This report scrutinizes and provides an analysis of eBay Inc. in terms of its performance, market position and business operation. This is achieved through an analysis of different forms through which the company markets its services, competitive advantage its capabilities and its overall marketing principles in reference to the PESTLE analysis. Also, the report gives a company overview which provides different strategies adopted by the company and as well provides a financial performance analysis through which the financial ratios are used to describe the financial position of the company. Subsequently, this report emphasises on several recommendations which gives eBay a competitive advantage of its competitors.
eBay is an international e-commerce company which is based in California and founded in 1995 by Pierre Omidyar. Purposely, through its website, the company facilitates business-to-consumer and consumer to consumer sales (EBay Inc. 2018). eBay translates its strategy into specific, measurable objectives and enables management to view performance in all areas of the organization at once and easily. It includes financial measures that tell the results of action already taken. Balance scorecard keeps eBay Inc. looking and moving forward by putting strategies and vision measures to pull people towards goal achievement. This is by complementing the financial measures with operational measures on customer satisfaction, internal processes, innovation and learning perspective as well as financial perspectives. This is supported by the market prospect ratios such as operating margin (25.4%), P/E ratio (7.32x), Return on Capital (15.19%) and dividend payout ratio (20.0%), as at 12 December 2017 (Clare, 2018). This ratio forms the fundamental evaluation platform for eBay performance both financially and overall business operation. These ratios indicate that the shareholders can obtain returns on their investment and the future financial performance of the company will be stable.
Comparatively, the management uses the scorecard for business planning, improving in technology and innovation and entrepreneurship skills. It also incorporates learning and development of employees. The company’s approach ensures that any strategic action implemented matches the desired outcome by clarifying and simplifying the organizational mission and vision (Rischpater, 2016). In consideration of improving performances, eBay employs the scorecard by offers the company four objectives for it to achieve its goals successfully. The company’s objectives are to increase their profits and revenue steadily, to understand the firm’s customers, to value customer service over self-interest, to encourage knowledge sharing among staff, communicate with each other, empower staff to make beneficial decisions for its customers, and to seek staff diversity.
eBay has obtained a 6.8% of the market share in the e-commerce industry. This indicates that the overall management operations, strategies and marketing policies are effective and working towards the achievement of the company’s mission and vision statements (Krishnamurthy, 2017). The company’s ratio indicates that the performance and financial health of eBay are improving every year and above the industry average. The liquidity ratios such as the current ratio of 2.19x, cash ratio of 1.66x and quick ratio of 2.19x indicate that the company is able to meet it a short-term obligation. As indicated by solvency ratios: debt-equity ratio (8.77%), total assets turnover (0.8x) and interest coverage ratio (7.78%) reflects that the company is able to pay interest and long-term debt and still be operational. Regarding profitability, profit margin (17.9%), return on equity of 10.88%, return on assets of 4.06%, and gross margin ratio (76.30%) indicates that the company has been able to obtain profits based on its operation.
Using PESTEL analysis
eBay Inc. uses PESTEL factors in all their marketing principles. This is by tracing the environment where the company operates in as well as where the company is opting to expand and launch its products. The company considers all the factors which include political, economic, social, technological, legal and environmental factors while making a framework for marketing and overall business operation. Politically, the company examines the political systems and situations as well as how the political condition can positively or negatively affect the business (Dudovskiy, 2017). Obviously, the company prefers countries which provide a conducive political environment in order to protect its assets and employees from adverse political instability. Subsequently, the company reviews the extent to which the government influences the economy through policies. Based on comprehensive research before launching products and branches, all eBay centers are based on countries which formulate policies that promote the industry.
In regards to economic factors, the company has established an important policy which ensures that the company takes into account all the micro-economical and macroeconomic factors while adapting marketing strategies. Subsequently, eBay employs socio-cultural aspects in places where it operates in. This is done by examining the attitudes and beliefs of the target population. Also, the company is trying to adapt to technological changes in the industry by constantly innovating and adopting new technological advances. In a legal perspective, the company ensures it adheres to all restrictions, standards, product safety, regulation and other government policies established in the market. Lastly, the company has adopted a responsible and ethical operation strategy which aims at protecting the environment.
eBay competitive advantage
Effective marketing strategies
The company has developed a sustainable strategy which has rendered the company with a competitive advantage in the market. Based on McKinsey 7s model, eBay employs all the internal elements associated with the method in order to equip the company with a necessary design for obtaining and achieving organizational goals and objectives. The strategies articulated by the company ensure that they are well-aligned with the mission, vision and organizational values. For instance, the Skimming Price marketing strategy adopted by eBay enables the company to stay ahead of Amazon through gaining the upper hand over their competitors. Strategic Human resource management and competition management.
The company has the ability to manage competition forces as well as the ability to maintain cooperation within the company. This has served as a dynamic capability which has promoted eBay products to establish its own brand. Achieving a competitive edge strengthens and puts the business in a better position within the industry (McGinn, 2017). For instance, the company has established the “eBay Strategic Entrepreneurship” through which the company exploits the prevailing competitive advantages while also exploring the potential future opportunities so that the business can prepare and allocate resources. The company has effective and well developed human resources which acknowledges and creates a friendly environment for all employees. Additionally, the organizational structure of the company ensures that all department and their specific employees have well-defined roles. By having defined roles, the management ensures that all employees can be held accountable for their course of action as well as reducing conflicts caused by overlapping roles.
