Assignment: Examining Business Strategy and the Five Forces Model: The Challenges Facing eBay; Time for Changes in Strategy? This week we look at strategic thinking in the business environment.
Your assignment this week is to:
1. First, research, and create, a Porter's Five Forces Model of eBay in either Visio, Excel, of PowerPoint format. Use external sources to assist in populating your model.
Next, report and analyze your findings, touching on the following questions;
1. What does your five forces analysis reveal about the nature and strength of the various competitive pressures eBay faces? Are the competitive pressures facing eBay and other online auction company's conducive to earning good profits? Why or why not?
2. Based on your analysis of the industry and eBay's situation, what problems and issues does eBay's top management need to address? Which ones are top priorities?
3. What do you see as the key success factors for firms in the online auction industry?
You are to use, and cite, no less than 3 outside sources for your report portion. This will be in
APA format and a minimum of 2 pages. That is, the BODY of your paper is to be a minimum of 2 pages. Title pages, Abstract and resource pages do not count to the total. Business Strategy and the Five Forces Model Competitive Rivalry EBay strategies and helping the company to identify the critical issues has five ways of coping with complexity and change of potential entrants, competitors, buyers, substitutes, and suppliers. This vigor describes the intensity of competition between existing players in the industry. Several companies present options that are alike to eBay; such has Amazon, 3 BUSINESS STRATEGY AND THE FIVE FORCES MODEL Buy.com, or Craigslist, that all provide a similar platform. Other organizations are beginning to design their online selling fact using EBay as an excellent tool, making eBay a group likely to remain a leader in online auction sales. However, these companies have not created brand recognition that eBay has, they still offer the same products, at a similar price, with the appeal of many customers.
Power of Supplier
Always using eBay has a significant number of casual sellers and collectors. At present, there are hardly any competitive pressures from suppliers, whose only other alternative would be to deal with their e-commerce site that would be potentially perilous for them to compete with other sellers on known site like eBay. EBay set again on the original total price, and those are the terms that suppliers have to agree to demeanor their online sales.
Power of the Buyer
The power of the majorities of eBay's customers tends to look for collector item or is bargain hunting. If eBay's prices begin to match that of prices at local stores, eBay will lose a significant amount of market share. The power of buyer has a direct impact on the eBay strategies. The sale attribute brings eBay more repayment by enduring focused on connecting consumers; maintain financial discipline and capitalizing new opportunities for growth.
Potential Entrants
With industries as innovative as eBay, companies have to be able to retain new customers, which, judging by the decreasing numbers of active eBay users. The potential risk to eBay could serve as a platform that easily be created and would require a limited amount of resources to become successful.
The Threat of Substitute Products 4 BUSINESS STRATEGY AND THE FIVE FORCES MODEL
The easier it is for an entrant to join the marketplace, the greater the risk of a business's market share being exhausted. . EBay sells a lot of products. Therefore, it is extremely uncovered with substitutes. What reduces the demand is the substitute factor for a particular set of products as customers switched to other alternatives.
Problems and Issues Ebay's Top Management Need To Address
Under director John Donahue Ebay's top management face several issues in need to address. They include; Looking for acquisitions that are pertinent to the company's business and those that fit with the preferred strategy can aid the business in achieving its financial goals.
Secondly, the eBay need to improve and pay more attention to all its subsidiaries in thus linking all of them create a powerful synergy that can develop eBay business.
Also, the feedback debate is helpful in many ways, re-evaluating and making certain it is organized should be one of eBay's best moves. EBay should work on the further globalization of its business and expand into emerging markets. To eventually contribute to overall success increased traffic can help in maintaining a large customer and seller base.
