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An Environmental Analysis Of eBay

Paper Type: Free Essay Subject: Information Technology
Wordcount: 5291 words Published: 15th May 2017

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The eBay is involved in internet auctions; it has been the most successful company in electronic auction that hosts more than 25 million sellers all over the world. Due to its reputation as a leading e-commerce company, it is the most competitive company. This company has come a long way since its inception by Pierre Omidyar in 1995, it was originally known as Auction Web, it faced a big challenge from its first sale of a broken laser pointer but now its web page leads in advertisements of diverse array of goods.

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This is a comprehensive business strategy for eBay’s e-business initiative in a detailed report form for the eBay’s CEO. It explains the value proposition and analysis of the company, on top of core competences that the company posses. The report continues explaining about the analysis of markets and evaluation trends of business in terms of competitive forces of potters’ five forces. The study explains the challenges that are faced within information and communication globally, as eBay business becomes global with certain stresses on the main processes of business, and systems like customer relationship customers, acknowledgement that is already in systems of legacy. Nevertheless, ICT infrastructure, efficient use integration of B2B, on top of security and standards.

The risks that are involved during development stage, mainly concentrates on technical development of product requirements, as well as problems dealing with finances. The chances of market monopolization due to factors like customer test change amongst others. The major objective that the business might have included; keeping owners comfortable, raising the sales growth for the business survival; enabling the survival of the market at the beginning of and during the hard moments. Another objective might be maximizing the profits, to ensure that the business is supported.

The critical success factors that the study found were: raising quality of products and production rates; promoting products and efficient service delivery and designing advanced strategies of advertising for revenue boost via increasing the sales. The study found that, the costs incurred by the business at the start of the business includes; cost for technology, technological development costs, consultation fee expenses, piloting training costs, running costs self advancement cost, among other costs. The benefits enjoyed include; improved cash flows, revenue increase, communication among other advantages mentioned in the report.

The current situation has exposed the business to a very much competitive market with other e-commerce companies like the Amazon, followed by a decrease in the customer preferences with most customers preferring for goods with fixed prices rather than auctioned goods. The eBay auction company has therefore to make efforts to maintain its initial position in the market.

The eBay company has major achievements that when restructured will help it to propel further and achieve its former glory.

In 2008 its marketplace segment managed to generate over $ 5.5 billion as compared to 4.8 million which was generated a decade back in 1998.

It has thousands of people that depend on it for their merchandise.

The three year revival plan that was aimed at creating an array of comprehensively structured marketplaces to effectively capture the customer demand by locating them at one online spot.

The adjustment of the fee structure to accommodate those sellers with fixed prices.

The adjustment of the search ordering system to enable first appearance of the highly rated merchants.

Embracing of new technologies such as Skype to increase communication over the internet.

The efforts towards expansion of the services through the acquisition of websites such as the stubHub that is involved in ticket selling and the prostores that enables creation of the online stores.

An Environmental analysis of eBay

Company Analysis and Value Proposition

The eBay company has been operating internet auction for a long time. The company has risen to higher height following the internet action business. It made it t mushroom to a very big company dealing with electronic marketing over the world. Pierre Omidyar found it in 1995 and at that time, it was known as Auction Web, deriving its name from its function. It now sells a wide range of goods and it has risen to the top clime of the business world to become on of the most recognizable and well-known web sites.

The company has found its revenue grow ten times in a decade in the United State rising from $4.8 million to $5.5 billion between 1998 to 2008. This was realized from selling merchandised goods. This represents a great growth meaning the company has a great market share. The company has made very many people to support themselves by selling through the eBay while a couple of them use the business service to supplement their income (Reaves, 2003). Its value to people is seen by getting the way it has been visited. It emerged to be the most visited site at 2008 on the web.

Value Proposition

The company is able to embrace change to ensure that it realizes its goals. For example, the company in 2009 first quarter revenue went down and required a great intervention. The customers preferring fixed priced retailers brought made the eBay company to lose badly. Most of the customers opted a more simple buying technique that did not involve such things as bidding that took most of their time. They also experience a great pressure from their competitors, as there emerged so many online sellers making most of the buyers to consider the auction technique obsolete.

