Core Competencies of Ebay

Keywords: competencies of ebay, ebay center competencies

In this record, there is an analysis about the global company - eBay. In the content, eBay's center competency, value chain, and the obstacles that eBay face will be illustrated and analyzed in order to obtain additional knowledge of the dissimilarities with the others.

Also, there's a local company - Charles & Keith is selected to do comparison with the eBay's globalized strategy. After contrasting one another strategy, then you will see the critical research of it that if the strategies are get employed by each others.

This analysis really helps to illustrate a global business how it operates like. Meanwhile, it offers the understanding about the central competency and value chain will be the key components to create increased value to customers.


In speed with fast growing of technology, convenience is given broadly by accessing the internet for chatting, e-mailing, video conferencing, even making online payment, online shopping, online public sale, and other e-business activities. In today's competitive business market, eBay is one of the successful e-commerce - online public sale sites which was founded by Pierre Omidyar (Cohen, 2002).

In 1995, eBay was officially built as a web trading program that manages person-to-person trading in a web-based auction format community by Pierre Omidyar. As a matchmaker, eBay offers a stage for sellers and customers to connect in worldwide, however, it could be individuals and businesses entail in buying and selling variety of goods and service. Invisibly, eBay provides a place where customers and vendors can quickly meet, exchange information about goods and prices, manage sales at least costs, and made collecting and great buy hunting fun (Bunnell and Luecke, 2000, p. 14).

In the world's major online market, as pioneer as eBay is, its exclusive setting where capital, desire, and personal information converge has progressed into a worldwide economic, sociable, and cultural sensation (Hillis, Petit, and Epley, 2006). Matching to eBay self-characteristic which is leading a universal shopping vacation spot on the internet virtually that has seen a driving a vehicle pressure of global e-commerce. However, for surviving in the global market, eBay attained PayPal in 2002, to permit anybody or business with an e-mail address to receive and send payments online safely, easily, and quickly. Besides, eBay also received SKYPE to enhance its operation thus maintain a certain service standard (Daniels, Radebaugh, and Sullivan, 2009).

Due to a global e-commerce business that eBay pursue, comparatively, challenges about translation software, digital split, cultural attitudes about e-commerce, government restrictions, and the pace of international growth are probably to be seen as hurdles in development (Daniels, Radebaugh, and Sullivan, 2009).

Core Competency of eBay

In the truth of eBay, the core competency which will be analyzed in here's like the company's interior factor - power. Regarding to Hitt, Ireland, and Hoskisson (2009, p. 103), central competencies are resources and functions that seen as competitive edge for the firm over its rivals, meanwhile, this can be a value-creating strategies to fulfill customers' needs. In order to meet customer's potential clients across time, constantly improve, innovate, and upgrade their competencies is needed. Being truly a strong central competency, it will need to have some significant components that are including the recognized customer benefit for the end product and difficulty of imitation (Hiebing and Cooper, 2004).

For the sake of further growing and progressively keeping the first innovator position up in the e-commerce industry, the central competencies of eBay have:

An efficient circulation system with developed proprietary software

In eBay's own website, there are group of phases that allow sellers to design, build-up, monitor, and set up their unique auctions to market outstanding thematic goods for those customers are prepared to pay a premium price on it, whereas, buyers used eBay's software to find products and place bids (Daniels, Radebaugh, and Sullivan, 2009).

A developed proprietary software which is scalable, full-bodied, interface and transaction-processing system that deal with all areas of public sale process (Physique 1). For instance (Body 2), it transmits e-mails when users register for the service, place a successful bid, and outbid. Furthermore, it transmits daily status changes to active sellers and bidders and maintains user registration information, account information, current auctions, and historical entries (Bunnell and Luecke, 2000, p. 32). It offers convenience for both retailers and buyers to gain access to eBay to check on in the new status whenever.

Figure 1: Public sale Process (I)

Figure 2: Auction Process (II)

Global Reach

With the mission of offering global trading program where anyone could operate whenever at anywhere, eBay acquired the best public sale websites in 23 countries such as Australia, Belgium, Canada, France, Germany, India, Ireland, Italy, South Korea, Singapore, Spain, Sweden, Switzerland, Taiwan, and the uk. People could find weird and cheaper products from eBay because of its global functionality (Daniels, Radebaugh, and Sullivan, 2009).

An Extensible Strategy

As a monopoly in America's sale, eBay's extensible strategy has provided variety of products, services, and marketplaces. There remain 12 million sale set up in different countries and has split into 18, 000 different categories. Almost approaching 2 million of new items are given for sale; in the same way, there are 62 million new users from eBay are pleased to get the items here too. That is why the opponents such as Yahoo and Amazon are hard to access in the public sale market to grab the market show (Dror, 2003).

