eBay - Case 24 (2)
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Pace University *
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490
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Information Systems
Date
Apr 3, 2024
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docx
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3
Uploaded by JudgeReindeerMaster634
1.
How did eBay pursue growth?
2.
eBay had steady and impressive growth since it began in 1995 seeing as it was such a strong force in the online auction industry. In two decades, the company had already amassed a net revenue of
over 10 billion dollars. The company did this by harnessing their unique business model and mission of enabling “individual self empowerment” and “trust between strangers.” The company also had websites outside of eBay that served different purposes such as
eBay Marketplaces, PayPal, Rent.com, Shopping.com, and eBay Style. This allowed them to have a much larger variety of products sold that could target a wider range of users, therefore promoting their growth. eBay did struggle to expand internationally and faced
challenges in all markets from a large number of competitors (due to low barriers to entry), however, it eventually worked to expand aggressively while combining with two of its other main points of strategy: products, and sense of community.
Using these main strategies, eBay shifted its focus to more localized approaches that greatly utilized the internet – the foundation of the original site. To break into more international markets, the company began to increase its market share and revenue through a high volume of acquisitions. These acquisitions were extensive and were based on a wide range of businesses in a wide range of global markets. For example, eBay acquired companies such as MercadoLibre, Lokau, and iBazar (all Latin American auction sites), as well as Shutl, a British marketplace site, and more. These acquisitions lasted two decades and were a brilliant use of their existing strategy to both grow rapidly, as well as effectively, seeing as they made some acquisitions in international markets that had been difficult to gain any sort of advantage in. Even through these efforts to expand internationally, eBay was growing internally to continue competing with competitors like Amazon, for example. They eventually introduced
the idea of fixed pricing to their site, which allowed eBay to compete directly with major competitors and penetrate new market
space. Previously, selling prices were solely determined by the highest bid which took days or weeks and drove people away.
1.
What source of competitive advantage does eBay have, and is that position supported by its resources and assets?
2.
eBay is a pioneering company in terms of online auctioning and marketplace which I believe is their main source of competitive advantage. They have several resources and assets that support this
claim. Since they paved the way of online auctioning, eBay was also able to pave the way of its advantages. An asset that the company has is flexibility. Online auctioning has limited time constraints, no geographic constraints, and extensive network economies. Their entire business model exists to attract a large number of users/bidders which attracts sellers, which attracts bidders, and so on.
They also have the resource of growing reliance and importance of e-commerce markets. E-commerce is a method of business transactions over that internet that skyrocketed in popularity just around the time of eBay’s inception. By beginning operations when both e-commerce and the internet were rising in popularity, eBay was/is able to grow and evolve its strategies to fit the needs of the internet and its users at a similar rate. People who were becoming more comfortable with the internet had more willingness
to support transactions through e-commerce – furthering the ability
of eBay to innovate internally and for the market as a whole. Although it has a lot of competition, people have grown to trust eBay since they were the founders of internet goods trading and have created a positive brand image for themselves, which comes as another aid to competitive advantage.
Its leadership is also an asset/resource in support of its continued efforts to expand within the online auctioning market that the company itself created. eBay was founded by passionate people who had a vision that would help solve a problem that they and a lot of other people may have. This initial leadership grew eBay throughout its beginning, accelerating its growth with expertise and the ability to cater to a market of people with interests that other companies were not aware existed yet. This idea has
continued throughout the varied leadership of the company. Since its competitive advantage is originality and a unique understanding
of the oldest and newest online auction users, leaders had to have the same understanding which worked to maintain the name and effectiveness of the site. New leaders at the company were willing to take risks to enhance the look and feel of technology and user interface of the platform, while still staying true to its initial advancements and purpose. Most of them had a strong grasp on the
direction of the company and its needs because they had been there
for years prior, exhibiting a sense of necessary loyalty (like Donahoe, for example). Even prior CEO Meg Whitman stayed on the board after stepping down. Strong leadership is crucial to maintaining any competitive advantage – whether it is previously established or newly developed.
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