EBay’s Strategy in China
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EBay’s Strategy in China
EBay experienced moments of high growth and decline when it entered the Chinese market. The company was relatively new at the time. However, it capitalized on the fact that it had a unique product to offer the market. Its acquisition of a local company was also influential in determining its growth. The company had experienced exponential growth in the US, and it hoped to achieve the same level of success in China. However, the company failed to realize the effects of competition from a local company. This meant that it failed to prepare to counter the competition. In an effort to prevent further decline, the company decided to form a joint venture with TOM Online. The latter was a local company, and eBay hoped that it would be able to attract more clients. At the time of the venture, the company had already lost a significant share of the market to a local competitor. The company can improve its business model, using the business model turnaround.
The business model turnaround combines the major elements of a business in a system that is well integrated. It consists of four elements including customer value proposition, profit formula, key resources, and key processes. The company needs to identify its customer value proposition by focusing on the favorable points of difference. It already offers the same services as the competition. Therefore, it needs a way to distinguish itself from the competition. The company recognizes that other companies are offering the same products and services. However, it distinguishes itself from the competition because it protects its users from purchasing counterfeit products. It has an effective system for monitoring such products. The company needs to develop a profit formula by focusing on the revenue model and the cost structure. It has lost some of the customers because it charges the listing and final prices, while its rival offers the same services freely. While it may seem that the company is making money through these charges, it is also experiencing indirect and direct costs by losing a large share of the market.
The company cannot deliver any value propositions to the customers without its key resources. While it has the right technologies, it has failed to maintain the right people. When the company acquired Eachnet, it had the chance of getting a larger market share since it was not in direct competition with anyone. However, the resignation of different personnel dealt a big blow to the company because it lost the people who had been responsible for its success in the first place. Therefore finding the right people is paramount for success. The company also needs to find a way of getting the right information as this will ensure that it make the right decisions. It needs to conduct extensive research detailing the reasons that people have chosen to use the services of the rival company.
The other thing that the company needs to consider is its key processes. It will do this by focusing on the processes as well as the rules and metrics. It needs to reconsider redesigning the product to ensure that it fits well with the targeted market. Applying the principles used in America will not work in this market. The company’s website should be reflective of the Chinese preferences. It also needs to redesign its marketing strategies, and hire people who understand the market. Another important factor to consider is the way it approaches its customers. It is clear that the customers in this market want direct contact with the company. Therefore, improving customer services will be important in retaining any new customers.