Topics: EBay, Online auction business model, Electronic commerce Pages: 41 (10349 words) Published: February 12, 2011
Question 1
What are the competitive advantages that contributed to the success of eBay using the value-chain analysis or RBV concept?

In 21st century the internet population started rising across various countries of Asia and eBay is the largest and leading provider of online auction for consumer-to-consumer in the world. Using the Resource-Based View concept, we will first identify the three key types of resources that eBay possess, and these are the competitive advantages that contributed to the success of eBay. 1. Tangible Resources

a) Financial Resources
• Revenue growth: between 2004 and 2006, net revenue grew between 30 and 59 percent per quarter. By 2006, revenues reached $5.9 billion, up from $3.2 billion in 2004. For 2007, consolidated net revenues expected to be in the range of $7 to $7.3 billion • Acquisition and partnerships in related and unrelated businesses to increase market share and revenue: $2.6 billion acquisition for Rent.com, Skype, Shopping.com and Stubhub.com; $318 million acquisition for Half.com; acquired Latin American auction sites; 25 percent stake in Craigslist, an online central network of urban communities; invested $2 million in the meet up social networking site • eBay alliances with large and international companies creates more opportunities to reach more potential customers, eBay already has international cooperation with Google – largest search engine company

b) Physical Resources
• eBay has a wide variety of product categories from collectibles to household products, which give them a competitive advantage among the entire online auction provider. eBay also offers a range of pricing formats such as fixed pricing, which a new for the company by establishing a fixed pricing format it allows eBay to compete directly with major competitors and penetrate new market space • eBay does not have any stores or warehouse as they do not carry any inventories. Therefore strength for the company as it can keep cost low • As competition intensified in the internet auction market, eBay has expanded its international presence by expanding internationally. eBay reached virtually covers most part of the world eg Asia Pacific, Europe and North America

c) Technologies Resources
• eBay different trading platform offers distinct services which target specific market niches, this allow them to broaden their customer base. The different platforms include:- - PayPal – the leader in online payment globally - Rent.com – US online apartment listing service - Skype – offering customers free video and audio communication online - Shopping.com – thousand of merchants and products and review which empower consumers to make informed choices - Stubhub.com – for selling and purchasing tickets for sports, concerts and other live entertainment

eBay further provides their products offering by introducing eBay Express and eBay Motor. - eBay Express – works like standard internet shopping but it gives seller access to over 200 million buyers worldwide. Seller can design products categories within minutes and buyers can purchase from multiple sellers by using a single shopping chart - eBay Motor – Considered the largest marketplace for automobiles buyers and sellers. Buyers and sellers can purchase or trade automobile parts to automobiles

2. Intangible Resources
• eBay establishes a trustworthy environment that attracts buyers and sellers. Millions of dollars of online transactions are being transacted daily. eBay ensure the payments are securely processed • eBay also set up an open forum and encourage eBay users to post their opinions and feedback. Feedback is recorded and amended to a user profile; they made use of the information to generate a rating for each buyer and seller. Hence other users may use the...

References: 1. Strategic Management – Text and Cases, 4th Edition, George Dess, G T Lumpkin, Alan Eisner, McGraw Hill, 2008
3. eBay, http://news.ebay.com/about.cfm, 1995 – 2009
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