Tài liệu Ebay in a league by itself

HANOI UNIVERSITY OF FOREIGN STUDIES PACULTY OF BUSINESS ADMINISTRATION AND TOURISM MANAGEMENT *** COURSE: STRETEGIC MANAGEMENT CASE STUDY REPORT: EBAY - IN A LEAGUE BY ITSELF Prepared by : Nguyen Manh Cuong BAI 02 Pham Duc Hanh BA4 02 Vu Van Thuy BA4 02 THƯ VIỆN DẠI HỌC HÀ NÒI HANOI UNIVERSin 116«*!« Hanoi 12/2005 6 b V eBay - /m a Leaĩiue b \ ỉísell EXECUTIVE S U M M A R Y The vvorld O n lin e auction industry has been really revolulionized by eBay - the íìrst and also the biggest C o r p o r a tio n in the industry. Since its foundation in 1995 by Pierre O m idyar - a ta le n te d b u s in c s s ra a n vvĩth g re a t c o m m a n d o f C o m p u ter Science and b u sin e ss strategy b u ild in g , the C orporation h a s c o n tin u o u s ly e x p e rie n c e d a g g re s s iv e expansion and enjoyed both rapid developm ent and im pressive proíĩtability. In 2004, it did came as a real surprise to the w hole world íìnancial coram unity w hen it announced that the goal set for the fiscal year 2005 had been already achieved. N et sales revenues stood at $3.27 billion, $0.27 billion m ore than expected and 72% higher than that o f the previous íĩscal year. At the same time, earnings beíbre interest and tax (EBIT) increased by 71%. And, that is still not the end story. In the íĩrst 3 quarters o f the íiscal year 2005, everything has turned out to be extrem ely favorable to eBay. The C o rp o ra tio n is well on its way to accomplishing the am bition o f further enhancing its dom inant position in the industry. In spite o f the flying color achievem ents that eBay is currently enjoying, the company has to deal vvith a great num ber o f problems. Top o f the list is the com plex and increased competition landscape the C o rp o ra tio n has put itself into w hile it has ío evolve into a general e-retailer in order to continue its cu ư en t rapid growth. Second, honestly speaking, íraud management at eBay has still been very poor com parcd to that o f its m ajor competitors like Yahoo A uctions, Ubid or Am azon. This is also highly related to the corporation’s unim pressive períorm ance level am ong the 6 leading íìrm s in the industry. The com pany’s image may be signiíicantly under fire due to high e ư o r rate and low consistency o f its web opcrations. Last but not least, eB ay’s aggressive expansion strategy has made it stretch too thin. Due to that stratcgy, eBay has had to share its sources and 1 ______________________________ eBay - I n a Leaọue hv Ịỵ ẹ ịl eíĩorts among many markets, hence cannot enjoy any strong establishm ent in most o f these and thereíore is highly vuinerable to íierce com petition from local rivals. The O n lin e auction industry dominated by eBay is the one in which very high growth rate intensive com petition, high entry barriers and expanding value-added services are often common characteristics to be seen. Although there have been 6 lcading firms consisting o f eBay, Amazon, Yahoo, Ubid, Bidville and ePier, com petition among them has been scorching íĩerce as the result o f really low switching cost for buyers and a great variety o f available substitutes. However, competition itself is neither good nor bad. Firm which can distinguish itself from competitors by giving custom ers m ore values are oíten found at a position to gain a com petitive advantage and vice versa (Ohama, K., 1999, p.35). operating in such an industry, eBay has been subject to signiílcantly negative o r positive impacts o f several extem al factors including the developm ent o f information and transportation tcchnology, thc continuous deregulation process in markets thanks lo rapid globalization and the quick changing habits o f people as the result o f changes in both the cultural and economic contexts. Progress in information and transportation technology has brought the Corporation a lot o f opportunities to improve its períbrmance and enhance its capabilities while directing it to much íĩercer com petition since all com pettors in this era have the equal right to erỹoy technological advances. Globalization hìs STcngly encouraged the deregulation process among markets, thus creating a ven favorable environment for e-com m erce developm ent in general and Online auction busineís in particular. Finally, the im p