Making Ebay Work

T fit of limit existence2 PART A Chapter Summary3 PART B accent and Case thick5 EBays Background5 Case Summary Making eBay get6 PART C Case dubiousnesss7 Case Question 17 Case Question 210 Case Question 310 PART D Implications and Recommendation12 Implications12 Recommendations13 Introduction strategicalal capabilities grow give out a source of agonistical expediency for both small and large institution. Organizations that wish to survive and compete in todays moral force problem world need to utensil unique and high-value strategicalal capabilities.This paper takes you done in depth outline of strategic capabilities and how it relates to the line of work environment. The dust in focus is eBay, an online sales carry follow. EBay is whiz of the largest online sales and sell connection with branches in everywhere two dozen countries. Its unique resources and key competences argon paramount to its ever-growing success in the industry. The frontmost part of this paper exit take you through the concept of strategic potentiality. This is the summary of the chapter 3 from the textbook, Exploring Corporate Strategy.This part will focus on definition of strategic force, the importance of resources and competencies to achieving strategic capabilities, appeal efficiency, and how strategic capabilities tail endside lead to sustainable development. The second part foc expends on the background of the display circumstance study company, eBay. There is a brief background about the company and summary of the baptismal font study. Part deuce-ace try ons to answer the slip-up questions. The questions atomic itemise 18 divided into three the first talking about the analytical role model for analyzing eBays strategic capability.There ar several analytical frameworks in the textbook, for in-depth and better understanding, the get up analysis was employ. The second question seeks to know what loving of capabilities hold back provided eBay with matched re raises. The last questions deals with managing capabilities much(prenominal) as bare-assed resources, invest and divesting in resources, and extending resources given new entrants in the grocery storeplaceplace and the ever-ever-changing temper of eBay. Each question has been answered by expert individuals with good intimacy of strategic capabilities.The paper concludes by taking into consideration possible lessons learnt from the chapter and case study. We besides give recommendations for development in eBay or new(prenominal) organic laws that seek to happen upon the feat of successful musical arrangements alike eBay. PART A Chapter Summary Strategic capability support be defined as the adequacy and suitableness of the resources and competencies of an organization for it to survive, prosper and deliver in the future. The strategic capability contri yetes to the private-enterprise(a) advantage of an organization by creating and implementing strategies that competitors find difficult to imitate or match.Unique and antiquated strategic capabilities give organizations better reputation and thanksgiving when compared with their competitors. impressiveness of resources, competences, core competences and high-energy capabilities An organizations strategic capabilities in general revolve some(a) its resources. The resources are each tangible or intangible asset and they are grouped into four categories an organizations resources substructure be Physical, monetary, Human, and intellectual. Physical resources intromit machines, building or harvestingion capacity of the organization.Financial resources are used in the day to day running of the strain they include capital, cash, debtors, creditors among differents. Human resource includes the number and mix of mountain in an organization. Most organizations ready human resource departments that help oneself manage the well-organism of the somebodynel in the or ganization. Intellectual resources are intangible resources that include patents, brands, business system, and client selective informationbase. Resources are important to an organization because they allow the organization to allege at lower cost or regress superior ware or ser ungodliness.The resources in an organization are of no worth if they are non existence utilized effectively. Organizations must utilize their resources by being competent. Competences in business policy are used to mean the activities and processes through which an organization deploys it resources effectively. Competences laughingstock either be threshold or core. room access competences are the essentials needed to compete in a given market, temporary hookup core competences are the effective use of resources to gain competitive advantage. Importance of cost-efficiencyThe guidance of cost-base of an organization ordure be a basis of achieving competitive advantage. Cost efficiency is driven by a number of cost drivers. pic How strategic capabilities washbowl lead to sustainable competitive advantage nourish stupefy resources that clients value in wrong of products and serve. fruit or services must exceed consumer need and taste. Rarity Having unique resources and competences in terms of personnel intellect, unique services rendered among separate things. Robustness A beefed-up and well-built form of strategic capabilities that annot be imitated by competitors. Non-substitutability Providing value to customers and possessing competences that are thickening and casually am vauntinglyuous. Diagnosing Strategic potential If organizations are to achieve competitive advantage by delivering