Ebay

eBay’s (diversification) expansion modes in China included acquisition and joint venture. Critically evaluate each mode of diversification by identifying the advantages and disadvantages for e bay given the competitive environment within the overall industry and specifically in China. You may use all the applicable tools learned so far to evaluate the industry and the opportunities and threats that eBay faces entering a foreign market.

Critically evaluate eBay’s most recent joint venture with Tom Online. Assess and quantify the benefits and risks for eBay given its 49% ownership interest in the venture. This analysis is specific to the Tom Online deal.

eBay tried to get into the Chinese market through both acquisition and joint venture. In order to know each modes of diversification serve which kind of advantages and disadvantages, we are going to evaluate those two mode separately.

eBay first entered China trough acquisition of EachNet. Internet EachNet has relatively large market share at then. During the first couple years, the threat of new entrants was high, because the internet penetration rate in China was low, but is growing fast, e-commerce from competitors has many opportunities to rise. However, it is low for eBay, because eBay acquired the largest C2C portal. Supplies didn’t have too much bargaining power at then, because there weren’t any strong performers like eBay EachNet. The bargaining power of buyers was relatively low, too. Customers who use eBay in China were early adopters; those customers didn’t have any other similar markets to go to. The threat of Substitute products was low. The Internet penetration rate continues rising at then, this is a steady growing market, customers online shopping rate is unlikely to go down. Lastly, the competition among the industry hadn’t become fierce yet. No other major plays in this C2C market can replace EachNet in China back then. Overall, this was an idea market for eBay to get in.

Some other...