Case Study eBay, Inc.: Bidding for the Future

Read the circumstance examine located on page 144 of the individuality titled Circumstance Studies in your textbook   and ad a 5- to 6-page recital in a Microsoft Word instrument, systemic on the controlthcoming seat:The CEO, John Donahoe is preparing to actuate the classify progressive. The classify has invited your consulting rooted to converge with the novel consideration of directors and examine the seat at eBay, Inc.To familiarize yourself with the client; your original toil is to ad a contrast recital which analyzes eBay’s calling environment and skillful-treatment. Your recital should embrace the controlthcoming:Analyse and examine the palppotent controlces and assiduity stipulations that possess impacted eBay’s deed balance the years?Analyze and examine how the inside structure and amelioration at eBay rule its deed?Examine how eBay has strategically responded to its competitive environment and inside capabilities?Identify the causes and consequences of the Consideration of Directors’ retardativeness?Examine and eminentlight other governance weaknesses that possess made eBay delicate to managerial opportunism?Examine how governance mechanisms at eBay possess been truthd in the late, and what was their commodities?Examine the rare maneuvers that were made by eBay stakeholders to balanceafter inside governance weaknesses?In your recital, you should be potent to unfold an insightful face at eBay’s seat, controlm recommendations control establishing commoditiesive governance practices, and stay the demand control governance mechanisms referable attributable attributablewithstanding the coming of deed victory.Stay your responses with examples.Cite any founts in APA controlmat.Submit your instrument to the W5 Assignment 2 Dropbox by Tuesday, July 1, 2014.Assignment 2 Grading CriteriaMaximum PointsAnalyzed and examidemand the palppotent controlces and assiduity stipulations that possess impacted eBay’s deed balance the years.30Analyzed and examidemand how the inside structure and amelioration at eBay ruled its deed.30Discussed how eBay has strategically responded to its competitive environment and inside capabilities.30Identified the causes and consequences of the Consideration of Directors’ retardativeness.20Discussed and eminentlighted other governance weaknesses that possess made eBay delicate to managerial opportunism.30Discussed how governance mechanisms at eBay possess been truthd in the late and what their commodities was.30Discussed the rare machination that were made by eBay stakeholders to balanceafter inside governance weaknesses.30Written Ingredients.50Total:250
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CASE 10 eBay Inc.: Proposeding control the Future
Kazi Ahmed
Phillip Cuter
Tara Ferrin
Jeffrey Fletcher
Fidel Rodriguez
Juliet Taylor
Robin Chapman
Arizona State University
?Our resolve is to head novel communities abquenched the cosmos-vulgar built on communication, sustained by
duty and orthodox by turn.? 1
Introduction
John Donahoe took balance as principal and CEO of eBay Inc. in March 2008, during an
unfavorpotent spell control the classify.2 Gundivided its course in 1995, eBay has practiced wealth
and hues enlargement year succeeding year, save the enlargement reprove has slowed gundivided 2006. Control the original
time, eBay’s wealths cut from the antecedent year, down by 7 percent in the fourth district of
2008.3 Although eBay is peaceful the assiduity pioneer control online dispose-ofing with 17 percent bargain
share, it has lost barfind divide to innovative guide competitors such as Amazon, Yahoo!, and
Google.The rich merit of Skype (a communications software classify) did referable attributable attributable
possess the consequence controlmer CEO, Meg Whitman, forebodeed. The classify’s trial into China
failed, and changes in dispose-ofer fees possess referable attributable attributable attributable supposing the results that eBay rulers had
anticipated. In reposeitution, there possess been lawsuits akin to cheat works. In March 2008,
Meg Whitman stepped down as CEO and was succeeded by John Donahoe, who has to
confront the commonfix seat. In a fast-cycle barfind such as online dispose-ofing, how can Donahoe
discbalance novel competitive advantages and repossess eBay’s barfind divide and enlargement reprove occasion
confronting a aggravate abstrtruth interdiplomatic and constitutional environment? In detail, Donahoe now
faces a global economic downturn, a struggling e-communication assiduity, and classify divides
trading betwixt $10 and $11 underneath their precedent year compensation of $40.
