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Innovation is very important in respect to the growth of a business. It can be defined as a new idea, method or a device which helps in providing a more appropriate solution in compare to the previous method for the particular task (Drucker, 2014). This reports is based on ebay which is an American multinational electronic commerce company. The organisation was founded in the year of 1995 by Pierre Omidyar. Main objective of this assignment is to identify innovation history of the organisation as well as their existing innovation performance and capabilities by applying SWOT analysis. At last, it will determine industry overview in appropriate manner.
The Organisation & Industry Overview
Organisation and its Innovation history
Ebay is a multinational e-commerce company which manage online auction and shopping services on which people can buy and sell variety of products by their own choice. The organisation was first named as Auctionweb by Pierre Omidyar on which they offered a few small used items for sale.
Political factor -
The government of US provide appropriate support to ebay after identifying their motive about reuse products and services. For the effective management of e-commerce issues, ebay formulates a Government Relations team as a new innovation that focuses on legislative and regulatory areas (eBay Government Relations. 2018).
Economical factors –
The economy of US got a effective growth from the business services of ebay. The organisation offering million of products in numerous categories to approx. 160 million users. The requirement of economy for new development practices drives changes in innovation strategy of ebay for the effective implementation of new and experimental ideas of fixed price and buy-it-now. Through this $90 billion worth of merchandise sold on eBay last year forms that call “the eBay economy.” (A Look at the “eBay Economy” in the U.S. 2018) The sales of organisation takes heights after the implementation of new and innovative ideas.
Social factor -
The government of US pay their maximum attention towards those business sectors that enhance employment opportunities. As a first innovation, organisation was introduced feedback system that was announced in the year of 1996 that affect positively on business sale (History of eBay – How they Got to Where They are Today. 2018). For the effective management of feedback services, organisation hire numerous employees and provide them opportunities for career development.
Technological factor –
Ebay is a multinational e-commerce organisation which works to provide tremendous selling and buying experience to customers at global level. For the effective business practices, in the year of 2006 ebay creates a symbiotic relationship with Paypal that provide digital transaction and further services to ebay as well as its customers (History of eBay – How they Got to Where They are Today. 2018).
Environmental factor –
The government of USA pay their maximum attention toward eco-friendly services therefore, they promote e-commerce practices. In this respect, ebay provides their own contribution and conduct a innovation named Green Projects that has allowed people to buy and supply green products for environmental safety services at worldwide. (A Thorough PESTLE Analysis of eBay. 2018).
Legal factor –
For Ebay, it is required to implement proper legislations and rules of a country that assist to managing business activities for upcoming projects. The government of UK provides higher benefits to Ebay in respects of global trading and international transportation service from the past few years. As its result, Ebay can implement new and innovative idea regarding quick delivery in their business practices.
Porter's five forces
Supplier Power –
In the past time, a constricted numbers of suppliers for pre-used materials creates a monopoly as they having a great bargaining power in the market. Thus, ebay introduce their e-commerce services for auction, pre-used as well as fresh products in worldwide (Turban and et. al., 2015). These activities assist in restrict suppliers bargaining power.
Buyer Power –
In the scenario of ebay, bargaining power of suppliers are basically higher because of its innovative idea of bidding. At its website, buyers can bid a proper price of product for a predetermined amount of time. When the time is up, item is declared as sold to the highest bidder. Thus, the organisation provides bargaining authority to their buyers for their desired services.
Threat of substitutes –
While setting up business for e-commerce treading, ebay faced fear of substitutes. Therefore, ebay implement new innovation as online auction for buying and selling practices of products. These kind of creative and experimental ideas assist in reducing threat of substitutes.
Threat of new entrants –
Ebay faced numerous competition from existing e-commerce organisations as Amazon, Alibaba and so on. Thus, Pierre Omidyar implement innovative ideas as auction in desired prices for different business products that assist in reducing threat of new entrants as Flipkart, Snapdeal and many more in present era.
Competitive Rivalry -
Ebay faced a strong competition in e-commerce market from amazon, Alibaba and many more. All these organisation adopts fast innovations for the growth of their business. At that time ebay were in the condition of less customers sustainability due to time consuming practices as auction. Thus, organisation implement new innovation as fixed price and buy-it-now that provide opportunity to capture traffic towards them.
The Organisations existing Innovation Performance and Capabilities
Ebay is a well known electronic commerce organisation that provide quality services to their customers at international level. In this respect, organisation faces strong competition from existing organisations in which amazon is known as strongest competition due to its strong innovation strategies. Thus, for ebay it is required to analyse their capabilities and performance aspects that assist them in implementing new innovation for grabbing numerous opportunities (Laudon and Traver, 2013). Some of the existing aspects of economy drives changes in a business organisation as in the year of 2013-2014, ebay innovate their strategy towards Global shipping program. Main objectives of this program is to remove hassle arranging global logistics, import charges and so on. Thus the program is not get a desired success because the seller of individual product sends them to US shipping centre after this they take them away to customers away from there.
