Business Strategy Implementation Process of eBay

This report consists of a detailed analysis of the business strategy implementation process of eBay. It seems in the contemporary world it has become of utmost necessity for multinational companies to implement an innovative and constantly developed marketing strategy to sustain a strong competitive position in the operating market. However, this report has identified some significant market analysis tools such as PESTEL and Porter’s Five Force analysis through which it has conducted the external environment analysis. It shows the company is currently in a better position than before. Furthermore, this report has focused on the comparative analysis of Amazon and eBay that shows through eBay is lagging behind in most comparative factors, still, it has improved its position better than before.  It, therefore, tried to analyze its operating environment through VRIO, Ansoff matrix, McKinsey framework to have a clear idea regarding its business operation. Finally, the report has focused on its internal issues that have been identified by the SWOT framework. After identifying the issues this research has tried to provide some useful recommendations that can be applied for the betterment of the organization.

Table of Contents

1.0 Introduction.. 4

2.0 PESTEL Analysis. 5

3.0 Porter’s Five Force Analysis. 8

4.0 Business KPI 12

5.0 VRIO Analysis. 14

6.0 Ansoff Matrix Analysis. 16

6.1 McKinsey Analysis. 18

7.0 SWOT Analysis. 22

8.0 SAF Framework. 24

9.0 Conclusion.. 25

10.0 Recommendation.. 26

References. 28

1.0 Introduction

In this contemporary world, business organizations are more focused on business expansion in the international arena rather than limiting their growth in the domestic market. In this respect, the organization requires strategic marketing management to ensure constant business growth. Strategic marketing, therefore, can be referred to as the process through which an organization implements different missions through a strategic process for maximizing the current marketing plan by using minimum resources.  It emphasizes a greater level of targeting, purpose, and depth to understand the consumer beads and requirements spending on marketplace scenarios. This report, therefore, is imposing its importance on understanding the way eBay is managing its strategic management in its operating business environment. It will also try to evaluate the way this company can gain maximum benefit from its marketing strategy through a proper market environment analysis by implementing different theories and models.

1.1 Organization background

eBayinc is one of the most recognized e-commerce leaders that connects millions of consumers as well as sellers in more than 190 countries. It believes in providing economic opportunities to different entrepreneurs, businesses, individuals, and organizations of all types and sizes. eBay offers its sellers opportunities to grow the business through their e-commerce business process with a few barriers regardless of size, geographic location, background, and business type. Irrespective of competing with sellers it tries to provide various facilities to enrich its capacities to secure both its organizational and seller’s interest through the market operation. In the 2021 (2.67 billion US dollars) quarter eBay guaranteed a hike in its revenue than it was in 2020 (2.48 billion US Dollars). With an employee strength of 13,300, the company imposes a strategy that leverages technologies for enhancing the marketplace experience of both its customers and sellers (ebayinc.com, 2021).

 Along with increasing revenues the company is aimed to enhance the promotional strategies to attract more consumers and sellers to secure a strong place in the global market. The main competitors of these brands are Amazon, Alibaba, Walmart, Rakuten, and Flipkart.

Furthermore, this report will focus on the way eBay can accelerate its growth and sustain that in the e-commerce business arena (annualreports.com, 2020).

2.0 PESTEL Analysis

Macro analysis of external environment analysis helps an organization to understand the issue or areas where it can improve to secure greater business growth. However, a PESTEL analysis discusses 6 external factors that influence business practice for every business organization. eBay, however, is no different in this regard. Being one of the most promising American e-commerce business organizations, these factors are equally important to underrate the way it can strategize the business in this changing global phenomenon.

