eBay

Inc.
is
an
American
multinational internet consumerto-consumer
corporation,
headquartered
in
San
Jose,
California. It was founded in 1995,
and became a notable success
story of the dot-com bubble; it is
now a multi-billion dollar business
with operations localized in over
thirty countries. The company
manages eBay.com, an online
auction and shopping website in
which people and businesses buy
and sell a broad variety of goods
and services worldwide.

Case:

The
Globalization
of eBay

International Business the Globalization of eBay Case study

I. Case Background
eBay Inc. is an American multinational internet consumer-to-consumer
corporation, headquartered in San Jose, California. It was founded in 1995,
and became a notable success story of the dot-com bubble; it is now a multibillion dollar business with operations localized in over thirty countries. The
company manages eBay.com, an online auction and shopping website in
which people and businesses buy and sell a broad variety of goods and
services worldwide. (Wikipedia)
Operations
eBay created an efficient distribution system that demanded virtually little
supervision. Sellers paid eBay for the opportunity to design, set up, monitor,
and supervise their particular auctions while buyers used eBay's software to
search for products and place bids. After the auction clock ran out, the seller
contacted the winning bidder to negotiate payment and shipping terms. For
this matchmaking service, eBay charges between 7 and 18 percent of the
closing auction price. In 1999, net revenues topped $225 million. By 2006,
revenues grew to $6 billion with net income of $1.1 billion. The company
projects revenue near $7.5 billion in 2007.
Core vision
To support interaction in the eBay community by providing a useful online
platform to value-oriented buyers and sellers; to uphold the principles of trust
and safety, guaranteeing low fraud losses and high transaction protection to
its community; and to focus on market efficiency by delivering state-of-the-art
information technology. Depicted as a Venn diagram, eBay saw its
competitive advantage residing in the overlapping center zone whereby it
could pioneer new communities around the world built on commerce,
sustained by trust, and inspired by opportunity.
Three Revenue Streams
1. Payment Fees (21 percent of the total revenue)
2. Final value fees (31 percent of total revenue)
3. Insertion Fees (48 percent of total revenue)
Global Expansion
The success of U.S. operations had, by the turn of the century, inspired eBay
to define its mission as providing a global trading platform where practically
anyone, anywhere, could trade practically anything at anytime. By 2007,
eBay's growing global reach meant its members could rely on local sites that
served customers in such countries as Australia, Austria, Belgium, Canada,

France, Germany, India, Ireland, Italy, South Korea, Singapore, Spain,

Sweden, Switzerland, Taiwan, and the United Kingdom.
Once eBay was firmly established in the United States, management looked
to the overseas market as the best opportunity to sustain growth; eBay's
international markets had more than twice as many Internet users. In terms of
market potential, eBay estimated it had less than 10 percent penetration of
the combined annual $30 trillion-plus global merchandise market.
International expansion then became the goal.
During the expansion period or globalization period they have encountered
difficulties such as different government regulations on the various countries,
language barrier because of the website translation difficulty, cultural attitude
about the ecommerce, challenges brought by the expansion itself.
II. Statement of the Problem
1. As the eBay is becoming global, how are they going to deal with the
challenges that they are currently facing such as:
a)
b)
c)
d)

translation software weaknesses

various rules and regulations
cultural attitudes
pace of international expansion

III. Alternatives
A great strategy defines the perspectives and tools managers use to appraise
the companys present situation, identifies the direction the company should
go and determine how the company will get there. The fundamental principle
is on how to create value. A value that measure the firms capability to sell
what it makes for more than the cost incurred to make it. Operationally, the
strategy of differentiation should be exercise in able to convert customer
insights, skilled and creative product development, persuasive marketing
programs and premier reputations for quality into superior value creation. We
find it fit to eBay to continuously develop unique features that are impossible
to match or copy and lead buyers to prefer their goods and services versus
those by rivals.

Technology availability to users - as eBay localize their website around

the world, they should also keep up with social media trends and
mobile phones application for them to stay ahead of competition.
Technology will enable eBay to offer new attractive services for loyal
and new users in an easy and convenient way.
As eBay keep on expanding internationally they should also look for
additional acquisitions or partnerships of other online auction sites
eBay should expand community services as a way to educate their
loyal and prospective customers in selling their products online with the
use of internet.

