Strategy and the Five Forces Model: The Challenges Facing eBay; Time for Changes

ID: 395023 • Letter: S

Question

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 Word, Excel, or 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 companies 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 organizations in the online auction industry?

Explanation / Answer

Porter's Five Forces for eBay:

Porter Five Force

Intensity

Competitive Rivalry Within The Industry

Medium to High

Bargaining Power Of Customers

High

Threat Of New Entrants

Medium

Bargaining Power Of Suppliers

Low To Medium

Threat Of Substitute Products

Low

Competitive Pressures for E Bay:-

Problems and Issues for E Bay:-

Factors such as the levels of bureaucracy and corruptions in the country specific, activities of trade unions and home market lobbying groups etc. always effect in business in terms of country specific and in turn, global revenue and profit margins.

In 2015, eBay was accused in a political controversy of collaborating with hundreds of overseas retailers to defraud the taxmen of each country!

A change in inflation rate has always had implications on eBay’s performance, globally. Exchange rate between USD and other currencies has always been affecting eBay’s profit margins. Tax complications in respective countries too affect the business.

Day by day rising online activity is challenged eBay to develop it’s delivery capability to deliver services promptly. Changing consumer preference or taste also challenges eBay to add more variety of products. Rising demand for high quality service is also threat but should be looked as an opportunity to do better.

Priorities to be undertaken:-

Key success factors:-