Ch 10-Case Study: Can eBay Continue Growing?

1.What is eBay’s business model and business strategy? How successful has it been?

eBay’s business model and business strategy is perfect for a web based company. They stock no inventory and ship no products; the revenue is derived from information movement. The success of eBay is evident as of 2006 there were 200 million users, 8,000 full-time employees, and $40 billion worth of goods changing hands. The bulk of revenue is from fees and commissions from the trading services. Direct advertising is also another source of revenue for eBay. Expansion in geography and cope are two focuses of eBay’s strategy.

2.What are the problems that eBay is currently facing?

eBay is currently facing problems in competition with Yahoo in Asian markets. Laws in other countries make it difficult to protect property and rights. eBay also has a threat from lack of honesty and integrity of its auctions. Online crime is definitely a big problem facing any online auctioneer or vendor. Customer service can also be a problem at times due to the sheer size of the company and its customers or users.

5.Will eBay be successful in the long run? Why or why not?

I believe that eBay will be successful in the long run. I feel this way for a few reasons. The first being that it already has a functional and profitable business model and plan. The second is that it has name recognition and virtually everyone wither has used eBay or knows someone whom has. Third is that with the success of the company good management will adapt to an ever changing competitive landscape and customer trends. The fourth and final reason is that the company has already recognized its current challenges and taken steps to mitigate those issues. Any newcomer to the scene will have a very difficult time competing with eBay and if they are truly innovative and clever, then they will likely be bought out by the giant anyway.

Sources: Management Information Systems Managing the Digital Firm, tenth edition. pgs. 424-426. Laudon, Kenneth C.