E-Bay is a company that was formed by Pierre Omidyar born in French. He had a deep interest in computers and this led him to take up studies in computing of which he graduated with a bachelor’s degree in computer science. Later on he became a computer programmer with a great potential in the same field. At this time, online auctioning formed such a big potential market and was so lucrative. It is upon these grounds that Pierre formed e-Bay company. This company came up with the modern person-to-person kind of online auctioning in the year 1995.
At that time, the company gained a total of one thousand six hundred auctioning sites (Eric 2004). By 1996, the company’s customer base reached an all high with a big traffic being experienced on the company’s website hence e-Bay had to come up with much better ways of serving its customers. By this time, e-Bay was rumoured to be the best provider of auctioning services globally particularly on hobbyists as well as bargain hunters and collectors and by late 1999, e-Bay was having a total of ten million customers as registered users.
It was estimated that a total of more than 370,000 clients were using e-Bay’s website each day and this showed the company’s potential. Commissions together with fees were hence paid to e-Bay by the companies using e-Bay services. In 2000, e-Bay was the official leading company, owning the largest website that was linking consumers all over the world Executive summary e-Bay as is an online auctioning company. Its major aim was to enable people to whatever goods and services they had to exchange using the internet.
It has been developing very fast m and as a result of its effectiveness, it has been recording sales through out constantly. Today, auctioning exists in various forms: person-to- person auctioning, business-to-consumer auctioning and business-to – business auctioning. e-Bay gains revenue in several ways one of them being the revenues it receives from the service of hosting a website that enables people and companies around the world to either advertise their goods or to find out which goods are available.
Today, e-Bay has stability, economically and in terms of overall resources it owns. A relatively higher fee is charged on sellers whereby at the initial commencement, an initial fee is paid and later on, ‘final fee’ is charged at the close of the auction. e-Bay checks at the end of the auction process whether there was fairness in terms of prices both to the buyer and the seller so that none of them goes through the auction feeling cheated or unfairness on their side (Fred 2002).
Finally, at the end of the transaction/auction, e-Bay will inform both the seller and also the buyer, by way of e-mail, if that bid that was offered stands at very higher prices than minimum price that the seller is offering. If the auction proves to be successful, the seller and the buyer should make private arrangements on how the goods will have to be transported so as to reach the buyer, and how the seller will receive payment. The company is not held responsible for whatever happens between buyers and sellers once the auction is over.
In this kind of business, the agreement is between two parties: the bidder who bids for the prices and the seller of the products. Strategy Safari According to the position school a prescriptive form, a business is viewed according to the industry in which it is operating. The school put in place by Michael Porter in the 1980’s stipulates how the business will improve on its current competitive position by within that industry in order to gain a greater competitive advantage. This school focuses on the strategic position of the firm and how this strategy comes down to generic positions.
This also entails analyzing the current position of the firm’s industry operating, in a formalized way. In this way, the firm planners turn out to become analysts. This has come to be such a profitable business for consultants as well as for academicians. These classes of people work very hard to uplift their scientific truth and hence boost their public image to companies, who are their major clients. As a result of continued expansion of this school and its propagation, game theory and value chains have become part of the school.
Relating this to e-Bay’s case, it can be seen that the game theory applies in the strategies laid down by the company which ensure that the company’s plans are forward focused against the present and the potential competitors in the in the industry (Greg 2004). The Design School on the other hand, emphasizes on the formation of strategies as being a conception process. This school as well combines the interior conditions within a firm to the conditions outside the firm that is, the environment within and without the organization.
Formation of the firm strategy is majorly aimed at conveying out the best possible profile that can be achieved by the firm. In this case, the firm management usually sets strategies that are simple and achievable of which these are communicated to the staff for them to be implemented. e-Bay has been striving to regulate itself to adjust to changes in the environment. This has been through implementation of the competing on the edge approach that assists in regulation to the environment (Sam 2006).
e-Bay’s Competing on the Edge Strategy E-Bay has a competitive advantage has a competitive advantage over other companies by the strategies it employs. Competing on the edge as a strategy focuses on the rate at which the business can adapt to change. This strategy enables a business to prepare effectively for the future since a firm’s ability to adapt to change very much influences the firm’s quality performance. Another success factor is the firm’s ability to survive during hard challenging moments and also the firm’s ability to easily change in order to accommodate new inventions and innovations into its operations (Joyce 2002).
The competing on the edge strategy, adopted by e-Bay ensures its activities are not controlled such that decisions are majorly made at the various business units, not at the company headquarters so that time is not wasted in consulting the all units from the headquarters but in stead, each business unit at each level takes appropriate decisions as is necessary. Basing on the wide structure of e-Bay, it would be so hard to always have all issues tackled at the headquarters. This strategy embraces the diversity approach which has seen e-Bay as auctioning company expands its operations and spread its branches globally.