Classify Pioneers and Balanceview
In 1995, shortly succeeding influenceing a victoryful online auction control a tamed laser pointer costing
$14.83, Pierre Omidyar realized that the Internet empowerd barfind power by entireowing pets
of buyers and dispose-ofers to light works and influence transactions. This orthodox him to launch
AuctionWeb, an online bargainfix control buyers and dispose-ofers.4 AuctionWeb functionally became eBay
in 1997 and hosted aggravate auctions per month in that year than it did in entire of 1996. Within four
years and with the aid of Meg Whitman, eBay grew from a programmer’s trial into a
momentous generally-knownly traded classify, trading on NASDAQ with the record EBAY5 (look Exhibit
1 control aggravate details on eBay’s narrative).
Meg Whitman was recruited as eBay’s raise principal and CEO in 1998 and aided import eBay
generally-known in September of that year. At the spell eBay’s registered truthrs had gain-groundn six-fold, to balance
2 pet, from the precedent year. Under Whitman’s pioneership the classify grew to balance 200
pet truthrs globally and balance $7 billion in wealth. During her employment, Whitman aided eBay
penetrate China, solidityd globally symmetrical marks enjoy UrbanPal and Skype into the eBay
portfolio, and most referable attributable attributableably, victoryfully steered the classify through the dot-com bust by
staying focused on its centre truthrs and centre accommodation?online auctions. She lives to serve
on eBay’s consideration of directors.
The authors would enjoy to cheer Professor Robert E. Hoskisson control his stay and guidance
during the fruit of this circumstance. This circumstance is referable attributable attributable attributable prepared to illustreprove either commoditiesive or
inefficacious handling of managerial seats. The circumstance is barely prepared control collocate examineion.
Succeeding a 20-year progress at Bain & Classify, Donahoe subsubjoined eBay in February 2005 as principal
of eBay bargainplaces, where he served control three years. Donahoe’s precedent ruler knowledge
made him an imaginative canvasser to aid swell bargainplaces, eBay’s centre calling. Under his
start eBay assumed Shopping.com, StubHub, Gumtree, and LoQUo, giving it a
strategic 142143143144intercourse in the gain-grounding online harmoniousity shopping assiduity, ticket sales,
and collocateifieds. At the spell of his transition to CEO, eBay’s barfind divide was gentle and it
had failed to find in its sum of choice visitors. In an attack to reinvigoreprove enlargement, Donahoe
shifted eBay’s seriousness closer to other competitors by melting from auctions to unroving compensation
listing, which has been the advantage engine control Wal-Mart.com, Amazon.com, and Yahoo.com. He
as-well streamlined the structure with a 10 percent workforce diminution and the merit of
Bill Me Succeeding, a transaction-methodic praise calling with a sum liquidation work of balance $1 billion,
as a complementary liquidation arrangement to UrbanPal.
Exhibit 1 eBay Narrative
Sources: 2008, eBay narrative, http://www.ebay.com, November 3; J. Swartz, 2008, eBay to lay
off 1,600 employees, cites administration, USA Today, October 7, 2B; 2008, eBay 2007 Controlm 10K, http://www.ebay.com, November 25, 51; 2008, eBay momentous direct
shareholders, http://finance.yahoo.com, November 26; B. Stone, 2008, Buy.com bargain with eBay
angers dispose-ofers, Novel York Spells, July 14, 1; C. Wolf, 2008, eBay cuts unroving-compensation sales fees by
70%, Washington Post, August 21, D03; J. Schofield, 2008, Technology, The Guardian,
February 21, 3; J. Swartz, 2008, Catalogueings down 13% in intimidate of eBay, USA Today, February
28, 3B; D. Rushe, 2008, Silicon Valley amelioration clash as eBay sues Craigslist, The Spells
(London), April 27, B9; 2008, Judge rules control eBay balance fake Tiffany jewelry sales, Interdiplomatic
Herald Tribune, July 15, F12; 2008, Google cancels ?Freedom? edge to appease
eBay, http://www.techweb.com, June 14; 2008, eBay Fact Sheet, http://www.ebay.com,
November 28; 2008, eCommercemarketextent and
trends, www.goecart.com/ecommerce_solutions_facts.asp, November 30; 2008, Cosmos-people’s most
valupotent unconcealed dispose-ofers, http://galenet.galegroup.com. November 30.
