EBay IT Business Strategy Management recommendations and conclusions

Question: Discuss eBay's IT Business strategy and provide analysis using Porter's five forces model and possible recommendations and conclusions? Answer: Introduction: eBay is an online marketplace renowned internationally with a base of 233 million customers across the globe. This multibillion business strategy operates in 37 countries. There is availability of millions of listed items with thousands of categories on e-bay across the globe. Here the items include toys, computers, books, antiques, electronics, sport and many other varieties of goods. There are several upcoming opportunities for e-bay as there is growth in numbers in mobile users, increment in product portfolio and services through the acquisition and opening of many online stores across the globe. IT business Strategy of e-bay: As far as the business strategy in IT is concerned, eBay stands as a middle man between the buyers and seller, who sell and bid items in eBays market range. Being as a pioneer in auctions held online, eBay had only few direct and strong competitors in the market. Hence, company gained a competitive advantage with its business model over the giant retailers as Amazon (Deloitte.wsj.com, 2015). In the beginning of the business, eBay had to invest in a huge proportion in order to gain CRM (Customer Relationship management) and IT skills and knowledge, But since its startup eBay used its skills to give services to the users over 100. Ebay is one of the leading online retailers in the world and thus it can be said that the investments have helped in achieving the competitive position at present. eBay uses PayPal for its online payment system and it also uses other methods of trasaction like debit card, credit card and online bank transfers. From the perspective of eBay, such toned tightly integration with PayPal has more benefits over more fees collection as the PayPal takes fees for each online transaction and there is a tight control over the experience of buyers shopping. PayPal provides an ease of use method for online payments (Jurevicius, 2015). Analysis of eBays strategy using Porter's five forces model: Porters five forces analysis is well known framework for analyzing the competition level in the business strategy development and within the organization. It draws attention upon the organizations economy for the derivation of five forces, which determines companys attractiveness and the intensity of the competition. An industry without attractiveness loses the overall profitability with the combination of these five forces (Management, 2015). Porters five forces consist of horizontal competition of three forces: Threats on the substitution of services and products, threats from the well established rivals and threats of the new entrants. There are another two forces on bargaining power of the customers and the bargaining power of the supplier. Porter developed his analysis of five forces in response to the popular SWOT analysis, which is found ad hoc and unrigorous (Mindtools.com, 2015). Threats on the substitution of services and products and the threats from the well established rivals and threats of the new entrants: In this context of porters analysis, eBay is facing the intense competition in the both of its payment business and marketplace when there is a consideration of online and offline competitors. As there is an option for customers to buy product from various range of retailers, auctioneers, hence the competition is intense (Smart Insights, 2013). Varieties of factors on product selection, pricing, influence customers purchasing decision. In the business of payments, there is a competition from various sources, such as debit card, credit card and other services to pay online as well as the mechanism for offline payment includes cash, money order, check or mobile phones. Considering the newer player entries such as Alibaba and Apple Pay, where it is expected to heighten the competition in the space of online payment. Threats due to substitute product: As eBay sells a large range of products and therefore eBay gets no threat from the analysis of porter five force. Even the product range continues to grow and hence the eBay is able to introduce varieties of products in order to adapt the changing trends of customer. bargaining power of the customers and the bargaining power of the supplier: When the bargaining power of suppliers and customer is concerned, there are fewer number of delivery and postal services as well as available number of shipping carriers, therefore any change in pricing or on the service disruption can affect the eBays ability to deliver products on time. Therefore, this situation carries the power to bargain. As the customer look for the low prices with the various products and services, hence the bargaining power of customer is big (Tutor2u.net, 2015). Possible recommendation: With growth of the online retail in the coming years, eBay needs to have logistics support. In future, predictive analysis and big data both are going to play an important role. There are many tools available in market to find the buying habit of the customer through mining the data. For example, Amazon uses customers history on buying details and suggest product accordingly. Additionally, eBay should focus on customer retention, instead of acquisition of customers. Because the loyal customers give more profit than the new customers. Conclusion: Being the most valuable strength of eBay, eBay is having live listener more than 150 million and active users are more than 105 million in 37 countries across the globe. This quality allows eBay to stand as a largest market place as eBay is having great acquisition over the power of online retailers. References Deloitte.wsj.com, (2015). An Inside Look at eBays Global Innovation Strategy - Deloitte CIO - WSJ. [online] Available at: https://deloitte.wsj.com/cio/2014/08/25/an-inside-look-at-ebays-global-innovation-strategy/ [Accessed 28 Feb. 2015]. Jurevicius, O. (2015). eBay Company SWOT analysis 2013 | Strategic Management Insight. [online] Strategicmanagementinsight.com. Available at: https://www.strategicmanagementinsight.com/swot-analyses/ebay-swot-analysis.html [Accessed 28 Feb. 2015]. Management, e. (2015). eBay Inc:Strategic Management. [online] Academia.edu. Available at: https://www.academia.edu/1887922/eBay_Inc_Strategic_Management [Accessed 28 Feb. 2015]. Mindtools.com, (2015). Porter's Five Forces Analysis: Assessing the Balance of Power in a Business Situation. [online] Available at: https://www.mindtools.com/pages/article/newTMC_08.htm [Accessed 28 Feb. 2015]. Smart Insights, (2013). eBay case study - Smart Insights Digital Marketing Advice. [online] Available at: https://www.smartinsights.com/ecommerce/ecommerce-strategy/ebay-case-study-2/ [Accessed 28 Feb. 2015]. Tutor2u.net, (2015). Porter's Five Forces Model: analysing industry structure. [online] Available at: https://www.tutor2u.net/business/strategy/porter_five_forces.htm [Accessed 28 Feb. 2015].