Therefore, in pursuit of reviving their business they decided to uphold change brought by the customers demand. They started an online fixed price sale and started coming out of the auction part. They also made this more competitive by centralizing the sale system by ensuring comprehensive market place array through their systems (Tatnall, 2007). The company also was able to embrace change by moving its business by joining secondary market that offers overstock method.

The Company’s Core Competencies


The company has a very strong background. This is generated from the revenues it collects from its daily functions. The company collects a lot of revenue from fees and commissions associated with sales made. The revenues come from the direct advertising site while others are from the end to end service providers. The finance e gotten is made to expand the company globally with a lot of ease. This makes the company to stand at a competitive edge in carrying their daily services that requires finance.

Advanced Technology

The company has provided the small scale retailers with end to end service using PayPal that enhances business transaction through the eBay. This site helps to impose several types of fees on these sellers that include posting and collection fee of unsold items. They also adjusted their eBay search ordering system to ensure that the highly rated merchants were the one who appears first to ensure that they receive more exposure. The system used a very complicated formula that ensures item price is linked with the buyer and offered them a place to rank the seller according to the customers’ satisfaction.

The technology they have has seen their smaller sellers of unique goods that have in the past successive. The investor supported the move very much making the company to have a great move to the right direction as far as expansion is concerned.

Provision of Incentives

The company adjusted their payments towards the provision of their service to their sellers. This move was made to cut across the board with no group benefiting than the other. The is made the company to gain more popularity as more sellers were able to access the market through the service provide by the company, hence fast expansion.

Market analysis and trends Evaluation of the business in terms of Porter’s competitive forces model. According to the company, the market analysis can be made by use of the five porters’ forces. The analysis assumes that there five forces that are important in determining the competitive power of the business (Mindtools, 2010).

The first one is the supplier power. The company has inclined their services to the fixed price suppliers ensuring that they narrow their suppliers to small group thus ensuring that they have stronger business suppliers. They have used the technology that they have to ensure that they are able to connect the suppliers with the customers. The suppliers are made to have power as they are made to choose between the prices that have been placed for the marketing purposes.

The next one is the buyer power. The company are able to help the buyers to get in touch with the suppliers and to made then to have a platform that ensure them they are able to rate the sellers according to the price of the item they offer. This helps the suppliers to lower the prices of the products that they are selling trough the buyers’ intervention. Therefore, the company is able to control a wide market range through this process.

Competitive Rivalry

The eBay company has experienced competition rivalry from different company that offers the same service thus making them to have a decrease in the market share. They have tried to counter this by providing the services that the customers require after ensuring that they have realized this. They have changed their business target by introducing a fixed price platform to ensure that apart from the auction system, they are capable of having another faster means of business. This has made the company to start being revived.

Threat of substitution is another force that the company has to deal with to ensure that the customers are not a threat to them by providing similar service. The companies are able to work with very high technology to ensure that the customers are not able to imitate them. They also have centralizing their business system to ensure that they are able to control their business and their top company secret kept a bay from the customer’s access.

Threat of a new entry is another force that the company has to fight with to ensure that people do not interfere with the market. They have strengthened their technology making their market share a little bit firms.

Technology and ICT System

The company’s ICT sector has done well as they are able to change it with a lot of ease. The interaction between the businesses to business has been working well as their are able to interact very well. The suppliers very easily making their ICT sector to be the best when it was started in 1995 have assimilated the technology that they have made over the years. The company has made sure that the security of the buyers and the sellers are entitled through the proper use of security (Quickmba, 2010). They have been able to maintain this over the years through a complex and multiple technology use. By integration of such technology, they have been very competitive.

Value Proposition

The company is able to embrace change to ensure that it realizes its goals. For example, the company in 2009 first quarter revenue went down and required a great intervention. The customers preferring fixed priced retailers brought made the eBay company to lose badly. Most of the customers opted a more simple buying technique that did not involve such things as bidding that took most of their time. They also experience a great pressure from their competitors, as there emerged so many online sellers making most of the buyers to consider the auction technique obsolete.

Therefore, in pursuit of reviving their business they decided to uphold change brought by the customers demand. They started an online fixed price sale and started coming out of the auction part. They also made this more competitive by centralizing the sale system by ensuring comprehensive market place array through their systems (Tatnall, 2007). The company also was able to embrace change by moving its business by joining secondary market that offers overstock method.

