Before we analyse eBay’s source of competitive advantage, it is crucial for us to use Porter’s five-forces model of industry competition to examine eBay’s external environment forces that are affecting its profitability (Dess et al., 2014, chapter 2). These five forces are as follows:
1. The threat of new entrants
2. The bargaining power of buyers
3. The bargaining power of suppliers
4. The threat of substitute products and services
5. The intensity of rivalry among competitors in an industry
The first force, the threat of new entrants is related to how strong the existing barriers to entry for potential players in an industry (Dess et al., 2014, chapter 2). If a new player in an industry is expecting a strong resistance from more established …show more content…
In eBay’s case, there are several competitive advantages it has over its competitors. The first being its product differentiation (Dess et al., 2014, chapter 5). eBay’s differentiation strategy is reflected in its unique business model where buyers and sellers are united online in a unique manner. Sellers carry their own inventory and buyers can find almost anything on eBay. Such ways help eBay keep its costs low as compared to others. Furthermore, another eBay’s competitive advantages is its entrepreneurial orientation. This involves practices that a firm implements to help identify and launch its corporate ventures (Dess et al., 2014, chapter 12). eBay’s entrepreneurial orientation can be seen from its five dimensions, such as autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking. In eBay’s case, eBay has successfully identified the need to penetrate into Asia’s market where if it is successful, it can possibly have the largest market share worldwide. This shows that eBay’s is constantly autonomous and proactive in trying to improve its business. eBay’s founder is perhaps the best example of autonomy and innovativeness because of his action of carrying forward a unique opportunity (online auctions) and successful completion of his vision (eBay). Also, through its many acquisitions, partnerships, and investments in related and unrelated …show more content…
Based on eBay’s SWOT analysis, its resources are valuable because they enable eBay to “exploit opportunities and minimize threats” by penetrating into new markets to reduce competition and lead the market share. Also, its resources can be considered rare because competitors do not possess the similar valuable resource (e.g. online auctions) and customers have established that eBay is the one who develops and owns online auctions. Unfortunately, eBay’s resources are easily imitated by its competitors. This, as a result, only create temporary value. Lastly, eBay’s resources are easy to substitute due to the fact there are other options that customers can opt for, such as retailing and eBay’s competitors (Yahoo, Amazon,
1. The threat of new entrants
2. The bargaining power of buyers
3. The bargaining power of suppliers
4. The threat of substitute products and services
5. The intensity of rivalry among competitors in an industry
The first force, the threat of new entrants is related to how strong the existing barriers to entry for potential players in an industry (Dess et al., 2014, chapter 2). If a new player in an industry is expecting a strong resistance from more established …show more content…
In eBay’s case, there are several competitive advantages it has over its competitors. The first being its product differentiation (Dess et al., 2014, chapter 5). eBay’s differentiation strategy is reflected in its unique business model where buyers and sellers are united online in a unique manner. Sellers carry their own inventory and buyers can find almost anything on eBay. Such ways help eBay keep its costs low as compared to others. Furthermore, another eBay’s competitive advantages is its entrepreneurial orientation. This involves practices that a firm implements to help identify and launch its corporate ventures (Dess et al., 2014, chapter 12). eBay’s entrepreneurial orientation can be seen from its five dimensions, such as autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking. In eBay’s case, eBay has successfully identified the need to penetrate into Asia’s market where if it is successful, it can possibly have the largest market share worldwide. This shows that eBay’s is constantly autonomous and proactive in trying to improve its business. eBay’s founder is perhaps the best example of autonomy and innovativeness because of his action of carrying forward a unique opportunity (online auctions) and successful completion of his vision (eBay). Also, through its many acquisitions, partnerships, and investments in related and unrelated …show more content…
Based on eBay’s SWOT analysis, its resources are valuable because they enable eBay to “exploit opportunities and minimize threats” by penetrating into new markets to reduce competition and lead the market share. Also, its resources can be considered rare because competitors do not possess the similar valuable resource (e.g. online auctions) and customers have established that eBay is the one who develops and owns online auctions. Unfortunately, eBay’s resources are easily imitated by its competitors. This, as a result, only create temporary value. Lastly, eBay’s resources are easy to substitute due to the fact there are other options that customers can opt for, such as retailing and eBay’s competitors (Yahoo, Amazon,