ro v e m e n t in p e o p le liv in g Standard h as actually resnaptd th eir shopping habit. Higher income has allovved them to pursue much o f heir 0 W1 in ep sts which in turn, creates a lot o f room for the Online auction industry to deveop. (n this complex landscape, m ainly featured by increasingly hard competition, eBa' rmy find following recommendations helpful in their attempls to íìnd a way out. 2 eBay - In a L ea m e by ỉtseỉi' At the íĩrst place, increasing investments in R&D to íurther enhance technological power is the key for eBay to win a competitive advantage. As high tech is the most prominent features o f the Online a u c tio n in dustry, going ah ead o f m ain c o m p e tito rs in terms o f technology will always work. Excellent technology will, for sure, will help eBay achieve bctter períbrmance than other competitors and save a lot o f administrative expense. Moreover, it will also enable the C orporation to manage ữaudulent activities more effectively. Second, eBay should reconsider its aggressive expansion strategy. M arkets and products seen as “question m arks” m ust be taken into minute consideration to decide whether they are worth both efforts and resources the company has to spend on to gain ju st a íòothold or not. At the sam e tim e, “ cashcows” should be nurtured careíiilly. Next, eBay should focus on Online auction business in w hich it is currentỉy having a competitive advantage and try to tap the Online auctions m arkets more deeply through better efficiency and effectiveness. Evolving into a general e- retailer merely makes it more vulnerable to com petitors and vvastes its resources as well as efforts. Fourth, in order to prevent prices o f auctioned items from being too expensive, certain ways to control delivery and credit card charges m ust be íòund soon. The Corporation needs to negotiate vvith its providers o f these services too keep these changes under control. Hopeíully, these above 4 main recommendations can be useful to eBay to some extent to help it deal with current problems vvell, enhance its leading position and tap into potential markets more successíully. For m ore details, please have a closer look at the table o f content in the next page. 3 ____________________________ eBay - In a Leasue bỵ_ Ilselí ^ T A BLE 0 F CONTENTS EXECUTIVE S U M M A R Y .................................................................................... 1 T A B LE OF C O N T E N T S .................................................................................... 4 LIST OF FIGURES AND T A B L E S ..................................................................... 5 1. BRIEF INTRODUCTION AND PR O B LEM I OPPORTUNITY STATEM ENT....6 2. A S SU M PT IO N S ............................................................................................. 9 3. SITUATION A N A LY S IS ................................................................................ 10 3 . 1 . S W O T ANALYSIS............................................................................................................................................ 10 3.1.1 Strengths......................................................................................................................... 10 3.1.2. W eaknesses....................................................................................................................ỉ 3 3. ỉ . 3. O pportunities................................................................................................................ 15 3.1.4. Threats........................................................................................................................... ỉ 8 3 . 2 . INDUSTRY AND COMPET1TION ANALYSIS........................................................................................... 2 0 3.2.1 ỉndustry cinalysis........................................................................................................... 20 3.2.2. ỉndustry tren ds..............................................................................................................23 3.2.3. K ey indnstry success/actors (KSFs).........................................................................25 3.2.4. Competitive anaỉysis................................................................................................... 27 3 . 