Business Plan


The risks during the development stage will usually center on technical development of the product, marketing, personnel requirements, and financial problems. By identifying and addressing each of the perceived risks during the development period, you will allay some of your major fears concerning the project and those of investors as well, (Dictionary, reference. 2011)

The Opportunities and Objectives


The opportunity to monopolize the market by influencing the Changing customer tastes.

The Liberation of customer preferences to increase the number of stable and potential customers.

Utilization of the Technological advancement to expand the business through acquisition of more internet service delivery.

Utilization of the Change in customer preferences to improve the eBay reputation.


To enable the market survival at the initial start up time and during the hard times like the market or at a time of crisis.

The aim of the owners and the shareholders to maximize the Profits to be supported.

To keep the owners comfortable by making enough profit.

To increase the sales growth to enable the survival of the business

Critical Success Factors

Increase in Product quality and production rates

Improvement on the Distribution channel s.

Setting of fair and competitive Prices

Promotion of the products and the services delivery.

Design the advanced Advertisement strategies to boost the revenues through increased sales.

Cost and benefits (ROI)


Costs for technology

produce an e-commerce website which requires high speed connections onto the Internet, develop a web server, and its software. The costs of the payment systems is among other costs that are relevant, This is irrespective of whether it is by taking the online payments directly from the Society’s web sites or from an alternative third-party agent such as the Pay pal or from a more expensive service like the use of an online bank.

The technological development Costs.

This might involve several programmers who can be able to make an interpretation of eBay functional requirements and the programs or create the company’s website. 

The Costs incurred for the consultancy support through design and the implementation

the services of specialists in e-commerce will be required in especially in the design and the implementations to guide the eBay management through this process.

Costs due to the organization for the piloting training.

In the process of the technological development of the website, it is a good idea for one to allow the administration staff to be using the system on almost a daily basis to pilot the systems as part of a training initiative.

The Running costs

These are mainly the upkeep of the web server and its maintenance costs.

The Running costs for change process

This involves the costs which factors in for the employees of eBay company to train and adapt to newly introduced technology, mainly some of the strategies that will be used to make the changes as smooth as possible.

Self Advertisement.

In addition to the eBay chance to be on the Internet it would result in the familiarity to the responses to the emails, the queries, and the complaints that requires the instantatious or very quick responses as it is opposed to the replies to the Customer/Client via letters. To successed online, the eBay company must address the issue of Change Management so that it incorporates into its business, processes which will enable the guiding of the company so that it can successfully maximize its Internet effectiveness. 

The Financial Benefits

Improve Cash flow

The Online payments results into the lead-time in receiving the payments for the memberships within the same day of application.  E-enabling all the membership processes is not always on the reengineering processes which makes it quicker than before, it results in a very complete overhaul to the previous ways of managing membership.  The E-enabled application and payments are always made online.  On the completion of the application, the documentation is quickly sent via the email to the members therefore adding on the value by cutting down the waiting time. It also saves when it comes on the printing and the postage for the Society.  Even if when the member has no email address, the documentation is still available for downloading for those registered members on the web site.

The Increase in the Revenues

The Internet increases the volume of the members thereby increasing on the total revenues that are collected as fees or commission on goods that are sold.

Non-financial benefits


The direct email marketing incurs very little or no costs when it is compared with the traditional direct mail marketing.  The direct email marketing always allows for the flexibility of sending the company’s message either day or night, as they want.


The Website for Information Management allows the membership process to be completely transparent.  Management will be in a position to know:

The total number of members

Members in need of renewing their membership

Members with arrears on membership fees 

The Total number of the members and the accredited members

The Forecast towards the expected revenue to be generated in advance by looking at the historic monthly revenues that have been generated.


The availability of the Internet implies that eBay becomes a global Business as a result of the exposure.  This attracts the potential members internationally.  The use of the Web to sell eBay’s products eliminates the physical boundaries the customer base.  The Customers all over the world can easily search, find out and purchase the products on the eBay products online.

Wider Considerations

During the signing up process of the prospective members for membership, personal data is being provided.  The provided data includes; the members name, the full address, and the credit card details. 

Implementation Plan


Secure a stead market and be to carry out the business global within a year.

Sign up more than 3 million customers all over the world within the first three years of operations.

