Ebay International Growth. Management Case Study Essay

EBay Case Study
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EBay international growth
Over the years, organizations across the world have constantly sought opportunities to increase their customer base, investment as well as revenue streams. As a result, when the growth strategies are exhausted at the domestic level, companies move to international markets intending to grow and expand. According to Bortoluzzi et al. (2018), distributing products into additional countries increases an organization's customer base as well as opening the firm to more investment opportunities. Typically, as a firm offer exciting solutions and build loyalty across the international markets, revenues build-up and increases as well (Holmes et al., 2018). Similarly, going to international markets helps in reducing costs by; increasing proximity to suppliers, minimizing shipping costs as well as utilizing economies of scale (Bortoluzzi et al., 2018). Besides international expansion allows a firm to diversify as well as boost innovation in the development of new business solutions.
However, entering foreign markets can be an uphill task especially in countries with strict rules and regulations (Xiaoqing, 2018). Different organizations have utilized diverse strategies such as joint ventures, mergers, and strategic alliances, direct exporting, partnering with foreign firms, acquiring firms in the different countries, franchising firm brand to mention a few (Mittal, 2018). Similarly, eBay, an American e-commerce conglomerate consistently tried to expand its market by diversifying its business through venturing into new businesses as well as expanding into other geographical sectors. Since its inception, eBay enjoyed strong revenue growth and was among the dominant e-commerce. The organization was favored by its unique business that helped unite over 221 million buyers and sellers. The growth led to the firm expanding its product portfolio from collectibles to household products, automobile, customer services as well as the mobile industry.
Despite the significant growth, eBay faced numerous challenges both in the domestic and international markets. For example, the minimal barriers in entering the e-commerce industry attracted many competitors such as Amazon Inc., uBid, overstock, and Yahoo. To counter the increased competition, eBay embarked on aggressive acquisitions as well as establishing partnerships and joint ventures with related and unrelated businesses across the world. For example, eBay acquired half.com and MercadoLibre in the year 2000 and 2001 respectively. Similarly, the organization announced international cooperation with Google an initiative that would help improve the business and customer base. Moreover, eBay engaged in joint ventures as well as strategic alliances. For instance, in 2004 the company purchased a 25% stake in Craigslist a well-established e-commerce player in the urban communities.
EBay international strategy
Over the years, businesses of all sizes have been launching operations in foreign markets. Although these expansion strategies offer a business numerous benefits such as increased market share and competitive advantage they also cause challenges such as increased financial risk. Therefore, for an organization to survive and thrive amidst the dramatic changes and the increased complexity they must formulate effective international strategies. According to Holmes et al., (2018), international strategies are business plans created by multinationals to help them achieve operational efficiency in the international markets. In a more practical form, it allows an organization to sell its products and services outside domestic markets. An effective international strategy requires a firm to analyze the global markets, resources and understanding market dynamics (Bortoluzzi et al., 2018). For example, eBay faced challenges related to competition, meeting customer’s preferences, and cultural barriers in the Asian market to mention a few. An international strategy helps increase market share, justify return investment, increase an organization competitive advantage, economies of scale, cost reduction, and risk reduction.
EBay offered its products to the local, national and international markets through its global platform. It utilized a global strategy that standardized and centralized operations in few countries. The organization used a single business strategy in the 24 countries in Asia, Europe, and North America. EBay’s global strategy allowed users to conduct transactions with ease in the online global community. The single platform, users could interact with each other and buy product and services irrespective of their geographical location. Besides, the global strategy allowed the organization to cut on costs through economies of scale as well as reduced development and maintenance costs.
However, the global strategy limited eBay's capability to meet business needs in different markets. This explains why the organization faced challenges in Asia markets but had better performance in the North America market. For instance, eBay's business model leveraged on the internet, however, the Asia continent had low coverage of 25% as compared to North America 78.6%. If the company utilized a transnational strategy that allows for customized products to meet the needs of the local markets, it would have achieved better performance in the Asian markets. EBay could achieve transnational strategy through leveraging its local acquisitions and accrue extra benefits by customizing the local business to meet the needs of the local markets. The transnational strategy would allow eBay to cut costs while meeti...