Leveraging It for a Competitive Advantage Case of Ebay
LEVERAGING IT FOR A COMPETITIVE ADVANTAGE— CASE OF EBAY
Edward T. Chen, University of Massachusetts Lowell, edward_chen@uml.edu ABSTRACT eBay is a highly visible company that has been immensely successful in their implementation of a business strategy that incorporates their information strategy. It is a shining example of an Internet era company that actually turns a profit, and managed to outlast the “dotcom crash”. By remaining flexible and adaptable, the ever-changing eBay has developed a technology platform that differentiates them from their rivals. This paper analyzes the information technology strategy and information systems policy adopted by eBay to react to the business dynamics while maintaining the leading position in the industry. The company is resilient, versatile, and an excellent example of how a company can successfully leverage information technology for a competitive advantage. Keywords: business strategy, information strategy, technology platform, competitive advantage
INTRODUCTION The business strategy of eBay is exemplified in the company’s mission statement, “eBay’s mission is to provide a global trading platform where practically anyone can trade practically anything” [3]. Technology and information systems are critical to the success and future of the company. eBay does not have any physical store locations; the company’s presence is that of a marketspace. Warehouses or inventories do not exist. The business is based on community, and the marketspace is what enables this community to come together. eBay’s revenue is based on commissions received from the sales that occur in their community, so the more people they can reach and the more these people are able to buy and sell, the higher eBay’s profits. eBay may collect as little as 6 percent on each sale, but most of that is profit. It’s truly the sort of business that couldn’t exist offline [5]. eBay uses technology and information systems to help the community members buy and sell
Edward T. Chen, University of Massachusetts Lowell, edward_chen@uml.edu ABSTRACT eBay is a highly visible company that has been immensely successful in their implementation of a business strategy that incorporates their information strategy. It is a shining example of an Internet era company that actually turns a profit, and managed to outlast the “dotcom crash”. By remaining flexible and adaptable, the ever-changing eBay has developed a technology platform that differentiates them from their rivals. This paper analyzes the information technology strategy and information systems policy adopted by eBay to react to the business dynamics while maintaining the leading position in the industry. The company is resilient, versatile, and an excellent example of how a company can successfully leverage information technology for a competitive advantage. Keywords: business strategy, information strategy, technology platform, competitive advantage
INTRODUCTION The business strategy of eBay is exemplified in the company’s mission statement, “eBay’s mission is to provide a global trading platform where practically anyone can trade practically anything” [3]. Technology and information systems are critical to the success and future of the company. eBay does not have any physical store locations; the company’s presence is that of a marketspace. Warehouses or inventories do not exist. The business is based on community, and the marketspace is what enables this community to come together. eBay’s revenue is based on commissions received from the sales that occur in their community, so the more people they can reach and the more these people are able to buy and sell, the higher eBay’s profits. eBay may collect as little as 6 percent on each sale, but most of that is profit. It’s truly the sort of business that couldn’t exist offline [5]. eBay uses technology and information systems to help the community members buy and sell
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