1 / 57

EBay A Case Study In Strategic Management Tony Gauvin, UMFK April 2006

EBay A Case Study In Strategic Management Tony Gauvin, UMFK April 2006. Some Acknowledgements. Graphics and some Data for presentation taken from investor.ebay.com The analysis is based in part on the case study prepared by the following students in Spring of 2005

Audrey
Download Presentation

EBay A Case Study In Strategic Management Tony Gauvin, UMFK April 2006

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. EBay A Case Study In Strategic Management Tony Gauvin, UMFK April 2006 ® 2006, Tony Gauvin, UMFK

  2. Some Acknowledgements • Graphics and some Data for presentation taken from investor.ebay.com • The analysis is based in part on the case study prepared by the following students in Spring of 2005 • Corey Daigle, Megan Foreman, and Seth Fraser • Other material was provided by the authors of the Case • Marcelo De Mattos and Forest David ® 2006, Tony Gauvin, UMFK

  3. Some Cool Facts Who we are, What we sell, Where we are Mission and Vision Internal Assessment - Financial Condition - IFE Matrix ?? External Assessment - EFE Matrix - CPM Matrix Strategy Formulation - SWOT Matrix - Space Matrix - IE Matrix - Grand Strategy Matrix - QSPM Matrix - Matrix Analysis Strategic Planning for the Future EPS/EBIT Decisions/Implementation/Evaluation 2004&05 Financials eBay press releases Overview ® 2006, Tony Gauvin, UMFK

  4. eBay is evolution • 1996 – 1998: US only, collectibles only • Started by Pierre Omidyar to assist his girl friend in collecting Pez Dispensers • 1999 – Moving beyond collectibles • 1999 – Going global • 2000 – Introducing Fixed Price and eBay Stores • 2002 – PayPal: removing friction and building a huge new business • 2004 – 2005: Creating other marketplaces → Marktplaats, Mobile, Rent.com, Shopping.com, Kijiji, ProStores Common theme – expanding our vision, our market and our opportunity Aspirational goal of growing faster than e-commerce ® 2006, Tony Gauvin, UMFK

  5. High performance company Years since started ® 2006, Tony Gauvin, UMFK

  6. Registered users ® 2006, Tony Gauvin, UMFK

  7. Gross merchandise volume ® 2006, Tony Gauvin, UMFK

  8. Total PayPal Accounts ® 2006, Tony Gauvin, UMFK

  9. PayPal Payment Growth ® 2006, Tony Gauvin, UMFK

  10. Who we Are Founded in September 1995, eBay is The World's Online Marketplace® for the sale of goods and services by a diverse community of individuals and small businesses. Today, the eBay community includes more than a hundred million registered members from around the world. People spend more time on eBay than any other online site, making it the most popular shopping destination on the Internet. ® 2006, Tony Gauvin, UMFK

  11. What we Sell On an average day, there are millions of items listed on eBay. People come to eBay to buy and sell items in thousands of categories from collectibles like trading cards, antiques, dolls, and house wares to practical items like used cars, clothing, books and CDs, and electronics. Buyers have the option to purchase items in an auction-style format or items can be purchased at a fixed price through a feature called Buy It Now. ® 2006, Tony Gauvin, UMFK

  12. Where we Are People from all over the world buy and sell on eBay. Currently, eBay has local sites that serve Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Malaysia, the Netherlands, New Zealand, the Philippines, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States. In addition, eBay has a presence in Latin America through its investment MercadoLibre.com. ® 2006, Tony Gauvin, UMFK

  13. eBay’s Community Values eBay is a community that encourages open and honest communication among all its members. Our community is guided by five fundamental values:  • We believe people are basically good. • We believe everyone has something to contribute. • We believe that an honest, open environment can bring out the best in people. • We recognize and respect everyone as a unique individual. • We encourage you to treat others the way you want to be treated. ® 2006, Tony Gauvin, UMFK

  14. eBay’s Mission Statement eBay's mission is to provide a global trading platform where practically anyone can trade practically anything. ® 2006, Tony Gauvin, UMFK 1