Factors	Results
Political	The USA is the second democracy in the world that enjoys a stable political environment.  The lower level of corruption helps the company to process a good business operation. It has established partnerships with various international companies that have made eBay undertake different political opinions. Being an international operator eBay has faced issues due to Brexit (Teece 2019). It needs to deal with the taxation and price hiking issues to stabilize the business in all its operating countries.
Economical	Currently, the main market (USA) of its operation is enjoying a stable economy. Covid 19 outbreak and its influence on the economy is influencing economic condition in a derogatory way. Hence, the weak economy and financial crisis of many countries are impacting eBay’s marketing. The rise of the eCommerce business in the same economic condition has benefited eBay to increase its business.
Social	It operates in all demographic areas to increase its target customer. It focuses on consumer preference regarding brands and products (Wang et al., 2021). eBays is also trying to develop its corporate social responsibilities to attract more customers. It is influenced by different racial, religious, and racial factors regarding its products.
Technological	eBay is constantly updating its technological infrastructure for faster delivery. It is focusing on innovation mainly in electronic goods. Developing technology to have detailed consumer preferences. eBay uses a combination of service and proprietary technology for market development. Implementing artificial intelligence for better consumer service and support.
Environmental	Being an international operator eBay is bound to follow all environmental rules and regulations. Also, eBay is focusing on selling second-hand products as its environmental goal. It is going to use 16% of its revenue from an environmental perspective
Legal	Being an international player the company tends to follow the rules and regulations of every nation. It must follow the taxation rules and regulations to avoid every type of legal intervention (Lasserre 2017). It has strengthened the data protection acts to ensure customer data safety.

Table 1: PESTEL Analysis

(Source: Self-created)

Analysis: External environment analysis is important to understand the market position of an organization. It seems eBay, to increase its revenue is focusing on strengthening its economic as well as social and environmental policies to attract more customers. Being one of the important players in the international e-commerce business sector, it is focused on its economic policies (Hänninen, Smedlund, &Mitronen 2018). It is implementing more standard payment policies to ensure a reduced number of fraud cases from both ends. Furthermore, the company is also developing its technological strength by implementing AI, to reduce the chances of cyber attacks, and system failures. It is equally focused on its environmental responsibilities that have derived eBay to change as well as strengthen its environmental decisions.

3.0 Porter’s Five Force Analysis

This model was developed by Michel. E. Porter can be described as one of the best strategic management tools that help an organization to understand the competitive landscape of the environment where it is operating. It can be described through five main factors for understanding the current competitive position of eBay in the market.

Factors	Analysis	Strength
Bargaining power of suppliers	eBay has a lump sum number of suppliers compared to its consumers. This reduces the strength of suppliers for this organization. Due to fairly standardized products the switching costs tend to be lower. Hence the organization enjoys high switching powerSupplies are not a credible threat for eBay as it has closely tied the profits of the suppliers (Mudany, Letting, &Gituro 2020).	Low
Bargaining power of consumers	As the organization has a lot of suppliers in comparison to buyers thus the consumers get several options of products and enjoy less control over prices. This makes them weak in regard to bargaining powers. There are various products in the market that make it complicated to find and select a particular company for a particular product (Kumar, &Anjaly 2017).The product quality also matters a lot for the buyers and they are able to select from a wide range of products and brands (Dangelico, &Vocalelli2017). This makes the bargaining power of sellers quite low.	Moderate
Threats of substitute	Being a retail company eBay has various substitutes for its generic products. Though there are hardly any substitutes for the products that are produced in the eBay factory. Comparatively the company keeps a lower price of their firm products that makes it facing less threat of substitutes.	Moderate
The threat of new entrants	Especially after covid 19, many brick-in-mortar stores are also operating in the digital market. The distribution of access is comparatively easier for the new entrants. Due to the capital requirements, the companies are facing to enter this market.	Moderate
Rivalry among competitors	There are several competitors in the retail market that have already gained enough recognition (Hanaysha 2018).  Especially after the covid 19 pandemic, many partner organizations are focusing on their own digital marketing (Jaller, &Pahwa 2020). Hence it has become most important to focus on competitors regarding their business strategy. In many cases, the fixed price policy of eBay is making the competitors stronger than eBay	High

Table 2: Porter’s Five Force Analysis

(Source: Self-created)

Analysis: The Company is operating in many that lead the organization to face several challenges from its competitors and market itself. The analysis shows that as one of the prominent players in the retail e-commerce industry the organization has several suppliers in comparison to its consumers. Due to that, the company enjoys a dominating role over its suppliers and as it provides a good cost of products, thus the suppliers can hardly switch the organization for their business. Hence it becomes easier for the company to provide multiple product variations to sustain the customer attraction (Fazal-e-Hasan et al., 2018). However, due to the recent covid 19 outbreak, the organization is facing competition from several new as well as existing business operators. The main reason behind this is the organizations are deliberately trying to develop their business process to hold the consumer and sustain their growth. Still, due to economic stabilization, the threat of new entrants is comparatively low. However, the organization needs to focus on product quality and price to influence consumers towards their products.

