EBay Inc Strategic Management

Strategic
Management
2nd Individual Case Analysis (eBay Inc.-20
NAZIFA BTE ABD. GHANI

MR111037
Associated Professor Dr. Mas Bambang

Baroto
International Business School

University Technology Malaysia
June 2012
Contents
1.0 Executive Summary................................................................................................ 4
2.0 Vision and Mission Analysis...................................................................................... 4
2.1 Vision: There is no vision stated in the case................................................................4
eBay Inc.-2009
[MR111037]
2.2 Mission............................................................................................................ 5
3.1 PEST Analysis.................................................................................................... 6
3.2 Competitive Analysis........................................................................................... 9
3.3 Industry Analysis.............................................................................................. 12
3.3.1 The Description of The Industry......................................................................12
3.3.2 Rivalry Among Competitor............................................................................14
3.3.3 Potential Entry of New Competitor...................................................................21
3.3.4 Potential Development of Substitute Products.....................................................22
3.3.5 Bargaining Power of Suppliers........................................................................24
3.3.6 Bargaining Power of Consumers......................................................................25
3.3.7 Conclusion of the Industry.............................................................................26
3.6 Defining the Key Success.................................................................................... 28
3.6 Opportunities and Threats.................................................................................... 31
3.7 The External Evaluation Factor (EFE).....................................................................38
3.8
Competitive Profile Matrix Analysis..................................................................42
4.0 Internal Analysis.................................................................................................. 43

4.1 Cultural Analysis............................................................................................... 43
4.2 Management Functions....................................................................................... 44
4.3 Marketing Strategy............................................................................................ 52
4.4 Financial Analysis............................................................................................. 61
4.4.1 Financial Ratio............................................................................................ 61
4.5 Production/Operation......................................................................................... 66
4.6 Research & Development (R&D)..........................................................................79
4.7 Management Information Systems Audit.................................................................79
4.8 Value Chain Analysis (VCA)................................................................................80
4.9 Strengths and Weaknesses................................................................................... 87
4.9.1 Internal Factor Evaluation (IFE) Matrix...........................................................102
5.0 Existing Objectives and Strategies..........................................................................106
5.3 Strategies........................................................................................................ 109
5.3.1 Strategies in Action.................................................................................... 109
5.3.1 Generic Strategies (Business Level Strategies )..................................................117
6.0 Strategy Formulation Tools................................................................................... 119
6.1 SWOT Analysis.............................................................................................. 119
6.2 SPACE Analysis............................................................................................. 126
Strategic Management/SEM II/ 2011/2012
eBay Inc.-2009
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6.3 BCG Analysis................................................................................................ 129

6.4 IE Analysis................................................................................................... 129
6.5 Grand Strategy Matrix..................................................................................... 130
6.6 Wrap Up Process............................................................................................ 132
6.7 The Qualitative Strategic Planning Matrix (QSPM).................................................133
7.0 The New Strategies............................................................................................ 137
7.1 Value Chain.................................................................................................. 140
1.0 Executive Summary

EBay Inc. encompasses eBay.com, the online marketplace, PayPal, which refers to the online
payments platform, and Skype, the Voice over Internet Protocol (VoIP) offered by eBays
subsidiary Skype Technologies S.A. Corporate revenues are earned primarily from three
business segments: (1) Marketplaces, (2) Payments, and (3) Communications.
eBay Inc.-2009
[MR111037]
In order to analyse these three segments, the analysis will be provided based on three
separated segments which is absolutely depends on the case study given. As a matter of fact,
this report provides an emphasis on strategic analysis based on its external and internal
environment analysis and company analysis or resources, competence and culture. Two future
strategic options are suggested in regards to the resource based strategies. As mentioned
before, this report analysis information is only based on the case study given.
To be guided, this analysis addresses the following segment:
1) Vision and Mission Analysis for eBay
2) External Environment Analysis
3) Internal Environment Analysis using value Chain analysis
4) Defining the Existing Objectives and the existing Strategies of eBay
5) Strategy Formulation Process with strategic tools
6) Implement New set Strategy
7) Implement new set of marketing and financial
8) Provide figure of existing objective, strategy, management issues, and financial issues versus new
objective, strategy, management issues and financial Issues
2.0 Vision and Mission Analysis

2.1 Vision: There is no vision stated in the case
2.2 Mission
The Original Mission Statement:
We intend to continue to work toward our mission of creating the worlds leading
ecommerce franchise by investing in our core Marketplaces segment and continuing to
build our adjacent Marketplaces businesses. (2007 Annual Report)
4
eBay Inc.-2009
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*Based on the case study, there are three mission statements given in the case study for
eBay. In this case, I only considered and analysed the latest mission statement which is
in 2007.
Mission Components
Included
Customers
Products and Services
Markets
Technology
Concern for Survival
Growth and Profits
Philosophy
Self-Concept
Not
Description
included
ecommerce franchise
Leader in the online
marketplace
Leading in e-commerce
-
Continuously
Investing
in
Marketplaces segment
Concern for Public Image

Concern for Employees
Table 1: Analyzing the eBays Mission Statement Based on the Nine Component
Therefore, there are only 4 components out of 9 general components of mission statements
and in this analysis the mission provided by eBay in 2007 has lacking of 5 components.
Based on table 1, the 5 missing components are; customers, Concern for Survival growth and
profits, Philosophy, Concern for Public Image as well as the Concern for Employees.
Mission Statement Evaluation

Case Facts
Broad in Scope
creating the worlds
Key Variables
Evaluation
Acceptable
leading ecommerce
franchise
-
Acceptable, but too
short.
Not mentioned
Identify the utility of the firms products
Not mentioned
Reveal that the firm is socially responsible
Not mentioned
Length (Less than 250 words)
Inspiring
eBay Inc.-2009
[MR111037]
Reveal that the firm is environmentally

responsible
Not mentioned
Include Nine Component
4 out of 9
Unacceptable
Reconciliatory
Unspecified
Enduring
Unspecified
Therefore, It is clear to say that EBay does not have complete mission statement because of
lacking of 5 components mentioned before. In fact, eBay mission statement is too broad and
unspecified.
3.1 PEST Analysis
Case Facts
Opportunity
Threat
Political, Legal , and governmental forces

-Legislation is in effect which requires collection of taxes
beginning after December 31, 2010. This new legislation may
cause a reduction in trading activity that would negatively
affect several business segments (Page 269, Para 6)
-In addition, tax compliance will increase costs. (Page 269,

Para 6)
-Legislation has also been proposed to prohibit sharing of
certain information over the
Internet, (Page 270, Para2)
Economic forces
-The resources of existing
competitor firms are larger and as a result, competitors could
weather an economic downturn (Page 268, Para2)
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-The company continued its turnaround strategy in a harsh

climate for consumer spending (Page 263, Para2)
-Weak global economic conditions, in addition to the
mortgage and worldwide credit related financial crisis, are
expected to limit revenue growth, particularly in the
Marketplaces segment, which is closely tied to consumer
purchase patterns (Page 269, Para2)
-Profitability is also affected by currency exchange rates (page

269, Para3)
-If the U.S. dollar weakens against foreign currencies,

transactions conducted in foreign currency denominations will
increase and inflate revenues, operating expenses, and net
income (Page 269, Para3)
-Alternatively, financial measures will be negatively impacted

by a rise in the value of the U.S. dollar (Page 269, Para3)
-Declining economic environment (Page 268, Para4)
- The revenue drop was attributable to the impact of the

stronger.
-Dollar and the lingering weak economy with high
unemployment (Page 274, Para1)
Social , Cultural , and Demographic forces

-Buyers and sellers enjoy trading among a wide selection of
goods and services in a secure, trusted, and efficient commerce
environment.(Page 265, Para5).
Breaches in data security are on the rise (Page 270, Para3)
eBay Inc.-2009
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Technological forces
Online classifieds help people meet, share ideas, and offer
goods/services at a local city or regional level(Page 266, Para4)
Competition is intense in communications services and subject

to rapid technological
Change(Page 268, Para2)
- The need for substantial resource investments in
technology and marketing in order to remain competitive
(Page 268, Para1)
Total
12
Conclusion:
From the above PEST analysis, eBay has being treated by the Treats occurred from other
Political, economic, social as well as Technology point of view. Since threat cannot be
controlled, the company who want to invest in this industry really need to be aware of the
treats in order to continuously sustain in the industry. As a matter of fact eBay Inc. cannot
avoid from facing this treat but it can control to reduce the treat.
3.2 Competitive Analysis
eBay is active in three different categories such as; Business segment I:Marketplaces,
Platforms, and Services; Business Segments II: Communications; and Business Segments III:
Communications. Generally, E-Bay competitors include: online and offline retailers,
distributors, liquidators, import and export companies, online and offline auctioneers,
catalogue and mail-order companies, classifieds, directories, search engines, products of
search engines, virtually all online and offline commerce participants (consumer-toconsumer, business-to-consumer and business-to-business), and online and offline shopping
channels and networks. However, Amazons strong growth and satisfied customer base
pose the greatest threat to eBay (Page 267, Para6)
The summary of each category of segments comes as below:
eBay Inc.-2009
[MR111037]
1- Market place: competitors in this field includes traditional department, warehouse,

discount, and general merchandise stores, emerging online retailers, online classified
services, and other offline and online home shopping networks such as Wal-Mart, Target,
Sears, Macy's, J .C. Penney, Costco, Office Depot, Staples, OfficeMax, Sam's Club,
Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC, and Home Shopping
Network. Companies such as Google Base and Microsoft Live Expo also offer similar online
services and classified ads.
2- Payments: The Payments segment competes against other online Payments services and
offline Payments methods, such as cash, check, money order, and established credit card
merchants. (Page 268, Para1). Pay me Later is funded by CIT Bank and Bill Me Later is
responsible for all functions related to the account (Page 269, Para5). Additional revenues
are also earned from advertising and revenue-sharing contracts with third parties that provide
transaction services to eBay and PayPal account users.(Page 264,Para1) PayPal is a
recognized global leader in online payment solutions with 70 million active accounts. PayPal
generated $60 billion in net total payment volume in 2008, an increase of 27 percent over
2007.(Page 266, Para9) The Payments segment competes against other online payment
services and offline payment methods, such as cash, check, money order, and established
credit card merchants (Page 268, Para1)
3- Communications: Communications segments competitors have larger amount of
resources compare to Skype. The Communications segment faces competition from local
telephone or cable companies and other VoIP providers. (Page 268, Para 1). Traditional
Communications companies offer bundled services, such as cable or satellite television, along
with internet and voice Communications services. (Page 268, Para 3)
For the second quarter of 2009, eBay reported nice growth in both their PayPal and Skype
business segments, which offset decline in their Marketplaces business segment.(page 263,
para2) EBays popularity is due to the value offered to its users. EBay provides a faster,
easier, safer online commerce experience (eBay, 2006, p. 7).(Page 263, para4).
eBay Inc.-2009
[MR111037]
*Because of lack of data for Communications segments competitors and Payments

segment competitors, the competitive analysis is only focused on Marketplaces segment.
Competitive Analysis for Marketplaces segment
Key
Variables
Competitor
s strength
Case Facts
Amazon
Competitor
s
Weakness
Opportunity Threat
Amazon states their success is

based on: the ability to attract
buyers and sellers; the volume of
transactions,
price, and selection of goods;
customer service; brand
recognition, community
cohesion, interaction, and size;
system reliability; delivery and
payment reliability; Web site
convenience and accessibility;
level of service fees; and quality
of search tools (eBay, 2006).(Page
269,Para1)
Amazon achieved Low gross
profit margins. Low in gross profit

margin can be considered as a
weakness for Amazon (Financial
analysis)
Competitor
s objective
and
strategy
Amazon
- Several other online marketing

channels such as: (1) syndicated
store programs, (2) sponsored
searches, (3) portal advertising,
and (4) e-mail campaigns
Amazon.com, 2006, p. 37).(Page
269, Para1)
- Amazon has initiated alliances
with partners to gains sales by
referring customers to
Amazon.com (Page 269, Para1)
10
eBay Inc.-2009
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- The success of Amazon is built
on similar customer-centric
entrepreneurial business models
that focus on customer-driven
value creation. (Page 268, para1
Competitor
s
Capabilities
Amazon
Competitor
s
Distribution
Channels
Competitor
s Financial
Position
However, Amazons strong growth

and satisfied customer base pose
the greatest threat to eBay (Page
267, Para6)
No Data Available
-Amazon, a leading online retailer,

reported net revenues of $19.2
billion as of year end 2008. (Page
268, Para4)
Amazon
Total
Conclusion:
Based on the competitive analysis, only Amazon has been found as the major competitors for
eBay in the industry. Other competitors mentioned in the case study cannot be analysed since
they only mentioned the name of the companies. Therefore, there are 1 opportunity with 6
threats have been found in this analysis.
3.3 Industry Analysis
3.3.1 The Description of The Industry
As mentioned before, eBay is active in three different segments such as; Business segment
I:Marketplaces, Platforms, and Services; Business Segments II: Communications; and
Business Segments III: Communications. In order to analyse the industry based on the
external analysis, five Porter Forces, which covered 5 components have been chosen in this
study,
which are:
(1) Rivalry among Competing Firms; (2) Potential entry of new
competitors; (3)Substitute Products; (4) Bargaining Power of suppliers; (5) Bargaining Power
of Buyers.
11
eBay Inc.-2009
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The description of each category of segments for eBay in each industry is shown as
below:
1- Market place:
In 2008, eBay has a 14 percent share of global e-commerce with 86.3 million active users. In
addition EBay is involved in long-term contractual agreements with firms that provide
marketing, customer support, and technology (Page 263, Para7) June 2008, eBay Inc. was
found liable for damages in the amount of 38.6 million Euro payable to the Louis Vuitton
and Christian Dior firms competitors in this field includes traditional department, warehouse,
discount, and general merchandise stores, emerging online retailers, online classified
services, and other offline and online home shopping networks such as Wal-Mart, Target,
Sears, Macy's, J .C. Penney, Costco, Office Depot, Staples, OfficeMax, Sam's Club,
Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC, and Home Shopping
Network. Companies such as Google Base and Microsoft Live Expo also offer similar online
services and classified ads. The Marketplaces platform is the core online commerce
platform eBay.com. (Page 265, Para6)
2- Payments: For the second quarter of 2009, eBay reported nice growth in both their
PayPal and Skype business segments (Page 263, Para2) The Payments segment competes
against other online Payments services and offline Payments methods, such as cash, check,
money order, and established credit card merchants. (Page 268, Para1). Pay me Later is
funded by CIT Bank and Bill Me Later is responsible for all functions related to the account
(Page 269, Para5). Additional revenues are also earned from advertising and revenue-sharing
contracts with third parties that provide transaction services to eBay and PayPal account
users.(Page 264,Para1) PayPal is a recognized global leader in online payment solutions with
70 million active accounts. PayPal generated $60 billion in net total payment volume in 2008,
an increase of 27 percent over 2007.(Page 266, Para9) The Payments segment competes
against other online payment services and offline payment methods, such as cash, check,
money order, and established credit card merchants (Page 268, Para1) Future profitability
depends on the ability to manage credit while attracting new profitable consumers. EBays
Bill Me Later has significant exposure to consumers potential default on loans.
12
eBay Inc.-2009
[MR111037]
3- Communications: For the second quarter of 2009, eBay reported nice growth in Skype
business segments (Page 263, Para2)Communications segments competitors have larger
amount of resources compare to Skype. The Communications segment faces competition
from local telephone or cable companies and other VoIP providers. (Page 268, Para 1).
Traditional Communications companies offer bundled services, such as cable or satellite
television, along with internet and voice Communications services. (Page 268, Para 3)
For the second quarter of 2009, eBay reported nice growth in both their PayPal and Skype
business segments, which offset decline in their Marketplaces business segment.(page
263, para2) EBays popularity is due to the value offered to its users. EBay provides a
faster, easier, safer online commerce experience (eBay, 2006, p. 7).(Page 263, para4).
As a matter of fact, due to the lack of information about other competitors to compare with
eBay, I have chosen only Amazon as the main competitors involved in this industry.
3.3.2 Rivalry Among Competitor
Key
Variables
Case Facts
Competitive Forces
Strong
Competitor
s strength
Amazon
-Amazon states their success is

based on: the ability to attract
buyers and sellers; the volume of
transactions,
price, and selection of goods;
customer service; brand
recognition, community
cohesion, interaction, and size;
system reliability; delivery and
payment reliability; Web site
convenience and accessibility;
level of service fees; and quality of
search tools (eBay, 2006).(Page
269,Para1)
-Amazon, a leading online retailer,
reported net revenues of $19.2
billion as of year end 2008. (Page
268, Para4)
13
Moderate
Weak
eBay Inc.-2009
[MR111037]
EBays popularity is due to the

value
offered to its users. EBay provides
a faster, easier, safer online
commerce experience
(eBay, 2006, p. 7).(Page 263,
eBay
(Market para4)
places)
EBay offers millions of items for
trade through
auction-style and fixed-price
trading in 39-markets and boasts
86.3 million active global
users as of 2008.(Page 264, para3)
-The key to success is eBays user

support, such as announcements,
bulletin boards, customer support,
personal pages, and more. (Page
265, Para5)
- EBay has also expanded specific
Customer Support efforts, such as
online self-help features
to increase efficiency of trades.
EBay offers both pre-trade and
post-trade ValueAdded Tools and Services to
facilitate faster and safe trading
and collections (Page 266, Para 2)
-EBays popularity is due to the
value offered to its users. EBay
provides a faster, easier, safer
online commerce experience
(eBay, 2006, p. 7).(Page 263,
para4)
-Increased in ROA is considered a

strength for eBay(Financial
analysis)
14
eBay Inc.-2009
Competitor
s
Weakness
[MR111037]
-Bay
compared
achieved
High
to
Amazon
gross
profit
margins High in gross profit

