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Ebay & online auction company Essay

Ebay, an online auction company that started in 1995 is offering more than fifty thousand categories of merchandise with its numerous local offices all over the globe.  Transaction is easy with Ebay because the buyer and seller perform payments for the items through PayPal and Skype Internet phone service for actual conversation.

What is eBay’s core competency? How does it relate to their chosen strategy?

Ebay’s core competency is being an online auction serving many customers in all parts of the world with large listing of items for sale.  In order to sustain its core competency, it negotiated with Google.com to have a joint venture, using the facility of google.com in search engine.  Aside from that, it uses the services of PayPal in receiving payments from the customer and Spyke for negotiation or business transactions with the customers.  It also developed its website in such a way that fraudulent clients may be detected and prevented to enter the negotiation.

How would you explain how eBay has decided to configure and coordinate its value chain?

Online auction is a risky business because no one could take hold of the customer’s decision and whereabouts; negotiation is done by means of trust.  Ebay’s value chain is characterized by integration of various strategies to meet the sellers and the buyers using technology.  Primarily, it has a listing of sellers posted on the web; it has value creation that allows for easy access and bidding to the stores; it facilitate Escrow system to limit fraud; it has marketing and sales strategy on the web; lastly, it has database that tracts the record of negotiation between the seller and buyer (Bidgoli, 2004, p. 534).

Ebay’s value chain is developed in such a way that the engines would be useful in trading goods and products as well as in facilitating transaction in the easiest and comfortable means possible.

Would you characterize eBay’s value chain as virtual or real? Why?

Ebay’s value chain could be characterized as virtual because the business is operational/existing though employs imagination because transaction is done and completed using computer and other technology.  As an e-market, it follows certain guidelines in the process meeting both customer satisfaction and problems encounter daily without the need for face to face transaction.  It is imaginary because it does not handle any physical products nor see the clients in other part of the globe.

Consider again your description of eBay’s strategy. Is it different from what it was ten years ago? Why?

Ebay is different from what it was ten years ago.  In the first place, Ebay entered into global trading through which its facilities and equipments cater to meet the demand of global competitiveness.  Omidyar, the owner, ran the business using a message board where buyer and seller could communicate until that message turned to a feedback system (Dralle & Reno, 2006, p. 5).  Today, it has developed its own website that facilitates many types of transaction all at the same time.

What implications to the challenges identified in the case have for eBay’s strategy – today and in the future?

With Ebay’s current strategy it is putting itself in a strategic position.  The investment done on the webpage design will allow for a better and a convenient transaction between clients, which is more important for a e-market like Ebay.  Probably, this strategy and innovation may not be effective in the future as it is today, but continues adaptation of computer technology will always make it to the top.


Bidgoli, H. (2004). The Internet Encyclopedia. USA: John Wiley and Sons.

Dralle, L. & Reno, D. (2006). The Unofficial Guide to Making Money on Ebay.

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