Acquisitions and alliances with companies

By associating Square Trade, Auctionwatch, AOL (Nerney, 1999), IBM (IBM and eBay Forge Broad e-business Alliance, 2001), Yahoo (Yahoo and eBay seal online offer, 2006) and attained PayPal and Skype (Daniels, Radebaugh, and Sullivan, 2009); eBay has beneficially meet the customer satisfaction in the meantime obtain the very best propagation to the users.

Strong brand id and recognition

'A powerful and highly recognized brand name commonly ends up with greater unit sales and allows owner to charge a premium over "off-brand" competition' (Bunnell and Luecke, 2000). eBay may have strong brand acceptance and popular by people are attributed by its global extension and building up a strong customer base. There may be 67 percent market share from brand personal information of eBay (Lee, 2007).

eBay's Value Chain

Figure 3: Porter's Value Chain Model

In the Porter's value string (Body 3), it is a model to investigate the organizational process as activities that the company to has the competitive benefit and create value for the customer (Michael Porter Value Chain Model Construction, 2010). By analyzing the primary activities, eBay could able to see where in fact the value can be added, thus, permit the business to achieve a ecological competitive advantage. Therefore, value string becomes an important key tool for any type of firm (Wickramasinghe and Lubitz, 2007).

The "margin" (Number 3) is really as same as added value, while the firm is split into "primary activities" and "support activities". Most important activities offer the customer an even of value that exceeds the price tag on the activities (THE WORTHINESS String, 2010) includes inbound logistics, procedures, outbound logistics, marketing and sales, and service. Alternatively, the support activities are encouraging the primary activities to be sure these activities a firm has the possibility to create better value. Also, a 'competitive advantage may be attained by reconfiguring the worthiness chain so as to provide lower cost or better differentiation (THE WORTHINESS String, 2010). In the next page, there's a value chain analysis of eBay that how it works with the worthiness chain (Figure 4).

Primary Activities (Bidgoli, 2004 )

Inbound Logistics

- Internet Links aid submitting of product information.

- Listings of products explain to customers.


(Value Creation)

- Database internet search engine allows quick access to products.

- Dynamic rates permits bidding to determine selling price.

Outbound logistics

- Distribution is facilitated or the responsibility of vendor.

- Escrow system try to limit fraudulence.

Marketing and Sales

- Having first mover advantages and advertising to make brand advantages.

- Forums enable community development.


- Database backed reports on sellers and buyers.

- eBay community that people interacted with one another under a couple of shared guidelines and targets.

Support Activities (Gopaikrishnan and Gupta, 2007)


- Does not take possession of the things for sale, thus reduces inventory management costs.

- Secure the cheapest possible price for purchases of optimum quality.

Technology Development

- Uses online option to innovate, to lessen costs also to protect and maintain competitive advantages.

- Includes internet marketing activities, lean manufacturing, customer relationship management (CRM), and a great many other technological innovations.

Human Source of information Management

- Developing a community whose users are mysterious, trust among merchants.

Firm Infrastructure

-Management Information System (MIS) for planning and control

-Operated much like a newspaper-classified section, it facilitated person-to-person transactions but didn't get possession of the things for sale.

Figure 4 -eBay Value Chain

The function of value string is to reduce the cost and create as well as enhance the differentiation. eBay configure with its value string activities which throughout the global world, the aim is to maximize the perceived value for its global users and decrease the expenses of value making. By having the main activities, coordination of the worthiness chain is significant by using aiding activities which integrated all the activities into a solid whole.

There are several factors affected eBay to configure value chain internationally are including cost/price issue, business conditions, translation software, logistics, and customers' needs.

Cost/Price issue

As operates a global networking, the currencies exchange rate, different pay rates in different country, inflation rates, and authorities laws have deeply affected the expenses of the business expending as well as the price setting.

Business Environment

Value string is configured in order to own strong competence to confront to the opponents like Amazon. com and China's website - Alibaba. com. By operating flexibly, it would in a position to help eBay to boost the competitive benefits.

Translation Software

Due to eBay purchased auction web sites in a variety of countries, the dialect used in the website also would be different that every country has their own indigenous words. Therefore, value string helps to take full advantage of the technology development and thus offer convenience to customer.


Have shown graph (physique 2) and talked about the way the eBay works. You can find inbound logistics and outbound logistics. Therefore, value string is configured to regulate the procedure and minimize the cost along the way that eBay works its public sale website. Besides, it maximizes the recognized value to users by creating value to them through the improvements status.