Consisting of balance 88 pet detached truthrs in 39 global bargains (look Exhibit 2 control eBay
marketfix locations), eBay proposes anyundivided the turn to be an entrepreneur.6 The
company’s bargainfix duty works online auctions, collocateified ad positions, and other positions
where vulgar can influence wholesale transactions. Unenjoy other e-communication companies, eBay
does referable attributable attributable attributable opereprove the online equipollent of a store; it is aggravate enjoy an online mentire or flea bargain. Its
liquidation duty affords controlms control men-folks to transmit capital to finished an e-commerce
transaction. Its third duty, communications, proposes technology that empowers signification and video
communications betwixt computers, and from a computer to an commonfix telephone.7
The e-communication assiduity is attrdetached owing it is proportionately unartificial to penetrate. Most of the momentous
players in the assiduity, including Yahoo!, Google, and eBay, began as smentire entrepreneurial
ventures with dirty aggravate than an Internet intercourse and lines of enactment. Referable attributable attributablewithstanding proportionately mean
entry barriers, enlargement is unamempower imputable to potent assiduity opposition.
Competitors
Amazon.com Inc.
Amazon.com Inc. (Amazon) was founded in 1994 as an online bookstore. Balance the years it
spacious to embrace items ranging from books and CDs to drapery and electronics. This
expansion occurred through severnerships with companies including Toys ?R? Us, AOL, and
Hoover’s.8 Amazon dispose-ofs other companies’ works on its Web position and truths its distribution
network to secure alert and accureprove propose. Succeeding a proportionately unprosperous attack to gather an
auction ingredient, Amazon created the Amazon bargainplace, which entireows dispose-ofers to fix truthd
items on the position, featuring them balance-and-above same novel items sold by Amazon.9
Exhibit 2 Locations of eBay Bargainplaces
Source: 2008, eBay Web position, http://www.ebay.com.
Amazon gift to be the mean-cost pioneer in the e-communication assiduity. In classify to live
attracting novel customers, Amazon lives to gather innovative estimate-borrowed benefits such as
?frustration-detached packaging??which eliminates unamenable-to-open work containers?and the
ability control customers to urban with installment liquidation schemes.10 Amazon is as-well attacking to
vertically integreprove as a supplier of kitchenware through its novel disunion, Pinzon.
In 2008, flush though third-district advantage was up 48 percent, Amazon stunted fourth-quarter
projections, citing forebodeations, adesire with the repose of the dispose-of sector, control a bare holiday
season.11
144145Yahoo!
Inc.
Originally referable attributable attributableorious primarily as a inquiry engine, Yahoo! Inc. triald into the e-commerce
assiduity in 1998 with the dissipation of Viaweb. In reposeitution to e-communication benefits, Yahoo!
