The most intriguing elements is that eBay was one of the first online auctions. In this regard, it is interesting to study all the aspects of its functioning and the company’s principles. From the analysis of the management aspects of this firm, many possibilities open up. For example, it understands how modern online platforms for selling things work. In addition, another exciting thing about eBay is that anyone can list anything for sale freely. This opportunity turned the online auction into a treasure trove for finding outlandish things. The third intriguing fact is that this online platform has brought many innovations and has become a model for many subsequent projects. Given these facts, it is important to study the reasons for the success of the company and what strategic goals are facing its leadership today.
Background/History
eBay is a world-renowned US company that provides online auction services, operates its website, and owns eBay Enterprise. The site attracted not only the fact that there were no commissions, many people who wanted to get rid of unnecessary things that are a pity to throw away but to sell inexpensively – just right. Moreover, in those years, various cheap goods were popular on the site.
Despite the growing popularity of the project, its organizer decided to reconsider his attitude toward it only a few years later. As a result, eBay became not just a hobby but a full-fledged project, and in 1997 the name AuctionWeb was changed to the more consonant eBay (O’Connell, 2021). With the popularity of the site growing, its founder Omidyar began to realize that he had created something unique. As a result, he engaged in its active development. Branches of the company are open in many countries of the world. Anything can be put up for sale as long as it is not prohibited by law. The project developed rapidly, and significant expenses began to be required to work on it. The developer decided to take a commission of 6% for each transaction, which covered part of the costs. At the same time, Omidyar realized that he could not cope with management.
Mission
eBay’s concept of governance is similar to the four principles of strategic management identified in their book by Dess et al. (2020). According to the authors, management should guide the company toward its key goals, consider stakeholders’ opinions, work with short and long development prospects, and distinguish between efficiency and effectiveness. All these concepts can be considered in the example of eBay. eBay’s mission is to provide a global marketplace where people can buy and sell anything. From the company’s official website, one can single out the main ethical aspects on which its work is based. eBay is guided by three main principles that ensure quality customer service and the fulfillment of its mission (eBay Inc., 2022). First of all, anyone can contribute to the company.
This indicates that the company is always open to new experiences. The second principle says that all participants who trade on the site must treat each other respectfully. The third principle of the company also concerns courtesy in communication for employees and customers.
SWOT Analysis
eBay is a successful e-commerce company, but it can also be threatened by some factors that will subsequently affect revenue. Any company must consider external and internal factors when drawing up its development plan (Dess et al., 2020). eBay’s governance has resulted in multiple positive and negative consequences for the organization.
Strengths
The main advantage of the company is that it constantly attracts new customers. Another strength of the company is its constant expansion. In the US, eBay’s market share grew by 22.1% in 2020 (Digital commerce, 2022). This can be considered a positive trend for recovery after the fall due to the coronavirus pandemic. At the same time, the company’s global indicators also show growth. According to Digital commerce (2022), the company’s financial growth for 2020 exceeded that of the previous seven years of its development. This undoubtedly refers to the strengths since ensuring good financial performance is an important management task.
Weaknesses
The main weakness of eBay today is the intense competition in online trading. With the growing pressure from such giants as Amazon and Aliexpress, it is vital to carry out strategic planning for the company’s further development. Another weakness of eBay is online scammers who pretend to be sellers on an online platform and swindle money from customers without sending goods. In addition, people can pretend to be employees of the company in order to steal their data from customers.
Opportunities
The company’s primary capability is that it is taking steps in a direction that is different from its competitors. eBay is targeting more niche consumer markets, which puts it in a better position. Another possibility is the further development of the mobile application, as it brings a significant share of sales carried out on the site.
Threats
One of the threats to the company could be its split and the sale of its large parts, such as ticket service StubHub. Such actions occur in the company under pressure from its large investors; however, in the future, this may become a significant financial threat in future (Soper, 2021). However, changing the company’s management strategy can easily avoid these financial threats.
Porter’s Five Forces
There is a certain set of tools with which you can analyze the strategic goals and capabilities of the company. According to Dess et al. (2020), Porter identified five elemental forces to consider when analyzing a company’s success. These forces are customers, suppliers, current competitors, new competitors, and substitute products. The first strength – customers – is a crucial aspect due to which the company functions because sellers and buyers are marketplace customers. Considering that the flow of customers to eBay is increasing every year, it can be concluded that management is moving in the right direction (Watson, 2019).
The second aspect is suppliers, here, customers act in their role at the auction because they come to the site to sell their goods. The current competitors discussed in the SWOT section of the analysis are a severe threat to eBay because they have a significant advantage and can go far ahead. However, the company in question is acting in a slightly different direction, which means it is not afraid of competition yet. For a long time, no new competitors appeared on online auctions and marketplaces due to the strong positions of current players. The aspect of substitute goods cannot fully apply to eBay because it does not manufacture products but allows other people to sell their goods.
Conclusion
The company has passed a long way in its development, located on one of the leading seats in e-commerce on the market. Nevertheless, it does not eliminate the organization from typical problems inherent in most large companies. Weaknesses and threats were discussed in this work, but with due attention from the management of the management, these shortcomings can be corrected or altered. eBay has several advantages that can compose a stable and prosperous financial future with a competent management approach. At the same time, the company follows the main management strategies that will help it plan its future vision and implement current goals.
References
Dess, G., McNamara, G., Eisner, A., & Lee, S. (2020). Strategic Management: Text and Cases (10th ed.). McGraw-Hill Higher Education (US). Web.
Digital commerce. (2022). eBay sales fall again as GMV declines for fifth consecutive quarter. Web.
eBay Inc. (2022). Our company. Web.
O’Connell, B. (2021). History of eBay: Facts and Timeline. The Street. Web.
Soper, S. (2021). EBay Projects Revenue That Tops Estimates on Customer Growth. Bloomberg. Web.
Watson, C. (2019). Chapter 1 The eBay Marketplace: Opportunities for Ecommerce Shops + eBay Statistics in 2022. Big commerce. Web.