3 . COMPANY ANALYSIS.....................................................................................................................................31 3.3.1. 3.3.2. 3.3.3. 3.3.4. Business culture analysis............................................................................................31 Management philosophy analysis............................................................................. 32 Company strucíure anaỉysis....................................................................................... 33 Financial analysis........................................................................................................34 3 . 4 . S t a k e h o l d e r s ANALYSIS........................................................................................................................ 3 6 3 . 5 . PORTFOLIO A N A LY SIS..................................................................................................................................3 9 3 . 6 . M a c r o — e n v i r o n m e n t a n a l y s i s .....................................................................................................4 3 4. STATEM ENT OF ALTERNATIVE OPTIONS................................................ 48 5. R E A SO N S FO R REJECTION OF SOM E ALTERN ATIVE O PTIO N S ............ 51 6. RECO M M END ATION S................................................................................. 53 R E F E R E N C E S ................................................................................................ 59 A PP EN D IX E S .................................................................................................. 62 APPENDIX 1: E B a Y’s INSERTION AND FINAL VALUE FE E S.................................................................6 2 A p p e n d i x 2 : e B a y P l a n s In d u s t r y ' s F i r s t O n l i n e A u c t i o n S h i p p i n g S e r v i c e s w ìt h M a i l B o x e s E t c . a n d i S h i p .c o m ................................................................................................... 63 A p p e n d i x 3 : e B a y ’ s F1NANCIAL s t a t e m e n t s ....................................................................................... 6 5 4 eBay - ỉn a Leaeue bv ỉtseli' LIST 0 F FIGURES AND T A B L E S Figure Paêe FIGURE 1: THE GROWTH 0 F EBAY FROM 2001 TO 2 0 0 3 ......................................................... 6 f ig u r e 2: p r o je c t e d P C s h ip m e n t s f r o m 2 0 0 0 TO 2 0 0 4 ................................................. 8 FIGURF. 3: THE POWCR OF 3 ............................................................................................................ 16 FIGURE 4: PROJECTED WORLDWlDE INTERNET USERS........................................................... 18 FIGURE 5: ELEMENT OF THE ONLINE AUCTION INDUSTRY.................................................. 24 FIGURE 6: ORGANIZATIONAL STRUCTURE OF EBAY..............................................................34 F1GURE 7: HIGH PERFORMANCE COMPANY............................................................................... 35 FIGURE 8: ONE YEAR STOCK PERFORMANCE v s . s & p 5 0 0 ....................................................... 36 f ig u r e 9: r e a l g d p o f e b a y ’s m a i n m a r k e t f r o m 2001 TO 2 0 0 4 .............................41 FIGURE 10: BCG GROWTH SHARE MARKET FOR SHARE GROWTH BY REGIONS............ 42 FIGURE 11: BCG GROWTH SHARE MARKET FOR SHARE GROWTH BY PRODUCTS.........43 eBay - ỉ n a Leasue b VItselt 1. BRIEF INTRODUCTION AND PR O B LEM / OPPORTUNITY STATEMENT. O ver the last decades, the name o f eBay has become synonymous with evolution. Since 1995 when Pierre Omidyar and his wife - Pamela W esley founded eBay in San Krancisco the liistory oi' thc company has bccn closely linked witli Ihe developm ent o f the O n lin e action industry. W hile still a fledgỉing íĩrm, eBay spearheaded the evolution o f eBay - commerce with the establishment o f an Online market place that would facilitate a person - to - person trading community based on a highly efficient information system. New ideas are an old tradition at eBay. The company that grew out o f the original eBay is today a highly innovative leader in the vvorld Online auction market. Intensively engaged in intemational and domestic alliances and partnerships, the contemporary eBay organization continues to set milestones on the road o f progress. 