products embrace advertising, e-mail, novels and knowledge, photo sharing, and Internet browser
toolbars and gather-ons.12 Yahoo! has a intercourse in aggravate than 20 countries. It appeals to advertisers
by creating a Web position that truthrs go to control entire of their demands, thereby creating the most inhospitableness
control its ads.13
Occasion the classify commonplacely works a Yahoo! Shopping position, it discontinued its auction position in
the United States and Canada in June 2007. However, Yahoo! peaceful runs auction Web positions in
Hong Kong, Singapore, and Taiwan.14
In strange-fangled years, Yahoo! was concerned in a captivatebalance propose by Microsoft. The software monster saw
Yahoo! as a controlm to contend with Google control advertising dollars. Succeeding a neighborly merit was
rejected, Microsoft attacked and failed at an unsolicited captivateover. Investors possess criticized
Yahoo!’s consideration control referable attributable attributable attributable bargaining aggravate commoditiesively with Microsoft and control referable attributable attributable attributable acting in their
interest.15Although Microsoft is recitaledly no desireer zealous in a unmeasured captivateover, it may peaceful try
to dissipation the Yahoo! inquiry engine duty.16
Google, Inc.
Google Inc. (Google) is a inquiry engine position that was founded in 1998. It truths proprietary
software to ?recognize correspondently what you balance and grant tail correspondently what you absence? when
searching on the Internet.17 Occasion Google persistently gathers applications, such as e-mail and file
sharing, 70 percent of its media are directed toward decent its inquiry engine capabilities.
This builds on Google’s superiority in this assiduity, which is extraneous from its popularity as a
inquiry engine. Google as-well has a potent interdiplomatic intercourse, with its position availpotent in 116
languages.18
From an e-communication perspective, Google Work Inquiry is an application that accomplish inquiry control
items availpotent control dissipation on the Internet and ostentation a side-by-side harmoniousity. Google does
referable attributable possess an auction position accelerationful, although dispose-ofers do possess the discretion of contrast a negotiable
compensation control their works. In classify to contend with eBay’s financial benefit duty, UrbanPal,
Google agoing Google Checkquenched in 2006 and began charging control its truth in February of 2008.19
Craigslist
A victoryful novel entrant in the e-communication assiduity is Craigslist. A retired classify, Craigslist
began in San Francisco as a controlm control topical residents to catalogue flushts and collocateified ads. Craigslist
differentiates itself by referable attributable attributable attributable charging to catalogue or dispose-of works on its Web position. Entire wealth afters
from fees control function postings and brokered hall catalogueings in clarified cities such as Novel York.
Craigscatalogue keeps its balancehead mean in multifarious controlms, such as by stable to opereprove quenched of a house
instead of an function erection and by having a staff of onlyly 25 employ-ees.20 Occasion confirmed
financials are referable attributable attributable attributable accelerationful, some experts judge the estimate of Craigscatalogue to be adjacent $5 billion.21 As sever of eBay’s enlargement and merit skillful-treatment it has assumed a duty, roughly 28
percent, of Craigscatalogue (look Exhibit 3 and Exhibit 4 control competitors’ financial postulates).
Acquisitions
eBay’s wealth enlargement has after abundantly through merits. The merits possess as-well
undisputed it to acception its geographic penetrate, actuate into akin callinges such as online
payments, and conciliate technology that accomplish establish its work differentiation.22 eBay has
completed multifarious merits, and some of the aggravate referable attributable attributableeworthy undivideds are examidemand here.
Half.com was undivided of eBay’s original merits and entireowed eBay to penetrate the unroving compensation
marketplace. It was assumed in 2000 control $312.8 pet. Half.com entireows eBay truthrs to dispose-of truthd
books, games, CDs, and DVDs at unroving compensations. Dispose-ofers are hired undeviatingly by Half.com and eBay
operates the Half.com Web position individually from eBay.com save entireows eBay.com truthr profiles to
be divided betwixt the Web positions.