value to customers, they need to understand how it is created. Value bowed stringed instrument describes the activities within and around an organization which together create a product or service. Value Network is the set of inter-organizational link and relationships that a re requi come out to create a product or service. Activity Maps it shows how the different activities of the an organization are colligate together Benchmarking comparison of programs and strategic positions of competitors. SWOT summary of key issues which affect the business environment. Managing and growing Strategic Capability In fix up for managers to manage and improve the strategic capability of an organization, there are certain decisions and actions which can be taken which relate to the development of strategic capabilities within the organization and external environment. These include Extending best practices managers might range strategic capabilities in one area of the business and wherefore seek to extend this throughout all the business units. Adding and changing activities this involves adding or changing capabilities so that they become much reinforcing of outcomes. Stretching competencies managers may see the prospect to build new products or services o ut of be capabilities. entrepreneurial Bricolage strategic capability can be built by exploiting resources, movells, and knowledge which have been ignored which is often what entrepreneurs who develop new business models do. Ceasing Activities involves doing out-of-door with current activities not central to the deli genuinely of value to customers. External Capability development developing capabilities by entering into alliances and joint ventures. PART B Background and Case summary EBays Background EBay is an online shopping and auction web direct where people and businesses buy and sell products and services. EBay was created in 1995 and they have over the years grown and expanded to over two dozen countries such as the United Kingdom, China and India.EBay recorded a shekels of $367 million consort to GAAP in their fourth quarter in the year 2008. Millions of collectibles, decor, appliances, computers, furnishings, equipment, vehicles, and another(prenominal) miscellane ous items are listed, bought, and sold daily on eBay. In 2005, eBay launched its avocation & Industrial category, breaking into the industrial surplus business. Some items are rare and valuable, while many others are dusty gizmos that would have been discarded if not for the thousands of eager bidders worldwide. Case Summary Making eBay workThe Making eBay dissemble case study is divided into three sections namely eBays business model, eBays management and Competition and cooperation. EBays business model A business model describes the structure of product, service and information flows and the roles of the participating parties. and so the business model in eBays case includes its products and services and the interactions betwixt buyers and sellers. The business model includes Value in eBay which is created by providing a realistic market for buyers and sellers.EBay listens to its customers and organizes Voice of the client groups which involve flying in a new group of about 10 sellers and buyers from around the country to its eat upices ein truth(prenominal) few months to discuss the company in depth. Technology allows every pretend of every potential customer to be traced. pull inshops and classes are held to teach people how to engage the most of the billet. EBay is governed from outside and within in the sense that the companys system has a source of automatic control in the form of buyers and sellers rating each other on each transaction. gross sales of culpable products are dealt with by withdrawing the item on sale and because banning the seller. EBays management Meg Whitman, an ex-consultant joined eBay in 1998 and has seen accordingly heavily influenced the companys management. Meg Whitman met a collection of knowledge Technology (IT) geeks who were handpicked by eBays founder Pierre Omidyar as flush management of the company. Meg Whitman felt she needed to reshuffle and change the management as most of the top executives understood more(prenominal) of the IT side of the company rather than understanding the business side of the company.Respected consultants were then delegate senior management roles. This change brought about the company be approach shot data and metric driven If you cant measure it, you cant control it. This simply means that category managers made decisions based on measuring and acting upon the data within their fiefdom or departments. EBay has in era upgraded its ability to ensure that technology does not fail. The companys website was plagued with outages in 1999 which except imbibe the site for a period of 22hours. The problems were as a result of software problems and lack of backup systems.Maynard Webb joined eBay to become the president of the companys technology unit and has since then ensured a ripe website by constantly upgrading the system. Meg Whitman is a manager who is known for attractions qualities such as understanding and plastic. She is a leader who buys into the company in more ways than one by auctioning some of her furniture from her ski condo in order to have an eBay selling experience. Competition and cooperation As the net has become a more competitive arena, eBay has definitely not stood still. The company tries to be aware and malleable.EBay bought Skype, the internet telephony organization in 2005 at the cost of $2. 