Amazon
margin can be considered as a

strength
for
eBay
(Financial
analysis)
eBay
(Market
place)
-For the second quarter of 2009,

eBays profit fell 29 percent and
revenue declined
4 percent as the company
continued its turnaround strategy
in a harsh climate for consumer
Spending (Page 263, Para2)
- For that
quarter, eBay reported
decline in their Marketplaces
business segment.(Page263,
Para2)
- EBay recently increased its fee

structure for its Marketplaces
business, which may negatively
impact the number of new
customers and revenue from
existing
users.(Page 269, Para7)
- eBay Revenue Growth of rate

has been decreasing for the last 3
years. Therefore, this decline trend
lead to decreasing the growth rate
in 2009 by 4%. This revenue
15
eBay Inc.-2009
[MR111037]
decline trend is considered as the
weakness of eBay (Financial
analysis)
-Decrease
in
Growth
rate
is
considered as weakness for eBay.
(Financial analysis)
-Decreased to almost double for
working capital is considered as
weakness for eBay (Financial
analysis)
-Declining in stock price started

from 2005 to 2008 can be
considered as the weakness for
eBay.(Financial analysis)
Competitor
s objective
and
strategy
Amazon
- Several other online marketing

channels such as: (1) syndicated
store programs, (2) sponsored
searches, (3) portal advertising,
and (4) e-mail campaigns
Amazon.com, 2006, p. 37).(Page
269, Para1)
- Amazon has initiated alliances
with partners to gains sales by
referring customers to
Amazon.com (Page 269, Para1)
- The success of Amazon is built
entrepreneurial business models
that focus on customer-driven
value creation. (Page 268, para1)
16
eBay Inc.-2009
eBay(Mar
ketplaces)
[MR111037]
- EBay plans to expand the

Marketplaces segment by focusing
on customers to improve the
buyers experience and reduce
seller costs by enhancing products
and services, improving online
trust and safety, enhancing
customer support, extending
product offerings geographically
and into new categories, and
developing retention strategies.
(Page 226, Para8)
-In August 2009, eBay Inc.

formed a partnership with
General Motors enabling hundreds
of GM dealers in California to
help consumers negotiate purchase
of new GM cars and trucks
through the eBay online
marketplace. (Pg.263,para1)
-Acquired by eBay Inc. in 2005,
Shopping.com is an online
comparison shopping site that
offers comparisons on millions of
products and product reviews.
(Page266, Para6)
-In, 2008, eBay launched an
advertising service that enables
third parties to advertise their eBay
listings and eBay stores on eBay
Web sites.(Page 266, Para5)
Competitor
s
17
However, Amazons strong growth

and satisfied customer base pose
eBay Inc.-2009
Capabilities
[MR111037]
the greatest threat to eBay (Page
267, Para6)
Amazon
eBay
(Marketpl
aces)
-EBays global networked

community of buyers and sellers
interact 24/7 in a secure and
trusted global marketplace (Page
264, para4)
- The Verified Rights Owner

Program enforces intellectual
property owners rights by
allowing owners to request the
removal of listings that contain
infringements. This program
protects intellectual property
and reduces counterfeit trade.
(Page 266, Para2)
- EBay.com offers a sense of
community to buyers and sellers
that is sustained by
Communications and high
transaction rates on a wide
selection of goods/services
(eBay.com, 2006).(Page 263,
para4)
-EBay offers millions of items for
trade through auction-style and
fixed-price trading in 39 markets
and boasts 86.3 million active
global users as of 2008.(Page 264,
para3)
-In response to the weak economy,
eBay undertook a 10 percent
reduction in its workforce with the
elimination of 1,000 jobs in 2008
and incurred $49,000 in
restructuring costs. In the same
year, eBay acquired Bill Me Later
and announced an anticipated
18
eBay Inc.-2009
[MR111037]
second acquisition of a vehicle
classified ad site, eBay
Motors(Page 269, para4)
Competitor
s
Distribution
Channels
eBay
(market
places)
No Data Available
-Nearly all of Californias 250 GM

dealers took part in the program so
consumers could visit Web pages
like gm.ebay.com and
chevy.ebay.com to browse new
2008 and 2009 GM vehicles, ask
dealers questions, and figure out
financing. (Pg.263,para1)
- EBay Inc. also offers online
classified advertisements to
members in hundreds of cities
and regions of the world, such as
the Netherlands, Germany, and
so on. (Page 266, Para4)
- By 2009, eBay has attained
customized local sites across four
major areas of the world in the
following regional markets; Asia
Pacific, Europe, North America
and Latin America (Page
265,Para1)
- EBay offers both pre-trade and

post-trade Value- Added Tools
and Services to facilitate faster and
safe trading and collections.
Examples of value added service
tools include calculator, shipping
and UPS labels (Page 266, Para2)
Competitor
s Financial
Position
19
- Amazon, a leading online

retailer, reported net revenues of
$19.2 billion as of year end
2008. (Page 268, Para4)
eBay Inc.-2009
[MR111037]
Amazon
eBay(Mark
etplace)
For the second quarter of 2009,

eBays profit fell 29 percent and
revenue declined
4 percent as the company
continued its turnaround strategy
in a harsh climate for consumer
spending.(page 263, para 2)
In 2008, eBay.com generated
approximately $59.7 billion in
gross merchandise revenues with
consumer electronics accounting
for the largest percentage of trade
at $6.0 billion or 17 percent, as
indicated in Exhibit 1 (Page 263,
Para 4)
Total
12
20
3.3.3 Potential Entry of New Competitor

a) for Marketplaces Segment
NO
1
Potential Entry of New Competitors

Case facts
Competition is expected to increase in the
future because barriers to entry in this segment
are low and new online sites can be launched at
a nominal cost (Page 268, Para2)
Total
Competitive Forces
Strong Moderate Weak
b) for Communications Segment

20
Competitive Forces
eBay Inc.-2009
NO
[MR111037]
Case facts
N/A
Strong
Moderate
Weak
Total
c) for Payments Segment
NO

Case facts
Competitive Forces
Strong Moderate Weak
N/A
Total
3.3.4 Potential Development of Substitute Products

a) For Marketplaces Segment
Potential Development of Substitute Products

NO
Case facts
1
Competitive Forces
Strong
Moderate Weak
Competitors include traditional

department, warehouse, discount, and
general merchandise stores, emerging
online
retailers, online classified services, and
other offline and online home shopping
networks
such as Wal-Mart, Target, Sears, Macys,
J.C. Penney, Costco, Office Depot,
Staples,
OfficeMax, Sams Club, Amazon.com,
Buy.com, AOL.com, Yahoo! Shopping,
21
eBay Inc.-2009
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MSN,
QVC, and Home Shopping Network.
(Page 268, Para2)
Companies such as Google Base and

Microsoft Live
Expo also offer similar online services
and classified ads. (Page 268, Para2)
However, Amazons strong growth and

satisfied customer base pose the greatest
threat to eBay (Page 267, Para6)
Total
b) For Communications Segment

NO
Case facts
1
Competitive Forces
Strong
Moderate Weak
Traditional communications companies

offer bundled services, such as cable or
satellite television, along with internet and
voice communications services (Page268,
para2)
The Communications
segment faces competition from local
telephone or cable companies and other
VoIP
providers. Furthermore, eBay anticipates
22
eBay Inc.-2009
[MR111037]
the need for substantial resource

investments in
technology and marketing in order to
remain competitive. (Page 1, Para268)
Total
c) For Payments Segment

NO
Case facts
1
Other online payment services and offline
payment methods, such as
cash, check, money order, and established
credit card merchants (Page 268, Para1)
2
The Payments segment
competes against other online payment
services and offline payment methods,
such as
cash, check, money order, and established
credit card merchants (Page 268, Para 1)
Competitive Forces
Strong
Moderate Weak
Total
3.3.5 Bargaining Power of Suppliers

NO
23
Bargaining Power of Suppliers

Case facts
Competitive Forces
Stron Moderat Wea
g
e
k
eBay Inc.-2009
[MR111037]
1 Competition is expected to increase in the future

because barriers to entry in this segment
are low (Page 268, Para2)
Total
NO

Case facts
Competitive Forces
Stron Moderat Wea
g
e
k
-
N/A
Total
c) For Payments Segment
NO

Case facts
Competitive Forces
Stron Moderat Wea
g
e
k
-
N/A
Total
3.3.6 Bargaining Power of Consumers

NO
1.
Bargaining Power of Consumers

Case facts
Financial crisis, are expected to limit
revenue growth, particularly in the
Marketplaces segment, which is closely
tied to consumer purchase patterns.(Page
269, Para2)
24
Competitive Analysis
Strong
Moderate Weak
eBay Inc.-2009
[MR111037]
Total
NO

Case facts
N/A
Strong
Moderate Weak
-
Total
b) For Payments Segment
NO

Case facts
N/A
Strong
Moderate Weak
-
Total
3.3.7 Conclusion of the Industry
a) For Marketplaces segment

Porters Five Forces Analysis Result
Competitive Forces
Key Variables
Strong
Moderate
Weak
Rivalry Among Competitor

Potential Entry of New Competitor
Total Result of Porters Five Forces
12
1
1
1
1
16
20
N/A
2
N/A
N/A
22
4
N/A
N/A
N/A
N/A
4
25
eBay Inc.-2009
[MR111037]
Vertical Analysis:
According to the case and above analysis, it can be concluded that competitive pressure to the
industry is moderate because 22 is the dominant number in this analysis. Therefore, it is
attractive for new entrant and new investors to enter in this industry. Besides that this industry
also having a large market size, fast growing in the market and it is not too many large
competitors in this industry. Thus if a firm can develop a business plan which makes them
diverse, customer oriental and unique, the potential of success is possible.
b) For Communications segment

Competitive Forces
Key Variables
Strong
Moderate
Weak

N/A
N/A
N/A
N/A
N/A
-
N/A
N/A
2
N/A
N/A
2
N/A
N/A
N/A
N/A
N/A
-
Vertical Analysis:
Because of lack of competitors information for this industry, I cannot analyse the forces of
this industry in details. But I concluded that the competitive pressure to the industry is
moderate.
c) For Payments segment
Competitive Forces
Key Variables
Strong
Moderate
Weak

N/A
N/A
N/A
N/A
N/A
N/A
2
N/A
N/A
N/A
N/A
N/A
26
eBay Inc.-2009
[MR111037]

N/A
-
N/A
2
N/A
-
Vertical Analysis:
As mentioned before, because of lack of competitors information for this industry, I cannot
analyse the forces of this industry in details. But I concluded that the competitive pressure to
the industry is moderate.
3.6 Defining the Key Success
*For defining the key success factor, I have found out only the key success factor for
marketplaces segment which is only involved Amazon as the main competitors. As a matter
of fact, because of lack of information based on the ase study given, I also did not provide
the key success factor for Communications segment as well as Payments segment.
a) for marketplaces Segment
2.
27
Providing Reliability
to Customers
&
Providing Value
Key Success Factor

NO
Key Success
Factor
1.
Case Facts
- The success of eBay and Amazon are built on similar

customer-centric entrepreneurial business models that
focus on customer-driven value creation.
Examination of the
strategies, business models, and customer benefits of
eBay and Amazon reveals a common
emphasis on relationship value and customer-focused
solutions (Page268, Para1)
- Buyers and sellers enjoy trading among a wide
selection of goods and services in a secure,
trusted, and efficient commerce environment (Page
265, Para5).
To facilitate trading with unknown partners on the
Internet, eBay Inc. provides a trusted
and safe trading environment by offering the following
eBay Inc.-2009
[MR111037]
-Amazon states
their success is based on: customer service; Web
site convenience and accessibility; brand recognition,
community
-EBays popularity is due to the value
offered to its users. EBay provides a faster, easier,
safer online commerce experience
(eBay, 2006, p. 7).(Page 263, para4)
Reputation
5
EBay.com offers a sense of community to

buyers and sellers that is sustained by Communications
and high transaction rates on a wide
selection of goods/services (eBay.com, 2006).(Page
263, para4)
-Amazon states
their success is based on: customer service; brand
recognition; level of service fees; and quality of search
tools(Page 266, Para1)
Financial Position
Brand Image &
Friendly Interface
3.
- Amazon, a leading online retailer, reported net

revenues of $19.2 billion as of year end
2008. (Page 268, Para4)
-In 2008, eBay.com generated approximately $59.7
billion in gross merchandise revenues with consumer
electronics accounting for the largest percentage of
trade at $6.0 billion or 17 percent, as indicated in
*Based on the case study given, because of the general information provided for the PEST,
I have considered the PEST analysis is meant for Marketplaces segment, Communications
segment and Payments segment. As a matter of fact, most of the list of opportunities and
threats are coming from the marketplaces segment. In order to differentiate the segment, I
have provided another table for the list of opportunities and threats for Communications
and Payments segment. But for Pest analysis the results remains the same.
3.6 Opportunities and Threats
for Marketplaces segment
28
eBay Inc.-2009
[MR111037]
The List of Opportunities

No.
Case Fact
Prioritiz
e
Opportunities Resulted from PEST Analysis and Competitive Analysis
1.
Profitability is also affected by currency exchange rates (page 269,

Para3)
2.
If the U.S. dollar weakens against foreign currencies, transactions

conducted in foreign currency denominations will increase and inflate
revenues, operating expenses, and net income (Page 269, Para3)
3.
Buyers and sellers enjoy trading among a wide selection of goods and
services in a secure, trusted, and efficient commerce environment.
(Page 265, Para5).
4.

5.
The need for substantial resource investments in technology and

marketing in order to remain competitive (Page 268, Para1)
Amazon achieved Low gross profit margins. Low in gross profit
6.
margin can be considered as a weakness for Amazon (Financial

analysis)
Opportunities Resulted from Industry Analysis (Porters 5 Forces)
N/A
The list of threats

No.
29
Case Fact
Prioritiz
e
eBay Inc.-2009
[MR111037]
Threats Resulted from PEST Analysis and Competitive Analysis
Legislation is in effect which requires collection of taxes beginning after

December 31, 2010. This new legislation may cause a reduction in
trading activity that would negatively affect several business segments
(Page 269, Para 6)
In addition, tax compliance will increase costs. (Page 269, Para 6)
Legislation has also been proposed to prohibit sharing of certain

information over the Internet, (Page 270, Para2)
17
The resources of existing competitor firms are larger and as a result,

competitors could weather an economic downturn (Page 268, Para2)
The company continued its turnaround strategy in a harsh climate for

consumer spending (Page 263, Para2)
16
Weak global economic conditions, in addition to the mortgage and

worldwide credit related financial crisis, are expected to limit revenue
growth, particularly in the Marketplaces segment, which is closely tied to
consumer purchase patterns (Page 269, Para2)
Alternatively, financial measures will be negatively impacted by a rise in

the value of the U.S. dollar (Page 269, Para3)
Declining economic environment (Page 268, Para4)
10
Dollar and the lingering weak economy with high unemployment (Page
274, Para1)
10
The revenue drop was attributable to the impact of the stronger.
11
11
Competition is intense in communications services and subject to rapid

technological
12
Breaches in data security are on the rise (Page 270, Para3)
12
13
Amazon states their success is based on: the ability to attract buyers and
13
30
eBay Inc.-2009
14
[MR111037]
sellers; the volume of transactions, price, and selection of goods;

customer service; brand recognition, community cohesion, interaction,
and size; system reliability; delivery and payment reliability; Web site
convenience and accessibility; level of service fees; and quality of search
tools (eBay, 2006).(Page 269,Para1)
Several other online marketing channels such as: (1) syndicated store
programs, (2) sponsored searches, (3) portal advertising, and (4) e-mail
campaigns Amazon.com, 2006, p. 37).(Page 269, Para1)
18
15
Amazon has initiated alliances with partners to gains sales by referring

customers to Amazon.com (Page 269, Para1)
20
16
The success of Amazon is built on similar customer-centric

entrepreneurial business models that focus on customer-driven value
creation. (Page 268, para1)
14
17
Amazon, a leading online retailer, reported net revenues of $19.2 billion

as of year end 2008. (Page 268, Para4)
22
Threats Resulted from Industry Analysis (Porters 5 Forces)
18
Marketplaces: Competition is expected to increase in the future because

barriers to entry in this segment
are low and new online sites can be launched at a nominal cost (Page 268,
Para2)
19
Competitors include traditional

department, warehouse, discount, and general merchandise stores,
emerging online
retailers, online classified services, and other offline and online home
shopping networks
such as Wal-Mart, Target, Sears, Macys, J.C. Penney, Costco, Office
Depot, Staples,
OfficeMax, Sams Club, Amazon.com, Buy.com, AOL.com, Yahoo!
Shopping, MSN,
QVC, and Home Shopping Network.(Page 268, Para2)
19
20
Companies such as Google Base and Microsoft Live

Expo also offer similar online services and classified ads. (Page 268,
21
31
eBay Inc.-2009
[MR111037]
Para2)
21
5
However, Amazons strong growth and satisfied customer base pose the
greatest threat to eBay (Page 267, Para6)
22
Marketplaces segment, which is closely tied to consumer purchase

patterns.(Page 269, Para2)
15
b) Opportunities and Threats for Communications segments

No.
Case Fact
Prioritiz
e
Opportunities Resulted from PEST Analysis
1.