In 2002 eBay dissipationd UrbanPal control $1.5 billion, thereby enabling dispose-ofers of any extent to receive
online liquidations from a buyer’s praise card or checking recital. This extremely stunted the
liquidation and shipment spells and supposing another fount of wealth control eBay. UrbanPal’s
transaction fee control transactions close than $3,000 is 2.9 percent of the sum
transferred.23 Wealths control UrbanPal in 2008 were $2.4 billion, making up 28 percent of eBay’s
sum wealth.24 In September 2008, eBay announced that UrbanPal was the only liquidation discretion control
a momentousity of its bargainfix catalogueings.25
In 2004 eBay assumed Shopping.com, Rent.com, and 28 percent holding of Craigslist. It
purchased Shopping.com control $620 pet. Shopping.com entireows vulgar to inquiry control works
and parallel compensations (harmonious to Google’s work inquiry controlmerly referable attributable attributableorious as Froogle). This
merit gave eBay a novel implement control buyers and dispose-ofers to interact and a novel moderation control ad
revenue.26
eBay assumed Rent.com control $415 pet. Rent.com joins landlords with tenants online,
charging characteristic possessors control each lease performed.27 The merit of Rent.com gave eBay
entry into the online collocateifieds bargain, occasion increasing wealth streams and online inhospitableness.
Exhibit 3 Guide Competitor Financials
Sources: 2008, Yahoo! Finance, http://finance.yahoo.com, November 24; 2008, Craigscatalogue Fact
Sheet, http://www.craigslist.org/about/factsheet, November 24
eBay assumed its severial holding of Craigscatalogue control an undisclosed sum. eBay’s relationship
with Craigscatalogue has frequently been slightly icy. eBay dissipationd its divides from an possessor that
went balance the other stockholders’ appetitiones to referable attributable attributable attributable dispose-of to a generally-known classify. Craigscatalogue entireeges that
eBay fixd a miscellany of superfluous demands on it, such as giving eBay blocking hues on entire
forms of corporeprove transactions. In 2008 eBay prisoner Craigscatalogue of diluting eBay’s holding
interepose by aggravate than 10 percent; Craigscatalogue countersued a month succeeding accusing eBay of unlawful
competition and copyright breaking owing it agoing the interdiplomatic collocateified-ad position
Kijiji.28 These lawsuits are thus-far to be constant.
eBay assumed Skype in 2005 control $2.6 billion. Skype is an Internet phundivided affordr, entireowing
users to controlm calls to approximately perfect state with their computers using Signification Balance Internet
Protocol (VOIP).29 eBay’s scheme control Skype was to integreprove it to entireow buyers and dispose-ofers to
communicate precedent to transactions.30 Skype is a detached benefit if twain severies are using Skype, save it
charges non-Skype truthrs control in-and-quenched calls.31 The sum of Skype truthrs has acceptiond from 57
pet in 2005 to 400 pet in 2008.32 In 2007, eBay visible a $1.4 billion asset impairment
control Skype, balanceing that either eBay balancehired control Skype or that the strategic integration of Skype
was referable attributable attributable attributable going as schemened. Thus, to maximize Skype’s immanent, eBay has announced that it schemes
to controlm Skype a standalundivided calling and accomplish influence an judicious generally-known assistance in the original half of
2010.33
eBay assumed Stubhub.com in 2007 control $310 pet. Stubhub.com is a raiseary ticket
marketfix that soliditys guaranteed fulfillment and shipment using FedEx.34 Stubhub severners
with American Express control association tickets and balance 60 teams control sporting flushts.35 In 2007
Stubhub was denominated the functional raiseary barfind control tickets by Momentous League
Baseball.36 Stubhub features a opportunity-ticketholder discretion, hopeful customer fealty, and an
easy arrangement control opportunity ticketholders to redispose-of tickets.37 eBay
operates Stubhub.com unconnectedly from eBay.com.
eBay’s dissipation of Fraud Sciences Ltd. control $169 pet in 2008 gathers to its technology portfolio.
eBay has desire workd on the referable attributable attributableion that duty is the guide to its victory, and it has announced
plans to amend the equalize of duty that it affords. Fraud Sciences has patent clear controlms to detect
fraudulent dissipations and affords eBay with the technology that it demands save failures the capability
to enunciate.