  15. Proposed Mission Statement eBay’s mission is to be the world’s most utilized and profitable “trading post.” Having bright and talented employees that are dedicated to serving both customers and communities, eBay provides the most technologically advanced, reliable, and secure trading platform available to anyone, anywhere, while always doing business in a highly ethical manner. ® 2006, Tony Gauvin, UMFK 1

  16. Proposed Vision Statement Our vision at eBay is provide an online business to enable anyone to auction practically anything. ® 2006, Tony Gauvin, UMFK 1

  17. External Audit ® 2006, Tony Gauvin, UMFK

  18. Opportunities ® 2006, Tony Gauvin, UMFK 2

  19. Threats ® 2006, Tony Gauvin, UMFK

  20. EFE Matrix ® 2006, Tony Gauvin, UMFK 3

  21. EFE Matrix ® 2006, Tony Gauvin, UMFK

  22. CPM ® 2006, Tony Gauvin, UMFK 4

  23. Internal Audit ® 2006, Tony Gauvin, UMFK

  24. Organizational Team • Beth Axelrod, Senior Vice President, Human Resources • Matt Bannick, President, eBay International • William C. Cobb, President, eBay North America • John Donahoe, President, eBay Marketplace • Michael Jacobson, Senior Vice President and General Counsel • Jeff Jordan, President, PayPal • Pierre Omidyar, Founder and Chairman of the Board • Bob Swan, Senior Vice President, Finance and Chief Financial Officer • Maynard Webb, Chief Operating Officer • Meg Whitman, President and CEO ® 2006, Tony Gauvin, UMFK

  25. Key Financials • End of year 2003 • Net Income grew to $442 million, up 77% • Resulted in record operating cash flows of $874 million, up 82% • Year end Balance Sheet • $5.8 billion in total assets • $2.7 billion in cash and investments ® 2006, Tony Gauvin, UMFK

  26. Key Financial Ratios Company Industry Sector S&P 500 Valuation Ratios P/E Ratio (TTM) 97.12 41.01 28.90 24.01 Beta 1.77 1.30 0.96 1.00 Growth Rates % Sales - 5 Yr Growth Rate 90.58 35.47 17.25 9.30 EPS (MRQ) vs Qtr 1 Yr Ago 55.07 27.30 15.43 28.69 EPS (TTM) vs TTM 1 Yr Ago 60.76 27.58 16.37 21.92 EPS - 5 Yr Growth Rate 111.74 43.79 15.23 12.15 Financial Strength Quick Ratio (MRQ) 3.13 1.22 0.93 1.26 Total Debt to Equity (MRQ) 0.03 0.73 0.82 0.85 ® 2006, Tony Gauvin, UMFK 5

  27. Key Financial Ratios Company Industry Sector S&P 500 Profitability Ratios % Gross Margin (TTM) 80.78 42.23 42.84 47.32 Gross Margin - 5 Yr Avg 79.48 41.08 42.06 47.01 Operating Margin (TTM) 29.01 11.97 12.90 20.33 Operating Margin - 5 Yr Avg 16.21 6.75 11.21 18.35 Net Profit Margin (TTM) 21.00 7.76 7.54 13.12 Net Profit Margin - 5 Yr Avg 13.53 3.74 7.62 11.59 Management Effectiveness % Return on Assets (TTM) 9.10 8.29 5.91 6.40 Return on Investment (TTM) 10.18 11.53 7.98 9.97 Return on Equity (TTM) 10.50 14.04 13.51 18.71 www.investor.stockpoint.com ® 2006, Tony Gauvin, UMFK

  28. eBay Stock Information ® 2006, Tony Gauvin, UMFK

  29. eBay as an Investment ® 2006, Tony Gauvin, UMFK

  30. Strengths eBay is the most well known online auction company in the world. 1. Strong auction community of loyal customers. 2. Excellent financial situation. 3. Have a fair payment system that encourages merchants to list products. 4. Strong presence in strategic global markets. 5. 6. Experienced management team. eBay has very little inventory since they do not actually take position of items sold on their site. 7. 8. Strong customer service. Percent of revenue in international markets increasing significantly. 9. ® 2006, Tony Gauvin, UMFK

