eBay started out as a host for an online marketplace intended for individuals, groups, or organizations who are interested in putting up their products or goods for sale. (Gomes-Casseres, 2001) It was established by Pierre Omidyar in September 1995. The dimensions of eBay was pretty simple from the start – a peer-to-peer structure – which allows trading of various things, ranging from books to CDs and DVDs, clothes, home appliances, digital electronics or gadgets, jewelry, and such.
From the time it was introduced, eBay has experienced incredible success as the percentage of sales kept increasing as the years went by. However, like any other business organizations, eBay reached a point where it needed to expand and develop its platform in order to lure more users and investors, and incorporate recent models or frameworks in business in order to cope with current business and marketing trends, particularly globalization, and compete with other online institutions that implement the same structure or platform.
With varied competition present in the virtual community, eBay’s success is attributed to its competitive advantages or core competencies. The ability of eBay to incorporate information systems and state of the art technologies in developing and expanding its platform has remained to be the company’s advantage over its competitors.
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The company is extremely particular about providing information to individuals, groups or organizations that are unable to determine what features or characteristics to look for when aiming to purchase products or goods from the online marketplace, or how to price the items appropriately when attempting to sell products or goods to other online users. (Chen, 2005)
The information system employed by eBay constitutes various technologies that are primarily directed toward customer service for information sufficiency. eBay believes that the availability and the depth and coverage of information provided for customers allow them to become engaged in realizing the goals and objectives of the company.
Online support is one of the primary priorities of eBay ranging from online forums or conferences through chat rooms and message boards, to the proper and timely responses to inquiries through FAQs and contact information to customer service representatives or managers, and such. (Chen, 2005) Overall, the strategy of eBay to prioritize information sufficiency to address customer needs and demands allows it to obtain competitive advantage by gaining the respect and trust of its constituents and developing market efficiency, through the information system that it employs.
Overall, the business strategy of eBay has not changed over the years. Although there have been various changes since the advent of globalization, it still remains to prioritize information sufficiency as an important factor in developing the organization. Information sufficiency even became more significant due to globalization, as more and more people become involved with the company.
Although it eBay looked into the possibility of international expansion through adaptation and acquisition, the primary strategy of the company still capitalized on its major value chain. Since the primary sources of income for eBay were the fees obtained from the sales or transactions, it aimed to increase these fees to obtain more revenue or income. In general, eBay still employs the same strategic design or dimension when it started. (Collier, 2006)
The decision of eBay to configure and coordinate its value chain was motivated by the increase profit or revenue that it would gain by attracting more sellers to establish their online markets through eBay as the payment or commission obtained from the finals sales is one of the primary sources of income for the company.
In addition, the role of globalization has fueled the configuration of the value chain to prioritize the involvement of customers from all over the world and the establishment of an online community that communes through eBay as a host. As eBay has reported, 100 percent of its income is obtained from the fees obtained from the sales, and capitalizing on its source of income was the greatest motivation for the configuration or coordination of its value chain. (Mascarenhas, Kesavan & Bernacchi, 2004)
The structure of eBay’s value chain is perceived as real, but at the same time, the practical or technical aspect of the company’s business processes and operations are fueled by its virtual dimensions. Since the life and blood of the company are the online users who register under the terms and conditions of the company to either establish their online markets or to purchase products from the various offerings that are peddled through eBay, and the products that are sold through eBay’s platform, its value chain may be partly be considered as real or physical.
However, considering the genuine or primary platform and value chain of the company, which is the presence of the information systems, it may now be then considered as virtual, for without the online dimensions and the established platform of eBay in the virtual community, the company will cease to exist. (Rayport & Sviokla, 1996)
As the company faces the various challenges posed by the corporate landscape in the twenty-first century, it will become difficult for eBay to handle or surpass them since there are many issues and concerns that it has overlooked for the past years due to its concentration on its current value chain or priorities.
Challenges presented include the technical or digital aspect of the online platform on which eBay depends for the sales and transactions and the maintenance of its valued information system, multiculturalism, perceptions and beliefs of e-commerce, ethical and legal considerations, as well as international relations.
Since eBay has proved to lack experience and knowledge about these issues due to its consistent prioritization of information systems, this only implies that it has to work doubly hard to restructure the goals and objectives of the company, as well as the processes and operations that it currently implements in order to cope fairly well with all the challenges and requirements that it has to meet if it expects to survive in the coming years, heralded by so many changes due to technology and globalization.
Chen, E. T. (2005). Leveraging for a Competitive Advantage – Case of eBay. Retrieved
December 17, 2008, from JCIS Online. Website: http://www.jcis-online.org/iis/2005_IIS/PDFs/Chen.pdf
Collier, M. (2006). Reworking Your eBay Stores Strategy. Retrieved December 17,
2008, from Entrepreneur.com, Inc. Website: http://www.entrepreneur.com/ebusiness/ebaycenter/ebaycolumnist/article165922.html
Gomes-Casseres, B. (2001). The History of eBay. Retrieved December 17, 2008, from
Mascarenhas, O. A., Kesavan, R. & Bernacchi, M. (2004). Customer Value-Chain
Involvement for Co-Creating Customer Delight. Journal of Consumer Marketing, Vol. 21, No. 7. Retrieved December 17, 2008, from Emerald. Website: http://www.huizenga.nova.edu/5017/ReadingList/Mascarenhas_Kesavan_Benacchi%20-%20Customer%20value-chain%20involvement%20for%20co-creating%20customer%20delight.pdf
Rayport, J. F. & Sviokla, J. J. (1996). Exploiting the Virtual Value Chain. The McKinsley
Quarterly, No. 1. Retrieved December 17, 2008, from: http://www.andreabiancalani.it/virtual.pdf
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