Exhibit 4 Historical Financial Balancelight of eBay and its Competitors
Sources:
2008, http://www.ebay.com; http://www.google.com; http://www.yahoo.com; http://www.overst
ock.com; http://finance.yahoo.com; http://www.amazon.com
147148Also, eBay has swelled into Europe and Asia through merits. It acceptiond its auction
penetrate with Alando in Germany, iBazar in France, Tradera in Sweden, Internet Auction in South
Korea, and Baazee in India. eBay incorporated interdiplomatic collocateified ad Web positions into its
portfolio with dissipations of Loquo in Spain, Gumtree in the United Kingdom, Marktplaats in the
Netherlands, and Den Bla Avis in Denmark. Each interdiplomatic merit entireows eBay to
swell and change-modify its wealth vile by purchasing systemic Web positions that the topical amelioration
understands.38 This is an extremely momentous component when enunciateing any character of intercourse in a
foreign state as eBay read through its knowledge in China (discussed in the Customer
Demographics and Interdiplomatic Knowledge subsection).
Alliances
In reposeitution to merits, eBay truths entireiances with smentire entrepreneurs and abundant companies to
acception wealths and repair the sum of items availpotent in the bargainplace.
In 2004, eBay systemic a conscious affordr program consisting of exams, references, and an
annual fee.39 Severners afford benefits and works that dispose-ofers command demand and eBay itself does
referable attributable appetition to propose, such as schedule skillful-treatment software, quenchedbound logistics, or a unmeasured
consignment calling.40 This aids eBay to entice dispose-ofers that command referable attributable attributable attributable differently truth its
services, or who appetition to influence a eminent sum of transactions save failure expertise in certain
areas. Having these benefits and works availpotent aids dispose-ofers actuate aggravate work than they
would differently.41Activia is undivided of the best-notorious conscious companies, providing bargainplace
listing tools to dispose-ofers of multiple items.42 This entireiance entireows entrepreneurs to truth the eBay
designate to gain-ground their calling occasion providing eBay fee wealth.
In 2006, eBay aligned with Yahoo! in a bargaining entireiance to raise wealth enlargement control twain
companies. Under the entireiance Yahoo! became the unpopular advertising affordr on eBay, the
companies possess a co-branded toolbar, and UrbanPal became Yahoo!’s preferred liquidation
provider.43 eBay as-well aligned with Google in 2006, making Google the first advertiser on
eBay’s Web positions quenchedside of the United States.44 Google has sought to integreprove Skype into the
relationship as a arrangement to prefer sales from Web advertising.
In 2007, eBay aligned with Northwest and Southwest Airlines to enpotent UrbanPal as a liquidation
option, and with Wal-Mart and Myspace.com to raise the enlargement of Skype.45 The entireiance
with Wal-Mart accomplish entireow eBay to dispose-of Skype phundivided equipment in 1,800 dispose-of locations.46 These
alliances aid swell the mark designate of twain UrbanPal and Skype occasion as-well increasing wealth
control eBay.
Although judiciously multifarious inferiorer dispose-ofers were angered by eBay’s 2008 entireiance
with Buy.com owing Buy.com does referable attributable attributable attributable urban catalogueing fees and its work, detached shipping, and
ability to captivate receipts agonize inferiorer dispose-ofers, this entireiance is undivided of the abundantst immanent wealth
generators control eBay. Buy.com is a middle-of-the-barfind tool that links dispose-ofers with buyers, and
it without-delay gathered five pet unroving-compensation catalogueings to the eBay bargainplace.47 eBay rulers
possess responded to the objections abquenched its entireiance with Buy.com by stating, ?eBay is
aggressively using compensation as a lever to amend the estimate and segregation on eBay.com. Consistent
with our goals, we possess penetrateed into a severnership with Buy.com to import their novel-in-season
merchandise onto eBay.com. We forebode to acquire a gigantic bargain from this severnership and we accomplish
build upon the results.?48
It appears that eBay accomplish live to truth severnerships as a abundant sever of its enlargement skillful-treatment.
Alliances with online competitors such as Yahoo! possess entireow …
Dissipation response to look unmeasured
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