5 ỉ " '3 1 53 í 43 ■5 33 ị2313 I FIGURE ỉ : THE GROWTH OF EBAY FROM 2001 TO 2003 (Source: eBay'}, Annual Reports, 2004) eBay maintained its own operation íacilities in Silicon Valley before m oving to San Joe, California. With more than 94.9 million registered users in more than 150 nations by the end o f thc íĩsca! year 2004, it is one o f the largest corporations in the world Online auction mdustry, having a recording annual revenue o f $3,271.3 million in the 2004 íiscal year. 6 eBay - In a L e a m e bv ỉtse lf R eliable and farsig h te d m an a g e m e n t is United w ith th e y o u th fu l d y n am ism a n d zest for in n o v atio n th a t ty p iíy th e C orporation. Since its early íòundation, eBay has constantly enjoyed an impressive increase in both sales and eam ings before interest and tax (EBIT). From ju st $5.7 millions in the 1997 íìscal year the com pany’s salcs soared to $3,271.3 million in 2004, 15% higher and one year earlier than expected, thus shocking the whole fmancial community. This with ílying - color períbrm ance absolutely does not mean that eBay cuưently has no existing problem s. In fact, it is another story. A t the very fư st point, th e C orporation’s management is having great difficulties in finding out appropriate strategies to maintain its current grovvth. Second, the C orporation is gradually losing its c o m p e titiv e a d v a n ta g e in the Online auction industry as it is increasingly involved in íĩxed - price sales transactions. Next, its initiatives against the Online íraudulent activities are not sufficient enough to prevent more and more com plex as well as innovative thieve. A nd last but not least, eBay has to deal vvith the increasing dissatisíaction from some o f its biggest corporate sellers since theỵ them selves have got into trouble while had to make a choice between selling a large volume and maintaining a sufficient profit margin (Jacob, s . L., 2004, p. 17). Until now, these problem s have so far have not had any signiíicant impacts on he Corporation. Hovvever, in the context o f increasingly ĩiercer competition, these vvill be likely to cause eBay to call it a day if appropriate solutions are not timely íòund. While having to deal w ith a great number o f problems, eBay also has no fewer opportunities to further develop and m aintain its dom inating position in the Online action industry. First and íbremost, aggressive acquisition has brought eBay larger room for improvement. Its acquisition o f Skype Technologies not only helps the C o rp o ra tio n reduce operating expenses, thus enabling it to further cut charges to customers, which in tum not only immeasurably enhances eBay’s competitive advantage but also expands thc corporatioivs categories o f services oíĩered. These all are totally in line with eBay's c o m p reh en siv e strateg y o f m ain ta in in g a n d p ro m o tin g its cu rren t lead in g position. Second, the prom ising economic development in Asian countries is representing eBay’s very high potential opportunity to tap this huge market deeply. In these nations, the im p ro v e m e n t in th c liv in g Standard h a s been rcsh ap in g p e o p le ’s sh o p p in g hab it; therefore draws an interest o f theirs in the broad line o f services that eBay is now supplying. Finally, in spite o f the fact that the W estem Europe and the USA markets have been already matured, taking into consideration the corporation’s current market share in a number o f P ro d u c ts including motors ( l e s s t h a n 1%), custom er electronics (1 - 4%), Computer (1 - 3% ), hom e and garden (less than 1%), etc., it is obviously that by the íurther enhancing its competitive advantage, eBay absolutely can set a nevv era o f its grovvth and developm ent in these demanding but proíitable markets. These would be throvvn light into in following sections o f this report. Pro^ctôd PCShipments 2ỈC 7------------------------------------------- r- V' 233C 'CO' rỉ 'rT */r. y r. VT 2X2 2X3 2C-34 2£« 2Xd JT. ZEĨ FIGURE 2 : PROJECTED PC SHIPMENTS F ROM 2 0 0 0 TO 2 0 0 4 (Source: The Organization ofEconomic Cooperaíion and Development, 2004) 8 eBay - In ư Leựịỉue b\' Iĩse ỉ I 2. ASSUMPTIONS As the