1. Case # 10 –eBay, Pg
Sample case

2. eBay External Analysis
Note: This is an abbreviated version of the External Analysis we conducted in class.
- This analysis utilizes only selected external factors for illustration purposes only
Your actual chart will include ALL external factors identified in your analysis.
- Answers should be in full sentences.

3. Questions
1- Evaluate the external environment of eBay (40 points total)
Part A. Environmental Factors Scan – PEST + DGP analysis / OT chart (25 points)
Political/ legal/ regulatory
Economic
Sociocultural
Technological
Demographic
Global
Physical

4. Opportunities Threats Political 1. Pending sales tax legislation
2. Crackdown on counterfeit product sales
3. Pending IRS income reporting legislation
Economic
4. Domestic economic downturn
5. Global economic downturn
6. Increasing unemployment rates
7. Decreasing disposable income

5. Opportunities Threats Sociocultural
8. Consumer preference for fixed price
9. Consumer preference for fixed price
10. Consumer preference for quality assurance
11. Consumer preference for easy returns
Technological
12. Availability of tech. companies to acquire
13. Anti-counterfeit technology
14. International technology standards
15. Direct communications technology
16. VOIP technology innovation

6. Opportunities Threats Demographic 17. Gen Y preference for technology
18. Ethnic shifts
19. Domestic Hispanic growth rate
20. Aging domestic population
Global
21. Emerging middle class in developing countries
22. Global expansion - China
23. Availability of global acquisitions
24. International business culture insight
25. International consumer culture insight
26. International user preferences for certain technologies
27. Foreign competitors
Physical
28. Availability of qualified technology human resources domestic
29. Availability of low cost qualified technology human resources India

7. Part B. Industry and Competitive Factors scan (5 points)
Key industry factors list
Competitor Analysis/ Key Competitor Factors list

8. Key Industry factors 30. High threat of new entrants
31. High threat of non-traditional new entrants
32. Fast market cycle
33. Increasing complexity in international environment

9. Competitor Analysis 34. Increasing foreign competition
35. Competition excels in quality and low cost
36. Competition excels in fixed cost marketplace
37. Strong international presence
38. Increasing competition from traditional retailers

10. Part C. Prepare an Impact Analysis/ External Factors Analysis (EFA) chart (10 points)
Chart impact and probability ratings (hand draw your chart)
Brief discussion of your EFA chart findings
NOTE: List External Critical Issues and discussion in (Question # 3)

11. External Factors Analysis Chart - EFA
3 16 2 20
18 14 38
19 31 12 21
1 37 26
27 33
Probability 29 22
35 5 4 8 13 28
Impact

12. Brief EFA Discussion
The EFA analysis indicates that the key impact factors revolve around several key areas:
Emerging and changing demographics (GEN Y 17 and Hispanic population domestically 18
Global opportunities in the emerging middle class in developing countries (21) and China specifically (22)
Global issues surrounding understanding of the business, cultural and technological climates in the global markets (24, 25, 26, 27, 33)
Competitive factors surrounding new entrants into the industry (30) and the increasing competitive threat of traditional retailers into the online marketplace (31, 38)

13. 2. Evaluate the internal environment of eBay (Organization Assessment) (40 points total)
Part A – Prepare an Internal Analysis (Organization Assessment) SW Chart (30 points)
Include all 6 sections of the Organization Assessment pyramid

14. Online retail industry leader/ 17% MS Entrepreneur market
Strengths
Weaknesses
1.0 Markets
Domestic Market
Online retail industry leader/ 17% MS
Entrepreneur market
88 million active users
Global marketplace presence (38 countries)
Online auction segment
Classified ad market
Age 45 +
Middle income
China
Failed venture in China
Low price segment
Global market MS
Fixed price segment
Ethnic Markets domestic
Japan
Quality
Ease of use/ Return sociocultural segment

15. Wide product diversification
Strengths
Weaknesses
2.0 Products and Services
Online payment system
Auction
Wide product diversification
Used products
Communications product
Counterfeit products
New Products
Phone ordering
Bartering internationally
Customer service
Quality Assurance

