eBay Inc. is an internet based multinational corporation headquartered in California and is one of the largest trending online market place for consumer goods and services. This case study focuses on the analysis of economic performance and growth of eBay Inc. The paper analysis in depth the core values and the mission of the company and then utilizes the analysis tools like PESTLE and SWOT for studying the internal and external factors that are accelerating the business performance of the company. On the other hand Consumer Profile Matrix (CPM) illustrates the comparative perspective of the company in the online market with its competitor Amazon. The case study assesses the major internal strengths and weaknesses of the company by IFE (Internal Factors Evaluation) and EFE (External Factor Evaluation) matrixes. The case study ends with the financial ratio analysis evaluated from the annual financial statement of the company to have an overview of the financial strength of eBay Inc.
eBay Inc. was in fact the first virtual online business platform for business entrepreneurs founded by Pierre Omidyar in 1995. Its major subsidiaries operating in America and other parts of the world are MercadolLibre, Inc., StubHub, half.com, Auction Co., eBay Motors etc. It has been experiencing tremendous growth in terms of increasing number of active dealers and market share in the global E-commerce market. The revenues of the market place grew by 13%, whereas the number of active users of the eBay forum increased by 14% which implies the healthy outlook of the company (Forbes.com, 2014).The mission or the main objective of the company is to create a vast online market place by expanding across the three main prospects of the online trading i.e. categories, geographies and formats. It not only aims at expanding its range of online products through incorporating wide number of categories and distinctive format of trading online but also strengthening their franchise in the E-commerce platform by investing more in their core market segments. eBay Inc. operations has been segregated into three major segments to fulfil its objectives:
1. Marketplaces Services and Platforms: It includes the marketplaces platforms like eBay.com, StubHub, Shopping.com, Online Advertising, Online Classifieds and Rent.com. While StubHub is a market place for buying and selling of tickets of shows, sports, events and theatres online, Shopping.com comes as a unique platform for comparison of millions of products through reviews. The Rent.com offers the listings of apartments for rents, whereas the Online Advertisements and Classifieds segments of eBay Inc. offers the reporting of advertisements and help the ones seeking for jobs and other services at a local level (David, 2010).
2. Payments: The payments portion of eBay Inc. includes two most trusted online transaction services like PayPal and Bill Me Later which allows the consumers to make and receive payments as well as attain instant credit in a secured way (David, 2010).
3. Communications: Skype was acquired by eBay Inc., is one of the leading Internet communication platform which allows buyers and seller to have 24/7 communication through the services of voice and video conferencing (David, 2010).
The PESTLE analysis of eBay Inc. is explained in this section which illustrates the major external elements driving the performance or affecting the performance of the company.
(Source: VanHoose, 2011)
Political Factors: eBay Inc. have been collecting taxes on their sale of goods and services since the legislation was passed on 2010. This may result in significant fall in their trading activities as the costs to the sellers increased (David, 2010).
Economic Factors: The major economic factors that are affecting the revenues of eBay Inc. is the fluctuations in the exchange rate of the US dollar. As it conducts more that 50 percent of business outside the country with the foreign partners over the world, the weakening of U.S. dollar in any of the partner country will result in fall in profitability.
Social Factors: The enormous expansion of eBay Inc. across the world within a short span has resulted in data security breaches. Millions of users have filed legal cases against them which harmed their social image and since then, eBay Inc. are making huge amount of investments for upgrading the security systems and ensuring adequate insurance policies to prevent such losses in future (Goyenko, Holden and Trzcinka, 2009).
Technological Factors: The technological advances are in the forefront of eBay Inc.’s business strategy to emerge as a trusted online forum for trade on vast range of goods and services. Through substantial investments in technology, it can add innovative features and expand its network of operations which make it more competitive in the international E-commerce market (VanHoose, 2011).
Legal Factors: eBay Inc. has several long term legal contracts with marketing, technology and consumer support agents which means that they have to bear the burden of fulfilling those contractual obligations regularly even if they are facing revenue crisis.
Environmental Factors: The large scale online trading of goods involved the practices of packing, distribution and transportation of goods from the warehouse to the consumers. The wide chain of logistics activities are therefore supposed to harm the environment in the form of generation of plastic wastes and pollution (Meier and Stormer, 2009).
The SWOT Analysis of eBay Inc. is illustrated in brief in the given table.