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EBay Fine Tune Case Study Analysis

1. Contrast eBay's original business model with its latest proposed business model.

2. What are the problems that eBay is currently facing? How is eBay trying to solve these problems?

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1. Contrast eBay's original business model with its latest proposed business model.
eBay's previous business model could not quickly adjust to the changing technological environment by using the current framework of online retail. "EBay operates on a unique business model which unites buyers and sellers in an online marketplace. The business model overcomes the inefficiencies of traditional marketplaces, which tend to be fragmented and offer a relatively limited variety of goods. This business model also saves on the transaction cost per sale, due to absence of intermediaries. Further eBay maintains zero inventory unlike and its other competitors and therefore costs related to inventory management is negligible. In particular, this model has been successful in addressing markets of new and scarce goods, and end-of-life products, and used and vintage items, which would otherwise be difficult to locate and purchase." (DataMonitor: EBay Inc., 2010).
The original model was not diversified thus the company would continue to lose value, market share and reduced profitability as a result of consumers shopping with the competition that has more items and competitive pricing strategies to offer. Presently eBay seeks new opportunities for growth expansion and business ventures in order to become the world's most multifaceted entity in the world of e-commerce. EBay would be unable to maintain a competitive advantage if they didn't come up with a plan to revolutionize the e-commerce infrastructure, therefore the proposed business model would appeal to a broader target audience by offering a variety that surpasses the auction framework. With the threat of having a plethora of competitive auctions, eBay is placed in a position of streamlining their strategic advantage, meaning the company's current business model is not enough to sustain the company's reputation as the successful international auctioneering powerhouse of e-commerce. Although eBay was the number one leader in online auction retail, there are several rivals that offer the same products for less currency which is always a contributing factor for online shoppers choosing a retail option.
The current business model offers eBay a variety of options stemming from developing strategic alliances that would enable the company to have an oligopolistic approach to online retail. In addition to establishing relationships with other organizations and venturing into new markets, the company would possess an advantage of global growth expansion with a stronger positioning in the marketplace. From the beginning, developers of eBay's focal point was to develop a buyer/seller trade platform on a global scale. This methodology was the fundamental mold that interconnected perspective business owner with the consumer through the e-commerce infrastructure.
2. What are the problems that eBay is currently facing? How is eBay trying to solve these problems?
"EBay has become an online middleman for buyers and sellers in a way which traditional brick and mortar companies cannot touch. Using the web has also brought along with it some challenges, especially regarding trust issues between buyers and sellers.
eBay seems to have dealt adequately with those trust issues, since users don't seem to mind and continue to use their service. eBay is operationally sound, especially considering it is still in its buildup period and it has a business model that scales extremely well. The management has shown that it responds quickly and well, and has been working hard to expand the business ...