology Brand name ‣ Skills and capability • Technical assistance • • Customer service Talented workforce • • Accuracy of billing Product innovation • • Guarantees and warranties e-commerce • • Advertising After-sales service For the online auctions industry, the main key success factors are related to marketing activities In a league by itself – Case Study – FT 06 Group 1 – 2006 16

Key success factors Online auctions vs. e-tailing Key success factors for online auctions include the amount of trafﬁc or security and are quite similar ‣ Key success factors of the online ‣ Further KSF are: auction industry and e-tailing in • Gaining a large subscriber base general are comparable • Retaining existing customers ‣ Auction sites, such as eBay have either moved into or come from an • Security issues (payment and e-tailing background perception of security) • Variety of products In a league by itself – Case Study – FT 06 Group 1 – 2006 17

Key success factors eBay The future success of eBay is dependent on the company’s ability to identify and optimally adjust to drivers of success ‣ Fixed prices ‣ Expansion of categories vs. focussing on using full capabilities of • Use of large subscriber base to move current categories from auctions to general (online) ‣ Other issues retailing • Larger, more established competition • International expansion has to be faced • Prioritization of efforts • Emphasis on ﬁxed prices? • Satisfying small and large customers In a league by itself – Case Study – FT 06 Group 1 – 2006 18

eBay Position of eBay and its competitors Strategic group map In a league by itself – Case Study – FT 06 Group 1 – 2006 19

eBay Positioning of eBay and its competitors Under consideration of the identified key success factors eBay’s position in the industry can be identified as follows ‣ eBay ‣ Competition • • extensive offering of products in trying to copy the business model of different categories: Collectables, eBay Vehicles, Real Estate, Office equipment • difficult to differentiate their product etc. • • no competitive advantage with regard brand name eBay is synonymous with to reputation, and brand awareness online auctioning • reputation as a safe and reliable and fiercely protected by the company In a league by itself – Case Study – FT 06 Group 1 – 2006 20

eBay Strategic group map Putting together the key success factors of eBay and its competition, the online auction industry shows different company types Strong Class. ads Reputation/ Brand Awareness Amazon.com Live Amazon auctions auctions Flea markets Yahoo uBid Weak Broad Narrow Number/ Variety of Auctions/ Product Categories In a league by itself – Case Study – FT 06 Group 1 – 2006 21

Internal Analysis Strategic statement Implications of the strategic statement Evaluation of the strategy In a league by itself – Case Study – FT 06 Group 1 – 2006 22

Internal Analysis Strategic Statement The strategic statement that describes eBay’s 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.” eBay sees itself as facilitator for product-related transactions over the Internet In a league by itself – Case Study – FT 06 Group 1 – 04 October 2006 23

Internal Analysis Implications of the strategic statement What are the implications of this particular formulation of a strategic statement for eBay? What? So what? “individual auctions and online removes physical barriers between stores” buyers and sellers creates added value through base “communities of interest” of additional information “peer review” creates conﬁdence “global environment” opens new markets This particular statement describes the company’s main processes and shows the opportunities eBay wants to pursue In a league by itself – Case Study – FT 06 Group 1 – 2006 24

Internal Analysis Evaluation of the strategy Does the strategy create a competitive advantage for eBay? – Is it a winning strategy ‣ The strategy describes the core ‣ A competitive advantage will be competencies of eBay created, if: ‣ Several “soft” factors are addressed • eBay handles the necessary processes more efﬁcient and effective • Not sure if these factors e.g. peer • eBay keeps its ﬁrst-mover advantage review differentiate eBay in a way that and stays always one step ahead of the creates a competitive advantage competition ‣ The strategy as described seems to be easy to replicate The strategy can be a winning strategy if eBay moves fast enough and optimizes the processes to gain a competitive advantage In a league by itself – Case Study – FT 06 Group 1 – 2006 25

Value chain analysis Value chain model Competencies Differences between eBay and amazon.com Implications Issues to address In a league by itself – Case Study – FT 06 Group 1 – 2006 26

