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SWOT Analysis

Strengths
1. 2. 3. 4. 5. 6. Worlds largest internet marketplace Business model Economies of scale Payment system Brand reputation Zero inventory held by company

Weaknesses
1. Inability to measure illegal activity on site 2. Lack of in depth descriptions of products 3. Technology malfunctions 4. High fees

Opportunities
1. Growing number of mobile shoppers 2. Become a retailer 3. Increase services and product portfolio through acquisition 4. Increasing User of the Internet 5. Expand the eBay Community

Threats
1. Online security 2. Increasing Number of Online Stores 3. Increasing Number of Online Trading Sites

Strengths
1. Worlds largest internet marketplace. eBay has more than 150 million live listings and more than 105 million active users globally in 37 countries. That makes eBay the largest marketplace online, having a great power over other online retailers. 2. Business model. eBay only acts as a middleman between sellers and buyers, who bid and sell items in eBays marketplace. Being a pioneer in online auctions, eBay had no competition and currently has only few strong direct competitors in Malaysia such as Zalora, Mudah.my and Lelong.com.my 3. Economies of scale. In the beginning, eBay had to invest heavily to gain IT and customer relationship management (CRM) knowledge and skills, but since then, used its skills to serve over 100 million users and to create the largest online marketplace with little additional costs. 4. Payment system. eBay uses PayPal, its own payment system, to proceed nearly all of the payments going from eBays marketplace. From eBays perspective, such tight integration has the benefits of more fees collected (PayPal takes transaction fees from the

businesses) and tighter control over buyers shopping experience. From buyers perspective, PayPal provides easy to use online payment method. 5. Brand reputation. A recognizable brand name is important to the success of a company. eBay has made sure to use color and unique writing to show their brand name off. eBay is also a trustworthy brand, known all over the world. 6. Zero Inventory Held by the Company. eBay does not have stores or warehouses. They do not hold any of their own inventories. This is strength for the company because it keeps costs down and does not put any threat of having to liquidate the company. eBay has kept it simple by simply being a place for people to trade items.

Weaknesses
1. Inability to Measure Illegal Activity on Site. eBay has taken many precautions to prevent illegal activity on their site. They estimate that only 1 percent of transactions on their site involve fraud. The customers however disagree to some extent. Some say that there are as much as 10 percent fraudulent transactions. EBay has no real way to measure the extent of illegality on their site. 2. Lack of In-Depth Descriptions for Products. The lack of description in products could be a factor in the amount of counterfeit and wrongly identified products that are sold to customers. 3. Technology malfunctions. eBay must take measures to keep malfunctions as low as possible to retain happy customers and to keep hackers out of personal PayPal and eBay accounts. 4. High fees. eBay fees for the sellers has risen significantly over the years. The firm receives fees on listed goods, sold goods, some adornment fees and PayPal transaction fees. The sellers often make zero profit on their low price products sold on eBay due to its high fees.

Opportunities
1. Growing number of mobile shoppers. eBay has a strong payments system PayPal that is widely accepted and used by many online retailers and online shoppers as it is convenient and easy to use. The growing number of mobile shoppers represents a huge growth opportunity for PayPal as its one of the few payment systems that meets the requirements for convenient shopping and payment processing on the go.

2. Become a retailer. eBay has an access to hugest online marketplace in the world and is well placed to take an advantage of that by becoming a retailer. The company has its IT and CRM systems in place already and could easily stake out a market share from other online retailers. 3. Increase services portfolio through acquisition. The company has successfully acquired many companies to extend its services offering and should continue adding new services through mergers and acquisitions. 4. Increasing User of the Internet. The internet is being used more and more each day. eBay can take this opportunity to expand and penetrate new markets. 5. Expand the eBay Community. For continued customer satisfaction eBay can increase its community feel. With new resources and sites tailored specifically to their community members eBay will continue to be the most highly respected internet auction site by its members.