Para3)
2.

3.
(Page 265, Para5).
4.

5.

6.

analysis)
32
eBay Inc.-2009
[MR111037]
N/A
The list of threats

No.
Case Fact
Prioritiz
e
Threats Resulted from PEST Analysis

(Page 269, Para 6)





10
274, Para1)
12
10
33
eBay Inc.-2009
11
[MR111037]

technological

12
Other online payment services and offline payment methods, such as

cash, check, money order, and established credit card merchants (Page
268, Para1)
13
13
The Payments segment

competes against other online payment services and offline payment
methods, such as
cash, check, money order, and established credit card merchants (Page
268, Para 1)
11
c) Opportunities and Threats for Payments segments

No.
Case Fact
Prioritiz
e
Opportunities Resulted from PEST Analysis
1.

Para3)
2.

3.
(Page 265, Para5).
4.

5.

6.
34
eBay Inc.-2009
[MR111037]

analysis)
N/A
The list of threats

No.
Case Fact
Prioritiz
e
Threats Resulted from PEST Analysis

(Page 269, Para 6)



35
eBay Inc.-2009
[MR111037]

7

274, Para1)
10
10
11

technological
13

12
13
Traditional communications companies offer bundled services, such as

cable or
satellite television, along with internet and voice communications
services (Page268, para2)
The Communications segment faces competition from local telephone or
cable companies and other VoIP providers. Furthermore, eBay anticipates
the need for substantial resource investments in technology and marketing
in order to remain competitive. (Page 1, Para268)
12
11
* Because of the lack information given in the case study particularly for competitors
information I provided only EFE and CPM analysis for marketplaces segment.
3.7 The External Evaluation Factor (EFE)

Item
Key external factor
Weight
Rating
Opportunity
36
Weighted
score
eBay Inc.-2009
[MR111037]
The need for substantial

resource investments in
technology and marketing
in order to remain
competitive (Page 268,
Para1)
Buyers and sellers enjoy

trading among a wide
selection of goods and
services in a secure, trusted,
and efficient commerce
environment.(Page 265,
Para5).
0.09
0.36
0.08
0.32
Profitability is also affected

by currency exchange rates
(page 269, Para3)
0.07
0.21
Online classifieds help

people meet, share ideas,
and offer goods/services at a
local city or regional
level(Page 266, Para4)
0.07
0.21
0.06
0.18
If the U.S. dollar weakens

against foreign currencies,
transactions conducted in
foreign currency
denominations will increase
and inflate revenues,
operating expenses, and net
37
eBay Inc.-2009
[MR111037]
Threat
In addition, tax compliance

will increase costs. (Page
269, Para 6)
Weak global economic

conditions, in addition to
the mortgage and
worldwide credit related
financial crisis, are
expected to limit revenue
growth, particularly in the
Marketplaces segment,
which is closely tied to
consumer purchase patterns
(Page 269, Para2)
The resources of existing

competitor firms are larger
and as a result, competitors
could weather an economic
downturn (Page 268,
Para2)
0.08
0.32
0.08
0.32
0.07
0.21
Competition is intense in
communications services
and subject to rapid
technological Change(Page
268, Para2)
0.06
0.18
10
However, Amazons strong

growth and satisfied
0.06
0.18
38
eBay Inc.-2009
[MR111037]
customer base pose the

greatest threat to eBay
(Page 267, Para6)
11
Legislation is in effect
which requires collection
of taxes beginning after
December 31, 2010. This
new legislation may cause
a reduction in trading
activity that would
negatively affect several
business segments (Page
269, Para 6)
0.06
0.18
12
Alternatively, financial
measures will be negatively
impacted by a rise in the
value of the U.S. dollar
(Page 269, Para3)
0.05
0.15
13
Dollar and the lingering

weak economy with high
unemployment (Page 274,
Para1)
0.05
0.15
14
Marketplaces: Competition
is expected to increase in
the future because barriers
to entry in this segment are
low and new online sites
can be launched at a
nominal cost (Page 268,
Para2)
0.05
0.15
15
Declining economic
environment (Page 268,
0.05
0.15
39
eBay Inc.-2009
[MR111037]
Para4)
Total
3.27
Conclusion
Based on External Factor Evaluation Analysis, eBay achieved 3.27 for marketplaces segment
which shows that the company is fairly stabil towards the opportunities and threats in its
industries. As a matter of fact, we can clearly see that eBay external strategies have fairly
success in taking advantage of existing opportunities and at the same time struggle to reduce
the threats since there is not too many large company involved in the industry.
3.8 Competitive Profile Matrix Analysis

*For CPM analysis, I have only considered Amazon as the only one competitor in the
marketplace segment since there is lack of data given based on the case study.
Key SUCCESS
FACTORS
Providing Value
to Consumers
Reliability &
Trustworthy
Friendly
Interface
Brand Image &
Reputation
Financial
Position
Total
eBay
Weight
Amazon
Rating
Score
Rating
Score
0.90
0.90
0.84
0.84
0.18
0.54
0.54
0.14
0.42
0.42
0.10
0.20
0.20
0.30
0.28
2.90
2.90
Conclusion:
From the CPM analysis we can see that eBays CPM value is 2.90 which is the same to
its competitor, Amazon. On the other hand, because of the lack information about the
competitors, I am going to focus only on Amazon as the main competitor for the internal
analysis since it is the major treat for eBay in this industry.
40
eBay Inc.-2009
[MR111037]
4.0 Internal Analysis

4.1 Cultural Analysis
*Based on the case study given, the cultural analysis factor provided in the case is a very
general statement for eBay without mentioning specifically for which segment. So because
of lack of data I did not separate them into different segment.
Case Facts
Segment
41
eBay
S
Amazon
eBay Inc.-2009
Marketplaces
[MR111037]
EBay transformed the Internet and the

way many of us shop and do business
worldwide (Page 264,para3)
-The success of eBay is built on similar

customer-centric entrepreneurial
business models that focus on customerdriven value creation (Page 268, Para1)
N/A
- The success
of Amazon is
built on
similar
customercentric
entrepreneuria
l
business
models that
focus on
customerdriven value
creation
(Page 268,
para1)
Communications
-EBay, the first virtual online business
community, empowers entrepreneurial
individuals to become e-commerce business
owners.(Page 2
63, Para4)
N/A
Payments
N/A
N/A
4.2 Management Functions
Functions
42
Segment
Case Facts
eBay
S W
Amazon
eBay Inc.-2009
[MR111037]
Planning
Marketplaces
Communications
-EBay plans to expand

the Marketplaces
segment by focusing on
customers to Improve the
buyers experience and
reduce seller costs by
enhancing products and
services,
improving online trust
and safety, enhancing
customer support,
extending product
offerings geographically
and into new categories,
and developing retention
strategies. (Page 226,
Para8)
EBay also that quarter
announced they would
spin off and make an
initial public offering of
their Skype business
segment in the beginning
of year 2010.
(Pg.263,para2)
- Registered subscribers
are expected to reach
500 million by 2012 and
revenues are anticipated
to double
by 2011.(Page 267,
Para4)
EBay Inc. plans to
implement a customer
management program
that emphasizes
acquiring new users and
upgrading current Skype
43
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
users to premium
products (Page 267,
Para5)
- Future plans
include expanding
Skypes desktop product
to mobile user devices
and other Web-based
devices. Plans include
also offering solutions to
a more diverse business
user and enhancing
the Skypes current
platform for greater
revenues because the
worldwide
communications
market is expected to
grow by 5.5 percent
annually with U.S. Web
conferencing
expected to grow 14.1
percent from 2008
through 2011 (eBay.com
2009).(Page 267, Para5)
Payments
44
EBays management
seeks to become the
number-one online
payment solution. EBay
plans to focus on
improving the customer
experience, enhancing
security, expanding
product
offerings, enhancing
buyer and seller
protection programs,
adding innovative
features, and
expanding its sales
N/A
N/A
eBay Inc.-2009
[MR111037]
channels (Page
267,Para2)
-Expansion
into international
markets and more
currencies is expected to
improve the ease and
efficiency
of cross-border
transactions (Page 267,
Para2)
Marketplaces
Organising
-In August 2009, eBay

Inc. formed a
partnership with
General Motors enabling
hundreds of
GM dealers in California
to help consumers
negotiate purchase of
new GM cars and trucks
marketplace.
(Pg.263,para1)
EBay has also expanded

specific Customer
Support efforts, such as
to increase efficiency of
trades(Page 266, Para2)
-In, 2008, eBay
launched an advertising
service that enables third
parties
to advertise their eBay
listings and eBay stores
45
N/A
-Amazon has
initiated alliances
with partners to
gains sales by
referring
customers to
Amazon.com
(Page 269, Para1)
N/A
N/A
eBay Inc.-2009
[MR111037]
on eBay Web sites.(Page
266, Para5)
- Acquired by eBay Inc.
in 2005, Shopping.com
is an online comparison
shopping
site that offers
comparisons on millions
of products and product
reviews.(Page266,
Para6)
-Rent.com, acquired by
eBay in 2005, (Page 266,
Para7)
Communications
-E-commerce is
supported by eBays
proprietary
Skype VoIP technology,
which allows free
telephone calls using a
broadband Internet
connection to any
telephone number.(Page
263, para4)
-The Communications
segment is composed of
Skype, which was
46
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
founded in 2003 and
acquired by eBay in
2005.
- As of December 2008,
Skype had acquired
370 million users, a 51
percent growth over the
same time a year ago.
Payments
PayPal was founded in

December 1998 and
acquired by eBay Inc. in
2002 (Page 266, Para 9)
Bill Me Later, acquired
by eBay Inc. in 2008,
offers consumers instant
credit at the point
of sale through over
1000 online U.S.
merchants (Page 267,
Para1)
N/A
N/A
N/A
Motivating
Marketplaces
N/A
N/A
N/A
N/A
Communications
47
eBay Inc.-2009
[MR111037]
Payments
N/A
Marketplaces
As of December 31,
2008, eBay Inc.
employed approximately
16,200 people.
(Page264, Para3)
N/A
N/A
Communications
N/A
N/A
N/A
N/A
-EBays global
networked community of
buyers and sellers
interact 24/7 in a secure
and trusted global
marketplace (Page 264,
para4)
N/A
Staffing
Payments
Marketplaces
Controlling
48
- EBay recently adopted

a policy that no
longer permits sellers to
leave negative feedback
(Page 266, Para2)
N/A
- Web Site Stability.
N/A
eBay Inc.-2009
[MR111037]
Increased volume and
greater complexity
requires additional
expensive investments in
hardware, software, and
personnel(Page 270,
Para4)
- The SafeHarbor
Program provides
guidelines for resolving
disputes among parties.
Complaints are
investigated and
offenders
may receive warnings
that are posted to users.
Violators may be
suspended from either
bidding on or listing
items for sale.(Page 22,
Para2)
The Verified Rights

Owner Program enforces
intellectual property
owners rights by
allowing owners to
request the removal of
listings that contain
infringements. This
program protects
intellectual property
and reduces counterfeit
trade.(Page 266, Para2)
N/A
N/A
For that
quarter, eBay reported
49
N/A
eBay Inc.-2009
[MR111037]
offset decline in their
Marketplaces business
segment (Page 263,
Para2)
- EBay has recently been
involved in litigation
with Tiffany & Co.,
Rolex, Louis Vuitton,
Christian Dior, LOral,
and Lancme for a lack
of policing trade and
infringement on
trademarks and
copyrights for the sale
of not for resale and
counterfeit items on
eBays Web
sites. (Page 269, Para8)
- Prohibit sharing of
certain information over
the Internet, such as
comments provided by
customers in eBays
Feedback Forum. This
limitation would
adversely affect eBays
ability to provide a
reliable and secure
community that shares
purchase information
and aspects of trades
with other members of
eBays Marketplaces
segment.(Page 270,
Para2)
50
N/A
N/A
eBay Inc.-2009
[MR111037]
Communications
Payments
For the second quarter of

2009, eBay reported
nice growth in Skype
business segments
(Page 263, Para2)
- For the second quarter

of 2009, eBay reported
nice growth in both
their PayPal (Page 263,
Para2)
-Although Bill Me Later

accounts are funded by
CIT Bank, Bill Me
Later is responsible
for all functions related
to the account.
-As of October 2008

certain transactions on
eBay.com purchased
using PayPal are
protected for the full
purchase price in the
event that the buyer does
not receive the
goods. This may result in
greater losses and writeoffs incurred by eBay
Inc.(Page 270, Para2)
51
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
4.3 Marketing Strategy
Factors
Segment
Marketplaces
Marketing
Case Facts
eBay
-The success of eBay is built

entrepreneurial business
models that focus on
customer-driven value
creation (Page 268, Para1)
S
Amazon
N/A
Strategy

and regions of the world,
such as the Netherlands,
Germany, and so on. (Page
266, Para4)
Communication
s
Payments
Promotion
Programs
Marketplaces
52
N/A
N/A
N/A
Additional revenues
are also earned from
advertising and revenuesharing contracts with third
parties that provide
transaction services to eBay
and PayPal account users.(Page
264, para1)
N/A
-Facilitate trading with

unknown partners on the
Internet, eBay Inc. provides a
trusted and safe trading
environment by offering the
following services: Feedback
-Amazon has
initiated
alliances with
partners to
gains sales by
referring
eBay Inc.-2009
[MR111037]
Forum, Safe Harbor Program,
Verified Rights Owner
Program, Customer Support,
Value-Added Tools
and Services, and Loyalty
Programs.(Page 266, Para1)
customers to
Amazon.com
through
several other
online
marketing
channels such
as: (1)
syndicated
store
programs, (2)
sponsored
searches, (3)
portal
advertising, and
(4) e-mail
campaigns
(Amazon.com,
2006, p. 37).
(Page 269,
Para1)
N/A
-Nearly all of Californias 250
GM dealers took part
in the program so consumers
could visit Web pages like
gm.ebay.com and
chevy.ebay.com (Page 263
Para1)
N/A
-Loyalty Programs that provide
cash back buyer rewards
coupons were selectively
distributed to recognize large

buyers to sustain customer loyalty.
(Page 266, Para2)
53
N/A
eBay Inc.-2009
[MR111037]
- The key to success is eBays

user support, such as
announcements,
bulletin boards, customer support,
personal pages, and more (Page
265, Para5)
Communications
N/A
N/A
Payments
N/A
N/A
Product and
Service
Planning
Marketplaces
- The Marketplaces platform is

the core online commerce
platform
eBay.com. (Page 265, Para6)
N/A
- Web Site Usability. Growth in

the number of products and
Web site features has caused
the site to become less userfriendly.(Page 270, Para4)
- EBays
Marketplaces division reported
$1.26 billion in revenue, a 14
percent year-over-year
decline(Page 274, Para1)
- Customer Support. Customer
support is challenged from
greater trade activity and an
increased number of users.
(Page 270, Para4)
54
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
Communication
s
-EBay, the first virtual online

business community, empowers
entrepreneurial individuals to
become e-commerce business
owners(Pg.263,para4)
N/A
-Skype is the worlds fastestgrowing Internet

communication
software platform.(Page 267,
Para3)
-Skype allows buyer/seller

communications 24/7 in a
secure and trusted community
that is supported by free
unlimited Internet voice and
video
communication (Page 267,
Para3)
Payments
-PayPal is a recognized
global leader in online payment
solutions
(Page 266, Para9)
-EBays Payments segment is
composed of PayPal and Bill
Me Later transaction services.
(Page 266, Para9)
-PayPal is available to any
online or offline individual or
business with an e-mail
address and allows members to
securely send and receive
payments online securely
without
sharing sensitive financial
information.(Page 266, Para10)
55
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
-If credit availability is further

reduced, Bill Me Later may not
be able to extend credit to
customers (Page 269, Para5)
- For the quarter ending July