  31. Weaknesses • Weak promotional and marketing activities • eBay does not pay dividends on their stock. • Some customers feel the website is cluttered • eBay’s position in the business to business (B2B) market is weak. • eBay has very little debt, therefore the company is not taking advantage of low interest rates to expand. • eBay has a higher tax rate since they do not take advantage of depreciation as well as other companies. • The company relies too much on word of mouth advertising, assuming everyone already knows about eBay. • The company does not do enough to convince leery potential customers that Internet business is financially safe. • Longer transaction times, since many merchants will not receive payment until a buyers check clears. • eBay is mainly a cash business. ® 2006, Tony Gauvin, UMFK

  32. IFE Matrix ® 2006, Tony Gauvin, UMFK

  33. The Analysis ® 2006, Tony Gauvin, UMFK

  34. SWOTMatrix ® 2006, Tony Gauvin, UMFK 7

  35. SPACE Matrix ® 2006, Tony Gauvin, UMFK

  36. SPACE Matrix ® 2006, Tony Gauvin, UMFK

  37. The Total IFE Weighted Scores Strong Average Weak 4.0 to 3.0 2.99 to 2.0 1.99 to 1.0 4.0 I II III High 3.0 IV V VI The 24% 24% EFE Total eBay Medium Weighted Scores 76% 76% Domestic International 2.0 VII VIII IX Low 1.0 IE Matrix ® 2006, Tony Gauvin, UMFK 11

  38. Rapid Market Growth Quadrant II Quadrant I Weak Strong Competitive Competitive Position Position Quadrant III Quadrant IV Slow Market Growth Grand Strategy Matrix ® 2006, Tony Gauvin, UMFK 10

  39. QSPM ® 2006, Tony Gauvin, UMFK

  40. QSPM ® 2006, Tony Gauvin, UMFK

  41. QSPM ® 2006, Tony Gauvin, UMFK

  42. QSPM ® 2006, Tony Gauvin, UMFK

  43. New Strategies Expand to all countries of the world Cost: $500,000.00-1,000,000.00(advertising) Advance in security of personal information 1,000,000.00+ Increase in Industry N/A Increase revenues by capturing more customers N/A Look into new pay system or create own (PayPal only in 38 countries) Millions Suggestion/Recommendations ® 2006, Tony Gauvin, UMFK

  44. eBay’s Thoughts We believe that our continued profitability at historical levels will depend in large part on our ability to do the following: • attract new users and keep existing users active on our websites;    • manage the costs of our business, including the costs associated with maintaining and developing our websites, customer support, transaction and chargeback rates, and international and product expansion;    • maintain sufficient transaction volume to attract buyers and sellers;    • increase the awareness of our brands; and    • provide our customers with superior community, customer support, and trading experiences. From 2003 annual report ® 2006, Tony Gauvin, UMFK

  45. EPS/EBIT Analysis • $Amount Needed: $1,500 • Stock Price $45 • Tax Rate 80/162=40% • Interest Rate 5% • # Shares Outstanding 609 ® 2006, Tony Gauvin, UMFK 14

  46. EPS/EBIT Analysis ® 2006, Tony Gauvin, UMFK

  47. Decisions Primary: Expand aggressively into China Secondary: Increase business to business operations Increase marketing campaigns in Asia ® 2006, Tony Gauvin, UMFK

  48. Implementation Objectives: Create a fully translated Chinese eBay site Increase sales by 35% Increase number of registered users ® 2006, Tony Gauvin, UMFK

  49. Evaluation Quarterly & Yearly Financial Statements Annual strategic meetings of division management and corporate management ® 2006, Tony Gauvin, UMFK

  50. 2004 Financial Information More than 104.8 million registered users 327.7 million items More than $8 billion in gross merchandise sales * All from first quarter of 2004 ® 2006, Tony Gauvin, UMFK

More Related