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Common Types of Key Success Factors of E- bay - Case Study Example

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Summary
The researcher of this essay will make an earnest attempt to evaluate and present technology-related key success factors (KSF), manufacturing-related KSF’s, distribution-related KSF’s, marketing-related KSF’s, skills-related KSF’s, organization capability…
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Common Types of Key Success Factors of E- bay
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 Common types of key success factors Technology-related KSF’s: The website that e-Bay maintains is pone of it’s biggest KSF’S. it provides users with value and utility which is not offered by any of its competitors and makes the users feel part of a global community. The website interface is interesting and creative which increases its appeal. Manufacturing-related KSF’s: e-Bay does not have a manufacturing related KSF as it is in the online auction industry where independent sellers and corporations sell through e-Bay which acts as a platform. Distribution-related KSF’s: e-Bay has a global reach that no other online auction company has. With 168 million buyers and sellers based in 115 countries around the world taking part in active buying and selling on the website, the company has, over the years developed alliances with major names such as UPS to provide its customers with extremely reliable, cost effective and timely distribution services. Marketing-related KSF’s: e-bay has a strong marketing strategy which allows it to reach consumers globally. Having formed alliances with major names such as Disney, AOL and IBM allows it to engage in advertisement opportunities which allows it to appeal to a wide range of consumers. Skills-related KSF’s: e-Bay has no need of a traditional sales force, therefore there is no predominant skill related KSF possessed by e-Bay. Organisation capability: 1/3 of all American internet users are registered with e-Bay and prefer it for carrying out their online purchases. A very big reason for this is that is the inexhaustible variety of products that are on sale at the website. Apart from this extremely successful differentiation strategy, e-Bay as an organization is successful because of the convenience, safety and cost effectiveness that it provides to its customers. Requiring no traditional sales force to aid in the selling process, the corporation can keep its costs down and increase profits. Other types of KSF’s: Another KSF for e-Bay is the fact that it is a publicly traded company. The company’s first IPO generated $66 million and the subsequent offer generated $660 million in capital. The company has almost 95 million registered users in more than 150 countries around the world and is the largest and most recognized auction website in the world with an established brand name that commands respect. Worksheet 9: Is the industry attractive and what are its prospects for above-average profitability? Factors to consider when determining industry attractiveness The industry’s growth potential: The increasing number of internet users and the worldwide change in lifestyle has made the online selling industry prosper. Added to this, there are still many ,markets that have yet to be penetrated by the largest names in the online selling industry. An example of this is Japan which is an attractive market with a lot of potential and is indicative of the prospective growth that the online auction industry can achieve. . Whether competition currently permits adequate profitability: Currently e-Bay’s biggest competitor is Amazon which is still quite far behind e-Bay with regard to the market share. With the current standings, and the low costs that are incurred as a result of the nature of the business, profitability is high and has been increasing over ti,me. Whether industry profitability will be favorably or unfavorably affected by prevailing driving forces: The industry on the whole is on the rise upwards as the number of internet users around the world are increasing. Similarly, the trend of online shopping has also been steadily on the rise and both of these combined are providing a great scope for growth in this regard. With the increase in the number of online retailers, the profit margin of firms like e-Bay will decline in the long run, however since these firms have very few over head expenses, those which maintain a high level of exposure will remain extremely profitable. The company’s competitive position in the industry and whether its position is likely to grow stronger or weaker: in the current circumstances e-Bay is outperforming all its competitors in the industry. However, the rising popularity of Amazon may prove to be a considerable challenge for the company in the future. If e-Bay maintains the current standard of service and continues organic and inorganic growth, it will have little difficulty in sustaining its market position. The company’s potential to capitalize on the vulnerabilities of weaker rivals: No online auction website offers an extensive array of products the likes of which e-Bay does, a fact that has been used by the firm to capture extensive market share. The website has hundreds of thousands of products on sale under numerous categories, and claims have been made that a person can find on e-Bay virtually anything that they might be looking for. Whether the company is able to defend against or counteract the factors that make the industry unattractive: Issues such as sale of counterfeits as well as other illegal activity has been associated with online selling and buying, however e-Bay has managed to gain the trust of the masses due to the steps that it has taken to counter these problems. Customer feedback on the sellers is used to check whether their activities were according to the rules set by the company. Apart from that, other programs have been taken up which include Safeharbor which is instrumental in deciding disputes between buyers and sellers. The degree of risk and uncertainty in the industry’s future: As is the case with any business, a certain level of risk is associated with this industry as well. Major contributing factors can be an increase in direct competitors which reduces profits drastically for firms, an exponential increase in the selling of counterfeit items which shakes the confidence of the consumer. However, the uncertainty associated with the future of the industry is not worrisome as the number of people who are attracted to this form of retailing is consistently increasing. The severity of problems confronting the industry as a whole: As mentioned before, major issues confronting the industry include the monitoring of illegal activity on the websites as well as ensuring that customers get what they pay for. even though a major portion of daily transactions do take place relatively harmlessly, there is till need to address this problem with greater vigor. Worksheet 10: How well is the present strategy working? Factors to consider in evaluating a company’s strategy According to the company’s financial report, the net revenues for the first quarter of the year 2010 were in the range of $2.1 Billion to $2.2 Billion and represented a growth of 12 to 18 percent over the first quarter sales revenues in the same period last year. For the full year 2010, the company is expecting net sales revenues in the range of $8.8 billion to $9.1 billion representing a growth of 9 to 12 % over the last year. Currently there no competitors which are as profitable as e-Bay. Since e-Bay is not a manufacturing firm, it will have to maintain other aspects of it’s business in a way so that customers can keep on renewing their association with e-Bay year after year. This will have to include a greater penetration into newer markets, maintaining the global reach that has been associated with this project while maintaining a successful distribution network. The sales revenues of the company, along with its position in the market shows that it has effectively retained its original customer base along with attracting prospective buyers through ventures such as the e-Bay express which focuses on much more conventional methods of e-retailing. The current price of an e-Bay share is $21.44, which has shown some marked fluctuations in the last 3 quarters but at which at any given time, as not stayed below the $20 per share mark for long. Currently the share price is on the rise again indicating an increased investor interest in the company’s stock. The Pre-Tax Profit Margin average for the last five years has been 25.1% which is indicative off a pretty sound financial standing. The post-tax profit that the sellers have generated 19% as a five year average. Both figures indicate a respectable, if not outright spectacular profit margin, but since the company as very little overhead costs, this profit margin is still relatively high. e-Bay as a brand name has managed to garner respect in the minds of the customers through innovation and a high standard of service that has been maintained over the years. e-Bay has the net profit margin of 19% and the return on investments is 11.7 % as recorded in the last years financial report. Compared to it’s competitors, e-Bay has the highest net profit margin and ROI. e-Bay is mainly known as the largest and most comprehensive online seller with a product portfolio of extensive girth. Added to this, the company provides the best online shopping experiences through it’s innovative and interactive website. Another bonus is that customers have come to count on, and depend upon the reliability, utility, as well as the guaranteed low prices that e-bay has been offering consistently. Standards &Poor’s rating system has assigned an A- corporate credit rating to e-Bay and has stated that it is due to the company’s widespread fame and along with impressive liquidity. Read More
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