30, 2009, eBays Payments
division reported $669.3
million in
revenue, an increase of 11
percent year over year. The
growth was driven by
continued
momentum in PayPal Merchant
Services and the contribution
made by Bill Me Later (Page
274,Para1)
Pricing
Marketplaces
-EBay provides the virtual

marketplace auction where the
N/A
N/A
N/A
market determines the price of
items sold (Page 264, Para3)
-In the Marketplaces platform,

eBay.com, traditional auctionstyle or fixed-price options are
offered in 39 markets. Auctionstyle listing allows a seller to
select a minimum
price for opening bids that stay
open for a period of time.
Alternatively, the fixed-price
format
allows sellers to name a sale
price upon listing instead of
waiting for the auction period
to expire.(Page 265,Para 6)
56
N/A
eBay Inc.-2009
[MR111037]
-If revenue significantly

declines, eBay may not be able
to meet
contractual obligations. EBay
recently increased its fee
structure for its Marketplaces
business, which may negatively
impact the number of new
customers and revenue from
existing
Communications
-Communications fees are

assessed either
N/A
N/A
on a subscription basis or per

minute charge for SkypeOut
minutes.(Page 264, Para1)
Payments
-International business
processing accounted for 45
percent of PayPals total
revenues for
2008. Higher fees earned on
international transactions
have provided eBay with
higher revenues
and gross margins in
comparison to revenues from
domestic transactions (Page
266, Para9)
- Any reduction in trading spill
over to a reduction in PayPal
revenues (Page 269, Para7)
57
N/A
N/A
eBay Inc.-2009
[MR111037]
Marketplaces
Distribution
-Nearly all of Californias 250

GM dealers took part
in the program so consumers
could visit Web pages like
gm.ebay.com and
chevy.ebay.com
to browse new 2008 and 2009
GM vehicles, ask dealers
questions, and figure out
financing. (Pg.263,para1)

and regions of the world,
such as the Netherlands,
Germany, and so on. (Page
266, Para4)
Shopping.com
is available in the United
States, the United Kingdom,
France,
Germany,
and
Australia.(Page 266, Para6)
-This program marked a shift

for San Jose, California-based
eBay, since most of the
vehicles sold on eBay Motors
a site that sells various types
of vehicles and auto parts
had historically been used.
(Pg.263,para1)
customized local sites across
four major areas of the
world in the following regional
markets; Asia Pacific, Europe,
North America and Latin
58
N/A
N/A
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
America (Page 265,Para1)
EBay offers both pre-trade

and post-trade ValueAdded Tools and Services to
facilitate faster and safe trading
and collections. Examples of
value added service tools
include calculator, shipping and
UPS labels (Page 266, Para2)
N/A
Communication
s
Payments
59
-In August 2009, eBay Inc.

hundreds of
GM dealers in California to
help consumers negotiate
purchase of new GM cars
and trucks
marketplace. (Pg.263,para1)
-Skype is available in 28
languages in over 225 countries
(eBay, 2006).(Page 263, page4)
Retailers that offer the Bill Me

Later service
include: Borders, Continental
Airlines, Fujitsu, JetBlue,
Overstock, QVC, Toshiba, Toys
R Us, and Walmart.com
(Page 267, Para 1)
N/A
N/A
eBay Inc.-2009
[MR111037]
Marketplaces
N/A
N/A
N/A
N/A
N/A
N/A
Marketing
Research
Communications
Payments
4.4 Financial Analysis

4.4.1 Financial Ratio
Because of lack of the needed information for its competitor, Amazon about financial
statements, only eBay Inc. has been analyzed in financial terms. These ratios come from the
exhibit given in this case and again this financial analysis has only considered eBay based on
their financial position from year to year because of the lack of data from its competitor,
Amazon.
*Because of lack of data, this financial analysis covered for all three segments in eBay Corp;
Marketplaces segment; Communications segment; and Payments segment.
60
eBay Inc.-2009
[MR111037]
a) Growth of the revenue:
Segment
Companys Revenue by Segments

Year 2006
Year 2007 Year 2008
(Millions)
(Millions)
(Millions)
Marketplaces
4,334,290
5,363,891
Communicati
194,921
ons
Payments
Total net
Year 2009
5,586,751
(Millions)
-
381,822
550,841
1,440,530
1,926,616
2,403,669
5,969,741
7,672,329
8,541,261
8,199,611
Revenue
Revenue
eBay Revenue
Growth of
29%
11%
-4%
rate has been
Growth
decreasing for
Percentage
the last 3
years.
Therefore,
this decline
trend lead to
decreasing the
growth rate in
2009 by 4%.
This revenue
decline trend
is considered
as the
weakness of
eBay
b) eBay Stock Price:

Companys Share Price in Millions
S
Year
Year
Year
Year
Year
2004
2005
2006
2007
2008
61
eBay Inc.-2009
[MR111037]
Declining in
stock price
$ 58.17
$43.22
$30.07
$33.19
$13.96
started from
2005 to 2008
can be
considered as
the weakness
for eBay
c) eBay Liquidity Ratio

Current Ratio
Year 2007
Year 2008
2.30
1.70
Decreased in Current Ratio

is the weakness for eBay
Quick Ratio
Year 2007
Year 2008
0.71
Decrease in Quick Ration is
1.17
the weakness for eBay

d) eBay Leverages Ratio
Debt to Equity Ratio
Year 2007
Year 2008
0.41
0.47
Increased in Debt to equity

Ratio is the weakness for
eBay
Debt Ratio
Year 2007
Year 2008
0.24
0.29
eBay Debt Ratio is increased

and it is considered as the
weakness for eBay
e) Profitability Ratio
Return on Assets (ROA)
Year 2007
62
Year 2008
S
-
[MR111037]
eBay Inc.-2009
11.41%
2.27%
Increased in
ROA is
considered a
strength for
Return on Equity (ROE)

Year 2007
Year 2008
3.0%
16.1%
eBay
S
Increased in
ROE is
considered as
a strength for
eBay
*In terms of the gross Profits margins this financial analysis can be compared with
Amazon since there is an information given in the case study given:
Gross Profit Margin (%)
Year 2006
eBay
Year 2007
Amazon
eBay
Amazon
Year 2008
eBay
Amazo
78.9%
22.9%
77%
22.6%
74%
22.3
%
eBay compared to
Amazon achieved
High gross profit
margins .High in
gross profit
margin can be
considered as a
strength for eBay
Gross Profit Growth Rate (%)

Year 2005- 2006
Year 2006 to 2007
Year 2007 to 2008
eBay
Amazon
eBay
Amazon
eBay
Amazo
25%
37%
7%
27%
n
Decrease in Growth
rate is considered as
weakness for eBay
63
eBay Inc.-2009
[MR111037]
f) Working Capital
Companys Working Capital
Year 2007
Year 2008
4,022,926
2,581,503
Decreased to almost double for

weakness for eBay
Finance / Accounting Audit Checklist

1. eBay Revenue Growth of rate has been decreasing for the last 3 years. Therefore, this
decline trend lead to decreasing the growth rate in 2009 by 4%. This revenue decline
trend is considered as the weakness of eBay
2. Declining in stock price started from 2005 to 2008 can be considered as the weakness for
eBay
3. Decreased in Current Ratio is the weakness for eBay
4. eBay Debt Ratio is increased and it is considered as the weakness for eBay
5. Increased in Debt to equity Ratio is the weakness for eBay
6. eBay Debt Ratio is increased and it is considered as the weakness for eBay
7. Increased in ROA is considered a strength for eBay
8. Increased in ROE is considered as a strength for eBay
64
eBay Inc.-2009
[MR111037]
9. eBay compared to Amazon achieved High gross profit margins .High in gross profit
margin can be considered as a strength for eBay
10. Decrease in Growth rate is considered as weakness for eBay
11. Decreased to almost double for working capital is considered as weakness for eBay
4.5 Production/Operation
Case Facts
Decision
Area
Segment
Process
Marketplaces
65
eBay
-In 2008,
eBay.com
generated
approximately
$59.7 billion in
gross merchandise
revenues
with consumer
electronics
accounting for the
largest
percentage of
trade at $6.0
billion
or 17 percent, as
indicated in
Exhibit 1(Page
264,Para2)
Amazon
Amazon, a
leading
online
retailer,
reported net
revenues of
$19.2 billion
as of year
end
2008. (Page
268, Para4)
Strengt
h
Weakness
eBay Inc.-2009
[MR111037]
-EBays
marketplace, or
marketspace, is
an online virtual
trading platform
for the sale of
goods and
services by a
community of
users that
comprises
individual buyers
and sellers,
as well as small
business owners
(Page 264,Para3)
N/A
-EBays
Marketplaces
platform
brings buyers and
sellers together
through fully
automated online
Web sites 24/7
(Page 265, Para5)
-Feedback Forum
provides feedback,
comments, and
ratings on other
66
eBay Inc.-2009
[MR111037]
users that can
be viewed by
potential users
when considering
a purchase.(Page
266, Para2)
Revenue is
earned from
advertisers and
retailers who pay a
fee for directing
shoppers to their
own sites (Page
266, Para6)
- The
Marketplaces
segment generates
revenues from
listings and fees
paid by sellers
(Page 264,Para1)
- Rent.com lists
apartment
availability,
rental costs, virtual
tours, roommate
searches, and
more. Revenue is
earned from
67
N/A
N/A
eBay Inc.-2009
[MR111037]
landlords
who pay a fee for
renters who find
apartments
through Rent.com.
(Page 266, Para7)
N/A
- StubHub is a
leading U.S. ticket
marketplace that
allows users to buy
and sell tickets
to sporting, events,
theater, and other
entertainment
events (Page
266,Page3)
Communicati
ons
-Skype revenue is
earned through
premium services
such as
making/receiving
domestic
or international
calls to and from
landline and
mobile phones,
voicemail, call
forwarding,
and
personalization,
such as ringtones.
N/A
-EBays prior
expenditures were
focused on
traditional wired
68
N/A
eBay Inc.-2009
[MR111037]
routes; however,
50 percent of
expenditures
are now in the
wireless
telecommunication
s sector.(Page 267,
Para 5)
-EBays ecommerce
platform also
provides full
support for the
buying process
(registration,
bidding,
management of
outbids, item
listing, and
transaction close),
community
bulletins, chat, a
proprietary
product search
engine, purchase
protection
programs,
customer support,
value added
services for
auction users, a
personal home
page that includes
tailored
information, and
fully automated
merchant services.
EBays success is
sustained through
Communications
and trust (eBay
69
eBay Inc.-2009
[MR111037]
2006).(Page
263,para4)
N/A
-The
Communications
segment generates
usage revenues
from Skype VoIP
for connection to
traditional fixed
and mobile
telephones
under eBays
subsidiary Skype
Technologies S.A
(Page 264,Para1)
N/A
-Skype
headquarters are
located in
Luxembourg, with
global offices in
Europe,
the United States,
and Asia(Page
267, Para 3)
70
eBay Inc.-2009
[MR111037]
N/A
Payments
-PayPal is
accepted both
online and offline
in 190 markets
worldwide and
processes
payments in 19
currencies (Page
266, Para10)
-When a consumer
makes a purchase
on credit, CIT
Bank initiates a
consumer loan at
the point of sale.
Bill
Me Later then
purchases the
consumers loan
from CIT Bank.
Bill Me Later
earns revenues
from interest on
the outstanding
balances, late fees,
and transaction
71
- The
Payments segment
revenues are
generated from
fees paid by
merchants for
payment
processing
services through
PayPal and Bill
Me Later
(Page 264,Para1)
N/A
N/A
eBay Inc.-2009
[MR111037]
fees.(Page 267,
Para1)
-Bill Me Later
initially funds
consumers loans
using cash from
business activities
and a line of
credit. As a result
of the global
financial
crisis, eBays
available line of
credit was
reduced (Page
269, Para5)
-Customer
Account Billing.
Transactionprocessing and
revenue collection
becomes more
difficult as the
number of
transactions
increase and
consumers
default on loans.
(Page 270, Para4)
72
N/A
N/A
eBay Inc.-2009
[MR111037]
Capacity
Marketplaces
- EBay offers
millions of items
for trade through
auction-style and
fixed-price trading
in 39 markets and
boasts 86.3
million active
global
users as of 2008.
(Page 264, para3)
- In 2007, eBay
sold nearly $60
billion goods,
which equates to
73
N/A
N/A
eBay Inc.-2009
[MR111037]
worldwide
eBay users
trading more
than $1,900
worth in goods
every second.
(Page 264, Para3)
Listings of items
for sale have
exceeded
140.0 million per
day.
(Page 265, Para5)
Rent.com,
acquired by eBay
in 2005, is the
most visited online
apartment listing
service
with over 20,000
listings in the
United States
(Page 266, Para7)
Communicati
ons
74
As
of December 2008,
approximately
516,000 online
storefronts were
listed in locations
across the globe
(Page 265, Para5)
-As of
2008, eBay has a
14 percent share of
global ecommerce with
86.3 million
N/A
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
active users.(Page
263, para 3)
-EBays
proprietary Skype
technology has
been downloaded
more than a billion
times.(Page 267,
Para3)
N/A
-Skype had
approximately
405.3 million
registered users
worldwide. (Page
267, para3)
-Interestingly,
nearly 11 million
Skype downloads
are to mobile
devices.(Page 267,
Para3)
- In 2008, Skype
users logged
approximately 16
billion minutes in
a single quarter,
an increase of 54
percent from the
prior year. Large
volumes are also
easily supported
by
Skype software.
(Page 267, Para4)
75
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
- At any given
point in time there
may be 300,000
simultaneous calls
and over 100,000
information
queries per
second. Overall,
Skype accounted
for 6 percent of
international
worldwide calling
minutes in 2007.
Business calls
represent 30
percent of current
Skype usage and
25 percent of calls
also use video
technology.(Page
267, Para4)
N/A
-Skype contributed
$170.0 million in
revenue for the
quarter,
representing 25
percent
year-over-year
growth. Skype
added 37.3 million
registered users
during the quarter
and
ended the period
with more than
480.5 million
registered
users(Page 274,
Para1)
76
N/A
eBay Inc.-2009
[MR111037]
Payments
-PayPal is a
recognized
global leader in
online payment
solutions with 70
million active
accounts (Page
266, Para9)
-PayPal earned
approximately
$30.4 billion of net
total payment
revenues directly
from eBay.com
transactions, which
represented
approximately
51 percent of
PayPals net Total
Payment Volume
during 2008 (Page
264, para2)
N/A
N/A
Inventory
N/A
N/A
Marketplaces
Communicati
ons
77
N/A
N/A
eBay Inc.-2009
[MR111037]
Payments
N/A
N/A
Marketplaces
Workforce
Communicati
ons
eBay undertook a
10 percent
reduction in its
workforce with the
elimination of
1,000 jobs in 2008
and incurred
$49,000 in
restructuring
costs (Page 269,
Para4)
N/A
N/A
N/A
N/A
Payments
Quality
Marketplaces
78
N/A
-EBay.com offers
a sense of
community to
buyers and sellers
Communications
and high
transaction rates
N/A
eBay Inc.-2009
[MR111037]
on a wide
selection of
goods/services
(eBay.com, 2006).
(Page 263, para4)
-EBays popularity
is due to the value
offered to its users.
EBay provides a
faster, easier,
safer online
commerce
experience
(eBay, 2006, p. 7).
(Page 263, para4)
-In June 2008,

eBay Inc. was
found liable for
damages in the
amount of 38.6
million Euro
payable to the
Louis Vuitton and
Christian Dior
firms. (Page 269,
Para8)
The German
Federal Supreme
Court has also
ruled that eBay
may owe penalties
from illegal
listings of
counterfeit and
stolen goods.
These
events may also
79
N/A
N/A
N/A
eBay Inc.-2009
[MR111037]
negatively affect
eBays reputation.
(Page 270, Para1)
Communicati
ons
Payments
- The potential
also exists for
Skype technology
to become
obsolete. (Page
268, Para2)
PayPal also reports
a very low
percentage of 0.33
percent loss from
fraud.(Page 266,
Para10)
N/A
N/A
4.6 Research & Development (R&D)

