Essay on Auditing

4134 Words 17 Pages
Assignment 2

AU2 Advanced External Auditing

Question 2
a) Three specific business strategies that explain eBay’s decision to offer good for sale at fixed prices:
1. Expand into New Markets: With the shrinking market of auction bidders on eBay and a growing market of fixed price buyers, customers may not prefer to go in the direction of purchasing goods in an online auction. Since, in an online auction the customer has to wait till the end of the auction to see which buyer with the highest bid wins that item. Whereas, in a fixed price type of format, there are no bids placed and the price remains constant. Customers may prefer the idea of price stability over waiting to see if they get the item as they may be
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If access to internet is an ongoing thing, consumers are more likely to go elsewhere to shop. (EBay Business Strategy Guide)

2. Concerns regarding privacy and protection of user data could be a risk as it could affect eBay’s business. Without proper consumer privacy and protection in place, consumers are at a risk of identity theft and eBay is more likely to be exposed to legal lawsuits and may lose a majority of its online consumers. Consumers want to know that they are being protected when purchasing online since consumers provide confidential information such as credit card information over the internet. For example, for PayPal, eBay must ensure that financial information and consumer identity are secure by having a ‘PayPal Purchase Protection’.

3. EBay is the “middle-man” that brings buyers and sellers together to sell products through eBay; eBay faces the risk of product quality, counterfeit goods and fulfillment problems. Since, consumers aren’t able to inspect goods before purchasing; eBay faces the challenge of meeting consumer expectations for the items purchased. (Top Ten Risks eBay Sellers Face)
As outlined above the business risks, I would assess the client business risk as medium. EBay has risks that are not in their control, this would however have an effect on any similar business in the industry.
c) In order to gain more shares in the e-commerce market and

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