Ebay Case Study

eBay was founded in the San Jose living room of Pierre Omidyar back in September 1995. The basic vision Omidyar had when he founded what became eBay was to create a person to person trading community based on democratic market principles; these principles allowed for a free flow of information, communication and ultimately transaction on tens of millions of items through the Internet. Along with the help of Meg Whitman, a skilled branding manager, and a senior staff from such heavily branded companies as PepsiCo and Disney, they established a strong mission for the company- that eBay be a company that is in the business of connecting people, not selling them things. This founding vision set the course for eBay's explosive growth from 1996-2003, making it the world's online marketplace for the sale of goods and services by a diverse community of individuals and businesses (Casseres, 2001).

The company eBay is an Internet business that runs by getting a small percentage of the money from every product sold. Managing a system of this magnitude could be difficult. There are certain things that you would have to impose in order to have a strong, secure, well established business.

eBay is one of the most popular ways to sell things in an online auction which makes it very efficient and effective for all of its users. Some of eBay's competitors include Amazon.com, Yahoo.com, and uBid.com. These competitors have healthy financial's, high brand awareness and similar technology and software for their customers, but they have nowhere near the scale of bidders and sellers for their auction sites.

Most people prefer to use eBay to sell their things, because of the high rate of usage. Management has to lay down certain rules and guideline for people to follow. For example, management created a Feedback Forum that is considered to be the first line of defense. It allows buyers and sellers to rate each other after each transaction and to leave comments. This information is then recorded in the users profile for others to view. This lets users know if they have had a pleasant or bad experience with the person.

Another feature they have is the Safe Harbor Program which provides guidelines for trading and information to help resolve user disputes and responds to reports of misuse of the eBay service (e10vk, pg 11). Safe Harbor issues warnings to users, removes listings, or suspends users from bidding if found violating terms of the user agreement. Management uses these terms to make sure that all of the users know that there will be penalties to people who don't follow the rules.

eBay is subject to the same foreign and domestic laws as other companies conducting business on and off the Internet (e10vk, pg 56). Currently however, there are few laws and regulations directed towards online services, mainly because little precedence exists. Therefore, online auction companies are taking it upon themselves to self-regulate. eBay for instance took it upon themselves to ban hand guns, tobacco and alcohol products, and has tried to take a stand against music and video piracy on the web. With the increase use of the Internet the last several years, states and foreign jurisdictions may attempt to impose regulations upon eBay or its users.

Since eBay is a global entity, regulation is not limited to just domestic issues. eBay must also follow foreign policy and regulation regarding e-commerce, which varies by country. These regulations include but are not limited to: differing intellectual property laws, profit repatriation restrictions, foreign currency exchange restrictions, exchange rate fluctuations, laws and business practices that favor local competitors or prohibit foreign ownership of certain businesses (Solomon, 2005).

eBay's industry level strategies are to: 1) focus on transaction liquidity, 2) provide the most reliable platform for global online commerce, 3) stay on top of technology to provided safety for users, and 4) provide a unique sense of community (eBay 2005).

eBay's corporate level strategy is to be the first to market and to gain a large portion of the market share so that when other companies enter the market they will be at a huge disadvantage. eBay tends to buy all start up business's that have items that can be auctioned off online. Examples would belike eBay buying rent.com and skype.com and adding them to their offerings (Sinclair, 2005).

eBay’s firm level strategy is quite simple. They use a very aggressive approach when entering a new market. The most common aggressiveness that eBay employs is to buyout or become a large owner of the leading online auctions website in the country they want to get into. An excellent example is the Latin American market. When eBay decided that they wanted to get into this market, they did a lot