Ebay: Facing The Global Challenge

eBay To: Board of Directors From: Management Team Subject: ebay: Facing the Challenge of Global Growth Date: 29 October 2008 Executive Summary: Introduction: The goal is for E-bay to move into more international markets; such as Russia, Denmark, Vietnam, and Turkey. In addition, to focus on fixed-price options and advance opportunities with more sellers and specialty items. Discussed will be the strategic impact on the above identified issues, and the best direction that E-bay should move into for advancement in business growth and operating margins. Industry Analysis: World Wide Internet users are on the rise. People across the world are adapting to using the internet (see Exhibit 1). With a large increase eBay would be able to market across the world. The company would make a considerable investment to expand in countries such as Russia, Denmark, Vietnam, and Turkey. With the current investment in 33 countries, a minute step to invest in more would be a significant gain in market share. The most positive outlook on the international market expansion is that the barrier to entry is relatively low. Competitors will need to enter the market and be able to know how to attract buyers, what will be sold and how much, and how to control their budget. Competitors also lack the knowledge that is developed from years and years of experience of the on-line auction industry. E-bay has the tacit knowledge and experience to continue to grow in the international market. The online auction industry will also give much strength to suppliers. With the decrease in selling costs this will coerce competitors to obtain groundwork to increase the amount of supplier’s and entices new sellers by offering higher profits per sale.In return this will truly benefit E-bay. Competitor Analysis: Amazon, another high competitor, will maintain to deliver more value to the customer in terms of ease, selection, and availability, which in turn will continue its competitive pressure on eBay. EBay to fully win over competition will need to increase the fixed-price options. Yahoo and Amazon both offer products at fixed-prices which bringin a variety of clientele. Some that may be not searching for a bargain, but a particular hard-to-find item. The fixed-price trading is expected to grow to nearly 50% by the year 2010 (see Exhibit 5). This causes for a huge emphasis, because this is a growing market.