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Running head: A STARTEGIC CONSIDERATION
A Strategic Consideration
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A STARTEGIC CONSIDERATION
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EBAY'S STRATEGY
1.1. EBay's problem with its strategy
The main problem with eBay is choosing to use international expansion for their growth, a
field where they had minimal experience. For many companies, growing their businesses overseas
can be very enticing. However, entrepreneurs should note that this is an entirely different ball
game. Firms usually encounter many difficulties in learning the dynamics of overseas markets and
establishing a new customer base. There are also new laws and regulations to learn, unfamiliar
local customs to learn as well as getting dependable trade partners (Panibratov, 2017). This
strategy seemed to work for the period between the years 2006 – 2008, where the firm derived its
revenue from three critical sources. First, was from the many products and services that the
company offered online, whether sold in fixed-price transactions or by way of auction. Second
was PayPal's transactional fees and Skype's communication fees. The expansion and
diversification saw revenues increase marginally by 11% in 2007. For eBay, an increase in ecommerce adoption, and internet usage created an excellent opportunity. And as a leading market
brand, the firm was in a very strategic position to capture a big chunk of the market in the early
stages. There was a notable success in particular markets in Latin America and Europe but little
progress in the Asian market. Further acquisitions of non-performing businesses like Skype by
eBay meant that the business diverted from its core auction and retail trade. This mistake led to
the company's share, shedding its value by half in 2008.
1.2 The Market Strategy
eBay seemed to use a market development strategy for growing internationally, followed
by diversification. As a market strategy, firms use market development to enter markets in different
A STARTEGIC CONSIDERATION
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geographical regions or customer segments using existing products (Fortin, 2017). To a business,
an eff...
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