5 billion. A lot of controversy attach this acquisition as people considered it too risky and eBay fired back by saying the company can create an unparallel e-commerce engine, pointing to their 2002 obtain of the online payment system, PayPal. eBay in like manner supported their action by saying three benefits would be realized as a result of the purchase the more members the company will acquire, the more valuable the company will become, and finally the more likely eBay will become a world leader in managing network effects. In 2006, eBay announced a deal with Google and has since then become one of Googles bigg est advert customers. EBay in like manner partnered with Baidu Inc, a Chinese web portal bought by eBay in 2002. Baidu promotes PayPal Beibao as the preferred method of payment on Baidu. Despite eBay success in the west, it is not as successful in the east. EBay had to pull out of Japan and is currently assay in Taiwan and lagging behind a refer in China. GMarket in Korea had a less complex system and so had a larger market base so eBay had to come up with eBay fetch to meet up to the customer ask in Korea.PART C Case Questions Case Question 1 Analyze eBay strategic capability using an analytical framework from the chapter Strategic Capability can be defined as the resources and competences of an organization needed for it to survive and prosper. EBays case shows us the necessity of an organization having sustainable resources and competences. In analyzing their strategic capability, the SWOT framework (strength, weakness, opportunities and threats) projects, clearly, the issu es surrounding a business and deduces how this issues gives them strategically capable. Strengths Bays greatest strength is that it is the first online auction site. Because of that, eBay is well trusted. The customers perception that he/she can buy a good without worrying, keeps him/her coming back. That is why, in 2006, eBay had 200 million customers. Out of that, 750,000 made their living from eBay. (Johnson, Scholes, & Whittington, 2008) From the case study, you can see a strong relationship between the business-to-customer and customer-to-customer relationship. For simulation, when a category manager sees a customer is having difficulty selling a product, he helps the customer by improving their presentation of the product.Also, eBay organizes Voice of the Customer were a group of 10 sellers and buyer are flown in from around the world, to discuss the company in depth. In regard to the customer to customer relationship, customers help each other by creating rules and norms to keep themselves safe from fraud. They alike have websites, offering advice on how to sell on eBay. This relationship seems little, but it is not. It has taken at least 13 years to build it that is why it would be very difficult for some other company to break in. some other major strength eBay has is Meg Whitman who is a unique resource. She is well experienced.She previously worked with Procter and Gamble, Hasbro and Stride Rite, and went to Harvard business school. When she came in, she multi-tasked, filling many of the senior management roles such as the head of the US business, head of international operations and vice president of consumer marketing with consultants. Through her eBay has been re-defined eBay has over thirty categories now (you can buy items ranging from books, cars, antiques to houses), their sales have increased and have acquired several tighten- like Skype and PayPal- strengthening eBay alive and keeping it flourishing. WeaknessAlthough things seem perf ect, eBay has a number of weaknesses Because items are sold online you cant be certain of the person you are transacting with. EBay customers suffer from other fraudulent activities by other customers. For example, another customer maybe selling a Gucci hand bag for a reasonable price. When you pay for it and receive the bag, you realize the bag is not original. another(prenominal) case of fraud occurs when stolen goods are sold. Fraudulent situations affect the customer to customer relationship. In addition, according to the case, in 1999 the site was shut down for 22 hours courtesy of software problems.This is a major weakness because eBays site cannot function when the system breaks down auctioning cannot take place. During these periods, a lot of profit will be lost, affecting the business and customers. EBay would be affected more because of the amount spent on repairing. In the past, even the payment system, PayPal, has been shut down. Opportunities Opportunities are lucky bre aks entrepreneurs use to get ahead of competition. Acquisitions provide new business strategy opportunities. In 2005, according to the case study, eBay bought Skype. It is an online telephone company.EBay acquired the firm for $2. 6 billion. Skypes software lets PC users talk to each other for guiltless and make cut-price calls to mobiles and landlines. A lot of critics didnt see the nerve center but for eBay it was a great opportunity. They were strengthening their threshold and unique resources. Skype is a unique resource because not a lot of businesses can abide to imitate that feat (spending $ 2. 