4.0 Business KPI

Amazon is one of the greatest competitors of eBay which is equally and in some cases operating more tactfully than eBay. However, KPI or key performance indicator analysis between these two companies will help eBay to understand the way both of them are performing in a specific business environment and their influence on business (Jocevskiet al., 2019). Furthermore, the analysis can be divided into four categories that include, sales and revenues, profitability in the market, valuation of the organization, and percentage of the active user base.

Indicators	Analysis
Sales and Revenues	In this case, eBay is far behind Amazon. In a trailing of 12 months, the total revenue of Amazon was $321.78 than just $10.71 billion of eBay. In the past three years, Amazon has significantly paced out the revenue growth of eBay. The difference between the average annual growths of these two organizations is 29.1% (Amazon) and 3.6% (eBay).
Profitability	In 2020 Amazon had a net income of $13.18 billion than $2.1 billion of eBay. However, the gross profit margin of Amazon was 38% compared to 70% of eBay. In five years average margin has also been high of eBay (23.55%) than Amazon (4.05%) The net income growth rate is also on the higher side of eBay (109.25%) than Amazon (8.93%)
Valuation Metrics	Though Amazon is in a higher rank in both P/S and P/E sales ratios still, eBay is not much further behind than this point. This is definitely a good sign for eBay (Nandonde 2019). The score says the P/S value of eBay was 3.99 and of Amazon was 4.70.
Active Use Base	Amazon in this respect also is in a better position than eBay. According to the data, 208 has earned more than 200 million monthly visitors than 109.4 visitors on eBay. However, eBay was the closest competitor of Amazon at this point.
Bottom Line analysis	In this scenario, Amazon has acquired comparatively a better position than eBay. Amazon being larger than eBay is giving it tough competition by dwarfing its business growth. eBay traded $57.71 in front of $3,260.48 of Amazon. Mainly the investment strategy of Amazon is appreciable than eBay.

Table 3: KPI Analysis

(Source: Self-created)

5.0 VRIO Analysis

Internal business environment analysis is useful to show the existing threat as well as to demonstrate the business strengths to understand the characteristics of the particular business organization.  eBay, therefore, requires to evaluate the internal environment precisely to understand the risks in this post-covid period when the other retail organizations are also giving it a tough competition (Borowski 2019). However, the analysis can also be conducted with the help of the VRIO framework that analyzes the internal environment through four factors of the business, which include, valuable, rare, inimitable, and organization or non-substitutable.

Valuable	It has set its brand image in terms of corporate social responsibility. Strong brand imageReckoned brandA strong relationship with suppliers. Innovation	Yes
Rare	International presence. It has strong problem solving skills. Capabilities for risk takingAdaptability skills	Medium
Inimitable	High quality productsThe prominent position of storesPotential marketing communicationsValues customer experiencesCompetitive pricing range.	Yes
Organized	Strong financial capabilityTechnological advancementTraining and development programs for employeesHigh investment in R&D programsMultiple distribution channelsHigh production capacityStrong human resourcesStrong organizational cultureGood marketing strategy	Yes

Table 4: VRIO Analysis

(Source: Self-created)

Analysis: While analyzing the internal environment of eBay, it can be seen that this company is gradually reading its strength in terms of CSR with all its stakeholders. In this way, the company has successfully built up itself as a non-substitutable company with broader business goals. To strengthen its value eBay has developed a distribution system that made it the company possible to build up a good relationship with the suppliers. Its urge for innovation and development has accelerated its international presence (Dara 2019). Also, the capacity to resolve the complexities and risk taking capacities has strengthened its global presence. Furthermore, the company is adaptable to new changes due to which it has successfully enhanced its product quality. Furthermore, a strong marketing communication has made it more strategically focused that turned it to use its inimitable resources more purposefully. It always focuses on its customer experience and tries to develop it consistently to serve its customers beyond imagination. eBay is substantially strong regarding its finance and brand strength. However, technological advancement is allowing eBay to manage a smooth global operation. Also, the constant training and development programs for its employees are encouraging the employees to perform more effectively which is resulting in the organizational performance in a substantial way. The company has a standardized strategic focus that has broader its vision to both local and international consumers to increase its brand awareness.