Variety of products
Based on eBay analysis, the company has a wide variety of products which enables them to command a significant market share from its various markets in 30 countries. Through this, the company is able to diversify its risk and failures and earn high returns (Dcosta, 2011). eBay is has established a reputed name around the world which in return has a positive effect on the company’s operations. Due to this, the company has to be able to win many awards for its high-quality products and its ability to offer new technologies.
Strong online presence
Subsequently, the company has developed an effective online interaction platform through which customers browse at their leisure and with expert help and advice whenever needed. By the business having a strong online presence as a vital marketing strategy component, it has been able to create a huge customer base. Correspondingly, a business requires quality online content to successfully attract and retain customers (Chaffey and Ellis-Chadwick, 2016). In this essence, eBay ensures that the online contents of all its platforms are designed with high integrity and more appealing to the customers in the most applicable way. The company is focused on strengthening its online presence through establishing a strong customer engagement, improving web experience and ensuring delivery of great online content.
In regards to online presence, the brand has a well-defined social media strategy which incorporates all social media platforms such as Facebook, Twitter, Instagram and YouTube among other, through which it has been able to expand their client base in huge margins. For instance, eBay Facebook page consists of over 5 million followers, and their profile page always incorporates the upcoming eBay launches.
Brand communication and values
In conveying its brand personality and positioning, eBay has utilized approximately all the best possible modes of communication. The major brand communication platforms include sports sponsorships, event sponsorship, the eBay experience gallery, public relations, and Mass media advertising. eBay brand communication is majorly designed to cater for several objectives. First, brand communication is reliable in reposition and maintaining eBay credibility, a world-class brand offering quality, premium, and positively shape the brand in the e-commerce industry. Second, to boost the acceptance by new customers and be at the top in the global charts of a e-commerce consumer brand.
Also, eBay services have provided the company with huge international media attention and coverage such as Forbes, Wall Street Journal, technology magazines, The Financial Times and as well the like Bloomberg Business Week. Additionally, the eBay has won several awards for its application of technology and design in innovating better services. Through this exposure, a large population shifted to eBay services as the media coverage acted as third-party endorsements.
All these communication channels used by eBay reflects the desire of brand in remaining at the forefront in regards to the application of new communication mediums, platform, and channels for marketing its brand. As a result of this, the brand has created and embraced immersive consumer experience with groundbreaking interactive forms of advertisement. Lastly, the brand has not ignored the significance of traditional media platforms as it commissions a significant portion of its revenue in advertisements through cinemas, outdoors, TV, Radio and as well print advertisement.
Like any other business entity, the company is facing challenges which are undermining the company’s objectives and goals. Despite record profits in the previous financial year, the firm is experiencing huge strategic challenges due to growing number of potential competitors, technological changes, demand for new products, and diversity in human resources among others.
The competition has successfully installed technology wars between e-commerce service providers such as Amazon and Walmart which have given eBay innovators a hard time in both software and hardware upgrading. A series of the technological update is expected in every new product in order to much the expected market standards (Animesh, 2018). However, this strategy is applied to all competitors, and hence eBay management has to establish enhanced technological capabilities in its services in order to remain in the business and gradually increase its profitability margins. Additionally, technological innovation facilities should be put in place which keeps track on new and trending technologies and seizes that opportunity to produce better hardware or software.
The company should consider cutting their prices while maintaining the quality, specification, and standards of its products and services. The current generation is always looking for affordability of product before examining the specification in any product. If the company reduces some of its popular service prices, its sales with increase abruptly since more consumers will have the pleasure of owning quality products at fair prices. In order to produce low prices, the company should employ the Low-Cost production and marketing strategies which ensure the end product incurs the lowest costs. This is will, in turn, increase the competitive advantage of eBay due to a large customer base established by the fair market prices.
Also, the company should consider formulating proposals that will target telecom operators to prioritize eBay products over the other service providers. This will increase eBay sales and promote its brand in countries where it’s recognized as the official brand of telecom operators in those countries. Another option is shifting into potential markets through which the company can establish stores before its competitors seize the opportunity. Lastly, the company should set up a centralized research and development facilities which aid in innovation, development, and improvement of services at minimal cost.
In conclusion, eBay has established a successful business operation which has resulted in eBay owning a significant market share in various markets where it operates from. Based on eBay performance analysis, the company has recorded high returns which are achieved by maximizing resources using a low-cost strategy. The balanced scorecard indicates that Samsung’s strategies are transferred into specific, measurable objectives which enable the management to view performance in all areas of the organization. Subsequently, the financial ratios indicate that the company is financially healthy and has the ability to meet its short term and long term obligations. Also, the PESTEL model indicates the company is well positioned in the market and ahead of its competitors. These models reflect that the company’s operations, strategies, and policies are highly accepted and applied by the entire workforce in all its centers.
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