benchmark for the completion o f the Strategy M anagement course, this report is prepared throughoutly basing on comprehensively analyzed both primary and secondary data with great attention to following assumptions: • All the iníòrm ation discussed in the vvhole report is nothing but the truth. • Asian economies will continue to grow smoothly and maintain their current world highest grovvth rate. • No unexpected great events, in terms o f both political and economic unrests, will occur and thus signiíìcantly impacting the USA and European nations or shaking these tvvo whole biggest economies to their very foundation. • The Internet will be increasingly more popular; hence reshapes people’s shopping habits more rapidly. In addition, more high-tech supporting eBay - commerce transactions will be well on their ways. • Transportation and carrying expenses will be reduced materially thanks to advancement in transportation technology. • International governments will impose no rules and regulations unfavorable to the developm ent o f th e Online auction industry. • In the next 5 years, no other types o f e-commerce distribution channels that are more efficient for large producers will be found. • No significant change in eBay’s management, which deeply restructures the C o r p o r a t i o n o r a b s o l u t e l y c h a n g e s its p o l i c y , w i l l h a p p e n . 9 _____________________________ eBay - ỉn a Lea&ue bv ItseỉỊ' 3. SITUATION ANALYSIS 3 1. SW O T a n a ly s is In its very primary purpose, this section is aimed to throvv some ílashlight into the strengths vveakncsses, opportunitics and threats for eBay then help intcrestcd parties to have a general overvievv or a throughout picture o f the corporation’s health. 3.1.1. Strengths The íìrst point about eBay to be stressed is that following the partnership with PBL Online - a leading Internet company in Australia in February 1999, the Corporation has experienced continuous years o f consolidation and proíìt grovvth. Opinions about eBay’s strengths are quite varied and most see following strengths as key factors contributing to its success. • eBay is currcntly tltc largest Online trading forum . Pierre Omidyar soon make a name for him self w ith the motto o f “create a place where people could business just like in the old days” (Quetin Hardy, 2000, p .l 18). eBay has eam ed a deserved rep u tatio n fo r b o th its e x c e lle n t Service q u a lity a n d im p re ssiv e ly am bitious objectives. Thanks to these, the Corporation has erỹoyed an unprecedented increase in the number o f registered users. A t the time being, it has been vvell serving more than 100 million users in over 150 nations. • eBay has the broadest caíegory o f items listed f o r sale am ong aỉl Online actỉons operaíors. Betvveen 1998 and 2002, more than 2,000 new categories were added. By 2004, over 27,000 categories o f items have been offered by the Corporation compared vvith that o f only 10 categories in 1995 - the íìrst year o f its íòundation. At present, eBay still intends to further expand the number o f categories offered to bring customers more choices in an attempt to enhancc their satisfaction. Products 10 eBay - In a L e a m e bv ỉtse ỉf offered by eBay vvidely range from motors, custom er electronics to clothing and accessories as vvell as jew elry and gemstones. The most im portaní value o f eBay is its well-known brand nante. For a long time, eBay has been far and away the dominant player in the Online auctions market. A lthough it has been clear for some time, principally since increasingly intensive com petition in the industry began to be felt as the vvhole world entered the new millennium, that the strength o f brands has been under fíre, the famous brand name o f eBay, accordine to David Jarvis (2004, p.23), will still retain its halo so long as it products are intrinsically better than these o f its mạịor competitors. eBay has a com pelling and enteríaining trading environment. The company is highly com m itted to satisfying its customers, and it says it is for customers to decide vvhether or not they are satisíĩed. In order to be in line w ith this goal, the corporation’s management sets up not only established rules but also comprehensive procedures to facilitate com munication and trade betvveen