Customers' Needs

As discussed earlier, eBay has the largest user base. To fully maximize the worthiness to the customer and know very well what they want, it is automatically to configure value chain. By building those value string activities, those have affected and shorten the length between the users. It really is a key factor that inspired not just a one country but it is useful to be configured in all country that eBay got into.

The more eBay extend the greater eBay coordinate. Coordination is a crucial part in doing a value chains model that how it helps to combine all the actions and works with the center competencies effectively and efficiently. When the coordination is well done in the worthiness chain, the marketplace share of eBay will be boosted up absolutely. There are many factors affected eBay to organize the value string activities are operational obstacles and countrywide cultures.

Operational Obstacles

As bought many leading public sale website, the communication in verbal and nonverbal have set up a hurdle towards success. It is because misunderstanding the particular local words will impede the related information of the products or service. Besides, the forex rate dimension systems also bring out the condition that has made users baffled about the price indeed. The government regulations also operates as a primary role in this factor that some countries have their own unique legal that some products are prohibited to go into.

National Cultures

Different countries have different culture attitudes and perceptions. For instance, almost all of the Parts of asia like China and Japan; they may well not more comfortable with purchasing the product through website that without coming in contact with the product the truth is. And even China, they already have their own local leading auction website - alibaba. com. Therefore, coordination of the worthiness chain is critical to be used in eBay to confront the dilemma.

eBay's Value String is Characterized as Virtual

In the e-commerce business industry, eBay is a Web-based website business that the organization is not producing any product and it just serves as a matchmaker or middleman to help its users who are either individuals or businesses to execute the auction and provide a place for folks joining to each others in worldwide.

eBay achieves competitive advantage and create value to the customer just only by keeping applying the extensible strategy to generate services, services, and market segments. Due to e-business matchmaker eBay special business feature, it facilitates communication to value-oriented potential buyers and retailers, sustains the ideas of trust and basic safety, guarantees low scam deficits and high security to its community exchange process by delivering state-of-the-art information technology (Daniels, Radebaugh, and Sullivan, 2009).

In here, eBay is characterized as online value chain because of some reasons that are illustrated in the next.

An online based only e-commerce business in the online marketspace

eBay is centralized its business within an online trading program that only placing information of product and service or other comedies to its users. In the E-marketplace, it providing information merely to the community is not counted as producing products; also, eBay do not has any ownership to the physical product. eBay just functions as a catalyst between your sellers and potential buyers (Bidgoli, 2004).

No economies of scale and scope is applied to the digital value string (Heterick and Twigg, 1999)

It is basically because eBay pursue a matchmaking service that charges the closing auction price to get the earnings only.

There is not a input and productivity (Heterick and Twigg, 1999)

As mentioned that there surely is no any product is made by eBay which is launched as a web trading system that conducted in the website.

Creates value string through five activities that different from the traditional value chain

eBay gathering and arranging information of the seller's product into a repository then buyers can opt for what to bet on. eBay synthesizing the wanted information to purchasers also. Besides, eBay also gathers, organizes, synthesizes and distributes information about the problem from both retailers and potential buyers (Rayport and Sviokla, 1995). From these several activities, these have created value to the users to show loyalty and trust on eBay.

Implications to the Obstacles Identified

The challenges faced in the case of eBay are including translation software, digital split, cultural attitudes about the e-commerce, authorities restrictions, and the pace of international growth (Daniels, Radebaugh, and Sullivan, 2009). In addition, different currencies, traditions rules and inspections, and trade guidelines produce substantial barrier to eBay. Those are reviewed in the below:

Translation software

As a worldwide trading platform, eBay has to face the condition that explaining the public sale post into particular native language to become comprehended by those native languages of audience. Yet, there may be restriction of the translation software that always imperfectly translates the indigenous language has become obstacle for eBay to its global strategy (Daniels, Radebaugh, and Sullivan, 2009).

Government regulation

Each country reveals unique ethnic and legal obstacles. It is a major issue that whether the service or product listed in the public sale program can be exported or brought in to the countries (Daniels, Radebaugh, and Sullivan, 2009). For instance, a French judge was experienced an issue that the Nazi memorabilia is prohibited to type in France.

The digital divide

Mostly it'll be encountered in the growing countries like India and China that they largely do not own their computer and the bank card as well. Because of the different level of financial condition and insufficient access to the internet, it is hard to enter this country and that might be a risk.