IV. Recommended Solution

The fundamental value of strategy for the international company is to manage
the tension between global integration and local responsiveness in a way that
converts a unique strategy into superior value. At this time, companies must
identify the force of the particular change, estimate the impact it may have on
their industrys structure, include changes in the long term growth rate, new
technologies, and manufacturing innovations that revise cost and efficiency
frontiers and technical expertise across countries, change in government
regulations or the entry or exit of major firms. It is worthwhile to note that
while many forces of change may be in play in a given industry, it is best to
separate major factors from minor ones and best position the firm to compete
and create value in the likely new industry. Given the growing appreciation of
the performance and the competitive benefits a core competency should be
linked in the value chain. Technically a core competency is a special outlook
that creates unique value for the firm by creating an acknowledged thread that
runs through all of the firms value activities like information management and
product distribution system. For eBay, thought is the main problem of the
translation software that they used. We therefore recommended that the
sellers (customers/clients) should include two translations in the product
description (English and the native language) to make the site command tools
as the concern of language translation for eBay though they should be
responsible in monitoring the message content. With regards to various rules
and regulations and cultural issues, eBay may maintain the fundamental
divergences in consumer tastes and preferences across countries. No matter
the moderating functions of money or technologies, the reasoning goes
differences in consumers tastes and preferences across countries due to
cultural predisposition, historical legacy, emergent nationalism and economic
prosperity. eBay should consider that Consumers prefer goods that are
sensitive to their way of life. . When it comes to government policies, eBay
should determine how to best configure and coordinate its value chain so that
it provides the necessary degree of local responsiveness without jeopardizing
its capability to create value.
V. Answers to the case questions (if there are any)
1. What is eBays core competency? How does is relate to their chosen
strategy?
After reading the case, we thought that the eBays core competency are
the developing software program for the online platform, and improving
digital infrastructure tools as like proprietary payment system that
seamlessly linked buyers and sellers, also lead to the created a safe,
secure environment for the online trading community.
The creative freedom is the companys strategy as allow users to using
the tools that the eBay provides to design, set up, monitor, and supervise
their particular auctions, and also eBay no matter what they are buying or
selling or where they are buying or selling the merchandise, and eBay
never tough the goods during the whole deal between buyer and seller.

2. How would you explain how eBay has decided to configure and
coordinate its value chain?
eBay linked its initial success to its core vision: to support interaction in
the eBay community by providing a useful online platform to valueoriented buyers and sellers; to uphold the principles of trust and safety,
guaranteeing low fraud losses and high transaction protection to its
community; and to focus on market efficiency by delivering state-of-the-art
information technology.
Since the eBay initial vision havent changed, eBay have a very poor
value chain as support activities with just providing the tools to make
transactions, technology and system development, and the online
platform user go to use the tools and system to managing the transaction.
The core technologies of eBay use to developing and improving the online
trading platform, because of the eBay want to provide a global trading
platform, the need to face much issues like conduct many transaction in
local currencies, and list product description in local languages, for the
solve the issues, eBay has decentralized its value chain configuration by
developing largely independent subsidiaries in other country as more than
18 countries.
3. Would you characterize eBays value chain as virtual or real? Why?
eBays value chain is virtual, the reason as eBay works by helping
individuals, and interested big businesses, buy and sell items in
thousands of categories including antiques and art, books, business and
industrial, cars, CDs and DVDs, clothing and accessories, coins,
collectibles, computers and electronics, home furnishings, real. estate,
sporting goods and memorabilia, stamps, tickets, toys, and travel, but
doesnt real produce or handle any of the products that sold on the eBay
sites. In reality, eBays an intermediary during the deal process; it acted
like a sophisticated software program running on a bunch of networked
Web .servers that left much of the work to sellers and buyers.
Operationally, then, eBay created an efficient distribution system that
demanded virtually little supervision. Sellers paid eBay for the opportunity
to design, set up, monitor, and supervise their particular auctions while
buyers used eBays software to search for products and place bids. After
the auction clock ran out, the seller contacted the winning bidder to
negotiate payment and shipping terms.
4. Consider again your description of eBays strategy. Is it different from what
it was ten years ago? Why?
eBays essential strategy has same with ten years ago as global strategy;
eBays platform was the premier segment website in more than 18
countries and has 114 million registered members from more than 150
countries. But only implemented of strategy has changed, like eBay has
expanded its presence in its core market USA, and extended its

operations to other countries, and rely on local sites that served Australia
Austria, Belgium, Canada, France, Germany, Ireland, Italy, Korea, the
Netherlands, New Zealand, Singapore, Spain, Sweden, Switzerland,
Taiwan, and the United Kingdom. In addition, eBay had built a presence in
Latin America, China and India.
5. What implication to the challenges identified in the case have for eBays
strategy-today and in the future?
The main challenge for eBay is how to extend e-commerce business
globally. eBay needs to focus on developing more tools and sophisticated
software that support sellers to interact with buyers in many other
countries, and include development the advantage translation software
and more secure and more sophistical payment system that could support
to exchange currency of buyers from different countries.
And other challenge is government regulation which is inevitably stymie
for eBay, the company should be try to avoid the activities that infringe
local rules, and reminder the seller follow the local government regulation
for reduce the risks.
VI. Leanings
After study the Globalization of eBay case, we learned that the
configuration and coordination of a value chain responds to changes in
customers, competitors, industries, and environments. Like, eBayss value
chain its from discovery the buyers and seller products that typically dont
have an efficient distribution system and develop, improve, provide the
platform to the buyer and seller. And eBays success and become a
international company, because of its ability to bring customers and
businesses together at a relatively low cost and overcome barriers such
as geographical location, language, government regulation, cross cultural/
race getting in the way. It has allowed a lot of people to become an
entrepreneur through the sale of goods and provision of services over the
internet.