entrepreneurial case

8/7/2019 Entrepreneurial Case

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ENTREPRENEURIAL CASE

Can eBays Success Continue?


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eBay1) What is Ebay?

According to All business(1999-2010) and Gomes-Casseres (2001),

Ebay-the world's largest online marketplace - wherepractically anyone can buy or sell practically

anything at any time.

Ebay has built an online person-to-person tradingcommunity on the Internet, using the World Wide

Web.


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CASE FACTS


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1.H istory of eBay

eBay was founded by Pierre Omidyar inSeptember 1995.

With an experienced management teamthey built a strong vision for the company

that eBay is a company that's in thebusiness of connecting people, not sellingthem things.


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2 .Key points of ebayT he company made approx. $ 1 billion in

profit in 2005 where the users do most of

the work likePicturing

Describing

ListingPacking

Selling

Their goods


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One of the lucrative service offered by ebay is

PayPal that offers online payments.

Also the firms popularity is growing abroad.

Now ebay is focusing on not only Europe but also

on china.

Ebay invested some $ 100 million for promoting

the company in china


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3 .New competitors of ebay

Other internet companies expandingtheir services .

GoogleAmazonYahooBertelsmannDangdang-Chinese internet book seller


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4 .D angdang

Peggy Yu, T he co-founder of Dangdang.started

the company in CHINA as a book seller in 1999.

Latter, T he company ventured into other areassuch as cell phones.

It give facilities for cash transaction to the china

customers.


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Q uestion 1

W hat should eBay's strategy be? W hat arethe companys strengths and weaknesses,

its threats and opportunities?


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eBay's strategy

Provide an online business to enable anyone to

auction practically anything.

Provides the most technologically advanced,reliable, and secure trading platform available to

anyone, anywhere.

Doing business in a highly ethical manner.Look into new pay system or create own.(Like

PayPal).


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Attract new users and keep existing users active on

websites.

Maintain sufficient transaction volume to attractbuyers and sellers.

Increase the awareness of this brand.

Provide customers with superior community,customer support, and trading experiences.

Create a fully translated Chinese eBay site


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Companys strengths and weaknesses,its threats and opportunities (S WO T)

Strengths:

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1. eBay is the most well known online auction company in the world.

2. Strong auction community of loyal customers.

3. Excellent financial situation.

4. Have a fair payment system that encourages merchants to list products.

5. Strong presence in strategic global markets.

6. Experienced management team.

7. Strong customer service.

8. Percent of revenue in international markets increasing significantly.


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2006 , Tony Gauvin, UMF K

W eaknesses

1. W eak promotional and marketing activities2 . eBay does not pay dividends on their stock .

3 . Some customers feel the website is cluttered4 . eBays position in the business to business (B 2 B) market is weak .

5 . eBay has very little debt, therefore the company is not taking advantageof low interest rates to expand .

6 . eBay has a higher tax rate since they do not take advantage ofdepreciation as well as other companies .

7.

The company relies too much on word of mouth advertising, assumingeveryone already knows about eBay .

8. Longer transaction times, since many merchants will not receive paymentuntil a buyers check clears .


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O pportunities

1. Current Internet usage estimated to be 420 million worldwide including 180million in the US.

2. Generation X and Y entering the workforce.3. Foreign markets especially in Asia are improving.4. US and Mexico exceeded $3 trillion in online sales in 2003.5. E-commerce in Latin America expected to grow to $82 billion in 2004.6. Under 25 percent of online North American households made an auction

purchase in 2003.

7. Online auction sales are estimated to reach $54 billion in 2007.8. The price of personal computers continues to fall.9. Internet sales remain tax free.10. Some customers prefer to finance large purchases "in house"

Opportunities


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Q uestion 2

W hat are the opportunity and risk in crossborder transaction?


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The opportunity and risk in crossborder transactionPolitical Risk:

Problems with bureaucracy

change in regime

state intervention in business affairs

Unfamiliar or restrictive workforce laws

S ocial/legal/physical infrastructure risk:

Inadequacy of infrastructure (e.g. ports, railways, roads)

Lack of sophistication around risk management

Unfamiliarity of corporate governance and financial reporting

requirements

Environmental liabilities (known and unknown,such as pollution)


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E conomic Risk:

V olatility of financial markets in host country

Insufficient financial recourse against the seller

C ultural risk:

Litigation culture

Bribery and corruption

Organizational cultural differences

L abour/talent risk:

Concerns over leadership/management capabilities

Talent shortages and retention issues.


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Q uestion 3

H ow can international transactions becontrolled ?


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Considerations in controllinginternational transaction:

Transfer pricing between headquarters and the

subsidiaries.

T he organization structure should facilitate control.

Multinational corporation require a different

departmentation.

Managers with special skills in currency adaptation.

Strictly follow the standard and policy of eachcountry.

In short, controlling-setting standards, measuring performance, and taking correctiveactions-must be flexible enough to take into account the organizational and countryspecific transaction .


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Q uestion 4

W hat has been your experience, If any, withonline transactions at

eBay,Amazon,Yahoo,and other onlineservices?


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Some Acknowledgements

Graphics and some D ata for presentation taken from

investor .ebay .com , www. ebay .in , www. ebay .co. uk

This case was provided by the Book

Management-A global and entrepreneurial perspective

Heinz

Weihrich,Mark Cannice,

Harold

Koontz


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