Case Facts
Strength
eBay
Amazon
N/A
N/A
4.7 Management Information Systems Audit

Case Facts
Segment
eBay
Marketplaces
80
Information is
recorded up to
12 months and
provides color-coded
star ratings(Page 266,
Para2)
Strength
Amazon
N/A
Weakness
Weakness
eBay Inc.-2009
[MR111037]
N/A
N/A
N/A
N/A
Communication
s
Payments
4.8 Value Chain Analysis (VCA)

a) Marketplaces Segment
Case Facts
Variables
Inbound
Logistics
Strength
eBay
In August 2009, eBay Inc. formed a partnership with
General Motors enabling hundreds of
GM dealers in California to help consumers negotiate
purchase of new GM cars and trucks
through the eBay online marketplace. (Page
263,para1)
Process
EBays marketplace, or marketspace, is an online
virtual trading platform for the sale of
goods and services by a community of users that
81
Weakness
eBay Inc.-2009
[MR111037]
comprises individual buyers and sellers,

as well as small business owners (Page 264,Para3)
EBays Marketplaces platform

brings buyers and sellers together through fully
automated online Web sites 24/7 (Page 265, Para5)
Feedback Forum provides feedback, comments, and
ratings on other users that can
be viewed by potential users when considering a
purchase.(Page 266, Para2)
Revenue is earned from advertisers and retailers who

pay a fee for directing shoppers to their own sites
(Page 266, Para6)
The Marketplaces segment generates revenues from

listings and fees paid by sellers (Page 264,Para1)
Rent.com lists apartment availability,

rental costs, virtual tours, roommate searches, and
more. Revenue is earned from landlords
who pay a fee for renters who find apartments through
Rent.com.(Page 266, Para7)
StubHub is a leading U.S. ticket marketplace that
allows users to buy and sell tickets
to sporting, events, theater, and other entertainment
events (Page 266,Page3)
Outbound
Logistics
The success of eBay is built on similar customercentric entrepreneurial business models that focus on
customer-driven value creation (Page 268, Para1)
EBay Inc. also offers online classified advertisements
to members in hundreds of cities and regions of the
world, such as the Netherlands, Germany, and so
on. (Page 266, Para4)
82
eBay Inc.-2009
[MR111037]
Nearly all of Californias 250 GM dealers took part

in the program so consumers could visit Web pages
like gm.ebay.com and chevy.ebay.com (Page 263
Para1)
Loyalty Programs that provide cash back buyer

rewards coupons were selectively
distributed to recognize large buyers to sustain customer

loyalty.(Page 266, Para2)
The key to success is eBays user support, such as

announcements, bulletin boards, customer support,
personal pages, and more (Page 265, Para5)
EBay provides the virtual marketplace auction where

the market determines the price of items sold (Page
264, Para3)
Facilitate trading with unknown partners on the

Internet, eBay Inc. provides a trusted and safe trading
environment by offering the following services:
Feedback Forum, Safe Harbor Program, Verified
Rights Owner Program, Customer Support, ValueAdded Tools and Services, and Loyalty Programs.
(Page 266, Para1)
Marketing
- Web Site Usability. Growth in the number of
& Sales
products and Web site features has caused the site to
become less user-friendly.(Page 270, Para4)
- EBays
Marketplaces division reported $1.26 billion in
revenue, a 14 percent year-over-year decline(Page
274, Para1)
83
eBay Inc.-2009
[MR111037]
Nearly all of Californias 250 GM dealers took part

in the program so consumers could visit Web pages
like gm.ebay.com and chevy.ebay.com
to browse new 2008 and 2009 GM vehicles, ask
dealers questions, and figure out financing.
(Pg.263,para1)
EBay Inc. also offers online classified advertisements
to members in hundreds of cities
and regions of the world, such as the Netherlands,
Germany, and so on. (Page 266, Para4)
Service
If revenue significantly declines, eBay may not be

able to meet contractual obligations. EBay recently
increased its fee structure for its Marketplaces
business, which may negatively impact the number of
new customers and revenue from existing
Customer Support. Customer support is challenged

from greater trade activity and an
increased number of users.(Page 270, Para4)
EBay.com offers a sense of community to buyers
and sellers that is sustained by Communications and
high transaction rates on a wide
selection of goods/services (eBay.com, 2006).
(Page 263, para4)
*For the supporting activities, there have already covered in management function,
Management Information System and Research & Development as well as in financial analysis.
b) Communications Segment
Variables
84
Case Facts
Strength
Weakness
eBay Inc.-2009
[MR111037]
eBay
Inbound
Logistics
N/A
Skype revenue is earned through premium services

such as making/receiving domestic
or international calls to and from landline and mobile
phones, voicemail, call forwarding,
and personalization, such as ringtones
EBays prior
expenditures were focused on traditional wired routes;
however, 50 percent of expenditures
are now in the wireless telecommunications sector.
(Page 267, Para 5)
Process
EBays e-commerce platform also provides full

support for the buying process (registration, bidding,
management of outbids, item listing, and transaction
close), community bulletins, chat, a proprietary
product search engine, purchase protection programs,
customer support, value added services for auction
users, a personal home page that includes tailored
information, and fully automated merchant services.
EBays success is
sustained through Communications and trust (eBay
2006).(Page 263,para4)
The Communications segment generates
usage revenues from Skype VoIP for connection to
traditional fixed and mobile telephones
under eBays subsidiary Skype Technologies S.A
(Page 264,Para1)
85
eBay Inc.-2009
[MR111037]
EBay, the first virtual online business community,

empowers entrepreneurial individuals to become ecommerce business owners(Pg.263,para4)
Outbound
Logistics
Skype allows buyer/seller communications 24/7 in a

secure and trusted community that is supported by
free unlimited Internet voice and video
communication (Page 267, Para3)
Communications fees are assessed either

on a subscription basis or per minute charge for
SkypeOut minutes.(Page 264, Para1)
Skype is the worlds fastest-growing Internet

communication
Marketing
software platform.(Page 267, Para3)
& Sales
Service
Skype is available in 28 languages in over 225

countries (eBay, 2006).(Page 263, page4
Interestingly, nearly 11 million

Skype downloads are to mobile devices.(Page 267,
Para3)
Management Information System and Research & Development as well as in financial
analysis.
86
eBay Inc.-2009
[MR111037]
C) Payments Segment
Case Facts
Variables
Strength
Weakness
eBay
Inbound
Logistics
Although Bill Me Later accounts are funded by CIT

Bank, Bill Me Later is responsible
for all functions related to the account
The
Payments segment revenues are generated from fees
paid by merchants for payment processing
services through PayPal and Bill Me Later
(Page 264,Para1)
Process
Bill Me Later initially funds consumers loans using

cash from business activities and a line of credit. As a
result of the global financial
crisis, eBays available line of credit was reduced
(Page 269, Para5)
Customer Account Billing. Transaction-processing
and revenue collection
becomes more difficult as the number of transactions
increase and consumers
default on loans.(Page 270, Para4)
87
eBay Inc.-2009
Outbound
Logistics
[MR111037]
PayPal is available to any online or offline individual

or business with an e-mail
address and allows members to securely send and
receive payments online securely without
sharing sensitive financial information.(Page 266,
Para10)
If credit availability is further reduced, Bill Me Later
may not be able to extend credit to customers (Page
269, Para5)
Additional revenues
are also earned from advertising and revenue-sharing
contracts with third parties that provide
transaction services to eBay and PayPal account users.
(Page 264, para1)
PayPal is a recognized
global leader in online payment solutions
(Page 266, Para9)
For the quarter ending July 30, 2009, eBays

Payments division reported $669.3 million in
revenue, an increase of 11 percent year over year. The
growth was driven by continued
Marketing momentum in PayPal Merchant Services and the
contribution made by Bill Me Later (Page 274,Para1)
& Sales
Any reduction in trading spill over to a reduction in PayPal

revenues (Page 269, Para7)
International business processing accounted for 45

percent of PayPals total revenues for
2008. Higher fees earned on international
transactions have provided eBay with higher
revenues
and gross margins in comparison to revenues from
domestic transactions (Page 266, Para9)
88
eBay Inc.-2009
[MR111037]
EBays Payments segment is composed of PayPal

and Bill Me Later transaction services. (Page 266,
Para9)
Service
Retailers that offer the Bill Me Later service

include: Borders, Continental Airlines, Fujitsu,
JetBlue, Overstock, QVC, Toshiba, Toys R Us, and
Walmart.com (Page 267, Para 1)
PayPal is accepted both online and offline in 190
markets worldwide and processes payments in 19
currencies (Page 266, Para10)
Management Information System and Research & Development as well as in financial
analysis.
*Based on the case study given, as a matter of fact, in order to differentiate the segment, I
have provided another table for the list of strengths and weaknesses for Marketplaces
segment, Communications segment and Payments segment. But, because of the financial
analysis is the analysis based on eBay as a whole, therefore, the list of the strengths and
weaknesses
for
financial
analysis
are
the
same
for
Marketplaces
segment,
Communications segment and Payments segment.
4.9 Strengths and Weaknesses

Strengths List:
NO
Case Fact
Strengths Resulted from Cultural Functions
89
Prioritize
eBay Inc.-2009
[MR111037]
1.
EBay transformed the Internet and the way many of us shop and
do business worldwide (Page 264,para3)
11
2.
The success of eBay is built on similar customer-centric

entrepreneurial business models that focus on customer-driven
value creation (Page 268, Para1)
Strengths Resulted from Management Functions
3.
EBay plans to expand the Marketplaces segment by focusing on

customers to Improve the buyers experience and reduce seller costs
by enhancing products and services, improving online trust and
safety, enhancing customer support, extending product offerings
geographically and into new categories, and developing retention
strategies. (Page 226, Para8)
35
4.
In August 2009, eBay Inc. formed a partnership with General

Motors enabling hundreds of GM dealers in California to help
consumers negotiate purchase of new GM cars and trucks through
the eBay online marketplace. (Pg.263,para1)
5.
EBay has also expanded specific Customer Support efforts, such as

online self-help features to increase efficiency of trades(Page 266,
Para2)
38
6.
In, 2008, eBay launched an advertising service that enables third

parties to advertise their eBay listings and eBay stores on eBay Web
sites.(Page 266, Para5)
37
7.
Acquired by eBay Inc. in 2005, Shopping.com is an online

comparison shopping site that offers comparisons on millions of
products and product reviews.(Page266, Para6)
39
8.
Rent.com, acquired by eBay in 2005, (Page 266, Para7)
19
9.
As of December 31, 2008, eBay Inc. employed approximately

16,200 people. (Page264, Para3)
40
10. The SafeHarbor Program provides guidelines for resolving disputes

among parties. Complaints are investigated and offenders may
20
90
eBay Inc.-2009
[MR111037]
receive warnings that are posted to users. Violators may be

suspended from either bidding on or listing items for sale.(Page
22, Para2)
11. The Verified Rights Owner Program enforces intellectual property
owners rights by allowing owners to request the removal of listings
that contain infringements. This program protects intellectual
property and reduces counterfeit trade.(Page 266, Para2)
21
Strengths Resulted from Marketing Strategy Function
12. EBay Inc. also offers online classified advertisements to members in
33
hundreds of cities and regions of the world, such as the Netherlands,

Germany, and so on. (Page 266, Para4)
13. Facilitate trading with unknown partners on the Internet, eBay Inc.
provides a trusted and safe trading environment by offering the
following services: Feedback Forum, Safe Harbor Program, Verified
Rights Owner Program, Customer Support, Value-Added Tools and
Services, and Loyalty Programs.(Page 266, Para1)
23
14. Nearly all of Californias 250 GM dealers took part in the program so
consumers could visit Web pages like gm.ebay.com and
chevy.ebay.com to browse new 2008 and 2009 GM vehicles, ask
dealers questions, and figure out financing. (Page 263 Para1)
22
15. Loyalty Programs that provide cash back buyer rewards coupons
were selectively distributed to recognize large buyers to sustain customer
24
loyalty.(Page 266, Para2)
16. The key to success is eBays user support, such as announcements,
10
bulletin boards, customer support, personal pages, and more (Page 265,
Para5)
17. The Marketplaces platform is the core online commerce platform

eBay.com. (Page 265, Para6)
34
18. EBay provides the virtual marketplace auction where the market
determines the price of items sold (Page 264, Para3)
19. In the Marketplaces platform, eBay.com, traditional auction-style or

fixed-price options are offered in 39 markets. Auction-style listing
allows a seller to select a minimum price for opening bids that stay
91
41
eBay Inc.-2009
[MR111037]
open for a period of time. Alternatively, the fixed-price format allows

sellers to name a sale price upon listing instead of waiting for the
auction period to expire.(Page 265,Para 6)
20. Shopping.com is available in the United States, the United Kingdom, 31
France, Germany, and Australia.(Page 266, Para6)
21. This program marked a shift for San Jose, California-based eBay,
32
since most of the vehicles sold on eBay Motorsa site that sells
various types of vehicles and auto parts had historically been used.
(Pg.263,para1)
22. By 2009, eBay has attained customized local sites across four major 42
areas of the world in the following regional markets; Asia Pacific,
Europe, North America and Latin America (Page 265,Para1)
23. EBay offers both pre-trade and post-trade Value-Added Tools
and Services to facilitate faster and safe trading and collections.
Examples of value added service tools include calculator, shipping
and UPS labels (Page 266, Para2)
27
24.
Strengths Resulted from Financial Analysis

Increased in ROA is considered a strength for eBay
25
25.
Increased in ROE is considered as a strength for eBay
26
26.
eBay compared to Amazon achieved High gross profit margins. 8

High in gross profit margin can be considered as a strength for
eBay.
Strengths Resulted from Production / Process Functions
27. In 2008, eBay.com generated approximately $59.7 billion in gross

merchandise revenues with consumer electronics accounting for the
largest percentage of trade at $6.0 billion or 17 percent, as
indicated in Exhibit 1(Page 264,Para2)
28. EBays marketplace, or marketspace, is an online virtual trading

platform for the sale of goods and services by a community of
users that comprises individual buyers and sellers, as well as small
business owners (Page 264,Para3)
36
29. Feedback Forum provides feedback, comments, and ratings on other

users that can be viewed by potential users when considering a
18
92
eBay Inc.-2009
[MR111037]
purchase.(Page 266, Para2)

30. Revenue is earned from advertisers and retailers who pay a fee for
directing shoppers to their own sites (Page 266, Para6)
28
31. The Marketplaces segment generates revenues from listings and

fees paid by sellers (Page 264,Para1)
32. Rent.com lists apartment availability, rental costs, virtual tours,
roommate searches, and more. Revenue is earned from landlords
who pay a fee for renters who find apartments through Rent.com.
(Page 266, Para7)
29
33. StubHub is a leading U.S. ticket marketplace that allows users to buy
and sell tickets to sporting, events, theater, and other entertainment
events (Page 266,Page3)
30
34. EBays Marketplaces platform brings buyers and sellers together

through fully automated online Web sites 24/7 (Page 265, Para5)
35. EBay offers millions of items for trade through auction-style and
fixed-price trading in 39 markets and boasts 86.3 million active
global users as of 2008.(Page 264, para3)
12
36. In 2007, eBay sold nearly $60 billion goods, which equates to
worldwide eBay users trading more than $1,900 worth in goods
every second.(Page 264, Para3)
37. Listings of items for sale have exceeded 140.0 million per day.
(Page 265, Para5)
13
38. Rent.com, acquired by eBay in 2005, is the most visited online

apartment listing service with over 20,000 listings in the United
States (Page 266, Para7)
14
39. As of December 2008, approximately 516,000 online storefronts

were listed in locations across the globe (Page 265, Para5)
17
40. EBay.com offers a sense of community to buyers and sellers that is 3

sustained by Communications and high transaction rates on a wide\
selection of goods/services (eBay.com, 2006). (Page 263, para4)
41. EBays popularity is due to the value offered to its users. EBay
provides a faster, easier, safer online commerce experience
93
15
eBay Inc.-2009
[MR111037]
(eBay, 2006, p. 7).(Page 263, para4)
Strengths Resulted from Management Information System (MIS) Functions
42. Information is recorded up to 12 months and provides color-coded

star ratings(Page 266, Para2)
16
Weaknesses List:
N
O
Case Facts
Prioritiz
e
Weaknesses Resulted from Management Functions
1.
EBay recently adopted a policy that no longer permits sellers to leave

negative feedback (Page 266, Para2)
11
2.
Web Site Stability. Increased volume and greater complexity requires

additional expensive investments in hardware, software, and
personnel(Page 270, Para4)
3.
For that quarter, eBay reported offset decline in their Marketplaces

business segment (Page 263, Para2)
13
94
eBay Inc.-2009
[MR111037]
4.
EBay has recently been involved in litigation with Tiffany & Co., Rolex,
Louis Vuitton, Christian Dior, LOral, and Lancme for a lack of
policing trade and infringement on trademarks and copyrights for
the sale of not for resale and counterfeit items on eBays Websites.
(Page 269, Para8)
5.
Prohibit sharing of certain information over the Internet, such as

comments provided by customers in eBays Feedback Forum. This
limitation would adversely affect eBays ability to provide a reliable and
secure community that shares purchase information and aspects of trades
with other members of eBays Marketplaces segment.(Page 270, Para2)
12
Weaknesses Resulted from Marketing Strategy Functions
6.
Web Site Usability. Growth in the number of products and Web site
features has caused the site to become less user-friendly.(Page 270,
Para4)
14
7.
EBays Marketplaces division reported $1.26 billion in revenue, a 14

percent year-over-year decline(Page 274, Para1)
8.
Customer Support. Customer support is challenged from greater trade

activity and an increased number of users.(Page 270, Para4)
9.
If revenue significantly declines, eBay may not be able to meet

6
contractual obligations. EBay recently increased its fee structure for its
Marketplaces business, which may negatively impact the number of new
customers and revenue from existing users.(Page 269, Para7)
Weaknesses Resulted from Financial Analysis
10.
eBay Revenue Growth of rate has been decreasing for the last 3 years. 7
Therefore, this decline trend lead to decreasing the growth rate in 2009
by 4%. This revenue decline trend is considered as the weakness of eBay
Declining in stock price started from 2005 to 2008 can be considered as 15
11.

