Analyze the key factors that have caused eBay to struggle in Japan, China, and other Asian markets to determine if these mistakes could have been avoided
Competition is an inevitable aspect of our day to day business world. It is a concept that has both positive and negative effects on businesses. It, for instance, comes hand in hand with extra expenses to be at par with other organizations that offer relatively similar products and services. On the positive side, competition leads to the production of quality products and services as companies try to meet the consumers’ needs in the best way possible. Competition also leads to a reduction of prices charged on goods and services.
Although eBay has been successful in different countries, for instance, in Germany, England, and France, it has had a rough time in the course of perpetrating its business practices in different countries such as Japan and China among other Asian countries. This has been due to some factors as discussed below.
Global brand image versus localization; eBay has been involved much in branding its image globally at the expense of localizing its brand to appeal the Asian consumers. This is a negative move since local support plays a significant role in any business. Another reason that contributed to eBay’s failure is the belief that since it had made success in the United States of America, success in Japan and other Asian countries is automatic.
This is a wrong assumption since markets differ in characteristics and preferences. Failure to familiarize and adapt to the Asian market and culture also contributed to the failure. Another key factor is poor management coordination between the headquarters and the locals as well as poor marketing strategies. Being slow in responding to competition for instance from Yahoo also led to poor performance. All the above-named mistakes of eBay could be avoided through strategic planning and implementation of activities (Prince, 2007).
Compare and contrast the strategies used by Yahoo and eBay in their Asian market approach
Different business organizations/companies employ different strategies to achieve success in their business practices and activities. Some strategies are associated with great success while others are deemed to contribute to failures. From the case study, we can see that Yahoo and eBay applied different strategies in their Asian market approach. Different results were obtained from the implementation of the strategies. The similarity among the strategies applied by the two companies is that they were all aimed at enhancing productivity and profitability through promoting efficiency, effectiveness as well as the economy.
We find that Yahoo was able to be swifter than eBay. It, for example, joined the market significantly earlier than eBay, an aspect that gave it a competitive advantage (first-mover advantage) to establish itself well in the market. Yahoo had learned from its experience in the United States of America where eBay first joined the market and when Yahoo followed, it failed drastically.
Regarding understanding the customers, it is evident that Yahoo was more sensitive as compared to eBay. As Jack Ma asserts, eBay’s failure in Japan and other Asian countries can be attributed to the fact that it was unable to build a community effect in these countries an aspect that is deemed very crucial. Yahoo on the other hand cherished customer satisfaction and hence the success in its operations.
Yahoo has also taken a partnership approach, in conjunction with an individualized approach, to all of its international businesses putting it to an advantage. An example of a partnership is formed with Japan’s Softbank Corporation. This has made it better about the eBay due to combined efforts that facilitate success. Another difference between the two companies; eBay and Yahoo can be seen regarding the charges upon the introduction of the different internet related services. While Yahoo tries very much to offer the initial services for free, eBay does not see the need for that but instead puts charges for all services to an extent of encouraging the young people to use credit cards.
All in all the differences between these two companies can be seen in the way they approach the Asian market and how they intend to satisfy the customers. Generally, Yahoo has a better approach and it is more customer-satisfaction oriented than eBay, which emphasizes more on the maximization of its profits at the expense of satisfying the consumer needs. Management has also played a great role where strategic planning and coordination have enhanced Yahoo’s success. This has been, for instance, through emphasizing on partnerships. eBay, on the other hand, has had poor decisions and coordination between its practices for instance between the headquarters and the locals. This is an aspect that has greatly contributed to the failure of eBay in Japan and other Asian countries (Llyod, 2004).
Assess what eBay’s shift to giving control of its main China operation to Tom
Online signifies
Each decision and step taken is usually aimed at achieving some results. The eBay’s shift to giving control of its main China operation to Tom online was not without some reason. After a lot of struggle to make its business ventures a success in Japan, China, and other Asian countries, we find the company (eBay) giving control of its main China operations to Tom online which is a Chinese internet portal and wireless operator. Although it could be for some positive motives, at the face, it sounds to be a sign of failure. This is because a business company should at any given time expand its boundaries rather than limiting it or cutting them short. Initially, the closedown of eBay’s main Chinese website was to allow for the launching of a new auction site where the name Eachnet was used as the brand name.
In a nutshell, we can see this movie to be an indication of the difficulties and problems that are faced by foreign internet organizations in China and other Asian countries. The shift of control to Tom Online is, however, a notable step and in a way, it marks a change of strategies and an end of its struggle to fight competition from other internet providing companies in China such as Alibaba.com.
Although the decision and move signifies defeat, I still don’t consider it to be a negative move but rather as a change of strategy for better strategies that ought to be successful and profitable. Whenever a certain strategy fails to provide expected and desired results, it is always good to change direction rather than wasting resources in a venture that neither benefits the business organization nor the customers it serves (Nuttall and Dickie, 2006).
Formulate some additional strategies that eBay could use in the Asian market
Different strategies could be used in a given situation to achieve the desired results. Some of the additional strategies that ought to be utilized by eBay in the Asian market to achieve better performance in terms of productivity and profitability include; having an understanding of the best way to localize its brand to appeal to and catch the attention of the Asian consumers. eBay should also have tried to understand and adapt to the Asian market especially the culture. This is because culture is a very sensitive aspect that should be looked at critically. It determines people’s needs and desires and thus, it ought to shape what should be provided by a particular business organization.
eBay also ought to be more aggressive rather than being over-confidence based on the fact that it was successful in other parts such as the United States of America. To be successful in the Asian market, eBay could also have perfected its management practices to ensure that all practices and activities are carried out as they should to allow for success. Strategies to be alert and respond to the competition, both locally and internationally ought to have been put in place to allow for success in the company’s undertakings. Marketing strategies also ought to be reinforced to ensure that all the consumer needs are identified and thus considered when making all decisions. This will allow for customer satisfaction which will, in turn, increase productivity and profitability (Spencer, 2006).
Reference List
Llyod, E. (2004). Yahoo! Asia Pacific. Web.
Nuttall, C. and Dickie, M. (2006). EBay suffers Chinese reversal.
Prince, L.D. (2007). How to Sell Anything on EBay… and Make a Fortune! New York: McGraw-Hill Professional.
Spencer, C. (2006). The EBay Entrepreneur: The Definitive Guide to Starting Your Own EBay Trading Assistant Business. London: Christopher Matthew Spencer.