Value chain analysis Value chain model 1/3 In order to assess the value chain of eBay, Porter’s model will be applied to eBay and its closest competitor Strong Class. ads Amazon.com Reputation/ Brand Amazon Live auctions Awareness auctions Flea markets Yahoo uBid Weak Broad Narrow Number/ Variety of Auctions/ Product Categories Further evaluation will include a closer look at amazon.com’s value chain and the main differences compared to eBay In a league by itself – Case Study – FT 06 Group 1 – 2006 27

Value chain analysis Value chain model 2/3 – eBay The application of the Value Chain model onto eBay delivers results that differ from the generic model Legal Finance Human Resources Margins Technical Development (R+D) Conversion Auction Peer from trafﬁc Marketing Payment to buyers Process Review and sellers Differentiation from other service providers leads to unique value creating activities for eBay In a league by itself – Case Study – FT 06 Group 1 – 2006 28

Value chain analysis Value chain model 3/3 – amazon.com Although they compete in the same industry, amazon.com’s value chain differs in many instances from eBay’s Legal Finance Human Resources Margins Technical Development (R+D) Con- version Market- Retail Cross- Product Product from ing process selling shipping review trafﬁc to buyers Differentiation from other service providers leads to unique value creating activities for amazon.com In a league by itself – Case Study – FT 06 Group 1 – 2006 29

Value chain analysis Competencies eBay amazon.com Competencies -Technical proficiency -Technical proficiency -Usability -Usability -Shipping Core competencies -Bidding site -Catalogue site -Conversion rate -Product review (traffic to subscribers) -Conversion rate Distinctive -Peer review -Cross-selling competencies Both, eBay and amazon.com, have distinctive competencies that differentiate them from competition and from another In a league by itself – Case Study – FT 06 Group 1 – 2006 30

Value chain analysis Differences between eBay and amazon.com eBay amazon.com eBay started with used products amazon.com started with new and is now expanding into new products and is now distributing products used products as well Community focus – connects Product focus people “Virtual” product – no ownership Handles physical products and or handling of physical products takes ownership Facilitates transactions Warehousing, packaging and delivery The main difference between the two companies is the handling of physical and “virtual” products In a league by itself – Case Study – FT 06 Group 1 – 2006 31

Value chain analysis Implications When they started business, the strategic intent of eBay and amazon.com differed considerably ‣ Through diversiﬁcation in new ‣ eBay’s way of handling products is market segments the targeted less capital intensive, hence easier users of eBay and amazon.com have to copy become more similar ‣ eBay adds value through bringing ‣ Both business models have become buyers and sellers together, who more professional over time, would not have made business providing a platform not only for otherwise consumers, but also for businesses The business models of eBay and amazon.com have become closer over the last years In a league by itself – Case Study – FT 06 Group 1 – 2006 32

Value chain analysis Issues to address Through the value chain analysis several issues within eBay can be identiﬁed, both present and near future issues ‣ Present ‣ Near future • • Too many sellers in comparison to the Positioning number of buyers • Prioritization of efforts • Security (of the auction process and • Changes in the number of categories payment) • Specialization • Fraud (through users in the auction • process and in the review process) Expansion in terms of different types of sellers • Necessity to accommodate power • sellers (businesses) Fixed price auctions Apart from system related issues the integration of professional sellers is one of the most urgent issues for eBay In a league by itself – Case Study – FT 06 Group 1 – 2006 33

Strategic actions Now what? SWOT TOWS-Matrix Competitive strength assessment Action groups Activity system In a league by itself – Case Study – FT 06 Group 1 – 2006 34

Strategic actions Now what? 1/3 – Industry characteristics What? So what? Now what? Market size Global market/ Opportunities for Protect market-share/ Scan many competitors market for new players Market growth Fast growing market Maintain growth initiative Keep up with speed of market (beware sustainable growth rate) Capacity & Economies Subscriber base is important/ Maintain brand image and of scale generate trafﬁc to get subscribers advertising efforts Vertical integration Up- and downstream integration Identify take-over candidates/ to keep competitive advantage software for vertical integration Product innovation Product life cycles are short, keep Rapid application development track with competitors and meet customers needs CAPEX Low requirements, hence low Monitor market for possible market entry barriers entrants In a league by itself – Case Study – FT 06 Group 1 – 2006 35

