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Ebay Strategic Management

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Ebay Strategic Management
eBay
Introduction
In this paper, eBay’s strategy for its growth through the years 2001-2010 is analyzed. eBay has tried itself to expand and diversify through its various business strategies. This paper would analyze the major strategies that affected the eBay’s growth positively and negatively.

Mergers and Acquisitions
One of the widely used strategies for diversification is Mergers and acquisition. Companies acquire stakes in other companies and control them. Some companies follow the strategy of acquiring a company to enter a new business market.

Year | Acquisitions | Stakes | Divestitures | 2009 | 1 | 0 | 1 | 2008 | 6 | 0 | 0 | 2007 | 3 | 1 | 0 | 2006 | 2 | 0 | 0 | 2005 | 8 | 0 | 2 | 2004 | 4 | 4 | 3 | 2003 | 3 | 1 | 1 | 2002 | 4 | 2 | 2 | 2001 | 4 | 2 | 1 | Total | 35 | 10 | 10 |

*Source: Alcastore.com

In the recent times, Mergers and acquisitions have become quite common due to the fact that the competition in business has grown. Also, economic recession has led to the strategic concept of acquiring and merging businesses.

eBay is an online American company which specializes in online shopping and auction and it is one of the market leaders in the Industry. eBay has strategically acquired companies so as to expand its market. In the initial days, the focus was more on developing the company. In the recent times, it acquired stakes in Skype (Online Voice over internet Protocol Company) for $2.6 billion. The best acquisition for eBay till date is considered as its buying out PayPal.

Paypal
In June 2002, eBay acquired PayPal, an online payment company for $1.5billion. PayPal was bought so as to help eBay in getting the payments quicker and help customers have a safe and reliable payment option. Merill Lynch’s Justin Baldauf (2002) said that PayPal is the gorilla Internet payment market as to eBay, the gorilla of web-based auction Industry. PayPal was popular and famous among many net-based customers of eBay at


References: Armstrong, Arthur and John Hagel III. 1996. “The Real Value of Online Communities.” Harvard Business Review Bajari, Patrick and Ali Hortacsu. 2000. “Winner’s Curse, Reserve Prices and Endogenous Entry: Empirical Insights from eBay Auctions.” Working paper, Stanford University. Clay, Karen. 1997. “Trade without Law: Private-Order Institutions in Mexican California.” Journal of Law, Economics and Organization, 13: 202-231. Duh, Rong-Ruey, Karim Jamal, and Shyam Sunder. 2001. “Control and Assurance in ECommerce: Privacy, Integrity and Security at eBay.” Working paper, Yale University. Greif, Avner. 1989. “Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders.” Journal of Economic History, 49: 857-82. Houser, Daniel and John Wooders. 2000. “Reputation in Auctions: Theory, and Evidence from eBay.” Working paper, University of Arizona. Katkar, Rama and David Lucking-Reiley. 2001. “Public versus Secret Reserve Prices in eBay Auctions: Results from a Pokeman Field Experiment.” Working paper, University of Arizona. Kollock, Peter. 1999. “The Production of Trust in Online Markets,” in Advances in Group Processes, Vol. McDonald, Cynthia G. and V. Carlos Slawson, Jr. 2000. “Reputation in an Internet Auction Model.” Working paper, University of Missouri-Columbia. McMillan, John and Christopher Woodruff. 2001. “Private Order Under Dysfunctional Public Order.” Michigan Law Review, 98: 2421-2458. Melnik, Mikhail I. and James Alm. 2001. “Does a Seller’s eCommerce Reputation Matter?” Working paper, Georgia State University. Milgrom, Paul R., Douglass C. North and Barry R. Weingast. 1990. “The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs.” Resnick, Paul, Richard Zeckhauser, Eric Friedman, and Ko Kuwabara. 2000. “Reputation Systems.” Communications of the ACM, 43: 45-8. Resnick, Paul and Richard Zeckhauser. 2001. “Trust among Strangers in Internet Transactions: Empirical Analysis of eBay’s Reputation System.” Working paper, University of Michigan. Saloner, Garth, Andrea Shepard, and Joel Podolny. 2001. Strategic Management. New York: Wiley. Snyder, James M. 2000. “Online Auction Fraud: Are the Auction Houses Doing All They Should or Could to Stop Online Fraud.” Federal Communications Law Journal, 52: 453-72. Woodruff, Christopher. 1998. “Contract Enforcement and Trade Liberalization in Mexico’s Footwear Industry.” World Development
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