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1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

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Page 1: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

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Page 2: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay: King of the Online Auction Industry

Louis MarinoPatrick Kreiser

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 3: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

1. What is competition like in the online auction

industry? Do a Five-Forces analysis to

support your conclusion.

Page 4: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

2. What is the competitive arena in online auctions – local, regional, national, multi-national, or global?

Is the arena changing? Is global competition a future

possibility?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 5: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

3. What forces are operating in the online auction macro-environment that have the power to alter the nature and structure of competition?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 6: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

4. What does a strategic group map reveal about the positions of the major players in the online auction industry?

Is eBay in a good position on the map?

Why or why not?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 7: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

5. What do you see as the key success factors for firms in the online auction industry?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 8: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

6. What does a SWOT analysis reveal about eBay’s situation? Is the company in an attractive

situation and position? Why or why not?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 9: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

7. What is your assessment of eBay’s financial condition?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 10: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

8. Does your competitive strength analysis of eBay and its rivals reveal that eBay has a competitive advantage or a disadvantage?

What are the sources of the advantage or disadvantage?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 11: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

9. Based on your analysis of the industry and of eBay’s situation, what problems and issues does eBay’s top management need to address? Which ones are top priority? Low priority?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 12: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

eBay

10. What actions would you recommend to Ms. Whitman and Mr. Omidyar to improve the company’s competitive position and long-term financial performance?

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Page 13: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

Q1. Industry Environment

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

SUPPLIERS BUYERS

SUBSTITUTES

POTENTIAL ENTRANTS

INDUSTRY COMPETITORS

Barriers relatively low except for marketing/ad costs; hard for incumbents to retaliate; likely entrants include other Internet portals

Software, servers, and website hosting services readily available; high traffic websites have some clout

Individuals have little leverage; power users may have some power; both users have low switching costs

Classified ads; flea markets, garage sales, live auctions – high transaction costs

Rapid growth weakens rivalry; recent entry of competitors heightens rivalry; Jockeying centers on image, reputation, brand awareness, etc. low switching costs, moderate product differentiation

Page 14: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

Q3. Driving Forces in the Macroenvironment

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Growing use of the Internet by individuals and households across the world (favorable)Recent entry of major competitors and the potential for further entry (unfavorable)Advances in Internet technology as concerns site reliability, security of credit card transactions, and user connection speeds (favorable)The long-term potential for global competition as the industry leaders maneuver and position themselves to contend for global market leadership

Page 15: 1-1. eBay: King of the Online Auction Industry Louis Marino Patrick Kreiser McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill

Q4. Strategic Map

McGraw-Hill/IrwinStrategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

eBay

Yahoo, Amazon

QXL.com

Classified Ads

Live auctions

Flea markets/Garage sales

Niche auctions, Fairmarket.com

Auction Categories

Rep

uta

tion

/Bra

nd

Aw

aren

ess Strong

Med.

Weak