Decreased in Current Ratio is the weakness for eBay
12.
13.
16
eBay Debt Ratio is increased and it is considered as the weakness for 17

eBay
95
eBay Inc.-2009
[MR111037]
14.
15.
Increased in Debt to equity Ratio is the weakness for eBay

18
eBay Debt Ratio is increased and it is considered as the weakness for 19
16.
17.
eBay
Decrease in Growth rate is considered as weakness for eBay
20
Decreased to almost double for working capital is considered as 4
weakness for eBay
Weaknesses Resulted from Production / Process Functions
18.
eBay undertook a 10 percent reduction in its workforce with the

elimination of 1,000 jobs in 2008 and incurred $49,000 in restructuring
costs (Page 269, Para4)
19.
In June 2008, eBay Inc. was found liable for damages in the amount of
38.6 million Euro payable to the Louis Vuitton and Christian Dior
firms. (Page 269, Para8)
10
20.
The German Federal Supreme Court has also ruled that eBay may owe
penalties from illegal listings of counterfeit and stolen goods. These
events may also negatively affect eBays reputation. (Page 270, Para1)
Weaknesses Resulted from Research & Development Functions
N/A
Weaknesses Resulted from Management Information System (MIS) Functions
N/A
b) Strengths and Weaknesses for Communications segments

Strengths List:
NO
Case Facts
1.
EBay, the first virtual online business community, empowers

entrepreneurial individuals to become e-commerce business
owners.(Page 2
63, Para4)
96
Prioritiz
e
eBay Inc.-2009
[MR111037]
2.

announced they would spin off and make an initial public
offering of their Skype business
segment in the beginning of year 2010. (Pg.263,para2)
3.
Registered subscribers
are expected to reach 500 million by 2012 and revenues are
anticipated to double
by 2011.(Page 267, Para4)
4.
EBay Inc. plans to implement a customer management

program that emphasizes
acquiring new users and upgrading current Skype users to
premium products (Page 267, Para5)
5.
Future plans include expanding Skypes desktop product to

mobile user devices and other Web-based devices. Plans
include also offering solutions to a more diverse business user
and enhancing
the Skypes current platform for greater revenues because the
worldwide communications market is expected to grow by 5.5
percent annually with U.S. Web conferencing expected to grow
14.1 percent from 2008 through 2011 (eBay.com 2009).(Page
267, Para5
E-commerce is supported by eBays proprietary
Skype VoIP technology, which allows free telephone calls
using a broadband Internet connection to any telephone
number.(Page 263, para4)
The Communications segment is composed of Skype, which
was founded in 2003 and
acquired by eBay in 2005.
6.
7.
8.
As of December 2008, Skype had acquired

370 million users, a 51 percent growth over the same time a
year ago.
For the second quarter of 2009, eBay reported nice growth in
Skype business segments (Page 263, Para2)
9.
10.
97
EBay, the first virtual online business community, empowers

entrepreneurial individuals to become e-commerce business
eBay Inc.-2009
[MR111037]
owners(Pg.263,para4)
11.
Skype is the worlds fastest-growing Internet communication

software platform.(Page 267, Para3)
12.
Skype allows buyer/seller communications 24/7 in a

secure and trusted community that is supported by free
unlimited Internet voice and video communication (Page 267,
Para3)
13.
Communications fees are assessed either

on a subscription basis or per minute charge for SkypeOut
minutes.(Page 264, Para1)
14.
15.
16.
17.
Skype is available in 28 languages in over 225 countries (eBay,

2006).(Page 263, page4)
eBay compared to Amazon achieved High gross profit
margins. High in gross profit margin can be considered as a
strength for eBay.
18.
19.
20.
98

Skype revenue is earned through premium services such as
making/receiving domestic or international calls to and from
landline and mobile phones, voicemail, call forwarding, and
personalization, such as ringtones.
EBays prior expenditures were focused on traditional wired
routes; however, 50 percent of expenditures are now in the
wireless telecommunications sector.(Page 267, Para 5)
EBays e-commerce platform also provides full support for the
buying process (registration, bidding, management of outbids,
item listing, and transaction close), community bulletins, chat,
a proprietary product search engine, purchase protection
programs, customer support, value added services for auction
users, a personal home page that includes tailored information,
and fully automated merchant services. EBays success is
sustained through Communications and trust (eBay 2006).
(Page 263,para4)
eBay Inc.-2009
21.
-The Communications segment generates

usage revenues from Skype VoIP for connection to
traditional fixed and mobile telephones
under eBays subsidiary Skype Technologies S.A (Page
264,Para1)
22.
Skype headquarters are located in Luxembourg, with global

offices in Europe, the United States, and Asia(Page 267, Para
3)
23.
As of 2008, eBay has a 14 percent share of global e-commerce

with 86.3 million active users.(Page 263, para 3)
24.
EBays proprietary Skype technology has been downloaded

more than a billion times.(Page 267, Para3)
25.
Skype had approximately 405.3 million registered users

worldwide. (Page 267, para3)
26.
Interestingly, nearly 11 million

Skype downloads are to mobile devices.(Page 267, Para3)
27.
In 2008, Skype users logged approximately 16 billion

minutes in a single quarter, an increase of 54 percent from the
prior year. Large volumes are also easily supported by Skype
software.(Page 267, Para4)
At any given point in time there may be 300,000 simultaneous
calls and over 100,000 information queries per second.
Overall, Skype accounted for 6 percent of international
worldwide calling minutes in 2007. Business calls represent
30 percent of current Skype usage and 25 percent of calls also
use video technology.(Page 267, Para4)
28.
29.
99
[MR111037]
Skype contributed $170.0 million in revenue for the quarter,

representing 25 percent year-over-year growth. Skype added
37.3 million registered users during the quarter and ended the
period with more than 480.5 million registered users(Page 274,
Para1)
eBay Inc.-2009
[MR111037]
Strengths Resulted from Research & Development Functions

N/A
N/A
Weaknesses List:
N
O
Case Fact
N/A
N/A
1.
eBay Revenue Growth of rate has been decreasing for the last 3 years.
Therefore, this decline trend lead to decreasing the growth rate in 2009
2.
by 4%. This revenue decline trend is considered as the weakness of eBay

Declining in stock price started from 2005 to 2008 can be considered as
3.
4.
eBay Debt Ratio is increased and it is considered as the weakness for
5.
6.
eBay
eBay Debt Ratio is increased and it is considered as the weakness for
7.
8.
eBay
Decreased to almost double for working capital is considered as
weakness for eBay
9.
The potential also exists for Skype technology to become obsolete. (Page
268, Para2)
100
Prioritiz
e
eBay Inc.-2009
[MR111037]
N/A
N/A
c) Strengths and Weaknesses for Payments segment
Strengths List:
NO
Case Facts
N/A
1.
EBays management seeks to become the number-one online
plans to focus on improving the customer experience,
enhancing security, expanding product
offerings, enhancing buyer and seller protection programs,
adding innovative features, and
expanding its sales channels (Page 267,Para2)
2.
3.
4.
5.
Expansion into international markets and more currencies is

expected to improve the ease and efficiency
of cross-border transactions (Page 267, Para2)
PayPal was founded in December 1998 and acquired by eBay
Inc. in 2002 (Page 266, Para 9)
Bill Me Later, acquired by eBay Inc. in 2008, offers
consumers instant credit at the point of sale through over 1000
online U.S. merchants (Page 267, Para1)
For the second quarter of 2009, eBay reported nice growth in
both their PayPal (Page 263, Para2)
101
Prioritiz
e
eBay Inc.-2009
[MR111037]
6.
Additional revenues are also earned from advertising and

revenue-sharing contracts with third parties that provide
transaction services to eBay and PayPal account users.(Page
264, para1)
7.
PayPal is a recognized global leader in online payment

solutions
(Page 266, Para9)
8.
EBays Payments segment is composed of PayPal and Bill Me

Later transaction services. (Page 266, Para9)
PayPal is available to any online or offline individual or
business with an e-mail address and allows members to
securely send and receive payments online securely without
sharing sensitive financial information.(Page 266, Para10)
9.
10.
International business processing accounted for 45 percent of

PayPals total revenues for 2008. Higher fees earned on
international transactions have provided eBay with higher
revenues
and gross margins in comparison to revenues from domestic
transactions (Page 266, Para9)
11.
Retailers that offer the Bill Me Later service

include: Borders, Continental Airlines, Fujitsu, JetBlue,
Overstock, QVC, Toshiba, Toys R Us, and Walmart.com
(Page 267, Para 1)
12.
13.
14.

eBay compared to Amazon achieved High gross profit
margins. High in gross profit margin can be considered as a
strength for eBay.
15.
16.
102

The Payments segment revenues are generated from fees paid
by merchants for payment processing services through PayPal
and Bill Me Later (Page 264,Para1)
PayPal is accepted both online and offline in 190 markets worldwide

and processes payments in 19 currencies (Page 266, Para10)
eBay Inc.-2009
[MR111037]
17.
When a consumer makes a purchase on credit, CIT Bank

initiates a consumer loan at the point of sale. Bill Me Later
then purchases the consumers loan from CIT Bank. Bill Me
Later earns revenues from interest on the outstanding balances,
late fees, and transaction fees.(Page 267, Para1)
18.
PayPal is a recognized global leader in online payment

solutions with 70 million active accounts (Page 266, Para9)
19.
PayPal earned approximately $30.4 billion of net total payment

revenues directly from eBay.com transactions, which
represented approximately 51 percent of PayPals net Total
Payment Volume during 2008 (Page 264, para2)
20.
PayPal also reports a very low percentage of 0.33 percent loss

from fraud.(Page 266, Para10)
Strengths Resulted from Research & Development Functions

N/A
N/A
Weaknesses List:
NO
Case Facts
1.
Although Bill Me Later accounts are funded by CIT Bank, Bill Me Later is
responsible for all functions related to the account.
2.
As of October 2008 certain transactions on eBay.com purchased using PayPal

are protected for the full purchase price in the event that the buyer does not
receive the goods. This may result in greater losses and write-offs incurred by
eBay Inc.(Page 270, Para2)
103
eBay Inc.-2009
[MR111037]
3.
If credit availability is further reduced, Bill Me Later may not be able to extend
credit to customers (Page 269, Para5)
4.
For the quarter ending July 30, 2009, eBays Payments division reported $669.3
million in revenue, an increase of 11 percent year over year. The growth was
driven by continued momentum in PayPal Merchant Services and the
contribution made by Bill Me Later (Page 274,Para1)
5.
Any reduction in trading spill over to a reduction in PayPal revenues (Page 269, Para7)
6.
eBay Revenue Growth of rate has been decreasing for the last 3 years.
Therefore, this decline trend lead to decreasing the growth rate in 2009 by 4%.
7.
This revenue decline trend is considered as the weakness of eBay

Declining in stock price started from 2005 to 2008 can be considered as the
weakness for eBay
8.
9.
10.
11.
12.
13.
eBay Debt Ratio is increased and it is considered as the weakness for eBay
eBay Debt Ratio is increased and it is considered as the weakness for eBay
Decreased to almost double for working capital is considered as weakness for
eBay
14.
Bill Me Later initially funds consumers loans using cash from business
activities and a line of credit. As a result of the global financial
crisis, eBays available line of credit was reduced (Page 269, Para5)
15.
Customer Account Billing. Transaction-processing and revenue collection

becomes more difficult as the number of transactions increase and consumers
default on loans.(Page 270, Para4)
N/A
N/A
104
eBay Inc.-2009
[MR111037]
4.9.1 Internal Factor Evaluation (IFE) Matrix
a) For Marketplaces segment
Item
Key external factor
Weight
Rating
Weighted
score
Strengths
1
105
EBays Marketplaces
platform brings buyers and
sellers together through
fully automated online Web
sites 24/7 (Page 265, Para5)
0.10
0.40
In 2008, eBay.com
generated approximately
$59.7 billion in gross
merchandise revenues with
consumer electronics
accounting for the largest
percentage of trade at
$6.0 billion or 17 percent,
as indicated in Exhibit
1(Page 264,Para2)
0.09
0.40
EBay.com offers a sense of

community to buyers and
sellers that is sustained by
transaction rates on a wide\
(eBay.com, 2006). (Page
263, para4)
0.09
0.36
0.07
0.24
In 2007, eBay sold nearly

$60 billion goods, which
equates to worldwide eBay
users trading more than
$1,900 worth in goods
eBay Inc.-2009
[MR111037]
every second.(Page 264,

Para3)
5
In August 2009, eBay Inc.

hundreds of GM dealers in
California to help
consumers negotiate
purchase of new GM cars
and trucks through the eBay
online marketplace.
(Pg.263,para1)
0.06
0.21
The success of eBay is built

0.07
0.21
0.06
0.18
EBay provides the virtual

marketplace auction where
the market determines the
price of items sold (Page 264,
Para3)
eBay compared to Amazon

achieved High gross profit
margins. High in gross
profit margin can be
considered as a strength
for eBay.
0.06
0.18
As of December 2008,
approximately 516,000
online storefronts were
listed in locations across
the globe (Page 265, Para5)
0.05
0.18
0.10
Weaknesses
106
EBays Marketplaces
billion in revenue, a 14
0.05
eBay Inc.-2009
[MR111037]
2
The German Federal

Supreme Court has also
ruled that eBay may owe
penalties from illegal
listings of counterfeit and
stolen goods. These events
may also negatively affect
eBays reputation. (Page
270, Para1)
0.05
0.10
EBay has recently been

involved in litigation with
Tiffany & Co., Rolex,
Louis Vuitton, Christian
Dior, LOral, and
Lancme for a lack of
policing trade and
infringement on
trademarks and
copyrights for the sale of
not for resale and
counterfeit items on eBays
Websites. (Page 269, Para8)
0.05
0.10
Decreased to almost double

for working capital is
considered as weakness for
eBay
0.04
0.08
Customer Support.
Customer support is
challenged from greater
trade activity and an
increased number of users.
(Page 270, Para4)
0.04
107
0.08
eBay Inc.-2009
[MR111037]
If revenue significantly
declines, eBay may not be
able to meet contractual
obligations. EBay recently
increased its fee structure
for its Marketplaces
business, which may
negatively impact the
number of new customers
and revenue from existing
0.04
0.08
eBay Revenue Growth of

rate has been decreasing for
the last 3 years. Therefore,
this decline trend lead to
decreasing the growth rate
in 2009 by 4%. This
revenue decline trend is
considered as the weakness
of eBay
0.05
0.10
Web Site Stability.