Strategic actions Now what? 2/3 – Changing forces What? So what? Now what? Emerging internet Internet technology must be Be ahead of and develop technology applications among core competencies software, standards & protocols Globalization Large base of suppliers and Form strategic alliances customers worldwide Long-term industry Industry is in growing phase, Be a main driver of technological growth adjust to technological advances advances Marketing innovation Differentiation necessary to Maintain current and develop accommodate huge potential new distinctive competencies Diffusion of technology Technology (R+D) as main Hire, train and reward best staff differentiating factor in industry Regulatory inﬂuences Future regulations are uncertain, Internal code of best practice only few regulations in place yet with high ethical standard Changing societal Growing acceptance and use of Actively participate in user attitudes and lifestyles Internet/ more competitors education (communities) In a league by itself – Case Study – FT 06 Group 1 – 2006 36

Strategic actions Now what? 3/3 – Strategic statement What? So what? Now what? Individual auctions and Removes physical barriers Keep processes easy, best in online store between buyers and sellers industry for auctions and stores Communities of Creates added value through Nurture communities, support interest base of additional information via newsletters etc. Peer review Creates conﬁdence Protect integrity process, actively monitor for fraud Global environment Opens new markets Support multi language platforms/ communicate advantages of global market to customers In a league by itself – Case Study – FT 06 Group 1 – 2006 37

Strategic actions SWOT 1/2 The internal analysis leads to the following ﬁndings ‣ Strengths ‣ Weaknesses • • eBay is the leading global brand for The model of eBay is open to a online auctions number of fraudulent activities • • The company exploits the beneﬁts of System breakdowns could affect the CRM trading activities of eBay • eBay has become a generic term for online auctions eBay has a very strong position in the online auction industry – it is more or less a synonym for online auctions In a league by itself – Case Study – FT 06 Group 1 – 2006 38

Strategic actions SWOT 2/2 The external analysis shows following opportunities and threats ‣ Opportunities ‣ Threats • • Acquisitions provide new business Success attracts competition strategy opportunities • Attacks by illegal practices could • Market development in new and happen emerging markets like China and India • Some costs like credit card charges is a huge opportunity cannot be controlled by eBay • Market penetration in current markets can change a large number of potential customers to subscribers Opportunities and threats can mainly be connected to the growing character of the industry In a league by itself – Case Study – FT 06 Group 1 – 2006 39

Strategic actions TOWS-Matrix Strengths – S Weaknesses – W Majority of Market Fraud issues - esp. at C2C level Strong Leadership Dependencies on system running at Communities of interest all times Global brand/ Megabrand B2C and C2C operations Financial strength First to market Opportunities – O SO Strategies WO Strategies Acquisiitions Global expansion Online banking Maintain simplicity of interaction Diversify into “new” product Growth of aspiring consumers in with buyers and seller - usabiity markets developing markets Online verification of products Strategic alliance with couriers Diversification Systems for product verification eBay stores - brick and mortar Threats – T ST Strategies WT Strategies Domestic players have advantage Acquisition strategy - global Alliance to postal services due to local experience expansion Use online security protocols Unscrupulous practices - spam and similar to banking for verification of viruses to eBayers authenticity Attracts competition because of Re-enforce marketing, management supernormal profits and systems as concentrated effort In a league by itself – Case Study – FT 06 Group 1 – 2006 40

Strategic actions Competitive strength assessment 1/2 eBay Yahoo uBid amazon.com Key success factors Weight Rating Score Rating Score Rating Score Rating Score Technology Expertise in technology 0.15 8 1,20 8 1,2 7 1,05 5 0,75 Skills and capabilities Talented workforce 0.05 7 0,35 5 0,25 6 0,30 5 0,25 Product innovation 0.20 9 1,80 7 1,40 8 1,60 6 1,20 After sales service 0.05 3 0,15 8 0,40 3 0,15 3 0,15 Marketing Brand name 0.15 10 1,50 10 1,50 9 1,35 4 0,60 Customer service 0.10 6 0,60 8 0,80 6 0,60 5 0,50 Accuracy of billing 0.10 9 0,90 7 0,70 7 0,70 7 0,70 Guarantees and warranties 0.10 6 0,60 8 0,80 6 0,60 5 0,50 Advertising 0.10 8 0,80 6 0,60 7 0,70 3 0,30 Total 1,00 66 7,90 67 7,65 59 7,05 43 4,95 In a league by itself – Case Study – FT 06 Group 1 – 2006 41