16. Strengths Weaknesses 3.0 Resource Management Financial
Year over year revenue growth
Net profit growth
Strategic alliance revenue
Global marketplace growth
Streamlined fee structure
Revenue growth through acquisition
PayPal revenue growth
Technological
Skype/ communications technology
Online payment system technology
Physical
44. No physical store
45. No inventory
Human Resource
Research and Development
18% operation exp. allocation to R/D
Innovation
Reputation
50. Low fees to sellers with high ratings
Craigslist acquisition
Low organic/ internal growth rate
Overvaluation of Skype acquisition
42. Skype performance
43. International technical competency
46. Layoffs
48. Competitors better at R/D
Low growth through innovation
51. Laws suits over counterfeit goods

17. Strengths
Weaknesses
4.0 Operations Systems
Financial
Charges restructure
Fee restructure
Production
57No distribution system required
No production required
No shipping systems required
Marketing
60. Fixed price listings
Human Resources
N/A
54.Results from restructures
Results from Skype acquisition
Results from Craigslist acquisition
61. Change in seller fees
Declining market share
Declining growth/ unique visitors

18. Acquisition competency Alliance management competency
Strengths
Weaknesses
5.0 Management Systems
New Leadership
New leader expertise
Acquisition competency
Alliance management competency
Growth by partnership strategy
International culture competency

19. Aggressive growth by acquisition Innovation Diversification
Strengths
Weaknesses
6.0 Culture
Aggressive growth by acquisition
Innovation
Diversification

20. Part B - Prepare an Internal Factors Analysis (IFA) chart (10 points)
Chart weighting and rating (hand draw your chart)
Brief discussion of your IFA chart findings
NOTE: List Internal Critical Issues and discussion in (Question # 3)

21. Internal Factors Analysis Chart - IFA

22. Brief IFA Discussion
The IFA analysis indicates that the key impact factors revolve around several key areas:
Core markets (1, 2, 8, 9, 21) strengths in the domestic online auction and retail markets, with core market demographics in the 45+ age group, middle income.
Acquisition, alliance and partnership competency (66, 67, 68)
International opportunities and performance (43, 13, 33)
Customer Service and Quality Assurance (28, 29)
Low growth through internal innovation (38, 48, 49)
Streamlined operations and resource requirements (44, 45, 57, 58, 59)
Growth of fixed price segment and performance (14, 60)
Declining growth rates (62, 63)
Communications product performance (55, 23)

23. 3. Discussion of Major Critical Issues (20 points)
List and briefly discuss the key critical issues (external and internal) that eBay is currently facing. These Critical Issues will be identified in your Internal and External analysis, above. Critical issues may include problems, issues, threats, weaknesses, opportunities, and strengths, but will more likely involve the interaction among several of these factors (e.g., a firm’s current dominant position being threatened by a new competitor with access to advanced technology). These are the issues and problems that, in your judgment, must be addressed by management and for which you intend to make recommendations.

24. eBay Critical Issues - External
How can eBay continue to expand the GEN Y consumer base, through technological innovation, product innovation and pricing?
How can eBay address and capture the rapidly growing Hispanic demographic domestically?
How can eBay capitalize on the emerging middle class in developing countries and specifically in China?
How can eBay gain understanding of the global markets, global technology preferences and global business practices?
How can eBay address the increasing competitive threat domestically of new entrants and the traditional retail competitors?

25. Critical Issues Assessment
Identify highest impact/ probability IFA items
Discuss interrelations between items
Assess in context of External O/T
Identify 4-5 critical issues
Write as “How to” statements 25

26. eBay Critical Issues - Internal
Ho w to continue to capitalize on the domestic online retail and auction market and appeal to a broad audience through widely diversified product offerings, while continuing to cater to the core markets of age 45 +, middle income with their changing preferences.
How to continue to capitalize on our acquisition, partnership and alliance competencies while improving our growth through internal innovation.
How to build upon/ improve our international market share, growth rate and revenue contributions, while improving our international cultural and technological competencies.
How to address customer expectations in the areas of trust, quality and customer service?
How to grow the fixed cost segment, and address our declining growth rates in unique visitors and financial performance
How to continue to maintain our streamlined, low-cost operations, production and resource requirements.
How to best utilize the communications technology (Skype) technology, while not cannibalizing our core business.