Thus, the procedure takes a long duration in delivering products and services to desired place. Therefore, the requirement of customers force organisation to adopt innovative drivers for fast shipping and delivering services with the help of fly drones. Through this, ebay provide services to their worldwide customers within 30-60 minutes by updating tracking information. In this process artificial intelligence will providing digital support for manual commands for delivering services. These new innovative ideas aid in providing maximum competitive advantages to firm. For the appropriate analysis of organisational existing innovation and performance capabilities it is required to conduct a development audit through SWOT analysis as -
Ebay is one of the largest international online seller company with the total number of 105 million users across 37 countries (SWOT analysis of eBay. 2018). It acts as a middle man between the seller and the buyers who bid and sell products on the website of eBay. As being the first company to launch this scheme, the respective organisation has no competition of its level that assist in determining its performance factors. The company is also offering localization services which means that they are using local languages in different countries to provide them remarkable services. Ebay also provides various payment options such as Pay-Pal which eases out the shopping experience of the customers. The reputation of the respective company is very much reliable. Additionally, the brand value of the is 11 billion.
The fee structure of the company has increased from past few years. Due to this, the profit level of sellers has decreased over the year. Ebay earns from listed products, sold products and Pay-pal transactions. Additionally, the centralised functional unit is not flexible enough which leads in resulting many issues working in the international market. The company paid limited emphasis on innovations which turned out to be a biggest concern. Due to this, it gave a big opportunity to the other small competitors to grow and earn more profitability. One weak aspect of organisation is fast delivering services in international countries. Thus, it can reduce long term customers sustainability towards the firm.
There are many opportunities available for ebay which can help the respective organisation to grow. The firm can enhance its online business to other markets. Currently, the company earns the most of its profit from United States and European market. Thus, ebay have a great opportunity to expand its business in order to earn more profit levels. Additionally, the respective organisation has an opportunity to expand its innovation through product development. This can be achieved by improving the accessibility to the products across the countries which can enhance the organisation's base of customers. In order to enhance their future capabilities, Ebay focuses towards fast delivery services through fly drones to the customers by providing exact tracking information through GPS.
Main objectives of this innovation is to enhance the experience of the customers and attract more buyers through fast delivering services. One most innovative feature of this experimental idea is that customers can choose their delivery day and time by their own on the basis of their suitability.
Ebay is a well establishes organisation. However, there are other competitors that are available in the market which can decrease the number of customers and profitability of the company. Hence, companies like Amazon, Flipkart, Alibaba, etc. are the biggest threats to the organisation. Also, the concept of the respective company can be imitated which can make ebay loose its uniqueness of the concept and market share (Comino and Ferretti, 2016). Additionally, the respective company is vulnerable in aspect to technology which makes other companies more stronger in the competition. The existing competitors of Ebay force them to make changes with the implementation of new and innovative ideas a fly drones.
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In a economy, each and every organisation implement digital transformation in terms of payment, delivering, search and advertising as well. In this procedure, electronic commerce encounters a drastic change which completely changes the whole scenario of business trading practices. Through this, each and every organisation can sale their products to requisite customers at global level. In the present time, approx. 17% companies that interested in multivariate testing for strategical changes rated it the most effective method for merchandising. On this platform, approx. 61% of companies run their business through e-commerce pages per month. In between those, 52% of business organisations and agencies examine their business growth in improvement conversion. In the present and future expected year, e-commerce spend per customer over the course of total average approx. $1,800 in the US and 1,600 in the UK (Essential Ecommerce Statistics for 2018. 2018).
This industry is not required for new conception because it is already having a drastic and creative innovation that emphasise profitability for different companies, customers, government and for a nation as well (Mohapatra, 2013). In this industry some of the organisation getting golden achievements in respect of success drives and building positive relationship between different countries. Due to having a large number of e-commerce firm, individual needs to implement innovative ideas to make themselves unique and better than others. In this regard, new innovation of Ebay as fly drones with the implementation of GPS and Artificial intelligence determining them a desired success in respect of easy delivering to customers at international level. These kind of ideas assist to enchaining future business capability for the effective sustainability in competitive market. IN 2020, the B2B and B2C e-commerce sales are expected to grown as well as reaching 6.7 trillion USD estimately. That means, there can be tremendous opportunities for employment as well business growth and success.
From the above report, it has been summarised that business innovation can work as a catalyst for the growth of the company. Through this, an organisation can enhance their capabilities the drive new changes on the basis of market and business requirements. This reports is determines history of organisation through PESTEL analysis for examine impacts of external environmental factors toward business innovation practices. Porter's five force model assist in determining industry requirement. The implication of SWOT analysis determined existing performance and future capabilities of firm for the effective implementation of new innovation. At last the requirement of industry reflects existing business strategy and requirement of new ideas as well.
- Comino, E. and Ferretti, V., 2016. Indicators-based spatial SWOT analysis: Supporting the strategic planning and management of complex territorial systems. Ecological Indicators. 60. pp.1104-1117.
- Drucker, P., 2014. Innovation and entrepreneurship. Routledge.E. Dobbs, M., 2014.
- Laudon, K.C. and Traver, C.G., 2013. E-commerce. Pearson.
- Mohapatra, S., 2013. E-commerce Strategy. In E-Commerce Strategy (pp. 155-171). Springer, Boston, MA.
- Turban, E., and et. al., 2015. Electronic commerce: A managerial and social networks perspective. Springer.