EBay In China Study Case Essay

Question 1eBay first entered the Chinese tradeplace in 2002 by acquiring a 33% stake in its local counterpart, EachNet, followed by a rise acquisition a year later in 2003. Critically prise eBay.s choice of market entry dodging for china (use Key coarse Matrix), listing some(prenominal) the advantages and disadvantages of its acquisition strategy (use Drivers (YIP) -CAGE Matrix). 30%Key plain MatrixLooking at the structure of key country hyaloplasm, we notice that this matrix has two axes (the x-axis that shows the hawkish strength observed in the country that we are studying the vertical axis represents the country atractiveness). For China, we prat say that among many another(prenominal)s, there is a top 6 of factors that come investment there (China is an attractive investment country)1. Capital Availability2. competitiveness3. Regulatory Environment4. Stability5. local Chinese Market and rail line Climate6. Openness to Regional and International Trade.Analyzing Chinas competitive strength, we conclude that this is a country still developing. China has shortages of infrastructures and services in several markets (Chinas competitive strength is not that in high spirits).Drivers (YIP)Location of application is a crucial source of potential advantage and one of the distinguishing features of world-wide strategy relative to other diversification strategies. Given internationalizations complexity, international strategy should be underpinned by a careful diagnosing of the strengths and driveion of trend in particular markets. George Yips drivers of globalization framework renders a basis for such diagnosis.CAGE1. Culture keep2. Administrative and political distance3. Geographical distance4. Economic distance.The differences surrounded by the US and China are capacious when evaluating the culture distance, the administrative and political distance, the geographical distance and the economic distance. When a company like eBay assumes inte nd to expand its business should be aware of these differences and adopt strategies that prevent these differences to come in in business success.Vantages/Disadvantages of the acquisition strategyWhen a company like eBay assumes intend to expand its business to China should be aware of the differences between both countries and adopt strategies that prevent these differences to interfere in business success. As a disadvantage, we discharge consider the chance of the company not adapt in a positive personal manner to the new market (there is the possibility of existence rejected by the Chinese market). As an advantage, we can consider the possibility of this acquisition became a huge success and the sales can increase abruptly (as the Chinese market is really big, this means that eBays profit would be really high after this movement).Question 2Assess the potential benefits and fortunes of eBay.s knock venture with Tom Online (use Global/Local Matrix). 20%The Global / Local Ma trix assesses the volume of international trade and the volume of foreign direct investment in an attention. The industry in which it operates eBay is located in the f number right corner as shown in the figure. It is a global industry which revised the philosophy Think Globally, Act Globally and where there are high levels of international trade and foreign direct investment.In new-fangled years the market for e-commerce in China has recorded tremendous growth. The roast venture on analyzing is based in the relationship between tom Online and Skype communications company online at eBay Inc. EBay is one of the largest brands of e-commerce in the world and tom turkey Online is a provider of excellent services to Chinese consumers. Both companies bequeath make financial contributions online, and the new market being built by a joint venture between eBay and turkey cock Online will provide a great experience for users. This joint venture will promove the radio link between user s and channels of distribution. at that placefore, in our view this joint venture has e trulything to be a success.Question 3Advantages / Disadvantages of JV international strategyOn one hand, a Joint Venture strategy has several advantages, generally when it is done on a market like Chinese one, which is very protective with its national trustys and little accommodative for foreign companies. TOM online is one of the largest wireless service providers and the fifth-largest internet portal in China, which allows Ebay to penetrate the market faster and easier thanks to its existing brand-awareness among Chinese population, generating for ebay a time saver. TOM online has also a strong political asset by being supported by Li Ka-shing, the biggest holder of the company, who has also strong connexions with hugh-ranking officials both in Chian and Hong Kong. This success on the Chinese market shows that the firm has a great expertise on the specificities of this business area, and de crease therisk for Ebay to make mistake with its strategy.Also, by making a JV, the financial risks and be decrease because they are shared between the two firms and a synergy is created between the two sides, increasing the financial power of the firms and allowing them to launch look with shared financial participation. On the other hand, with a JV, the earnings remove to be shared, so they are lower. To make this partnership happen, it demand a lot more work and energy than with the other type of partnership. That includes strong research about the law and the compatibility between the two structures.This setting of the JV comes with a lot of impact on the management of the new entity. There is risk of disagreement on how the dividends should be shared, disagreement on the managerial model to adopt and on the global strategy. All these problemes can stimulate to conflict of interest and make the JV losing market shares.Question 4 Strategic recomendation on International Comm ercial Strategy for E-Bay Alliance, Acquisition or Abandon Strategy Cf Excel document for QSPM Matrix.Due to this QSPM analysis, we can see that the acquiring method is still more than the expanding method, but from close, thusly we know that Ebay is the auction website, so we can council them to continue acquiring the other companies