Cultural behaviour about e-commerce

In high uncertainty-avoidance civilizations country like Japan, India, China, even the half of Asian are distrustful of e-commerce deals. They tend to acquire the items that are new (Daniels, Radebaugh, and Sullivan, 2009). Regretfully, eBay was troubled in the problem that the web trading is not seduced by them.

Pace of international expansion

Due to increase the business enterprise to the international sometimes appears to be too rushed; as a result, it brought out the difficulty for acquisition. The prime paid to obtain the foreign operation is getting increase (Daniels, Radebaugh, and Sullivan, 2009).

According to the eBay's global strategy, majorly, eBay is completed an AAA global strategy. These AAA presents acquisition, activation, and activity. There are some implications to the difficulties in today and in the foreseeable future are shown in the following:

May lose the users as well as the customer's loyalty

If the translation software is not correcting well, it'll probably inspired the users proceed to the another public sale message board to continually their business. Invisibly, it gives the probabilities to Amozon. com to seize the market show from eBay. Besides, with no convenience that eBay gives, users will eventually lose the patient to eBay and move their loyalty to the rivals.

May earn an additional price from the translation and market share from developing countries

In the future, by helping the user convert the post meaning to him or her familiar language with a few us dollars charges can help eBay to possess another value string activity to increase its value. Also, regularly operate eBay auction community forum in India and China would in a position to gain gain access to into this tough market that their population all are quite high.

Without knowing the country legal may get in problem

eBay must value and identify to each country legal environment to be able never to against with the country's legal issue. From the experience, eBay must try to improve and enhance the romance between each country's governments.

Gain learning experience to the social attitude

Before entering this country, eBay should do a crucial Pestel evaluation about the country in order to eliminate the chances to handle losing. Through the learning encounters in Japan, eBay learned the different social attitude and their behaviour. In the future, eBay is able to be knowledgeable before it chooses to enter a fresh expansion.

The Evaluation of the Globalized Strategy

The local company which has been picked up is Charles & Keith. Charles & Keith is a Singapore based mostly fashion company. It really is well known by selling the woman's boots and accessories. In today, Charles & Keith has been over 170 franchises worldwide and become one of the successful tale in the international chain. Its global enlargement began at 2000, the retailers in 22 countries including Japan, Brunei, and Indonesia (Ramlan, 2010).

In the following, there's a table (Amount 6) that showing an evaluation of the globalized Strategy between eBay and Charles and Keith.




Partnership with DBS Standard bank (Charles & Keith ups ante by venturing into Asia, ME & European countries, 2010)


Combination of affordability and design (Tan, 2009)

Recruiting Japanese among others nationality (Tan, 2009)

Standardization of employees and service

Figure 5: Comparison of Global Strategy

As a result, there is no similar globalized strategy between eBay and Charles & Keith. For the reason that eBay and Charles & Keith are providing in different industry and their value string is completely different. Why? It is because eBay only provides an public sale website for the potential buyers and retailers to make business exchange. Its value string is exclusive value chain. Alternatively, Charles & Keith does business popular industry that they produce, design, and retailing by themselves. It can be a traditional form of value chain that has suggestions, output, economies of scale or opportunity.

If eBay's acquisition strategy is applied into Charles & Keith to build up its enlargement to overseas, it'll be been successful in spending enough portions and developing a clear Pestel examination before entering a particular country. While, if Charles & Keith's franchising strategy is applied into eBay, it will not be succeeded. It is because the eBay's business model and the complete operation are can't be franchising due to its special e-commerce qualifications.

Secondly, eBay's activation is urged to use in Charles & Keith because the strategy is directed same point of view. In eBay, its activation is targeted at increasing the users members like vendors and purchasers. Therefore, to increase customers' purchases, Charles & Keith is possible to apply it. While, Charles & Keith strategy that partnering with DBS Lender is prompted to be applied in eBay to be able to get enough investment.

Activity of eBay also is encouraged to be used in Charles & Keith in order to boost the level of sales. While, combination of affordability and design is not inspired to use in eBay being that they are different categories of business. Continually, the abroad recruitment is urged to be employed in eBay in order to get more understanding of this country culture. Last but not least, that is approximately the standardization of product and service, in here, although the industry is totally different but they still can use same strategy that is standardization with their service in both company.


In summary, by analysing eBay business, it creates a great deal of understanding about the company working in the global world. Key competency and value string actually are having some integration, this two components will be the key components that the company how to create the greatest competitive edge and create value to the client. Thus, it profit customer, as long as get accustomed to it, the clients show the commitment to the business too.

At the last area of the contrast of the globalized strategy, that is an interesting part that actually the globalized strategy between this two company all are having the important theory that is how to improve the customers and the market talk about throughout the worldwide.

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