buyers and sellers. The sole purpose o f all these is nothing but to give their customers m ore values and satisfaction. eB ay has excellení interrelatỉonships with its cusíom ers thanks to the effective application o f the customer-to-custom er business modeỉ. Through the creation o f the Feedback Forum in 1996, regular meetings like Voice o f the Custom er in 1999, the íbundation o f eBay University in 2000, the launch o f the Digital Opportunity Program for seniors and the creation o f chat rooms, eBay can maintain close contacts vvith its customers, respond timely to their requests, acquire new íeatures from them, and facilitate the flow o f iníbrm ation extremely 11 _______________________________eBay - In a Leauue by Itseỉf eííìciently. These contribute immeasurably to build up thcir custom ers’ trust and loyalty - the m ost precious good will for any organizations. Trading aí eBay is highly cosí-effecíive and convenient thanks to the application o f PayPal paym ent channel, autom ated checkout services and quick delivery. Because there is no need for traditional intermediaries, eBay can provide their customers services at much lovver costs than their main competitors do. (S The increase ỉn the employment o f the Internet and m obile Communications Itas giveit eBay unprecedeníed capacity to store, retrieve, anaỉyie and share in/orm ation - key factors that transíòrms the corporation’s efforts into successful outcome (Deans, c . p. et al., 2002). Professional m anagem ení is often considered as eB a y’s One o f the most vaỉuable assets. Pierre Omidyar totally hit the nail in the head when he decided to invite M s. M agaret Whitman whose much experience in management, especially brand management to become the CEO and president o f the Corporation. The very ambitious entrepreneur has been always the backbone by the whoIe organization. She wants to be in business just for herself and with drive, imagination, innovation, salesm anship, and a good head for staying in the back - manages her way in a fiercely competitive system. G ood users inter/ace. This helps eBay attracts more registered users more effectively than its main competitors. • M arketing activities a í eBay are reaỉỉy cost-effective. Immediately after the corporation’s establishment, Pierre Omidyar has realizeđ the extreme povver o f marketing and thus has employed it successíully to enable the growth o f eBay. Then, as Ms. Magaret W hitman joined the company, with her deep knovvledge and second-to-none expertise in marketing, especially in brand marketing, well- 12 __________________________________ eBay - In a Leatỉtte bv ỉtseỉt' prepared and effective marketing campaigns have been vvell on their ways. These can matcrialize and are on track to help the company more. The mission to “help people trade practically anything on earth” has been as much as an image as a sloean and has helped eBay become and remain a leader in the Online auction industry. The slogan is known, thus providing a high levcl of" avvareness for any nevv advcrtising campaigns. • A s eBay only acís as a broker, it does noí encounter any type o f inventory or distribution costs, vvhich is shockingly unusual for all other e-commerce businesses. This, in a very subtle way, explains why the Corporation has a much higher proíìt margin than its main competitors 3.1.2. W eaknesses (•) eB ay’s f ư s t m over advaníage is fadin g due to the íhrilUng emergence o f several strong Online aucíion fìrm s. A c lo se r look a t th e Online a u c tio n o u tlo o k rev eals 6 principals leading íirm s namely Amazon Auctions, BidVille, eBay, ePier, uBid and Yahoo. Auctions. ưníortunately, top o f the list is not eBay but the performance o f Amazon Auctions - its closet overall competitor. • eB ay is catering too much to the interests o f p o w er sellers. To handle the problem o f increasing dissatisfaction from some o f its largest corporate sellers as the result o f low profit margins, ineffective distribution channel for large volumes and the fairness policy, eBay is making great efforts to keep back these customers through reconsidering the level - playing - íĩeld policy, which means povver sellers are going to enjoy special perks and generous fee discounts. This, o f course, makes sm aller sellers feel as if they are discriminated. Therefore, while trying to satisfy only some big sellers, eBay is gradually losing numerous small ones (I-Iardy, L., 2003). 