Threats
1. Online security. PayPal stores online shoppers personal information, such as bank account details, which is a target for online thefts. The more online customers PayPal has, the more attractive as a target for identity thefts it becomes. 2. Increasing Number of Online Stores. Online shopping is becoming more and more common. Stores such as Zalora, Lelong.com.my and Mudah.my have developed sites where people can shop from the comfort of their own home. This poses a large threat to eBay. They are now not only competing with other online auction sites but also online retailers. 3. Increasing Number of Online Trading Sites When an industry is attractive new competitors will always try to enter and steal some of the market share. eBay already has many competitors surrounding them including Zalora, Lelong.com.my and Mudah.my. Some boast that they are an alternative to eBay while others just try to be better than eBay. To sustain a competitive advantage above their competitors eBay must continue to grow and advance in the online auction industry. Strategies must be determined and defenses formed.

Strategy-Formulation Analytical Framework


Input Stage: Internal Factor Evaluation (IFE) Matrix

Key Internal Factor


Weight Rating Weighted Score

Strengths
1 2 3 4 5 6 Worlds largest internet marketplace Business Model Economies of Scale Payment system Brand reputation Zero inventory held by company 0.20 0.10 0.14 0.20 0.06 0.08 4 3 4 4 3 3 0.80 0.30 0.56 0.80 0.18 0.24

Weaknesses
1 2 3 4 Inability to measure illegal activity on site Lack of in depth description of products Technology malfunction High fees 0.10 0.10 0.05 0.05 1 1 1 1 0.10 0.10 0.05 0.05

Total Weighted Score

1.00

3.12

IFE results analysis

External Factor Evaluation (EFE) Matrix

Key Internal Factor


Weight Rating Weighted Score

Opportunities
1 2 3 4 Growing number of mobile shoppers Become retailer Increase service and product portfolio through acquisition Increasing Use of the internet Expand the ebay Community 0.20 0.10 0.14 0.20 0.06 4 3 4 4 3 0.80 0.30 0.56 0.80 0.18

Threats
1 2 3 Online security Increasing Number of Online Stores Increasing Number Of Online Trading Sites 0.10 0.10 0.05 1 1 1 0.10 0.10 0.05

Total Weighted Score

1.00

3.12

EFE results analysis

Competitive Profile Matrix (CPM)

Critical Success Factors


Advertising Market Penetration Customer Service Brand Awareness User friendly website Revenue Growth Financial Condition Customer Loyalty Market Share Product Quality Information about user Price Competitiveness

Ebay Weight Rating 0.10 0.10 0.20 0.15 0.20 0.15 0.15 0.15 0.15 0.15 0.15 0.15 3 3 4 4 4 4 4 4 4 4 4 4 Score 0.30 0.30 0.80 0.60 0.80 0.60 0.60 0.60 0.60 0.60 0.60 0.60

Mudah.My Rating 3 3 3 3 4 3 3 3 3 3 3 3 Score 0.30 0.30 0.60 0.45 0.80 0.45 0.45 0.45 0.45 0.45 0.45 0.45

Lelong.Com.My Rating 2 1 2 2 2 2 2 2 2 2 2 2 Score 0.20 0.10 0.40 0.30 0.40 0.30 0.30 0.30 0.30 0.30 0.30 0.30

Total

1.00

3.60

3.10

2.00

SWOT Matrix
INTERNAL FACTORS Strengths (S) 1. Worlds largest internet marketplace 2. Business model 3. Economies of scale 4. Payment system 5. Brand reputation 6. Zero inventory held by company SO Strategies 1. Build on brand loyalty. 2. Attract more customers with better user security features. 3. Establish for mobile platforms and payment 4. Maintain simplicity of interaction with the online communitys capability Weaknesses (W) 1. Inability to measure illegal activity on site 2. Lack of in depth descriptions of products 3. Technology malfunctions 4. High fees

EXTERNAL FACTORS
) Opportunities (O) 1. Growing number of mobile shoppers 2. Become a retailer 3. Increase services and product portfolio through acquisition 4. Increasing User of the Internet 5. Expand the eBay Community Threats (T) 1. Online security 2. Increasing Number of Online Stores 3. Increasing Number of Online Trading Sites

WO Strategies 1. Increasing awareness of customers product portfolio and services 2. Lower product fees to user. 3. System for online verification of products

ST Strategies 1. Gains competitive advantage among competitors. 2. Use partnership to provide better and easier product to consumer 3. Use online security option for verification and authentication 4. Advertise the bargain capabilities of ebay website

WT Strategies 1. Authentication of consumer identity 2. Aggressive advertising.