6 billion). It is a threshold resource because Skype helps customers transcend more effectively. Through Skype, customers can see and hear each other reducing the rate of fraudulent activities.In addition, eBay has opportunities through new and acclivitous markets. EBay has over 30 sites, were language differs. For example, if you go to the Chinese site, it wouldnt be in English. B ut it wasnt always like that before. This opportunity occurs when a country becomes more modernized, like Singapore. When it happens, eBay has an opportunity to increase its market segment. This is how eBay has been able to grow, over the years. Also, a product produced 5 years ago can still be sold and found on eBay. In a way, eBay keeps products alive. You can find a first edition magazines and old models of cars on eBay.This is one of eBays core competences. EBay keeps Markets current. Threats As with many of the global earnings brands, success attracts competition. (SWOT Analysis Lesson, 2008) Competition is a threat because it reduces the amount of customers you have. From the case study, eBay has a big threat in Korea. GMarket is the Korean version of eBay. It is partly owned by Yahoo. Although Yahoos auctioning unit isnt as strong as eBay, it can become a threat in the future. Already, because of Yahoo in Japan, eBay has pulled out. It doesnt do well in the vitamin E becau se international competitors have a cultural edge over them.Furthermore, some costs cannot be controlled by eBay, which is a threat. It is a threat because if a customer doesnt understand why he has to pay extra, for example delivery charges and credit card charges, he might feel cheated. If go off prices were to rise, the cost is passed on to the consumer in terms of delivery and postal fees. This could make the overall cost of an auctioned item too expensive, making customers look for cheaper prices(SWOT Analysis Lesson, 2008) Also, individuals pretend to be eBay staffs, using their logos, the send illegal e-mails.Case Question 2 What are the capabilities that have provided eBay with competitive advantage and why? hjogdnfjuhfe Case Question 3 Using the concept of sustainability and dynamic capabilities how would you manage (creating new resources and competences, investing/divesting in others extending others) Given New entrants to market and the changing nature of eBay. Concept of Sustainability Concepts of sustainability and dynamic capabilities are major strategies that organizations use to capture competitive edge over competitors.Sustainability of strategic capability deals with the beat that organizations use to achieve and maintain competitive advantage over a long and sustainable period of time. Three main factors influence sustainable strategic capabilities Inimitability, Rarity, and Value. Inimitability refers to the robustness or sturdiness of the strategic capability. It involves identifying capabilities that are likely to be durable and which competitors find difficult to imitate or obtain (Johnson, Scholes, & Whittington, 2008). Inimitability can be achieved through three main ways, they are complexness Complexity of strategic capabilities is the quality of being intricate and compounded. When organizations like eBay have very complex strategies, it will be very difficult for new entrants to the market to imitate such strategies. An example o f a complex strategy in eBay could be the internal linkages in the organization. These internal linkages deal with how eBay internally links activities and processes together to deliver customer value. Internal linkages can be in form of relationship between top-management, middle-management and lower management staff.EBay has a very good communication network that allows for efficiency which will in turn produce efficiency and increase customer satisfaction. Organization can also build external interconnectedness with its customers to make it difficult for their strategies to be imitated. When developing new resources, organizations can seek opinions or partner with their customers or clients to incur idea that will add value to the company and also generate strategic capabilities that are robust in nature. gardening and history Culture and history are very unique to each organization.It is almost unsufferable to find two organizations with similar cultural background. When inv esting or divesting in resources, organization should make sure their investment is culturally inclined. When strategies are linked to cultural embeddedness, there is the likelihood that such competences have authentic over time and in accompaniment way. The origins and history by which competences have developed over time are referred to as path dependency, are proper(postnominal) to the organization and cannot be imitated (Johnson, Scholes, & Whittington, 2008). Causal Ambiguity Ambiguity deals with not being able to discern the meaning or cause of a event effect. It is very difficult for organizations to imitate another organization when the former cannot slowly discern the cause and effect of the latters success. Organizations like eBay have varying causal factors that affect its success in the industry that other competitors find hard to discern. Other factors that affect sustainable development include the rarity and value of the strategic capability.When an organization is seeking competitive advantage, it needs to make sure the resources its investing in have colossal values to the customers and they should be very unique and rare capabilities. Unique resources and competences can include marketing strategies that are peculiar to the particular organization. Dynamic Capabilities The changing environment in the business world today calls for the implementation of dynamic capabilities. Dynamic capabilities are an organizations abilities to renew and recreate its strategic capabilities to meet the needs of a changing environment (Johnson, Scholes, & Whittington, 2008).Dynamic capabilities help organization to integrate, build, and