6.0 Ansoff Matrix Analysis

The strategic direction of eBay can be analyzed through Ansoff Matrix to have a clear idea regarding the process through which this company is pursuing its internal as well as external strategies to secure its current market position (Zhang, & Hui 2018). There are mainly four factors through which this analysis can be done, which include, market penetration, product development, market development, and diversification.

Market Penetration Increased production capacityEnhanced marketing investmentIncreased distributionCompetitive pricingReduced operational costsDevelopment of new products and features with new partners	Product Development Existing product modificationBringing new products to market. Focusing on strategic partnershipIncreasing product life cycle.
Market Development More focus on research and development programsExpansion at both regional and international levels. New customer segmentation with proper brand awareness	Diversification VerticalHorizontalNew business expansionMerger and acquisition

Table 5: Ansoff Matrix Analysis

(Source: Self-created)

Analysis: Ensuring a high profit generation from the operating market a business organization always requires to implement proper marketing strategy. Following that instance, eBay also has brought significant changes in its marketing strategy to win the race.  With different technological changes, the company ensures a high production rate to achieve the expected growth. Furthermore, it also has increased the market investment to gather more data regarding customer preferences and to maintain competitive pricing for gaining maximum market advantage (Dora, Roespinoedji, &Roespinoedji, 2021). New partnerships and joint ventures are also reducing market risks for this company to win the competition. New technological improvement has been possible due to its extensive investment in market research for policy implementation. Hence, launching new products according to the customer segmentation is helping the company to acquire more customers. However, the company is also modifying and improving the existing products and diversifying the market into two main divisions. This includes vertical and horizontal diversification to involve more partners with them.

6.1 McKinsey Analysis

This analysis of internal organizational strategy can be done in two different ways, such as soft elements and hard elements (Vieiraet al., 2019). This helps the organization to understand its strong points and evaluate the areas of improvement. 

Hard Elements	Soft Elements
Strategy	The clearly defined strategy helped the company to communicate with all It also knows how to manage competitive pressures through suggestive measures It always considers the changing customer requirements to sustain consumer interest.  The flexible and adaptive nature of eBay helped the company to reduce its rigidity.	Shared value	It has some core values that include creativity, accountability, transparency, honesty, and trust.  eBay encourages the practice of inclusive culture to celebrate diversity.  It always tries to align the tasks with company propagates and core values to make a reliable brand image.
Structure	It enjoys a flat organizational hierarchy for having easier information access.  It maintains an internal and departmental team dynamic to encourage teamwork It follows a hybrid organizational structure between centralized and decentralized organizational structures. However, it tries to follow an intricate and developed communication system to integrate employees and management.	Styles	eBay practices a participative leadership style that enables it to involve and engage the employees in the managerial decision making process (Grewal, Motyka, & Levy, 2018). This type of leadership practice helps the company to achieve business goals.  It also helps the company to identify the potential and current problems It tries to implement a healthy competition with an encouraging and supportive organizational culture.   eBay tends to keep a functional and effective team to achieve organizational business goals.
System	It has a well defined and demarcated system that ensures effective business operation.  It diversifies departments such as supply chain, public relations, strategic leadership, sales, and more. eBay has defined the market system through properly designed methods and tools (Putraet al., 2019). It monitors as well as evaluates the designs through proper observation and informal discussion.   It always tries to align the internal organizational process with harmony and broader business strategy	Staff	eBay appoints its employees based on their skills and knowledge in both internal and external environments.  eBay manages a larger number of employees that ensures diversity and synchronization. The human resource department of eBay helps to identify potential needs of capacity and capability for the organization.
		Skills	A commendable workforce helps the company to maintain high skill and capacity. eBay clearly defines the job roles and tasks to the hired employees.  Proper training and development programs help the company to sharpen the employee skills.  The skills are being developed according to the current company requirements

Table 6: McKinsey Analysis

(Source: Self-created)

7.0 SWOT Analysis

Strength Growth of active buyerIncrement of Gross Merchandise VolumeAn increasing rate of online shopping in post-covid period Enhancement in international transactions	Weakness Online scamming and less data securityStrong market competition. Less presence in intense competition and physical markets. Inability to eradicate fraud sellers.
Opportunity “Niche” strategy for the marketplace.Promising and potential customer retentionGrowth in using mobile applicationsBulk partnership in different regions	Threat Security breachingAllegation of selling illegal entities. Influence of government policies and taxation in business operation and margins. Allegation of gouging lawsuits of product prices. The threat of pressure in portfolio management.