SPACE Matrix

Internal Strength Position


Financial Strength (FS) Return on Investment (ROI) Leverage Liquidity Working Capital Cash Flow 6 2 6 5 6

External Strength Position Environmental Stability (ES)


Rate of Inflation Technological Changes Price Elasticity of Demand Competitive Pressure Barriers to Entry Into Market -1 -4 -3 -5 -6

Financial Strength (FS) Average

= 25/5 Environmental Stability (ES) = 5 Average

= 19/5 = -3.8

Competitive Advantage (CA) Market Share Product Quality Customer Loyalty Technological know-how Control over supplier and Distributors -1 -2 -2 -3 -5

Industry Strength (IS) Growth Potential Financial Stability Rivalry Among Competitors Resources Utilization Profit Potential 5 4 4 4 6

Competitive Advantage (CA) Average

= -13/5 Industry Strength (IS) = -2.6 Average

= 23/5 = 4.6

Directional Vector Coordinates: X-axis = -2.6 + 4.6

=2

Y-axis = 5 + (-3.8) = 1.2

FS

Conservative

5 4 3 2 1

Aggressive

(+2, + 1.2)

CA -6 -5 -4 -3 -2 -1 -1 -2 -3 1 2 3 4 5

IS

Defensive

-4 -5 -6 ES

Competitive

ebays should pursue Aggressive Strategies

Quantitative Strategic Planning Matrix Strategic Alternatives


1 2 Enhance Security features

Key Factors

Establish for Weight Mobile Platforms & Payment AS TAS

AS

TAS

Opportunities
1. Growing number of mobile shoppers 2. Become retailer 3. Increase service and product portfolio through acquisition 4. Increasing Use of the internet 5. Expand the ebay Community 0.25 0.10 0.05 0.05 0.02 4 4 4 4 2 1.00 0.40 0.20 0.20 0.10 3 2 2 2 3 0.75 0.20 0.10 0.10 0.15

Threats
1. Online security 2. Increasing Number of Online Stores 3. Increasing Number Of Online Trading Sites Sum of Weights 0.10 0.10 0.09 1.00 4 4 0.40 0.36 3 1 0.30 0.09

Strengths
1. Worlds largest internet marketplace 2. Business Model 3. Economies of Scale 4. Payment system 5. Brand reputation 0.20 0.10 0.14 0.20 0.06 1 1 2 4 0.14 0.40 0.24 0.20 3 3 3 2 0.42 0.60 0.12 0.60

6. Zero inventory held by company

0.08

0.32

0.16

Weaknesses
1. Inability to measure illegal activity on site 2. Lack of in depth description of products 3. Technology malfunction 4. High fees Sum of Weights 0.10 0.05 0.05 0.02 2 3 2 0.20 0.15 0.10 3 2 3 0.30 0.10 0.15

1.00 4.97 3.13

Sum of Total Attractiveness Score

Grand Strategy Matrix

Financial Highlights Comparison from 2010 -2012


Profitability ROA ROE Operating Profit Margin Net Profit Market Liquidity Current Ratio Quick Ratio Inventory Capital Leverage Debt/Assets Debt/Equity (5 year average) Long term D/E (5 year average) Activity Inventory Turnover Fixed Asset Turnover Total Asset Turnover Average Collection Period Shareholder's Return P/E Ratio Dividend Payout Ratio 60.6 87.7 82.6 52.49 12.3 29.4 2.5 11.4 28.6 2.7 11.1 29.7 2.7 11.2 27.4 2.60 1.46 1.48 1.52 1.18 1.33 0.95 1.39 1.03 1.30 1.00 5.1% -0.1% 10.34% 4.72% 56.13% 3.6% 0.0% 8.78% 58.48% 4.4% 0.3% 8.2% 25.4% 4.19% 3.41%

2010

2011

2012

2013 or 5 yr average