Ebay

Tiffany & Co

A Corporate and Financial Analysis of Ebay.Inc

Uploaded by MikeyK on Jun 11, 2006

A Corporate and Financial Analysis of Ebay.Inc

Executive Summary

Section One - Corporate Level

Part 1 - Brief History of the Corporation

eBay was founded by Pierre Omidyar's in his San Jose home in September of 1995, under the name AuctionWeb. From its early beginnings it was meant to be a marketplace for the sale of goods and services for a variety of interested individuals. It was incorporated in 1996, and has since grown to become the world's largest most financially successful online auction company.

After realizing the overall potential of his idea, Pierre and his cofounder Jeff Skoll brought on Meg Whitman, as CEO, to efficiently handle the growing popularity, and sustain eBay's success. Meg earned a MBA at Harvard Business School, and had gained high acclaims and top-shelf experience at the successful company of Hasbro.

With the addition of Meg Whitman's expert experience eBay soon expanded rapidly to service a wide variety of buyers and sellers, and in September of 1998 the company went public. The shares were initially offered at $18 and immediately rose to $47 by the end of the day. The company has not faltered since, rising to revenues exceeding $700 million by 2001.

In its short history, eBay has chosen several different paths than traditional companies to get to where it is. Most all of eBay's advertisement was done through word of mouth and through agreements with a few Internet companies such as AOL and Disney. The large portion of savings from low advertising costs is invested in innovative marketing strategies to keep them ahead of its competitors.

I believe that eBay is has achieved such an incredible amount of success in such a relatively short period of time because of its beginning philosophy of giving power to its users. With that foundation of loyal users it is able to expand its name by word of mouth and continue to grow to service a wider variety of users and their products. Also eBay's ability of provide access to such a broad variety of products at relatively low prices will continue to attract more users and profits in the future.

Part 2 - Corporate Level Analysis

1. Does the corporation have a mission statement? Does it define the business, identify the major goals, and articulate the corporate philosophy?

Yes, eBay does have a mission statement. I believe that this mission statement defines the business as broad and simplistic as possible. It is very broad and short, not identifying any of its specific goals. It is very short and simple "eBay's mission is to develop a global online trading platform that will help practically anyone buy or sell practically anything." The statement describes the ultimate goal of the business without describing any other goals of the company. I think it demonstrates how eBay's philosophy is simple and "down to earth", creating a very inviting environment to it users.

2. Is their mission statement appropriate for them? Explain.

I believe that eBay thrives on its image of providing a simple way for its users to get the very best deals on trading online. Although short, I think that their mission statement describes not only the ultimate goal of the company but some of their character as well. After researching more about the company it seems to fit perfectly within their overall values and philosophies. Also because their market is so broad it helps to have a very broad mission statement to allow them to make changes in their focus without altering their overall goal.

3.How vertically integrated is the corporation? If it is vertically integrated, is it pursuing a strategy of taper of full integration?

eBay is not vertically integrated. It is a company that simply supplies a medium for person to person trading. It connects the buyer to the seller and allows for an easy transaction between the two. The products are registered and displayed on the site by the sellers, and when an item is purchased the seller ships it to the buyer, and eBay earns a commission from the sale.

4. How diversified is the corporation?

It is highly diversified in the types of products it provides. The range of products varies from collectibles to cars, almost anything that a user is willing to sell. The site makes it easy for the buyers to locate the products with everything divided into categories and a convenient search engine for quick access to a specific item. Although it provides a wide variety of products eBay's area of business is relatively simple; it only offers a stable connection between the buyer and a seller. I believe the overall concept of business for eBay is simple, to provide the most convenient, reliable, and cheapest way for users to buy and sell products on the Internet.

5. Is the corporation transferring skills, realizing economies of scope, and/or achieving supply chain efficiencies through strategic alliances?

eBay has many different alliances with a variety of major companies. Many of its partnerships have provided it with a vast amount of resources allowing it to grow more rapidly. It has various marketing alliances, which associates major brand names with eBay, and helps to attract new users through advertisement and name recognition. Also a recent alliance with Microsoft has allowed eBay to dramatically upgrade its technology of API (application programming interface), which allows them to fully integrate into other sites across the Internet. These partnerships are key to eBay's overall success and it offers a variety of benefits to it allies as well. Many of its partners receive benefits such as brand name recognition, increased user base, and strategic networking opportunities. This vast network of partners is allowing eBay to continue its rapid expansion, creating new markets, increasing technology, and bringing on a broad range of new users.