To increase the number of business websites to 10 within the first year.


Secure new markets worldwide- general sales manager.

Obtain licenses and permits – legal executive.

Set up regional blog on the websites – project manager.

Begin recruiting customers – sales manager.

Create marketing collateral – marketing manager.

Solicit referrals from clients – relationship manager.


Resource allocation

Time allocation


Secure new markets worldwide.

sales manager

3 months


Obtain licenses and permits.

legal executive

I month


Set up regional blog on websites.

project manager



Begin recruiting customers.

sales manager

1 year


Create marketing collateral.

marketing manager

1 year


Solicit referrals from clients.

relationship manager

I month


Strategies for assessing the e-Business initiative

Balanced Scorecard for eBay

Scorecard Balanced Areas for Measures

Strategic Objective




Year 1


a)Raise the customer retention.

Business ability to retain the customers.



b)Grow the business by focusing on customers.

Bring in more revenues from each customer



c)Increase profitability range.

Improve the overall profitability range of the company to over 70%.

profitability range.


d)To increase competence level of the business.

competitive level of the business will be raised to the highest level.

competence level.


Customer value perspective

a)To prioritize customer needs and value.

The customer needs and value will be highly appreciated.

customer needs.

High appreciation

b)To raise the customer retention/turn over.

The customer retention ability of the business will be raised to the maximum of 90%.

customer retention ability.


c)Enhance the customer satisfaction.

Satisfaction of loyal customers to be enhanced

customer satisfaction.


Process or Internal operations perspective.

a)Initiate a strong measure of process performance

Initiate a strong measure of process performance to increase overall efficiency by 80% this financial year.

process performance


b)To increase productivity.

Formulate policies of the business to increase productivity.



c)To improve the operation metrics of the business

Operation metrics of the business will be improved to the highest standards within the consecutive series of three years.

highest standards.


Learning and growth perspective.

a)Increase the technological innovations

Increase the technological innovations of the employees to by encouraging experimentation and creativity.

experimentation and creativity.


b)Optimize the company ‘s workforce

Optimize the workforce by reducing the overall turnover from 17 to 13% by the end of the financial year.

Overall turnover.


c)Mentor organizational culture.

organizational culture will be mentored towards increment of the productivity by implementing SMART goals.

Increment of the productivity


Major revenues are derived from the fees and the commissions obtained from the sales transactions, partly the advertisements on the sites and the end t end kind of service provision as that of paypal.

The eBay requires heavy financial investments in the range of over $100 that should enable it maintain a stable position over the market place and gain the advantage over its competitors like the Amazon retailers who have successfully gained monopoly of services such as the sale of goods with fixed prices, which is advantageous over the traditional means such as auctioning. The required finances can be sourced from the financial institutions in the form of a loan. These finances can be used to upgrade the achievements of the business.

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Web site Analysis of eBay

EBay needs to develop the analytics for analyzing web site performance. This will be used for the purpose of taking measurements, gathering, analysis and reporting internet data for the reason of optimizing the web usage. Apart from being a tool of being measuring website traffic, it can also be used both in business and market research. Their application can enable eBay to take out come of traditional print campaign of advertising. It wills also helping traffic elimination to the web to the change of website after launch of advertising campaigns that is new. It will provide eBay with data on the number of visitors’ page views and so on, that is used to gauge popularity and traffic trends which help when carry out market research., (Sterne, 2002)

Being one the analytics categories, off-site web measurements and analysis regardless of being one’s own or for the web maintains, takes them 5 weeks. Among them, is the measurement potential audience website; visibility or share of voices; and lastly the buzz or comments that is happening as a whole on the internet. On the other hand, on-site web analytics can be used to measure the journey of visitors refer to the web site. This involves the conversions and drivers in the contexts, for example, the landing pages that provide encouragement to people to buy. On-site we analytics measure the performance of eBay’s website in a context that is commercial. Typically this data is compared against indicators of key performances for performance analysis. In addition, it is used in improving a site on a web, or audience campaign response. In the history, web analytics have been used to refer to on-site visitor measurement. On the other hand, in the past recent years, this factor has been blurred, mainly because; vendors are ending up producing tools the both categories get spanned, (Srinivasan, 2001).