Table 7: SWOT Analysis

(Source: Self-created)

Analysis: While thinking about business expansion an internal organization like eBay must always evaluate the business environment properly to have a clear idea regarding it. SWOT analysis mainly indicated the internal factors of a business. It shows that as this company had already been expanded in more than 30 countries, thus it has a strong market presence to its potential customers. The constantly developing technology is giving it constant support in tracking, money transferring, and many more things. Still, it somehow has failed to get a strong grip in the physical market that needs to be developed to acquire more market presence. If the company can successfully utilize the opportunities like the use of mobile applications, and customer choice data collection in an appropriate manner it would have created a strong customer base in its operating market (Johnsonet al., 2019). However, there are some threats that need to be evaluated properly for further business strategy implementation. The company had already been alleged to sell fraud and illegal products that are way more influential to create a negative brand image in a competitive world. It also has failed to reduce or exclude fraud sellers that can eventually reduce the popularity of eBay.

8.0 SAF Framework

SAF Matrix*	Strategic Options
Competitiveness	E-commerce	Business Strategy
Suitability	6	8	7
Feasibility	5	5	5
Acceptability	7	6	6
Total	18	19	17

*The scores have been identified on the range of 10

Table 8: SAF Framework Analysis

(Source: Self-created)

Analysis: While discussing the SAF framework of eBay it needs to be said that the compatibility test has been analyzed on the basis of three main components of the business, such as strategy, competitiveness, and eCommerce business. It shows that the organization has successfully implemented these factors in its business strategy. In three factors the feasibility score of this brand is 5. That shows it is still rigid to some extent to maintain its business strategy. It needed to be more flexible to get better market results. However, the organization is quite flexible to adopt new technologies that have enhanced its business capabilities and capacities. It also has taken significant decisions to change its business strategy for the betterment of the organization (Bhattacharya, Srivastava, &Verma, 2019). From managing market penetration through joint ventures and also building strong partnerships with numerous other brands to make a strong market recognition. Through all these the organization has successfully entered into the international competition. Still, it needs to be more acceptable regarding its issues that can influence its market presence for the long term. Also, their financial investment needs to be more evaluated, investing only in R&D will not improve its potential in the market. Rather than it must focus on its strategic entities to reduce the risk of data breach and customer security. While evaluating its acceptability in three variables, it can be seen that the employees along with the management are quite clear regarding their basic organizational requirements (Chernev 2018). This is making the organization to form strategies that are influencing the organization to achieve organizational goals in a more tactful way. As eBay is not following any aggressive business strategy thus it requires the company to take some strategic steps that can identify the market risks to increase the suitability of its taken strategies in its operating market.

9.0 Conclusion

This report has tried to understand the way eBay performs its business strategy in the global market. It seems the company is currently performing with potential by continuous changes in its strategic management. With the changing global spectrum, the organization is also facing severe competition from other global retailers. It seems the company has several opportunities that can be utilized for gaining more profits in the operating areas. However, with the changing business style, the choice of consumers has also been changed by utilizing which the organization is trying to establish its global market presence. However, the company simultaneously has been alleged to use fraudulent activities for increasing market presence, thus, if the company fails to rectify the issue it will create a negative influence on its market reputation.

10.0 Recommendation

eBay is one of the strong competitors of the global retailers needs to make some improvements in its operations to eradicate its market threats. This report, therefore, has identified some recommendations that can help the company to manage its development.

• It needs to strengthen its customer data security to ensure its loyalty towards them. It seems the company is facing allegations regarding customer data breaching that can reduce the consumer’s number of eBay. 
• In many cases, the consumers are getting low quality products from fraud sellers. The company needs to identify the fraud sellers and cancel their licenses to upgrade their service. It will not only ensure company loyalty, apparently will establish the customer centric mentality of the organization.
• More intense market research will help eBay to understand customer preferences regarding various goods and brands. It will help them to develop a partnership with specific brands rather than many 
• The company needs to implement a more B2C centric business strategy to acquire more target customers. If the company changes its strategy to some extent. Rather than focusing only on production enhancement and technological development, eBay also needs to focus on its quality. It needs to make sure that the quality is matching the customer requirement. It will help to stabilize customer loyalty on brand and market promotion will also be effective for capturing new target markets.