Increased volume and
greater complexity requires
additional expensive
investments in hardware,
software, and
0.03
0.06
Total
3.10
Conclusion
IFE matrix shows the information related to strategy formulation EBay. EBay achieved an
overall of 3.10 total weighted score. 3.10 indicates that the business of eBay on this
marketplaces segment is strong because of eBay has an ability to respond to internal factors
of the organisation.
108
eBay Inc.-2009
[MR111037]
5.0 Existing Objectives and Strategies

*Because of lack of data, I found out that the information for strategic objectives and
financial objectives for Marketplaces segment and Payments segment are too general
without any specific target or objectives. I provided the strategic objectives and financial
objective for communication segment base on the case study given.
a) Strategic Objective:
No
.
1.
Segmen
t
Goals
1) To expand
the
Market
Marketpla
places
ces
segment
by
focusing
on
customer
Objectives
N/A
2) To
enhance
online
trust and
safety
and
develop
new
products
2.
Commu
nication
s
109
1) Increase
Registere
d
subscribe
rs.
1)Increase
Registered
subscribers to
500 million by
2012.
Case Facts
1) EBay plans to expand
the Marketplaces
customers by
enhancing products
and services, (Page266,
Para8)
2) Improving online trust

customer support,
extending product
offerings
geographically and into
new categories, and
developing retention
strategies.(Page266,
Para8)
1)Registered subscribers
are expected to reach 500
million by 2012 (Page267,
Para4)
Remarks
Product
Development
Unsuccess
ful
Product
Development
Unsuccess
ful
(Market
Penetration)
Successfu
l
eBay Inc.-2009
Paymen
ts
110
[MR111037]
2) Increase
the grow of
worldwide
communicati
ons market.
2) Increase the
grow of
worldwide
communications
market to 5.5
percent
annually.
3)Increase
the grow of
U.S Web
Conferencing
.
3) Increase the
grow of U.S
Web
conferencing to
14.1 percent
from 2008
through 2011.
1) To be
integrate
PayPal
with
eBay.com
listings
and other
Marketpl
aces
businesse
s
N/A
2) The worldwide
communications
market is expected to grow
by 5.5 percent annually
(Page 267, Para5)
3)U.S. Web conferencing

expected to grow 14.1
percent from 2008 through
2011 (Page 267, Para5)
1) Global expansion is to
be gained by
integrating PayPal
with eBay.com listings
and other Marketplaces
businesses. (Page 267,
Para2)
Market
Penetration
Unsuccessful
Product
development
Unsuccess
ful
Forward
Integration
Unsuccess
ful
eBay Inc.-2009
[MR111037]
2) To
expand
into
internatio
nal
market
N/A
2) Expansion into
international markets
and more currencies is
expected to improve the
ease and efficiency of
cross-border
transactions (Page 267,
Para2)
Market
Development
Successfu
l
b) Financial Objective:
No
.
Segment
1.
2.
Marketplaces
Communication
s
Goals
1) To reduce
seller
cost.
Increase
Revenue
Objectives
N/A
- Increase
revenue to
double by 2011
Case Facts
Remarks
1) To improve
By enhancing
the buyers
Product and
experience and
services
reduce seller
(Product
Development)
costs(Page266
Unsuccessfu
, Para8)
l
1) Revenues
By raising the
are anticipated
total registers
to double
subscribers to
500 million by
by 2011 (Page
2012
267, Para4)
(Market
Penetration)
Unsuccessfu
l
Payments
111
Increase
Revenue
N/A
3) Increased
revenues
are to be
gained by
integrating
PayPal
By integrating
PayPal with
eBay.com
listings and
other
Marketplaces
segment
(Forward
eBay Inc.-2009
[MR111037]
Integration)
with
eBay.com
Unsuccessfu
listings
l
and other
Marketplac
es
businesses.
(Page 267,
Para2)
5.3 Strategies
5.3.1 Strategies in Action
The Type of
Strategies
The Title of
Strategies
Segment
Marketplaces
Forward
Integration
Case Facts
- In August 2009, eBay Inc. formed
a partnership with General Motors
enabling hundreds of
GM dealers in California to help
consumers negotiate purchase of
new GM cars and trucks
marketplace. (Page 263,para1)
N/A
Integration
Communication
s
N/A
Payments
112
eBay Inc.-2009
[MR111037]
Marketplaces
N/A
Back ward
Integration
N/A
Communication
s
Payments
Marketplaces
Horizontal
Integration
Because Bill Me Later is not a

chartered financial institution, an
arrangement with CIT Bank allows
Bill Me Later to extend credit to
customers
(Page 267, Para1)
-Acquired by eBay Inc. in 2005,
Shopping.com is an online
comparison shopping site that offers
comparisons on millions of products
and product reviews. Shopping.com
is available in the United States, the
United Kingdom, France, Germany,
and Australia (Page 266, Para6)
- Rent.com, acquired by eBay in
2005, Rent.com lists apartment
availability,
rental costs, virtual tours, roommate
searches, and more. (Page 266,
Para7
Communication
s
113
-The Communications segment is

composed of Skype, which was
founded in 2003 and
acquired by eBay in 2005. Skype is
the worlds fastest-growing Internet
communication
software platform. As of 2008,
Skype had approximately 405.3
million registered users
worldwide. (Page 267,Para3)
eBay Inc.-2009
[MR111037]
Payments
-Bill Me Later, acquired by eBay

Inc. in 2008, offers consumers
instant credit at the point
of sale through over 1000 online
U.S. merchants (Page 267, Para1)
- PayPal was founded in December
1998 and acquired by eBay Inc. in
2002. PayPal is a recognized
global leader in online payment
solutions with 70 million active
accounts (Page 266, Para9)
Marketplaces
Product
Development
Intensive
-EBay provides the virtual

marketplace auction where the
market determines the price of items
sold (Page 264,Para3)
- In, 2008, eBay launched an
advertising service that enables third
parties to advertise their eBay
- StubHub is a leading U.S. ticket
marketplace that allows users to buy
and sell tickets
to sporting, events, theater, and other
entertainment events (Page
266,Page3)
- Rent.com lists apartment
availability,
rental costs, virtual tours, roommate
searches, and more. Revenue is
earned from landlords
who pay a fee for renters who find
apartments through Rent.com.(Page
266, Para7)
114
eBay Inc.-2009
[MR111037]
Communication
s
Payments
Marketplaces
Market
Development
E-commerce is supported by
eBays proprietary
Skype VoIP technology, which
allows free telephone calls using a
broadband Internet connection
to any telephone number.(Page 263,
para4)
-EBays Payments segment is
composed of PayPal and Bill Me
Later transaction services. (Page
266, Para9)
major areas of the
world in the following regional
markets; Asia Pacific, Europe, North
America and Latin America (Page
265,Para1)
- Global expansion and increased

revenues are to be gained by
integrating PayPal with eBay.com
listings and other Marketplaces
businesses. Expansion
into international markets and
more currencies is expected to
improve the ease and efficiency
of cross-border transactions and
grow both the Marketplaces and
Payments segments.(Page 267,
Para2)
Communication
s
115
-offering solutions to a more diverse

business user and enhancing
the Skypes current platform for
greater revenues because the
worldwide communications
market is expected to grow by 5.5
eBay Inc.-2009
[MR111037]
percent annually with U.S. Web
conferencing
expected to grow 14.1 percent from
2008 through 2011 (eBay.com
2009).(Page 267, Para5)
Payments
Global expansion and increased

revenues are to be gained by
integrating PayPal with eBay.com
listings and other Marketplaces
businesses. (Page 267, Para2).
Expansion
into international markets and more
currencies is expected to improve
the ease and efficiency
of cross-border transactions (Page
267, Para2)
Marketplaces
Marketing
Penetration
EBay offers millions of items for

trade through
auction-style and fixed-price trading
in 39 markets and boasts 86.3
million active global
users as of 2008.(Page264, Para3)
- EBay has also expanded specific
to increase efficiency of trades(Page
266, Para2)
-As of December 2008,
approximately 516,000 online
storefronts were listed in locations
across the globe (Page 265, Para5)
- 57 percent of Marketplaces
revenue,
however, came from markets outside
of the United States(Page 274,
Para1)
116
eBay Inc.-2009
[MR111037]

members in hundreds of cities and
regions of the world, such as the
Netherlands, Germany, and so on.
(Page 266, Para4)
- In, 2008, eBay launched an
advertising service that enables third
parties to advertise their eBay

major areas of the world in the
following regional markets; Asia
Pacific, Europe, North America and
Latin America (Page 265,Para1)
EBays global networked
community of buyers and sellers
interact 24/7 in a secure and
trusted global marketplace (Page
264, para4)
- Shopping.com
is available in the United States, the
United Kingdom, France, Germany,
and Australia.(Page 266, Para6)
-Rent.com, acquired by eBay in

2005, is the most visited online
apartment listing service
with over 20,000 listings in the
United States (Page 266, Para7)
Communication
117

announced they would spin off and
eBay Inc.-2009
[MR111037]
s
make an initial public offering of

segment in the beginning of year
2010. (Pg.263,para2)
- Registered subscribers
are expected to reach 500 million
by 2012 and revenues are
anticipated to double
by 2011.(Page 267, Para4)
- EBay Inc. plans to implement a
customer management program that
emphasizes
acquiring new users and upgrading
current Skype users to premium
products (Page 267, Para5)
- Skype is available in 28 languages
in over 225 countries (eBay, 2006).
(Page 263, page4)
- Skype headquarters are located in
Luxembourg, with global offices in
Europe,
the United States, and Asia(Page
267, Para 3)
- Skype had approximately 405.3
million registered users
worldwide. (Page 267, para3)
- Skype contributed $170.0 million
in revenue for the quarter,
representing 25 percent
year-over-year growth. Skype added
37.3 million registered users during
the quarter and
ended the period with more than
480.5 million registered users(Page
274, Para1)
118
eBay Inc.-2009
[MR111037]
Payments
Marketplaces
Related
Diversification
Diversification
-PayPal is accepted both online and

offline in 190 markets worldwide
and processes payments in 19
currencies (Page 266, Para10)
-EBay Inc.s Marketplaces platforms

and services segment includes
eBay.com, StubHub,
Online Classifieds, Online
Advertising, Shopping.com, and
Rent.com.(Page 265, Para4)
EBay Inc. also offers online
and regions of the world, such as the
Netherlands, Germany, and so on
(Page 266, Para4)
EBay has also expanded specific
to increase efficiency of trades(Page
266, Para2)
- EBay Inc. provides a trusted

and safe trading environment by
offering the following services:
Feedback Forum, Safe
Harbor Program, Verified Rights
Owner Program, Customer Support,
Value-Added Tools
and Services, and Loyalty Programs
Communication
119
EBays e-commerce platform also

provides full support for the buying
eBay Inc.-2009
[MR111037]
s
process (registration, bidding,

management of outbids, item listing,
and transaction close), community
bulletins chat, a proprietary product
search engine, purchase protection
programs, customer support, value
added services for auction users, a
personal home page that includes
tailored information, and fully
automated merchant services(Page
263,para4)
N/A
Payments
Not Related
Diversification
Marketplaces
N/A
Communication
s
EBays prior
expenditures were focused on
traditional wired routes; however, 50
percent of expenditures
are now in the wireless
telecommunications sector.(Page
267, Para 5)
Payments
N/A
Defensive
Marketplaces
Retrenchment
120
- eBay undertook a 10 percent

restructuring
costs and announced an anticipated
second acquisition of a vehicle
classified ad site, eBay Motors.
(Page 269, Para4)
eBay Inc.-2009
[MR111037]
N/A
Communication
s
Payments
Divestiture
eBay undertook a 10 percent

restructuring
costs. In the same year, eBay
acquired Bill Me Later (Page 269,
Para4)
N/A
Marketplaces
N/A
Communication
s
N/A
Payments
N/A
Liquidation
Marketplaces
N/A
Communication
s
N/A
Payments
5.3.1 Generic Strategies (Business Level Strategies )
No.
1.
121
Segment
Marketplaces
Case Facts
BLS
EBay plans to expand

the Marketplaces
customers to
improve the buyers
experience and reduce
Cost Leadership
Strategies
eBay Inc.-2009
[MR111037]
seller costs by
enhancing products and
services,
improving online trust
customer support,
extending product
offerings
geographically and into
new categories, and
developing retention
strategies. (Page 226,
Para8)
In the Marketplaces
platform, eBay.com,
traditional auction-style
or fixed-price options
are offered in 39
markets. Auction-style
listing allows a seller to
select a minimum
price for opening bids
that stay open for a
period of time.
Alternatively, the fixedprice format
allows sellers to name a
sale price upon listing
instead of waiting for
the auction period to
expire.(Page 265,Para
6)
EBay provides the
virtual marketplace
auction where the
market determines the
price of items sold
(Page 264, Para3)
122
eBay Inc.-2009
2.
[MR111037]
Communications
Payments
EBay also that

quarter
announced they would
spin off and make an
initial public offering of
segment in the
beginning of year 2010.
(Pg.263,para2)
EBays management
seeks to become the
number-one online
plans to focus on
improving the customer
experience, enhancing
security, expanding
product
offerings, enhancing
buyer and seller
protection programs,
adding innovative
features, and
expanding its sales
channels (Page
267,Para2)
Focus strategies
Focus Strategies
6.0 Strategy Formulation Tools

6.1 SWOT Analysis
*Based on the case study given, in order to make analysis using

SWOT, I need information from EFE matrix and IFE matrix.
Because of lack of data from EFE matrix for communications
segment and payments segment, I only provided SWOT analysis for
marketplaces segment.
123
eBay Inc.-2009
124
[MR111037]
eBay Inc.-2009
[MR111037]
Strength
1) EBays Marketplaces
platform brings buyers
and sellers together
through fully
automated online Web
sites 24/7 (Page 265,
Para5)
2) In 2008, eBay.com
generated
approximately $59.7
billion in gross
merchandise revenues
with consumer
electronics accounting
for the largest
percentage of trade
at $6.0 billion or 17
percent, as indicated
in Exhibit 1(Page
264,Para2)
3) EBay.com offers a
sense of community
to buyers and sellers
Communications and
high transaction rates
on a wide\ selection of
goods/services
(eBay.com, 2006).
(Page 263, para4)
4) In 2007, eBay sold
nearly $60 billion
goods, which equates
to worldwide eBay
users trading more
than $1,900 worth in
goods every second.
(Page 264, Para3)
2)
The German Federal Supreme Court

has also ruled that eBay may owe
penalties from illegal listings of
counterfeit and stolen goods. These
events may also negatively affect
eBays reputation. (Page 270, Para1)
3)
EBay has recently been involved in

litigation with Tiffany & Co., Rolex,
Louis Vuitton, Christian Dior,
LOral, and Lancme for a lack of
policing trade and infringement on
trademarks and copyrights for the
sale of not for resale and
counterfeit items on eBays Websites.
(Page 269, Para8)
4)
Decreased to almost double for

weakness for eBay
5)
Customer Support. Customer support

is challenged from greater trade
activity and an increased number of
6)
If revenue significantly declines,

eBay may not be able to meet
contractual obligations. EBay
recently increased its fee structure
for its Marketplaces business, which
may negatively impact the number of
new customers and revenue from
existing users.(Page 269, Para7)
7)
eBay Revenue Growth of rate has

been decreasing for the last 3 years.
Therefore, this decline trend lead to
decreasing the growth rate in 2009 by
4%. This revenue decline trend is
considered as the weakness of eBay
5) In August 2009, eBay

Inc. formed a
partnership with
General Motors
GM dealers in
8) Web Site Stability. Increased volume
Strategic Management/SEM
II/ 2011/2012 and greater complexity requires
California to help
consumers negotiate
additional expensive investments in
purchase of new GM
hardware, software, and
cars and trucks
through the eBay
online marketplace.
SWOT
MATRIX
125
Weakness
1) EBays Marketplaces division
reported $1.26 billion in revenue, a
14 percent year-over-year
eBay Inc.-2009
[MR111037]
Strategies driven from SWOT analysis:

The chosen quadrant : SO
Result
Strategy
1. With the High in gross profit margin of
eBay, this company should expand their
Market Development
market into global as well as focus for
Market Penetration
new product offering , into new
Product Development
emerging market especially in new
market of China and India which they
are considered as the most populated
area and it is a huge opportunity for
eBay. (global expansion)
(S2,S4,S8,S9,O1,O5)
2. With focus on customer-driven value
creation, eBay should continuously
maintain simplicity of interaction with
the online communitys capability and
meet the demand in the industry in
order to be competitive.
(S3,S4,S6,O1,O2,04)
Product Development
Conclusion of SWOT analyis:

Selected Corporate level strategies:
1. Product Development
2. Market Penetration
3. Market development
Selected Business Level strategies:
With maintain simplicity of interaction with the online communitys capability and meet the
demand in the industry in order to be competitive. (S3,S4,S6,O1,O2,04) : Differentiation
Strategies
126
eBay Inc.-2009
[MR111037]
6.2 SPACE Analysis

*Due to the lack of information SPACE analysis showed below is the
SPACE analysis for eBay marketplaces segment.
For Marketplaces segment

Financial Position (FP)
EBays
Marketplaces division reported $1.26 billion in revenue, a 14 percent year-over-year
eBay Revenue Growth of rate has been decreasing for the last 3 years. Therefore, this
decline trend lead to decreasing the growth rate in 2009 by 4%. This revenue decline
trend is considered as the weakness of eBay
Decreased to almost double for working capital is considered as weakness for eBay
In 2008, eBay.com generated approximately $59.7 billion in gross merchandise

revenues
with consumer electronics accounting for the largest percentage of trade at $6.0
billion
or 17 percent, as indicated in Exhibit 1(Page 264,Para2)
3.33
FP Average
Industry Position (IP)
However, Amazons strong growth and satisfied customer base pose the greatest
threat to eBay (Page 267, Para6)
Competition is expected to increase in the future because barriers to entry in this
segment are low (Page 268, Para2)
It is attractive for new entrant and new investors to enter in this industry. Besides that
this industry also having a large market size, fast growing in the market and it is not
127
eBay Inc.-2009
[MR111037]
too many large competitors in this industry. Thus if a firm can develop a business
plan which makes them diverse, customer oriental and unique, the potential of
success is possible
IP Average
Stability Position (SP)

The company continued its turnaround strategy in a harsh climate for consumer
spending (Page 263, Para2)
Weak global economic conditions, in addition to the mortgage and worldwide credit
related financial crisis, are expected to limit revenue growth, particularly in the
Marketplaces segment, which is closely tied to consumer purchase patterns (Page
269, Para2)
-If the U.S. dollar weakens against foreign currencies, transactions conducted in
foreign currency denominations will increase and inflate revenues, operating
expenses, and net income (Page 269, Para3)
-5
-4
The need for substantial resource investments in

technology and marketing in order to remain competitive (Page 268, Para1)
-3
-6
-3
-4.2
SP Average
Competitive Position (CP)
In August 2009, eBay Inc. formed a partnership with General Motors enabling
hundreds of GM dealers in California to help consumers negotiate purchase of new
GM cars and trucks through the eBay online marketplace. (Pg.263,para1)
-2
Acquired by eBay Inc. in 2005, Shopping.com is an online comparison shopping

site that offers comparisons on millions of products and product reviews.(Page266,
Para6)
-1
The success of eBay is built on similar customer-centric entrepreneurial business

models that focus on customer-driven value creation (Page 268, Para1)
EBay has recently been involved in litigation with Tiffany & Co., Rolex, Louis
Vuitton, Christian Dior, LOral, and Lancme for a lack of policing trade and
infringement on trademarks and copyrights for the sale of not for resale and
counterfeit items on eBays Web
sites. (Page 269, Para8)
-2
Loyalty Programs that provide cash back buyer rewards coupons were selectively
-2
128
-5
eBay Inc.-2009
[MR111037]
distributed to recognize large buyers to sustain customer loyalty.(Page 266, Para2)

