Why Ebay Failed in China

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A report on Ebay and Taobao.

Ebay v/s Taobao

Critically evaluate eBay’s chosen market entry strategies, into the Chinese ‘C2C’ market, determining the shortcomings of the strategies deployed during the case study period.
When entering into a new market, there are many aspects that must be considered in order for a company to be successful. Through this case study we will look at how eBay developed their market strategy using the concept of six key factors timing, location, marketing, HRM, logistics and ownership (Peng & Meyer, 2011) and obtain results on how the company fell apart into the China’s C2C market.
EBay entered into Chinese market via acquisition of EachNet, a Chinese online auction established in 1999 by
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This confusion was one of eBay’s largest problems and it gave Taobao an advantage over eBay (Yeh, 2007).
As you can see, eBay made some vital mistakes with their entry strategy with China. EBay used ineffective marketing methods (through websites), not being able to respond to what customers wanted from a C2C market place, and, most critically, being unaware of rivals and their emergence in the market. Appendix 1 shows an analysis of the environment eBay was entering into, and illustrates some vital aspects that better market research could have highlighted for eBay (threat of substitute and internal competition with Taobao, for example). After analyzing the external environment of eBay using Porter’s five forces model, the next step is to focus internally at eBay’s core competencies in order to determine whether those strengths provide them with competitive advantages. In order to define these core competencies as competitive advantages or disadvantages, a VRIO analysis must be used. This technique measures each capability against whether it creates value for the company, it is rare in the industry, it is costly to imitate and if it is exploited by the organization. Each core competency identified for eBay is listed in Figure 2 in Appendix 1.
Taking complete control of EachNet through full acquisition and therefore having access to all resources of the Chinese Market could have been a successful strategy and would have been if it had

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