EBAY’S STRATEGY

EBAY’S STRATEGY

EBay’s problem with its strategy

The main problem with eBay is choosing to use international expansion for their growth, a field where they had minimal experience. For many companies, growing their businesses overseas can be very enticing. However, entrepreneurs should note that this is an entirely different ball game. Firms usually encounter many difficulties in learning the dynamics of overseas markets and establishing a new customer base. There are also new laws and regulations to learn, unfamiliar local customs to learn as well as getting dependable trade partners (Panibratov, 2017). This strategy seemed to work for the period between the years 2006 – 2008, where the firm derived its revenue from three critical sources. First, was from the many products and services that the company offered online, whether sold in fixed-price transactions or by way of auction. Second was PayPal’s transactional fees and Skype’s communication fees. The expansion and diversification saw revenues increase marginally by 11% in 2007. For eBay, increase in e-commerce adoption, and internet usage created an excellent opportunity. And as a leading market brand, the firm was in a very strategic position to capture a big chunk of the market in the early stages. There was notable success in particular markets in Latin America and Europe but little progress in the Asian market. Further acquisitions of non-performing businesses like Skype by eBay meant that the business diverted from its core auction and retail trade. This mistake led to the company’s share, shedding its value by half in 2008.

The Market Strategy

eBay seemed to use a market development strategy for growing internationally, followed by diversification. As a market strategy, firms use market development to enter markets in different geographical regions or customer segments using existing products (Fortin, 2017). To a business, an efficient market penetration strategy should focus on how a business could build synergy to be competitive in these new markets. For the company, its strategy became successful primarily because they were able to leverage on the new wave of e-commerce adoption and internet usage that was available in these foreign markets. The firm was also able to create value in new markets through related and unrelated diversification when it used $ 6billion to acquire PayPal, Skype, StubHub, and Rent.com. By making these acquisitions, the company hoped to expand its range of products and services and at the same time, create value for the investor. eBay used unrelated diversification by acquiring these companies in an attempt to leverage their support services. For instance, buying a 25% stake in Craigslist enabled eBay to leverage on the company’s critical competencies. Such aggressive acquisition was partly due to increased competition on online auctions. This further lead to corporate partnerships, strategic alliances, and joint ventures with competing firms like Yahoo and Tom Online to counter contenders like Google (Team, 2014).

Executive’s Decision making Process

As the business executives plan on making significant changes to the products, customer approach, and business model, they should first consider their firm’s competitive advantage. The success of the business in North America depended on a carefully evaluated competitive strategy. Therefore, before formulating a strategy, eBay should carry out analysis on their assets and resources and how much of these resources could be utilized to acquire competitive advantages. Other important considerations in their strategy should be; applying a more focused strategy; managing value chain relationships; differentiation, as well as creating unique products and services that are valued (Fortin, 2017).

GARMIN’S BUSINESS STRATEGY REVIEW

Role of Goals in changing the company’s direction for Garmin

Garmin should consider changing their strategy as the future is quiteunpredictable, despite the fact that Garmin Limited has had success in the achievement of specific milestones previously set. The company’s business model has been in the supply of navigation devices powered by GPS to assist pilots, drivers, or boat captains with direction. However, the business has recently ventured into wearables with their Vivo brand. Setting goals is a tough choice, and businesses have to consider such changes in the wake of new market realities. Upon deciding the direction a company wants to go, setting goals provides a roadmap by which various mileposts can be focused on as the company moves towards the new trend. Therefore, having clear set objectives helps in translating a firm’s vision into targets that are measurable (Locke & Latham, 2013). Everyone clearly understands what to do and when to do it. For these reasons, employees become more motivated and are enthusiastic about their work. Less time is wasted, and where employees discover their skill gaps, they find better ways to enhance their skills. Moreover, goals can be used as the basis of evaluating performance and taking corrective actions when there is a deviation. They can also be viewed as structures within which projects are developed. Garmin’s future survival can only be guaranteed by setting up transformative goals to help the firm deal with new technologies and change in customer preferences. Thus Garmin should reduce relying on their custom navigation devices that are GPS powered to trendy, innovative wearable products, where the markets seem to be headed (Knapp, 2016). Competing effectively in the segment will require that Garmin alter its operational model to that of focusing on innovative productions. Similarly, they could consider researching on where their GPS technology would be a better market fit.

Types of Plans needed for such an Industry

Many companies like Fitbit, Jawbone, and Apple are now offering GPS-enabled software and hardware. This changes the whole scenario where Garmin had predominantly been a household name in portable navigation devices like the ones used on automobiles. There is a permanent disruption of Garmin’s market by the smartphone apps necessitating the development of long-term goals. The firm should, therefore, review promising segments such as marine and aviation, outdoor and fitness sectors amidst the take-off in the smartwatch market. For instance, the firm could discontinue production for the automobile’s GPS market where it had previously focused on. Thus enabling the firm to access long-term capital that they can channel to promising sectors in marine, outdoor, and aviation. The future for GPS technology seems more mobile, and the current business model for Garmin is not sustainable in the long-run. According to Jiang (2014), such a firm should consider exploring a strategic corporate partnerships with big mobile device developers. It could copy an example of the collaboration between Apple and Nike, where they came up with Nike+ used in Apple watches. Also, since data costs are on the decline, advancements in GPS technology will lead to market players leaning more on software development. Another long-term strategy that Garmin could explore is acquisition. Presently the market is crowded with so many GPS technologies with minimal differentiation amongst the various competitors (Knapp, 2016). The firm could buy off competitors that are sure to bring on board sustainable competitive advantages.

Contingency Factors affecting planning by Garmin Executives and how to affect planning

For the company, the length of future commitments that are present as well as natural vulnerability will affect plan by company’s executives (Simerson, 2011). GPS gadgets market is continually changing with more sleek and efficient gadgets springing up from every corner. Plans by the firm’s executives should be along with establishing more innovative ways of launching their products in the market. Also, with fierce competition, proper planning, and time management for their projects should ensure that they are always ahead of the curve. Another critical planning concern is budgeting for the effective allocation of resources. It should be clear for the firm to determine how much funds are available for making adjustments to products offered on need by need basis. The firm should also consider the necessity and the extent to which protocol and other services can be diverted to avoid overdependence on the core business.

Challenges to Garmin’s Executives as global Market Leaders

As a market leader in GPS technology, the firm will encounter such difficulties as rife competition from other firms seeking to solve a similar need. As a strategy, the firm ought to be on the lookout for market changes in the products they offer. They could consider tech advancements in the transportation sector by paying attention to specific customers’ needs. Therefore, Garmin will need to use innovative strategies to align their products with the customer’s needs (Simerson, 2011).