If revenue significantly declines, eBay may not be able to meet
contractual obligations. EBay recently increased its fee structure for its
Marketplaces business, which may negatively impact the number of new customers
-2.0
CP Average
Conclusion
X= IP + CP = (4) + (-2.0) = 2.0
Y = FP + SP = (3.33) + (-4.2) = -0.9
Coordinate : (x, y)= (2, -0.9)
FP
CP
IP
SP
COMPETITIVE PROFILE:
1. Product Development
2. Market Development
3. Market Penetration
Conclusion:
129
-5
[MR111037]
eBay Inc.-2009
This quadrant, shows that eBay with major competitive advantages in a high growth
industry. Therefore, the chosen strategies are related to the focus on eBay growth
potential in highly competitive industry position. eBay then should pursue strategy of:
Product Development, Market Development as well as Market Penetration.
6.3 BCG Analysis
*As a matter of fact, in order for implementing BCG analysis, the information related to
competitors is needed. But, due to the lack of information the BCG analysis cannot be
proceeded.
6.4 IE Analysis
*As a matter of fact, eBay consisted of three segments. But due to the lack of information,
I only can focused on the position of eBay based on Marketplaces segments.
THE IFE TOTAL WEIGTHED SCORES
4.0
3.0
I
2.0
II
III
3.0
2.0
1.0
THE EFE TOTAL
WEIGTHED SCORES
EFE : 3.27
IFE: 3.10
FALLS INTO CELL II: Grow & Build

Therefore intensive Market Penetration, Market
Development and Product Development can be most
130
eBay Inc.-2009
[MR111037]
appropriate for this division.
6.5 Grand Strategy Matrix

*Due to the fact that this matrix needs the resulted from CPM analysis, I only analysed
Grand Strategy Matrix for Marketplaces segment. Grand Strategy Matrix for
Communications segment and Payment segment cannot be done in this analysis.
Marketplaces
Net Revenue by Segments

2006
2007
$4,334,290 24%
$5,363,891 4%
2008
$5,586,751
Payments
$1,440,530 34%
$1,926,616 25%
$2,403,669
Communication
s
Total Net
Revenues
$194,921
$381,822
$550,841
96%
$5,969,741 29%
44%
$7,672,329 11%
$8,541,261
In this situation, I only consider the latest growth rate of revenue in 2007 to 2008 for eBay.
As a matter of fact, because of lack of information related to the industry growth rate for each
segment, eBays growth rate will be used for this analysis. From table above, we can see that
the growth rate of revenue for eBay annually higher than 5 percent. So, therefore the growth
rate for eBay, as a whole,
is in the Rapid growth. But, the growth rate of eBay in
Marketplaces segment is 4%. This situation can be considered as slow growth rate. As
mentioned before, CPM analysis will be used in this analysis. Due to the lack of information,
only CPM for marketplaces segment is provided in this analysis where the value is (CPM:
eBay = 2.9, Amazon = 2.9)
131
eBay Inc.-2009
[MR111037]
RAPID MARKET GROWTH
QUADRANT II
QUADRANT I
Pos
QUADRANT III
QUADRANT IV
SLOW MARKET GROWTH

MARKETPLACES
SEGMENT
eBay for Marketplaces segment falls to Quadrant IV. Based on the growth revenue rate for
Marketplaces segment, it has been proved that the percentage is 4percent which is less that
5percent. Therefore the growth rate for marketplaces segment is the slow growth rate. In
addition, based on the CPM analysis, It has been proved eBay possess a strong competitive
position in the industry especially from Amazon. Therefore, eBay falls to fourth quadrant
which means that strong competitive position with a slow growth industry. Thus the strategies
that suit for eBay are :
1)Related Diversification
2) Unrelated Diversification
3) Joint Ventures
132
eBay Inc.-2009
[MR111037]
6.6 Wrap Up Process

Methods
Product
Market
Market
Related
Unrelated
Development
Development
Penetration
Diversificatio
Diversificatio
(PD)
(MD)
(MP)
Swot
Matrix
SPACE
Matrix
BCG
N/A
N/A
N/A
N/A
N/A
Matrix
IE Matrix
Grand
Strategy
Total
133
eBay Inc.-2009
[MR111037]
6.7 The Qualitative Strategic Planning Matrix (QSPM)

* Because of lack of information from the EFE of communications segment and
payments segment, the qualitative strategic planning matrix here is only for Marketplaces
segment.
Strategic Alternatives
Product
Market
Development
Key Factors
Opportunities
The need for substantial
resource investments in
technology and marketing
in order to remain
competitive (Page 268,
Para1)
Buyers and sellers enjoy
trading among a wide
selection of goods and
services in a secure, trusted,
and efficient commerce
environment.(Page 265,
Para5).
Penetration
Weight
AS
TAS
AS
TAS
0.15
0.6
0.45
0.10
0.40
0.30
0.09
0.09
0.27
0.08
0.24
0.08
0.07
0.07
0.21
Profitability is also affected

by currency exchange rates
(page 269, Para3)
Online classifieds help
people meet, share ideas,
and offer goods/services at a
local city or regional
level(Page 266, Para4)
If the U.S. dollar weakens
against foreign currencies,
transactions conducted in
foreign currency
denominations will increase
and inflate revenues,
operating expenses, and net
134
eBay Inc.-2009
[MR111037]

Threats
In addition, tax compliance
will increase costs. (Page
269, Para 6)
Weak global economic
conditions, in addition to
the mortgage and worldwide
credit related financial crisis,
are expected to limit revenue
growth, particularly in the
Marketplaces segment,
which is closely tied to
consumer purchase patterns
(Page 269, Para2)
Competition is intense in
communications services
and subject to rapid
technological Change(Page
268, Para2)
However, Amazons strong
growth and satisfied
customer base pose the
greatest threat to eBay (Page
267, Para6)
Marketplaces: Competition
is expected to increase in the
future because barriers to
entry in this segment are low
and new online sites can be
launched at a nominal cost
(Page 268, Para2)
0.12
0.12
0.24
0.10
0.30
0.40
0.12
0.36
0.24
0.10
0.36
0.20
0.14
0.21
0.30
0.45
0.07
1.00
Strengths
EBays Marketplaces
platform brings buyers and
sellers together through fully
automated online Web sites
135
0.15
eBay Inc.-2009
[MR111037]
24/7 (Page 265, Para5)

As of December 2008,
approximately 516,000
online storefronts were
listed in locations across the
globe (Page 265, Para5)
EBay.com offers a sense of
community to buyers and
sellers that is sustained by
transaction rates on a wide\
(eBay.com, 2006). (Page
263, para4)
In 2007, eBay sold nearly
$60 billion goods, which
equates to worldwide eBay
users trading more than
$1,900 worth in goods
every second.(Page 264,
Para3)
The success of eBay is built
0.12
0.24
0.36
0.12
0.36
0.12
0.09
0.18
0.27
0.09
0.27
0.09
Weaknesses
EBays Marketplaces
billion in revenue, a 14
The German Federal
Supreme Court has also
ruled that eBay may owe
penalties from illegal
listings of counterfeit and
stolen goods. These events
may also negatively affect
eBays reputation. (Page
270, Para1)
136
0.10
0.10
0.20
0.10
0.40
0.10
eBay Inc.-2009
[MR111037]
EBay has recently been

involved in litigation with
Tiffany & Co., Rolex, Louis
Vuitton, Christian Dior,
LOral, and Lancme for a
If revenue significantly
declines, eBay may not be
able to meet contractual
obligations. EBay recently
increased its fee structure
for its Marketplaces
business, which may
negatively impact the
number of new customers
eBay Revenue Growth of
rate has been decreasing for
the last 3 years. Therefore,
this decline trend lead to
decreasing the growth rate in
2009 by 4%. This revenue
decline trend is considered
as the weakness of eBay
Total
0.09
0.27
0.09
0.08
0.08
0.24
0.06
0.12
0.18
4.9
4.68
Based on the QSPM analysis:

QSPM Outcome:
1. Product Development :4.9
2.Market Penetration : 4.68
Corporate Level Strategies
PD :
-With focus on customer-driven value creation, eBay should continuously maintain
simplicity of interaction with the online communitys capability and meet the demand in the
industry in order to be competitive. (S3,S4,S6,O1,O2,04)
-With the High in gross profit margin of eBay, this company should expand their market into
global as well as focus for new product offering , into new emerging market especially in
new market of China and India which they are considered as the most populated area and it is
a huge opportunity for eBay. (global expansion) (S2,S4,S8,S9,O1,O5)
137
eBay Inc.-2009
[MR111037]
Business Level Strategies: Differentiation Strategies

-With maintain simplicity of interaction with the online communitys capability and meet the
demand in the industry in order to be competitive. (S3,S4,S6,O1,O2,04) : Differentiation
Strategies
7.0 The New Strategies

*This new strategies is focused on Marketplaces segment. Because of lack of
information from communications segment and Payments segment of eBay, the analysis
for this new strategies cannot be completed. As a matter of fact, each analysis for each
segment or division cannot be combined into one analysis. This matter is impossible to
be done because each division represent different product category as well as different
strategies. Therefore, in this situation, due to the lack of information I provided only the
new strategies for eBay in marketplaces segment.
No.
1.
138
Segment
Market
places
Objectives
(New)
Goals (New)
Maintaining global
growth initiative as a
strategy to motivate
consumers through
acquisitions, new market
and new products in
order to adopt into
different culture demand.
Develop new
market with new
product in China
and India (the
highest
population) in
order to adopt
into different
culture demand.
N o f r a u d u l e n t activities
may happened through
authentication and
verifications.
Introduce
zero fraud by
introducing web
security system
for fraudulent
activities that
may happened
through
authentication
and verifications.
Remarks
Product
Development
& Market
Development
Product
Development
eBay Inc.-2009
[MR111037]
Going to make eBay as

generic brand for consumers
No.
1.
Segment
Marketplaces
Enforce the
marketing
department to
improve
advertising by
global branding.
Goals
Objectives
.Increase revenue and

long term profit by
satisfying the needs of
the customers.
Increase revenue in
marketplace segment by
30% annually
Increase working
capital to $
5,000,000.00 by 2012
Achieved the working

capital to $ 5,000,000.00
by 2012
New Policy for New strategies:

The manager should monitor the eBay progression of growth every week.
Technical Department should make a corrective action immediately, and improve
after sale services.
10 days training provided for current staff, 15 days for new staff per year. Training
can help the organization to increase efficiency as well as increase the level of
motivation of the employees.
Special rewards is provided for the staff who achieved high performance in work and
complete attendance monthly.
Marketing Department
Company Objective: Ensure the effectiveness of virtual marketing through online
advertising as well as other media.
139
eBay Inc.-2009
[MR111037]
Supporting Policies:
1. Management is concerned with all those activities which are essential to determine and
satisfy the needs of customers so as to achieve the objectives of business
2. The marketing manager must scientifically study the demands of customers before
offering them any goods or services. Selling the goods or services is not that important,
as the satisfaction of the customers needs.
3. The Marketing manager must attract more and more customers to buy the firms products
and services.
4. The marketing department provides quality products to customers at reasonable prices
and thus creates its impact on the customers.
Reorganise:
Roles of Key Players for eBay organisation.
Project Manager
The Project Manager has the ability to provide resources as needed for the project and has
final say on determining the membership of the Project Team. The project manager also
should be able to organise efficiently partnership as well as the acquisition process.
Project Administrator
The Project Administrator is the leader in the effort to define, understand and measure the
process. He/she serves on the Project Team and is available to dedicate 20-30% of his or her
time to the reorganising effort.
Project Team
The Project Team is composed of managers and employees from each of the potentially
affected functional/divisional areas.
The roles of the Project Team in simplifying the processes include:
Participate in the creation of the "As-Is" Process Model.
Highlight major problems and issues, and recommend areas where improvements and
"Quick Wins" can be made.
140
Assist in addressing the immediate workload distribution problems.

eBay Inc.-2009
[MR111037]
Participate in the recommendations on how work should be completed.
7.1 Value Chain

For Marketplaces segment
Inbound Logistics and The process (Production) remains the same in this case.
Case Facts
Variables
Inbound
Logistics
eBay
In August 2009, eBay Inc. formed a partnership with General Motors
GM dealers in California to help consumers negotiate purchase of new
GM cars and trucks
through the eBay online marketplace. (Page 263,para1)
Process
EBays marketplace, or marketspace, is an online virtual trading
platform for the sale of
goods and services by a community of users that comprises individual
buyers and sellers,
as well as small business owners (Page 264,Para3)
EBays Marketplaces platform

brings buyers and sellers together through fully automated online Web
sites 24/7 (Page 265, Para5)
Feedback Forum provides feedback, comments, and ratings on other
users that can
be viewed by potential users when considering a purchase.(Page 266,
Para2)
Revenue is earned from advertisers and retailers who pay a fee for
directing shoppers to their own sites (Page 266, Para6)
141
eBay Inc.-2009
[MR111037]
The Marketplaces segment generates revenues from listings and fees

paid by sellers (Page 264,Para1)
Rent.com lists apartment availability,
rental costs, virtual tours, roommate searches, and more. Revenue is
earned from landlords
who pay a fee for renters who find apartments through Rent.com.(Page
266, Para7)
StubHub is a leading U.S. ticket marketplace that allows users to buy and
sell tickets
to sporting, events, theater, and other entertainment events (Page
266,Page3)
Generic brand for consumers

Outbound
Logistics
142
eBay Inc.-2009
[MR111037]
Increase revenue and long term profit by satisfying the needs of the
customers.
Increase working capital to $ 5,000,000.00 by 2012
Develop new market with new product in China and India (the highest
population) in order to adopt into different culture demand.
Marketing &
Sales
Enforce the marketing department to improve advertising by global

branding.
Maintaining global growth initiative as a strategy to motivate
consumers through acquisitions, new market and new
products in order to adopt into different culture demand.
Service
I n t r o d u c e zero Fraud by web security system for fraudulent

activities that may happened through authentication and verifications.
N o f r a u d u l e n t activities may happened through authentication and
verifications.
143

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Strategic

2nd Individual Case Analysis (eBay Inc.-20

NAZIFA BTE ABD. GHANI

Associated Professor Dr. Mas Bambang

International Business School

Competitive Profile Matrix Analysis..................................................................42

4.0 Internal Analysis.................................................................................................. 43

Strategic Management/SEM II/ 2011/2012

6.3 BCG Analysis................................................................................................ 129

1.0 Executive Summary

Strategic Management/SEM II/ 2011/2012

2.0 Vision and Mission Analysis

Strategic Management/SEM II/ 2011/2012

Concern for Public Image

Mission Statement Evaluation

Acceptable, but too

Identify the utility of the firms products

Reveal that the firm is socially responsible

Length (Less than 250 words)

Strategic Management/SEM II/ 2011/2012

Reveal that the firm is environmentally

Include Nine Component

Political, Legal , and governmental forces

-In addition, tax compliance will increase costs. (Page 269,

Strategic Management/SEM II/ 2011/2012

-The company continued its turnaround strategy in a harsh

-Profitability is also affected by currency exchange rates (page

-If the U.S. dollar weakens against foreign currencies,

-Alternatively, financial measures will be negatively impacted

-Declining economic environment (Page 268, Para4)

- The revenue drop was attributable to the impact of the

Social , Cultural , and Demographic forces

Breaches in data security are on the rise (Page 270, Para3)

Strategic Management/SEM II/ 2011/2012

Competition is intense in communications services and subject

Strategic Management/SEM II/ 2011/2012

1- Market place: competitors in this field includes traditional department, warehouse,

Strategic Management/SEM II/ 2011/2012

*Because of lack of data for Communications segments competitors and Payments

Amazon states their success is

Amazon achieved Low gross

profit margins. Low in gross profit

- Several other online marketing

Strategic Management/SEM II/ 2011/2012

However, Amazons strong growth

-Amazon, a leading online retailer,

(1) Rivalry among Competing Firms; (2) Potential entry of new

Strategic Management/SEM II/ 2011/2012

Strategic Management/SEM II/ 2011/2012

-Amazon states their success is

Strategic Management/SEM II/ 2011/2012

EBays popularity is due to the

-The key to success is eBays user

-Increased in ROA is considered a

Strategic Management/SEM II/ 2011/2012

margins High in gross profit

margin can be considered as a

-For the second quarter of 2009,

- EBay recently increased its fee

- eBay Revenue Growth of rate

Strategic Management/SEM II/ 2011/2012

considered as weakness for eBay.

-Declining in stock price started

- Several other online marketing