eBay's Strategy in China: Alliance or Acquisition

eBay's Strategy in China: Alliance or Acquisition Description

n December 2006, eBay, Inc, a US company that offers e-commerce, e-payments and internet communication services globally, announced its plan to form a joint venture with China-based online portal and wireless operator, TOM Online, that would give each company 49% and 51% ownership, respectively. This was eBay's third strategic move in China, following its acquisition of a 33% stake in domestic counterpart EachNet in 2002 that marked its entry into the market, and a full acquisition in 2003. Despite the initial good results, eBay had been losing market share to local rival and Alibaba's fully-owned subsidiary-TaoBao. By 2006, eBay had seen its market share drop from a high of 85% to a staggering 29%, while TaoBao's continued to increase, reaching 60%. The joint venture was therefore an attempt by eBay to save its failing Chinese operations. The move also reflected the increasing difficulties foreign internet companies were facing in China because of fierce competition and a changing market environment. eBay believed that it would benefit from TOM Online's local knowledge and political connections. However, some analysts questioned whether political connections alone were the answer and suggested that eBay focus on its product and service offerings instead. How could eBay leverage the joint venture to its success in China? What alternatives did eBay have for enhancing its strategic position in the Chinese market?

Case Description eBay's Strategy in China: Alliance or Acquisition

Strategic Managment Tools Used in Case Study Analysis of eBay's Strategy in China: Alliance or Acquisition

STEP 1. Problem Identification in eBay's Strategy in China: Alliance or Acquisition case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of eBay's Strategy in China: Alliance or Acquisition case study

STEP 3. Industry Specific / Porter Five Forces Analysis of eBay's Strategy in China: Alliance or Acquisition case study

STEP 4. Evaluating Alternatives / SWOT Analysis of eBay's Strategy in China: Alliance or Acquisition case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis eBay's Strategy in China: Alliance or Acquisition case study

STEP 6. Recommendations eBay's Strategy in China: Alliance or Acquisition case study

STEP 7. Basis of Recommendations for eBay's Strategy in China: Alliance or Acquisition case study

Case Analysis of eBay's Strategy in China: Alliance or Acquisition

eBay's Strategy in China: Alliance or Acquisition is a Harvard Business (HBR) Case Study on Global Business , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. eBay's Strategy in China: Alliance or Acquisition is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. eBay's Strategy in China: Alliance or Acquisition case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. eBay's Strategy in China: Alliance or Acquisition will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

eBay's Strategy in China: Alliance or Acquisition case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Global Business, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of eBay's Strategy in China: Alliance or Acquisition, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The eBay's Strategy in China: Alliance or Acquisition case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Global Business Solutions

In the Texas Business School, eBay's Strategy in China: Alliance or Acquisition case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – eBay's Strategy in China: Alliance or Acquisition

Step 1 – Problem Identification of eBay's Strategy in China: Alliance or Acquisition - Harvard Business School Case Study

The first step to solve HBR eBay's Strategy in China: Alliance or Acquisition case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Ebay China is facing right now. Even though the problem statement is essentially – “Global Business” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Ebay China, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the eBay's Strategy in China: Alliance or Acquisition.

The external environment analysis of eBay's Strategy in China: Alliance or Acquisition will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in eBay's Strategy in China: Alliance or Acquisition case study. PESTEL analysis of " eBay's Strategy in China: Alliance or Acquisition" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with eBay's Strategy in China: Alliance or Acquisition macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for eBay's Strategy in China: Alliance or Acquisition

To do comprehensive PESTEL analysis of case study – eBay's Strategy in China: Alliance or Acquisition , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact eBay's Strategy in China: Alliance or Acquisition

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on eBay's Strategy in China: Alliance or Acquisition

Government policies have significant impact on the business environment of any country. The firm in “ eBay's Strategy in China: Alliance or Acquisition ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Ebay China is operating, firms are required to store customer data within the premises of the country. Ebay China needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. eBay's Strategy in China: Alliance or Acquisition has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Ebay China in case study eBay's Strategy in China: Alliance or Acquisition" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Ebay China in case study “ eBay's Strategy in China: Alliance or Acquisition ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Ebay China in case study “ eBay's Strategy in China: Alliance or Acquisition ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on eBay's Strategy in China: Alliance or Acquisition

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ eBay's Strategy in China: Alliance or Acquisition ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Ebay China can compete against other competitors.

Government Scheme & Subsidies Impact on eBay's Strategy in China: Alliance or Acquisition

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at eBay's Strategy in China: Alliance or Acquisition case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on eBay's Strategy in China: Alliance or Acquisition

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Ebay China needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact eBay's Strategy in China: Alliance or Acquisition

Social Factors that Impact eBay's Strategy in China: Alliance or Acquisition

Technological Factors that Impact eBay's Strategy in China: Alliance or Acquisition

Environmental Factors that Impact eBay's Strategy in China: Alliance or Acquisition

Legal Factors that Impact eBay's Strategy in China: Alliance or Acquisition

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in eBay's Strategy in China: Alliance or Acquisition case study. PESTEL analysis of " eBay's Strategy in China: Alliance or Acquisition" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: eBay's Strategy in China: Alliance or Acquisition case study solution