Strategic actions Competitive strength assessment 2/2 What strengths and weaknesses of eBay in relation to the competition can be identiﬁed through the competitive strength assessment? ‣ Strengths ‣ Weaknesses • • Expertise in technology After sales service • • Talented workforce Customer service • • Product innovation Guarantees and warranties • Brand name • Accuracy of billing • Advertising The identiﬁed weaknesses are due to activities eBay performs and have no immediate effect, as they don’t affect operations In a league by itself – Case Study – FT 06 Group 1 – 2006 42

Strategic actions Action groups 1/2 ‣ Maintain global growth initiative • selling new applications • • creating standards for the industry acquisitions (develop new markets) (e.g. protocols) • alliances (postal services, brick and • application programme interface and mortar stores) developers programme • new markets (develop India and China) • new products (m-commerce, e-tailing, ‣ Security brick & mortar shops, online-banking) • back-up systems • keep different cultures in mind • online veriﬁcations of electronic goods ‣ Technological development • enhance trustee service • • online banking protocols rapid application development (software for new and existing market • enhance back-end areas, e-tailing) In a league by itself – Case Study – FT 06 Group 1 – 2006 43

Strategic actions Action groups 2/2 ‣ Reinforcing marketing ‣ People matter • • improve and maintain image through employ best in industry advertising (above and below the line) • continuous training • user education participation • retain performers through rewards • global branding to make eBay generic • code of conduct and ethics policy brand with online auctions and e-tailing ‣ Protect market share ‣ Step ahead (of market dynamics) • aggressive marketing and advertising • increase competitive intelligence • innovative products and interfaces • identify and analyze global trends • aggressive quality control through peer • participate in user education review • innovation concentric environment • parallel systems In a league by itself – Case Study – FT 06 Group 1 – 2006 44

Strategic actions Activity system Maintain global growth Tech. Develop- Reinforce met marketing Prioritization Security 1 Step 2 ahead of market Protect 3 dynamics market share 4 People 5 matter 6 In a league by itself – Case Study – FT 06 Group 1 – 2006 45

Competitive approach Porter’s generic strategies SPACE Miles/ Snow Warfare Justiﬁcation Ansoff-Matrix In a league by itself – Case Study – FT 06 Group 1 – 2006 46

Competitive approach Porter’s generic strategies 1/2 According to Porter a company can pursue a cost-leadership or a differentiation strategy ‣ Quality ‣ Service ‣ Features • • • Security Trustee service Innovative products • • • Quality control User education M-commerce through peer review • • Interface/ Usability Interfaces • Alliances • • Online banking API • • Innovative products Industry standards • • Security Online veriﬁcation eBay can be identiﬁed as differentiator that builds a unique position through quality, service and features In a league by itself – Case Study – FT 06 Group 1 – 2006 47

Competitive approach SPACE 1/5 - Environment and stability Factors determining environment and stability (ES) 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 rang of competing products Wide 0 1 2 3 4 5 6 Narrow Barriers to entry into market Few 0 1 2 3 4 5 6 Many Competitive pressure High 0 1 2 3 4 5 6 Low Price elasticity of demand Elastic 0 1 2 3 4 5 6 Inelastic Average: 3.00 – Score on the graph: -3.0 In a league by itself – Case Study – FT 06 Group 1 – 2006 48