Another advantage associated with this strategy pursued by e-Bay is that competing on the edge has kept e-Bay pro-active such that dominating and controlling the auctioning industry has been top on its agendas and in deed, it has achieved. However, this strategy has also proved to be inefficient and unreliable since it is not assured that the policies drawn will be achieved (Gale 2000). The competition on the edge as a strategy looks at ways of restructuring competitive advantage of the firm so that it can comply with the current advertising market that is always changing.
This strategy also aims at making the whole organization to be more innovative and inventive. This is achievable through maintaining the competitive advantages of the firm and just as it will be the aim of any other strategy, competing on the edge strategy provides a link between where the firm is currently, where it intends to go and the means through which the firm is to get there. It involves allocation of relevant resources and the relevant personnel to be in charge of the projects.
Competing on the edge theory is appropriately applicable in cases where the environment changes so fast and hence the managers in charge must be ready to adapt equally so as to stay in business. In this case, e-Bay is in such a highly competitive business with auctioning and advertising playing a crucial role in connecting buyers and sellers of various goods in the world. The environment within that industry is so rapidly changing hence this strategy is very appropriate (Nancy 2001). Another key role played by this theory is that it helps a lot in bringing back order in times when there is trouble.
Competing on the edge emphasizes the fact that for companies to acquire best adaptation, they merely require partial, not complete connection. Cases of excessive structures are an obstacle in a company’s attempt to perform effectively and at the same time if the structures are too few, chaos arises. Equally, for best performance and order in the firm, there ought to be just moderate rules, not too much rules in the organization and the managers should be willing to let go excess roles and powers in order to bring about stability and greater adaptability in the firm.
The competing on the edge strategy is based on five foundations called building blocks along with three theories; complexity theory, time-paced evolution and the nature of speed. The building blocks are improvisations, regeneration, experimentation, co-adaptation and lastly, time-pacing. Other Strategies Strategies are meant to increase as well as sustain the domination of a company in a particular industry. When new products are launched and promotion is done in the target market, the market will become wider and the products as well as the company will become popular.
E-Bay employed this strategy in the late 20th Century and the number of clients not only increased massively but it also made them to be loyal to the company and they kept coming back for more products hence customer base and loyalty went up. e-Bay also undertook an initiative to display the different strands of products in 1999. This was mainly achieved by persistent advertising along with making leaflets for the customers. This service attracted more customers (Amy 2007). In another strategy, e-Bay has been merging with other companies so as to improve on its delivery of services.
Such companies with which e-Bay has merged include Yahoo! and also America Online. These companies do provide communication services online and by merging with them, e-Bay managers intended to ensure customer communication with each other and with the company become beneficial to the fullest (Tony 2006). In yet another developmental strategy, the company targeted widening the e-Bay community and making its brand strong. To do this, the company depended on advertising by verbal communication so that the customers were to spread word about the company and its activities hence its brand name would spread.
Alliances have also become a major strategy for growth. In 1998 for example, e-Bay company formed alliance with First Auction Company. In their contract, each of the companies could advertise on the other company’s website. This strategy was aimed at expanding their market and to increase the customer base and by mid 1999, this objective was fully achieved (Ward 2001). The other strategy employed is making the web features modern. So as to come up with the best web design, the company involved both sellers and buyers.
The site has become modern; it has been divided into much smaller parts in order to cater for the customer’s individual needs. It has also become very easy to access this site (Roites 1998). In order to stimulate customer and overall community trust towards the company, e-Bay has been providing such services as insurance cover. This has helped in maintaining closer links with clients and it has won the trust of the entire community (Paul 2004). . e-Bay has many strength and opportunities compared to its competitors.
The fact that e-Bay is such a world known brand name makes it be more depended upon by clients. Also, it has had to liaise with over 250 companies and this has increased its efficiency and popularity. It even has a university, e-Bay university and is a public company trading its shares on stock market (Gresham 2002). It also acquired yahoo. com and this has impacted positively on its market. Today’s world experiences increased internet use and this means more people can access the company’s website hence more customers (Livingstone 1999).
Conclusion E-Bay currently holds a very large market share in the online auctioning and advertising with an estimated 100 million people using the company to acquire and sell goods all over the world. Its strategies have come to work well and the company’s challenges, though they are many, have been outweighed by efficient strategies and a responsive environment. The company has an exclusive management system and its diversity globally has not only increased its competence and sales but it has also eased trade the world over. This company has generally been successful and its future potential is very high.