International Business- Ebay
Over the past few years eBay’s growth has slowed and new competitors have emerged. EBay’s largest sales generator, the U.S. auction business, has matured and is now producing less revenue per listing. In the company’s efforts to continue their growth and to increase the shareholder’s wealth, eBay has ventured into the Asian Markets in particularly China and South Korea. Although China is the world’s second largest Internet market; eBay has repeatedly had problems in the Asian Markets (Mangalindan, 2006). In this assignment I’ll be discussing some of the key concepts of global marketing and identifying some of eBay’s short comings that have contributed to their problems with the Asian Markets.
The first concept of global marketing that I will discuss is when to enter. Although eBay was not a pioneer in this market they did invest in the emerging market early. EBay made an initial investment of $30 million in EachNet, a Chinese online auction company in 2002. EBay then completed the acquisition for an additional $150 million in 2003. In the same token the company also purchased a majority stake in Internet Auction Co. in Korea for $120 million in 2001 and proceeded to buy the company out for an additional $362 million in 2004 (Mangalindan, 2006). By investing in these pioneers of the emerging markets eBay was able to effectively develop a captive customer base and well as have a large market share with brand or company recognition.
The next concept of global marketing that I will discuss is the mode of entry. EBay was looking to take advantage of a wholly owned subsidiary or acquisition. By doing this eBay would maintain control over all operations as well as the global strategy. Unfortunately along with the advantages of a wholly owned subsidiary come the disadvantages of the high cost of acquisition as well as having to absorb any or all the of the risk involved.
The next concept of global marketing that I will discuss is the marketing mix or the four “P”s (product, price, promotion and place). This is the area in which eBay encountered a lot of its problems. In the opening paragraph I stated that eBay’s largest sales generator was its U.S. auction business. When eBay moved into the Asian markets they were looking to standardize the product to reflect their U.S. auction business instead of adapting them to the Asian market. Only two years ago the Internet