Ebay There Are a Number

eBay

There are a number of factors in the external environment that will influence the success of eBay's strategy in China. The first is the political environment. China is a complex nation in which to do business, largely because the economy has a high degree of government intervention. Google's difficulties in China illustrate the political risks inherent in operating in China (Sterling, 2011). The choice of partners in China is critical to minimizing the political risk. A poor choice of partners could put the company in the crosshairs of the Chinese government, reducing profit potential.

Another factor in the external environment is the economic environment. China's market is attractive to eBay because it is a high-growth market, with hundreds of millions of Chinese joining the Internet. The success of eBay's entry into the Chinese market is highly dependent on the ability of the Chinese economy to maintain its strong growth trajectory and bring more consumers online. In addition, increased economic activity will result in an increase in the level of interpersonal commerce of the type on which eBay thrives. The company will need to take stock of the antecedents of China's success and ensure that those conditions still exist; otherwise eBay will need to revisit its forecasts (Hu & Khan, 1997).

Another factor that will determine eBay's success in China is the social environment. The Chinese consumer behaves much differently from consumers in the United States. eBay's ability to appeal to the Chinese consumer will be key to its success in the country. The local partner is expected to be of significant value here. In addition to the differences between the cultures, it is also worth noting that the Chinese consumer culture is changing rapidly (Knowledge @ Wharton, 2006). The degree to which eBay can adapt to these changes will dictate its success, especially if it can adapt to the changes in the Chinese consumer more rapidly than its competitors.

The technological environment will also pose some unique issues for eBay in China that could dictate its fortunes. Chinese consumers are as yet unaccustomed to online purchases, the banking system is not as wired, and there are issues with Chinese characters that eBay will need to address. Until Internet security matches Western levels, eBay's ability to penetrate the Chinese market could be inhibited. Information security in China is struggling to keep up with the explosion of the Internet there, including Internet crime (AsiaInfo, 2009).

The competitive environment will also be a challenge for China. Google and other American companies have met with strong competition in China, in part because Chinese consumers prefer Chinese companies and in part because the market is so large that competition is intense. The degree of competitive intensity that develops in the Chinese online auction market will help determine the success of eBay's new venture in the country.

Lastly, a critical component of the external environment is the development of ancillary industries that serve to support eBay's operations. This includes everything from Internet security and Internet service providers to courier services and online banking. Courier services is an interesting factor because they are essential to eBay's success in the United States, but underdeveloped in China. Chinese consumers simply cannot send goods to one another as easily as Americans can. Thus, eBay's success will depend in part on the development of the industries that typically support eBay's operations.