EBay. Inc. and Amazon. com


Problem definition and historical context

In wide spectrum. the instance of eBay and Amazon explores the strategic interaction between the two organisations as they embrace different concern theoretical accounts. This instance considers how rivals in the market can successfully dispute the challenger in extremely competitory market where concern is defined by strong web effects and fluctuating costs. The audiences in this instance are given a opportunity to measure the virtues and the demerits of the concern platform utilized by eBay in contrast to Amazon’s online based retail theoretical account ( Harvard concern school. 2012 ) . In add-on. the instance allows those interested to measure concern public presentation in the event of looping value because of the indirect interactions in the two industries. The instance offers a vivid geographic expedition and analysis of how Amazon expanded its concern in the competitory environment every bit good as discoursing how eBay responded and the schemes they can follow to take down the difference in net incomes between the two. All this is done through an in-depth analysis of acquisition of GSI commercialism by eBay in 2011. Briefly. concern competition is the chief issue in this instance.

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Case research

Business competition between the two corporations quickly grew in 2011. ten old ages after a narrative by “Businessweek’ labeled eBay vs. Amazon was released. The publication by Businessweek clearly depicted that between the two. the company that would win the biggest market portion would likely rule the hereafter of internet-based concern. By the clip of this publication. Amazon was taking in all facets of on-line minutess. Inherently. the history of the two corporations is based on Royal conflict. The competition between the two companies is really high. Actually. Amazon and eBay are the biggest houses in online concern. They are rivals of each other. Despite being in the same concern. the two corporations have been runing by taking different concern attacks. In footings of fiscal growing. Amazon had established itself as the market leader. Its fiscal facets had grown by 37 % as compared to eBay’s 6 % ( Harvard concern school. 2012 ) . Furthermore. eBay specializes in concentrating on being a facilitator in cyberspace concern while Amazon focuses on going a one-stop platform. It is in the is respect that the instance establishes that Amazon in the long-run will outrun eBay in the on-line phase. The two companies expand their markets by unifying with other related companies.


EBay Company offers a market topographic point where both retail merchants and purchasers interact. The company aims at enabling both purchasers and Sellerss to hold at a impersonal monetary value that can be referred to as action monetary value. Similar to Amazon. vitamin E bay offers its clients with assortment of merchandises where they can take on what to purchase or sell. Both companies deal with used good but purely covering with e commercialism as manner of payment.

Generic Strategies Grid ( 2 char. per axis )

291909541338500 The generic schemes are largely applied in analysing competitory advantage of the concern environment of both companies.

Cost leading Differentiation


Cost focal point Differentiation focal point

This chart articulates ways how e Bay company can derive competitory advantage over the other feasible rivals.

Five Forces Model

In concern context. Five Forces Model is paramount as they help so concerns analyze their competitory advantage. It is overriding to understand both internal and external concern environment so in order to develop feasible schemes to stay in the competitory border. In mention to the instance survey. the Five Forces Model will greatly assist to analyse the intense competition between Amazon. com and vitamin E Bay. More significantly. Five Forces Model is a feasible tool to assist both companies to be after in ways such as coming up with new merchandises needed by the clients. Supplier Power is the first component that trades with providers and monetary values of the trade goods ( Harvard concern school. 2012 ) . With the intense competition as witnessed in the instance survey. each company is endeavoring with best ways how they can demand the monetary values of trade goods to take down. Indeed. E bay has collaborated with many providers by offering clients with assortment of merchandises runing from different monetary values.

Buyer Power is the 2nd component in the Five Forces Model. Ultimately. this component is concerned on how best the purchasers can convey down monetary values of trade goods. Quite different from Amazon. E bay has offered their clients with a direct linkage with their providers with an impulse to convey down cost of goods. Competitive Rivalry is another theoretical account vital to understand all possible rivals around the concern. As noted in the instance survey. possible rivals in this industry include newspapers citations. music or picture stores and personal home pages among others. Menace of Substitution is less as both companies have a strong CRM hence doing it hard for other companies to displace them in the market. Last. the companies face intense competion from Threat of New Entry companies such as yokel among others.

Strategic analysis

Value concatenation analysis

Value concatenation analysis entails analysis of the mode in which companies guarantee value creative activity to their clients with the usage of their resources and schemes. In relation to eBay. the company ensures value creative activity to their clients through monetary value film editing. heightening its client hunt capablenesss and guaranting its new concern theoretical account. The company’s inbound logistics are well-built. EBay is tight-lipped in respect to their attack to payment processing. communications. website operations and more significantly client support. With regard to its operations. the company does non curtail the care of a market place and this resulted to it come ining new markets outside U. S. A in 2011 ( Harvard concern school. 2012 ) . Obviously. eBay unlike Amazon is depicted a powerful in relation to its operations. With the debut of its nucleus concern sections. that is communications. payments and market places. eBay aimed to keep the trust and chance by developing new concern communities globally with the aid of e- concern. In this instance. the company compared to Amazon generated much gross and increased its popularity around the universe.

Undertaking hazard theoretical account

Undertaking hazard direction aims to mensurate the company’s capablenesss and hazards and the most effectual steps it adopts to forestall assorted hazards as it conducts concern. With regard to project hazard theoretical account. eBay is depicted as one with clear undertaking hazard direction procedure. On the other manus. Amazon besides has a good established undertaking hazard theoretical account to turn to company’s capablenesss and hazards.

Model justification

The concern theoretical account assumed by eBay that is auctions market place is depicted by the article and paramount in guaranting the success of the company particularly in the competitory concern environment. The theoretical account provides effectual and efficient agencies of payments. communicating and agencies of come ining new markets. Based on the article. the concern theoretical account assumed by the company connects purchasers and Sellerss in such a manner that it ensures value creative activity. The theoretical account is besides portrayed every bit effectual as it improved the gross of the company in the twelvemonth in 1999 ( Harvard concern school. 2012 ) .

Options flow from strategic theoretical accounts

To guarantee its competitory. eBay harmonizing to the article used groundbreaking concern platforms and theoretical accounts to pull more clients globally. However. the article depicts that the company should besides concentrate on spread outing and transforming its concern and undertaking hazard theoretical accounts in countries such as selling and services to its clients. In this instance. the company should be in a place to vie with rivals such as Amazon.

Technology and costs

Technological alterations are happening drastically therefore mentioning the demand why the companies should be at par with these inventions. The engineering used by both companies is effectual to heighten the hunt catalog and ability to recover information at easiness hence cutting operational cost. Use of AWS has immense benefits. as it is non merely dependable but besides secure. Another advantage of this engineering in relation to cost is that it is simple in scalability. Use of superior engineering such as AWS. S3. catalogue and EC2 enhances the company to cut down fixed monetary values of trade goods ( Harvard concern school. 2012 ) .


Competition between the two corporations is high and specifically eBay should follow several schemes to minimise the available spread. For case. eBay should encompass better advertizement schemes and hunt for better advertizement spouses. This will assist pull some of the Amazons clients to their side. Second. to guarantee that they stand a opportunity to cut down the concern spread. eBay should concentrate on its strengths. Geting into the digital media gross revenues should be another country to strategize on. In footings of cyberspace engineering. eBay should guarantee better cyberspace hunt as good guaranting improved tagging attacks. Last. it is of importance for eBay to cut down the PayPal fees to lure and pull more clients. On the other manus. Amazon should happen on doing their merchandises better besides viing with their close rival on monetary value.


Harvard concern school. ( 2012 ) . Bay. Inc. and Amazon. com ( A ) and ( B ) .

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