Key Success Factors for Firms In The Online Auction Industry
At present, eBay does not come into view to have a far adequate advantage to be able to uphold themselves as leaders in the online auction industry. EBay will have to distinguish themselves from their competitors and reconsider the primary strategies to be as profitable and show continued growth in the future. In accordance to the binding firm hold estimating, eBay at present has significance in the area of product variation and brand name. For a extended period, EBay has been the first runner in the online auction industry, giving them an excellent competition significant when it comes to branding and reputation of the company. 5 BUSINESS STRATEGY AND THE FIVE FORCES MODEL Porter's Five Force Porter's Five Forces Model is a critical instrument to break down an outer aggressive environment of the business. The model incorporates threat of entry, threat of rivalry, threat of suppliers, threat of purchasers and threat of substitutes.
Threat of Entry
This business is an Internet driven administration industry, where there is a low hindrances to entry. The primary hindrance may that a few items are not allowed to be sold in specific states and nation. Along these lines, the fundamental obstructions might originate from government regulation subsequently any online closeout ought not abuse those laws. EBay has built up obstructs that deal with enactment side of the law. EBay has made its image name among clients of its administrations and it is truly difficult to enter a business sector where security and brand acknowledgment are this critical in the business. It is found that the boundaries to entry others are low, be that as it may it is difficult to be fruitful in the business where the security and brand acknowledgment is vital to the clients of the administrations.
Threat of Rivalry
Yippee! Barters, Google and Overstock.com have been the most imperative contenders of eBay. They have been battling eBay for a bit of the business sector in the business. Additionally, one of greatest contender of eBay is the drop off industry, however numerous drop off organizations likewise utilize eBay administrations. There is an enormous rivalry as a result of low entry boundaries. EBay keeps on providing so as to pull in its clients most ideal administrations at the least cost (Porter's bland procedure: cost initiative system requiring little to no effort ability in wide market) . They are additionally keeping on extending on a level plane into new markets. With great brand personality and acknowledgment comes wellbeing and security, which is fundamental in this industry. There are likewise low leave boundaries in this industry. EBay possesses 35.14 % of the business sector starting 21st of February, 2012, which leaves space for them to grow. EBay requirements to stay aware of purchasers needs and needs alongside watching out for its rivals keeping in mind the end goal to be fruitful.
Threat of Suppliers
Each and every client of web administrations may be a "player" of eBay. Along these lines, there are an endless number of suppliers and everybody can offer something as a potential supplier for eBay. EBay plan of action gives an administration that brings the purchasers and venders together. The suppliers don't have much power aside from on account of exchange of the top of the line things at the end of the day costly products: land or autos or types of gear. It is clear that both the purchasers and merchants need insurance for their things. EBay utilizes PayPal as a part of request to accommodate smooth and brisk installment of things where the venders need to get their cash rapidly. Be that as it may, it is entangled to offer costly where the suppliers have more power. Keeping in mind the end goal to encourage the offering costly things, eBay acquired Skype where to side can without much of a stretch impart and trade information . The suppliers all in all don't have much power unless they are managing top of the line things. 6 BUSINESS STRATEGY AND THE FIVE FORCES MODEL
Threat of Buyers
There is boundless number of purchasers and that what makes eBay effective and profitable. Anybody around the globe can see and purchase the any thing recorded on eBay which implies that the purchasers don't have any genuine force in impacting eBay. In any case, eBay listens to their clients, which is the reason they established the client criticism program. This has removed the terrible dealers and purchasers. By and large, eBay's purchasers don't have much impact unless they are managing costly things.
Threat of Substitutes
There are few substitutes to exchanging on the web. One them is to do a reversal to exchanging at a bartering house. Another choice is to offer the things straightforwardly as opposed to setting them on a bartering. Setting the little things on a customary closeout is not financially savvy approach and there would be a set number of purchasers. This is won't not be a sensible alternative to dealers in light of the fact that the Internet and eBay opens up a huge number of purchaser and merchants worldwide through Internet. The Internet has particularly opened up the business sector for claim to fame things, for example, first version cookbooks or customary lunchboxes with superheroes on them. This is impractical without an administration, for example, eBay. In a word, the threat of substitutes is found as low the length of eBay keeps up its positive picture and advance. References Thompson, A, Strickland, A, & Gamble, A. (2010). Crafting and executing strategy. New York, NY: McGraw-Hill.