Ebay's strategy in China: Alliance or Acquisition? - publié le 02/11/2011

Résumé du document

In 1990's, many companies invested in the internet, the dotcom companies, because they thought it will generate a lot of profits quickly and will help in expanding their businesses. For them, internet represented a new market and a new economy. So, lots of companies were created around the world and the valuations of internet stocks were known as an important increase.

But in 2000's, there was a dotcom crash. Indeed, several factors were causing this failure. In first, lot of companies lacked experience in term of strategic decision-making, finances, marketing. Indeed, the managers of these companies had an IT and computer skills but they didn't have business experience. Secondly, another factor was the lack of product differentiation. So, they didn't have a competitive advantage and their strategies were to make promotions and price discount.

So, they reduced their profit margin and some companies stopped their activities because they had too many debts. Also, one important factor was the incompetent managers. Indeed, they didn't take into account customers' needs; there was not after-sales service or market researches before launching a new product. Finally, customers were not ready to buy on internet because at this period, the security was not perfect. Customers were afraid to give their identity, credit card details on internet.

But,some companies succeeded in this sector as Ebay. Indeed, Ebay is one dotcom company which is one example of success. Ebay succeeded in internet because the company recruited lot of employees who had an important experiences and skills in their areas. Indeed, its employees studied in great schools, like Harvard, had different skills (marketing, finance, consumer, technology) and represented all useful areas in the big company. Also, Ebay has grown locally, nationally and globally.

Extraits

[...] Ebay's entry in a new foreign market a. Presentation of the company Ebay is an online platform which was founded by Pierre Omidyar in 1995 in California. On the Ebay's platform, we can buy and sell item; it's a C to C business. In 1998, Ebay launched its IPO (initial public offerings), proposing 4.025 million shares at $18. This IPO helped Ebay to have cash: $66 million. The first strategy of Ebay is an expansion strategy. Indeed, the company implemented locally and globally. [...]

[...] Ebay decided to penetrate the market with an acquisition and a joint venture. But, as we could see, the company didn't take into account the cultural differences which exist between its US market and the Chinese market. Especially about the consumers' needs about services and the management of employees. But thanks to its flexibility and its capacity to react quickly, Ebay could continue on the Chinese market, in particular with its joint venture with Tom Online. Ebay believed that its position of leader in the other country will be an important advantage to penetrate the Chinese market. [...]

[...] Ebay's strategy in China: Alliance or Acquisition? TABLE OF CONTENTS INTRODUCTION EBay's market entry in a new foreign market a. Presentation of the company b. The Chinese market c. Why does Ebay want to enter in this new market? II) The implementation strategy a. Acquisition of Each net: advantages and disadvantages b. Joint venture with Tom Online CONCLUSION Bibliography INTRODUCTION In 1990's, many companies invested in the internet, the dotcom companies, because they thought generating lot of profits quickly and expanding easier their businesses. [...]

[...] And the company has everything to gain because in 2010, there were 360 million of internet users in China. There were 100 million of users which had a high speed connection. There were 720 million of Chinese people who use a mobile phone whose 192 million users of m-mobile. Also of internet consumers use the e-commerce. So, the market has a strong potential of development. In France, it's 70%. BIBLIOGRAPHY - Olivier Verot, l'internet en Chine en 2010 December : http://www.marketing-chine.com/e-marketing/linternet-en-chine-en-2010 - Jiangyong Lu and Zhigang Tao, Ebay's strategy in China : Alliance or acquisition ? [...]

[...] Ebay intervenes if there is litigation between the seller and the buyer. Moreover, there are several means of payment: Paypal, the tranfer, the check, Google checkout or the cash payment. b. The Chinese online market In 2006, there were 137 million internet users and about 31,5% of them shopped online. Also, the transactions from C2C e-commerce reached $ 2.9 billion. Then, with its growth, more and more Chinese consumers had access to the internet, and the penetration rate continues to increase (in 2002: and in 2006: 10,5%). [...]