21/11/2011

E-Bay Strategy In China Alliance or Acquisition? Case Study Strategic Management

Gabriela Šalamonová Barbora Jandová Pierrick Boissel Julien Meunier Alexandre Godet

SUMMARY

I. The Input Stage
     CAGE VRIO Analysis CPM matrix EFE matrix IFE matrix

II. The Matching Stage
   BCG matrix SPACE matrix GSM matrix

III. The Decision Stage
  Matrix Analysis QSPM matrix

IV. Questions
    Assessment of eBay´s choice of market entry strategy for China, listing both the advantages and disadvantages of its acquisition strategy Assessment of the potential benefits and risks of eBay´ s joint venture with Tom Online Assessment of both companies: eBay and Tom Online, decisions on their respective percentage of stake …show more content…

TaoBao was established in May 2003, soon gained the hearts of Chinese consumers and beat eBay EachNet in China´s C2C online auction market. Its service offerings were later extended to include B2C e-commerce. By 2006, the company had become the leading C2C and B2C marketplace in China with a gross merchandise volume of US$2.1 billion, amounting to a 110% increase from 2005. Unlike eBay EachNet (in 2006) had seen its market share declining each year, until it had only a staggering 29%, compared to TaoBao´s 60%. On the other hand, TaoBao, albeit founded much later than eBay, was a subsidiary of Alibaba which had a more established presence in China. However, given a choice between a new foreign company and a domestic one, Chinese people would opt for the latter. Trust was particularly important in China, due to the lack of an adequate legal system or other formal means of dispute resolution.

Critical Success Factors   Market Share – by year 2006 eBay´ s market share declined to 29%, in comparison to TaoBao´ s 60%, Price – eBay provides services fees – Insertion fee, Optional Features fee, Final Value fee, but to buyers were offered free, in comparison to TaoBao where it was free when they just listed an item, Competitiveness – TaoBao disposes with the people´ s trust and history because of subsidiary of Alibaba. Also, Chinese people prefer domestic company more than foreign one. Customer Service – e.g. TaoBao made an