Competitive approach SPACE 2/5 - Industry strength Factors determining industry strength (IS) Growth potential Low 0 1 2 3 4 5 6 High Profit potential Low 0 1 2 3 4 5 6 High Financial stability Low 0 1 2 3 4 5 6 High Technological know-how Simple 0 1 2 3 4 5 6 Complex Resource utilization Inefficient 0 1 2 3 4 5 6 Efficient Capital intensity High 0 1 2 3 4 5 6 Low Ease of entry into market Easy 0 1 2 3 4 5 6 Difficult Productivity, capacity utilization Low 0 1 2 3 4 5 6 High Average: 4.25 – Score on graph: 4.3 In a league by itself – Case Study – FT 06 Group 1 – 2006 49

Competitive approach SPACE 3/5 - Competitive advantage Factors determining competitive advantage (CA) 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 cycle Variable 0 1 2 3 4 5 6 FIxed Customer loyalty Low 0 1 2 3 4 5 6 High Competitor’s capacity utilization Low 0 1 2 3 4 5 6 High Technological know-how Low 0 1 2 3 4 5 6 High Vertical integration Low 0 1 2 3 4 5 6 High Average: 4.13 – Score on graph: -1.9 In a league by itself – Case Study – FT 06 Group 1 – 2006 50

Competitive approach SPACE 4/5 - Financial strength Factors determining financial strength (FS) Return on investment Low 0 1 2 3 4 5 6 High Leverage Imbalanced 0 1 2 3 4 5 6 Balanced Liquidity Imbalanced 0 1 2 3 4 5 6 Balanced Capital required/ capital available High 0 1 2 3 4 5 6 Low Cash flow Low 0 1 2 3 4 5 6 High Ease of exit from market Difficult 0 1 2 3 4 5 6 Easy Risk involvement in business Much 0 1 2 3 4 5 6 Little Average 3.86 – Score on graph: 3.9 In a league by itself – Case Study – FT 06 Group 1 – 2006 51

Competitive approach SPACE 5/5 FS 3.9 ‣ Aggressive posture • eBay has a competitive advantage and is in the ﬁnancial position to protect it CA IS -1.9 4.3 ‣ Competitive posture • The competitive advantage exists, but -3.0 eBay still has to improve its situation in emerging markets like e-tailing ES The main markets of eBay are online auctions and e-tailing, the company has a strong position to enhance it situation there In a league by itself – Case Study – FT 06 Group 1 – 2006 52

Competitive approach Miles/ Snow Factors Strategic typologies Market characteristics Analyzer Technology Analyzer Competition Prospector/ Analyzer Business’s relative strength Prospector According to the typologies of Miles and Snow and the ﬁndings for eBay, the proposed strategies should be of offensive nature In a league by itself – Case Study – FT 06 Group 1 – 2006 53

Competitive approach Warfare The model from Miles/ Snow and the SPACE-model both identify aggressive, offensive strategies for eBay ‣ From the set of offensive strategies that eBay can choose, we identiﬁed and propose two: ‣ Frontal Assault • eBay has the power (resources like capital) to take on any upcoming competitor and push him out of the market before he can establish his position ‣ Encirclement • The strategy of encirclement includes a number of various actions that attack competition in several ways. Again, caused by its market position, eBay has the possibility to deal with competitors, before they become a threat eBay is in the position to take on competitors as they enter the market, either by pushing them out, or taking them over In a league by itself – Case Study – FT 06 Group 1 – 2006 54

Competitive approach Justification Are the identified strategic moves in alignment with/ supporting the strategic intent? ‣ Vision • “To be the world’s personal trading community” (eBay) ‣ Mission • “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.” ‣ Objectives • Identified action groups Looking at the vision, mission and objectives that have been identified for eBay, the offensive approach is justified In a league by itself – Case Study – FT 06 Group 1 – 2006 55

Competitive approach Ansoff-Matrix Product/ Market offer present new Market penetration Product development present Protect market share Technological development Maintain global growth initiative Market Market development Diversiﬁcation Maintain global growth initiative Step ahead new Reinforce marketing Maintain global growth initiative eBay’s current strategies and the identiﬁed strategic thrusts follow all of the possibilities Ansoff described for this matrix In a league by itself – Case Study – FT 06 Group 1 – 2006 56

Strategy for online auctions Case Study – i In a league by itself – Case Study – FT 06 Group 1 – 2006

Strategic evaluation of eBay

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