reconfigure internal and external competences to address the ever changing environment. When an organization is developing, investing, divesting or extending in resources, it should be able to transfer and modify existing resources to keep competitive edge over its competitors. The organization should have intellectual ski lls that can easily implement new capabilities to foster development. PART D Implications and Recommendation Implications The following are the implications of the case study Making eBay WorkCompetitive and Cooperative Competition and Cooperation are one of the major elements used to successfully excel in the business world. Form the case it is sight that eBay is very competitive and cooperative. Competitive in the sense that eBay bought companies like Skype, the internet telephony organization (http//www. skype. com/) and PayPal an online payment system (www. paypal. com/) in order for it to keep up with the evolving activities on the internet. GMarket in Korea had a less complex system so eBay created eBay express to meet up to customer needs in Korea. Bay is cooperative in the sense that it partnerships with companies like Google, yahoo and Baidu in other for it to be more effective in its services. Customer complaisant Some organizations do not pay attention to the needs or co mplaints of their customers and take the appropriate measures to satisfy them, but eBay listens to customers and tries to keep up with what they want to sell, buy and how they want to do it. This brings about profitability, good reputation and more customers. So every organization should try to be customer kindly because it serves as an advantage to them.The great importance of Technology The basis on which eBay operates is technology thats why its of great importance to them. eBay endeavours to up grade their systems to fit the latest technology, make sure the site is handy at all times, ensure no fraudulent activity or illegal transaction is carried out in the site and also ensures that the site is virus free. This helps eBay to operate effectively. Staying Aware and Flexible eBay tries to stay aware and flexible at all times. The company tires to get feedback from customers, complaints, suggestions and also take beak of customer activity on the site.This helps eBay to make nec essary adjustments in other to satisfy their customers. Nearly all of its fastest-growing new categories emerged from registering seller activity in the area and quietly giving it a nudge at the decently moment. For example eBay noticed a few car sells on the site so the company created a separate site called eBay Motors which has special features such as vehicle inspection and shipping. Organizations should try and stay aware and flexible in running while running their business.Good management can make a positive difference in an organization Having a good manager or management body in an organization can make the organization excel. When Meg Whitman came into eBay in 1998 she made eBay become data and metric driven and she also brought about strategies which made eBay work better. eBay had a software problem and this caused the site to be shut down for 22 hours. When Maynard Webb was brought into the company as the president of eBay he quickly upgraded the systems and make sure t hey are upgraded constantly and this makes the site function more effectively.Have a good knowledge about a particular market before entering it It is observed from the case that eBay is not doing well in the east but is doing well in the west. It pulled out of Japan, is suffering in Taiwan and it lags behind a rival in China. This shows that eBay those not have the right strategy to excel in those areas so it is advisable to have a vivid knowledge and strategy about a particular market or area before entering it in order to excel. Recommendations The following are the recommendations for the case Making eBay Work. eBay is not doing well in the east, in order for eBay to do well in the east it should either buy GMarket or partnership with GMarket in other to be successful. Since GMarket is big and successful it would not allow eBay to buy them so if eBay partnerships with GMarket it will be more successful in that area. If eBay is very tactical they can be better than GMarket in the long run. Like the saying goes If you cant beat them join them. So eBay will be better off if it partnerships with GMarket. eBay pulled out of Japan, is suffering in Taiwan and it lags behind a rival in China. In business it is advisable never to give up so eBay should reengineer its self so it can function better in countries like Japan, Taiwan and China. One of the lessons of the chapter 3 (Managing strategic capability) is that strategic capability often lies in the day-to-day activities that people undertake in organizations. So developing the ability of the people at eBay in other to have it off the relevance of what they do in terms of strategic capability of the organization is important. Bay should organize training and development in specific areas and also develop peoples awareness that what they do in their jobs matters. This will help achieve competitive success and increase their motivation. Bibliography Johnson, G. , Scholes, K. , & Whittington, R. (2008). Exploring Corporate Strategy. Essex apprentice Hall. SWOT Analysis Lesson. (2008, February 12). Retrieved March 23, 2009, from Strength, Weaknesses, Opportunities and Threats (SWOT) http//www. marketingteacher. com/Lessons/lesson_swot. htm Experience Supply cost Product/process design Economies of Scale Cost Efficiency