Analysis Recommendations

EBay’s Web Site Redevelopment,

EBay Company needs to redevelop its web to brand, market and sell well in the market. As an effect, it is much imperative for eBay to redesign its web, to attract new leads and product sale. The company needs to use new software tiles as well as tools of programming for the enhancement of functionality and look web pages. It needs to incorporate AJAX programming technology, or in other words, the technology suits. This technology incredibly creates responsive web pages that tend to be dynamic. This in addition combines valuable tools of programming and languages for the formation of one mega-tool that enables smoother communication between end users and the servers of the web. This program in general will provide the following advantages; this will make eBay enjoy almost zero delay services between user interface and web servers, as it eliminate the need of page refreshing. In the process of minimizing communication between user interface and web server, it saves server bandwidth while enhancing server functioning. As an effect, it reduces the workload on the server. This takes them 1 month.( Mybestratedwebhosting, 2011)

Though their acquisition programs have proved to be much successful, they still have a responsibility of creating a synergy will intend and diversify will detract the eBay from the core business, auction. Though, the management is maintaining that this format of hosting fixed-price by retailers who tend to be reliable, makes shopping to be friendlier to customers and much predictable. However, the fact remains that, this format is diluting eBay’s brand and reputation as a flea market that is dynamic. As a fact, other than economic problems, its stock has tanked down. This will lead to an increase in eBay’s site traffic.

Since the Skype business is not working well, the company needs to resale it. The objective of Skype was for buyers and sellers to chart about their transactions; however, the expectation was never realized. This is because, though eBay spend about $2.5 billion, it only collect only apportion of that initial cost.

Outsourcing of ICT Infrastructure and Services Delivery

eBay company needs to maximize savings through ICT use. This will make service delivery much efficient and effective. Under the raising pressure from the budget, back office departments that support PayPal service is supposed to cut their expenses for the preservation of front office services. Simultaneously, they are needed to provide extra solutions and services that tend to assist in unlocking savings across the company. The delivery of efficient services will reduce the operating expenses, add value from rationalize investment, greater accessibility to knew experiences and skills, and lastly, increasing efficiency of IT department will enable IT staff more under similar time frame. As an effect, this will lead to a conflict that will lead to the problem of altering main priorities, gaps ability, and directly influences core service delivery. When solving such like conflict, the needs to outsource back office departments, Swanson. 2007. This recommendation will take them one year due to contract applications this takes an approximate of 6 weeks

A part from providing security, the outsourced company will provide management of ICT infrastructures. This will help eBay firm built reliability, confidence and trust much quickly. This is because; eBay will concentrate on their core business their customers. As an effect of outsourcing, the outsourced company will provide flexible services that will tent to meet eBay’s needs. Having deep technical expertise, eBay will also be provided with high standards of quality services that are based on respect and mutual respect.

IT Staffing Requirements

The company needs to come up with it staffing requirements to that will tend to support their new initiatives and its global expansion and online delivery. This is because; the IT staffing requirements are in most cases dictated by the responsibility of IT within the company. It should never base on region, size of the industry, industry among other metrics that are similar. The two most significant parameters are the technological complexity of the company, and the IT department scope.

The IT staffing requirements was to be based on what will lead to effective and efficient performances of the individual procedure. In the current world, IT staffing requirements varies depending on local practices; for instance, federal, state, and locals. Generally, the standards have just been generalized that; the staff should be enough in number with far much appropriate training and supervision. Both education and training levels might also vary, including registered IT engineers, licensed practical engineers, as well as unlicensed practical assistance personnel.

Support services for eBay

The firm needs to develop support services for eBay and its world wide expansion and online delivery. The company is supposed to develop parts compatibility gatherings. This improves significance and freeing up of items, on top of explaining in details. The eBay product service support consists of product API and product Metadata products that help in listing support parts compatibility. The product information has calls that return product information. It assists in identifying products that have been associated with compatibilities. This product API gets application compatibility for products, based on their specification; they also find products for the category that is specified, and lastly, gets all available details of compatible details for the products described. On the other hand, eBay needs to implement product Metadata for the return of specified categories. It collects all possible values for multiple property compatibility, among other functions, (Developer program. 2011).

International legal and ethical issues

The company needs to consider international legal and ethical issues. eBay needs to notify users of their partnership with law enforcers. It is on blotter of p


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