13 ^ '\ r {ỳ 7 'o eBay - ỉn li Leaaiu’ bỵ Itselt continue its rapỉd growth, eBay Itas no cltoice bui to evolve into a general e- tailer where it will fa c e f a r more severe competition. As fíxed - price sales are accounting for an increasingly signiíicant proportion o f the corporation’s annual revenue; the decision to purchase Haf.com - a íìxed price and person - to - person format was made; and the By It Now tool was introduced, eBay has placed itself in a p o sitio n vvhich is o p en to grovving c o m p c titio n w ith Online retailers such as Amazon.com and e-commerce solutions such as M icrosoữ. It has been even said that eBay is eoine to face severe competition from Google - a search engine. Obviously, putting itself into such situation is totally uníavorable as all o f the competitors are extremely strong and are also holding leading positions in the market. • eBay is not fư m ly estabỉished in m any/oreign markets. It has only a /o o íh o ỉd in a num ber o f locations. Thereíore, there is very low probability that it can competc succcssfully with local rivals. To pursue the strategy o f continuous expansion, eBay has stretched itself too thin. Some analysts even see it as “two inches deep and miles wide” (Nick w ., 2004, p.13). This results directly from eBay’ constant and aggressive alliances and partnerships with as well as acquisitions o f several foreign Online trading platíbrm s including PBL Online, Alando.de AG - Germ any’s largest Online person-to-person trading site, etc. Too quick expansion explains why eBay cannot manage sufficient time to tailor their businesses in these íbreign markets, thus being highly vulnerable to competition form local rivals. • Inadequate qualiíy control procedures ha ve beett aỉso an ìncreasing concern f o r managentení at eBay. According to a recent research by Empirix involving 6 leading Online auction sites, eBay’ web has much more vvebsite breakdovvns and 14 eBay - In a League bv Itselí failures than these o f other competitors (Empirix.com, 2003). in the context o f fíerce com petition, if this weakness is not addressed soon, it will pose a great challenge for the Corporation. The percentage o f erro r rale o f eBay is surprisingly high (3.97) compared with that o f others while average transaction length is the highest (13.2 seconds). What makes 1he matter -vvorse is that its payment PayPal has encounlered numcrous shutdovvns and oulages, thus making it very inconvenient for both sellers and buyers. • Frauduỉent activities has becomỉng a m ore and m ore alarnting issue consisting o f the redistribution o f stolen goods, m is-presentation o f goods, trading in counterfeit goods or pirated goods, etc. Although eBay has tried its best to alleviate this problem through the introduction o f the SaíeH arbor initiatives but in reality, facts and fígures still show an increase in these illegal activities. • The Feedback Forum, initially served as a tool to ensure honesty and integrity among traders, has not been efficient enough to enhance eBay’ community r affínity. 3.1.3. Opportunities {•) Constant and aggressive acquisitions have brought eBay much room fo r developmení. Being fully aware that Skype Technologies - an Internet telephony 55 million members is going to be a real threat to it, eBay has done it utmost ( ị. u to buy this Corporation with the net value worth o f $2.6 billion. This tum s out to ^ 5'v^ '^ c r f)e’f a strategic decision since it helps eBay reduce its operating expenses í\ significantly, which in tum , is absolutely in line w ith its whole comprehensive organizational strategy o f aggressive expansion. Thanks to Skype’s software, PC users can erỹoy free talks and make cut - price calls to mobiles and landlines. In another attempt, to expand its product lines while still maintaining a desired proíĩt r , margin, eBay bought out PayPal in 2002. This was aim ed to further facilitate person-to-person credit card payments. Actually, eB ay's revenue from payment Services has accounted for an increasingly important proportion o f its total revenue. In 2003, the íìgure stood at 33.8%, an obviously material levcl. a e lie r e g o w h e re b u y à rs a re ebY / B u