Term Paper on "Strategic Management Ebay Expanding Into Asia"

Term Paper 4 pages (1111 words) Sources: 1

[EXCERPT] . . . .

Strategic Management - eBay: Expanding into Asia

How has eBay expanded abroad? What strategies has it used in its international expansion?

eBay has relied on a variety of strategies for global expansion, each having a varying level of success over time. One of the most successfully has been an equity investment in MercadoLibre.com, which significantly opened up the South American market and continues to generate profitable growth today. The strategy in Germany was very similar to South America, with eBay acquiring Alando auction house. This strategy continued through the Netherlands with the acquisition of Marketplaats.nl and the acquisition of Tradera.com for expansion into the Swedish market.

The strategy in China was the same as Europe, yet eBay failed in this nation as it faced an entrenched competitor, Taobao, which had 70% of the auction and online selling in China by the time eBay arrived in this nation. eBay struggled against Taobao because of the high level of preference Chinese consumers had for this e-commerce and auction site that had already become a favorite with many Internet users.

eBay's ability to grow quickly and most successfully in cultures most comparable to western nations, and the use of equity investments to gain access to markets dissimilar to theirs is one of the critical success factors in their global growth. This is common with corporations who have created business models that do exceptionally well in westernized nations yet don't scale well globally, Wal-Mart being a case in point. The challenges to eBay are even more significant however, as gaining and keeping the trust of consumers is crucial to their long-term growth. The community aspect of their business model needs to be in precise alignment with the expectations, perceptions and needs of consumers in each global market of interest. Where eBay has succeeded, they have used equity investment and joint ventures to attain a level of community trust. Where they have failed, their trust levels have been low and the task very challenging of growing their markets in foreign countries. There is much more to the failure of eBay in Asia, and that analysis is explained in the next question.

2. Why is eBay having difficulty expanding in Asia? What should eBay do?

The foundation of the eBay business model is the combination of unique and differentiation products offered by a community of users who trust each other and share a common perception of fair pricing and value. The success or failure of e-commerce across national and cultural boundaries is most influenced by the apparent and earned trust between community participants where risk is assumed to be evenly distributed between buyer, selling and intermediary (McCole, Ramsey, Williams, 2010). This is one of the systemic problems eBay is having expanding into China specifically and Asia overall. Due to the lack of trust in eBay there is a lack of community being built around its brand and platform. This significantly slows down both individuals and businesses willing to put their products up for sale on the site or purchase from it as well. In conjunction with these factors, the difference in time perception and the lack of congruency between the U.S. And China specifically on cultural factors have made expansion into these nations problematic.

For eBay to be successful, they must execute at a nearly perfect level across the nations they… READ MORE

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