eBay business model and operations

Ebay

The recent (or ongoing) recession has provided an excellent external opportunity for eBay, as the company has long offered many consumer products at discounted rates in addition to higher end auction items. The recession means that more individuals will be seeking bargains for many more expensive consumer items, and eBay can offer used or even new alternatives to paying full retail price for these goods. Growing Internet availability throughout the world is another significant opportunity, as more consumers are able to join eBay every day. At the same time, this increase in availability makes it easier for competition to surface, and this creates something of a threat for eBay. The recession has also reduced the overall demand for discretionary items, which includes pretty much everything eBay deals in.

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Internally, eBay is very strong in its knowledge and in the consistency of its operations, Having been in business for quite some time and largely perfected the Internet auction process while at the same time expanding the services and scope of the company, eBay is very solidly positioned to continue operating in a profitable and secure manner that any competitors would be hard-pressed to emulate. The company's size and industry standing are also barriers to innovation, however, which at this point in the company's development is a definite weakness that it possesses. Though the company was highly innovative when it first emerged, as was necessary due to the fact that it was essentially inventing its industry and business model as it evolved, there are numerous smaller niche competitors that have arisen that are proving more innovative than eBay in terms of creating value and revenue.

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Knowledge is key in any business, but especially in a marketplace marked by rapid changes not only in consumer trends and desired but also in modes of operation and conducting business. In all of its major endeavors, eBay has demonstrated a marked ability not only to acquire the necessary knowledge, but to apply it in direct and effective manners. Knowledge management is thus a core competency that the company demonstrates that is a definite source of its competitive advantage. The ability to diversify and to integrate is also strong in the company, as demonstrated by its PayPal and Skype divisions (though Skype was recently sold -- perhaps much to eBay's credit and profit, in the long-term). All of these aspects help the company to remain competitive and create value for the company's shareholders, which increases confidence in the company and its chances for success.

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