y o rs g o w ỉisre F!GURE 3 : T H E POWER OF 3 (Source: Morgan Stanley Conference, February 2005) Stable econom ic growth in A sia in general and in Chỉna as w ell as in India in p articu ỉar also brings eBay a !ot o f opportunities to develop. As the whole Asia is w ritin g d o w n a n e w e c o n o m ic story, it can e íĩe c tiv e ly tra n síò rm w o rld Science and technology, knowledge and creativity into jobs, growth, and economic success. The generation, dissemination, and application o f distinctive know - how has become the driving íbrce behind economic growth in a globally interconnected economy o f this continent, thus putting a premium on innovation, agility, and entrepreneurship. As the GDP per capita in this area has been on an increase (Rovvland, M., 2004, p.24), people are gradually changing their shopping h a b its, a n d Online sh o p p in g is g o in g to be m o re o f a c h o ic e for both the time and conveniencc it brings them. Singapore’s Prime M inister even likes to describe eBay - ỉn a L ea m e bv ỉtse lĩ A sia as a ju m b o je t. S outheast A sia ’s 10 eco n o m ies are th e base, vvhile India form s o n e using and C h in a an d o th e r E a ste m A sian co u n tries form anolher. W hat really Iies b eh in d th is rh eto rical d e sc rip tio n is that A sian co u n tries w ill co n tin u e to ach iev e su stain ab le eco n o m ic g ro w th in the next years, im pỉy in g an im pressiv e im provem ent in p e o p le ’s living S ta n d ard , vvhich in tu m indicates a very p ro m isin g fu tu re fo r eB ay in this huge continent. A lth o u g h th e USA a n d E u rop ea n m a rk eís ỉta v e b e en m a tu red , ta k in g into a cco u n t e B a y ’s c u rre n t m a rk eí sh a re in th e se m a rk ets, it is o b vio u s th a i th e C orporation s tilỉ has m a n y o p p o rtu n ities to fu r th e r en h a n ce íh e ir p o sitio n íhere. F o r ex am p le, by th e íb u rth q u a rte r o f th e íĩscal year 2003, eB ay h as ju s t do m in ated o n ly less th an 1% o f th e m o to r m ark et, from 1 to 4% o f the c o n su m e r e lectro n ics m ark et, from 1 to 3% o f th e Computer m arket, less than 1% o f th e hom e an d g ard en m a rk e t and so o n in th e us. So, p o te n tia ls in th e se tw o w o rld big g est m ark ets still rem ain to be tapped as m u ch m o re cu sto m ers w h o are g o in g to realize b e n e ílts o f Online a u ctio n s tra n sac tio n s n eed to be w ell - serv ed . B y e n h a n c in g its co m petitive a d v an tag e, eB ay absolutely can co n so lid ate its fo o th o ld in th ese tw o p ro fitab le m ark ets a s vvell a s seek th e o p p o rtu n ities o f grovvth and d evelopm ent. The q u ic k in crea se in th e n u m b er o f w or!d In te rn e t u sers aỉso represenís an in íere stin g op p o rtu n ity f o r eB ay to develop. eBay - ỉ n (ỉ Leasue bv h s e lí P r o j e c t e d W o r ld w id e I n t e r n e t U s e r e 1:20D yr. yr. yr. yr. yr. yr. 2-Cũ 2 ŨŨ1 2002 2DC3 20D4 2005 yr. 2DC6 F1GURE 4: PROJECTED WORLDWIDE INTERNET USERS (Source: The (Jrganization o f Economic Cooperation a nd Development, 2004) 3.1.4. Threats Heading into the year 2006, everything appears to be extremely smooth w ith eBay. Its stock price m ovem ent is actually something o f great assurance to both its lenders and investors. H ow ever, in the context o f globalization, changing economic and political milieu as well as increasingly íiercer completion, eBay cannot afford to tum a blind eye to following alarm ing threats. • VAAj y * O ccasional Jraudulent o r iilegai activity ọ f eB ay seỉlers that gets widely p u b liciied and erodes user confidence in using eBay to either list or bid. A ccording to Monroc - a Seattle - area trader o f Computer equipment, 10% o f the time users get some jerk who wants to cheat them (2004, p.213). Com m on illegal behaviors o f eBay sellers include mis-presentation o f goods, trading in counteríeit or pirated goods; íailure to deliver goods paid for and shill bidding. Obviously, these represent a very signiílcant danger to eBay. Although the SaíeHarbor program was launched in 1998 in the corporatiorTs attempts to handle this issue, so far no noticeable progress has been recorded or reported yet. Since the svvitching cost for buyers is very low, eBay will gradually lose all o f its users if 18