Case Study : Porter 's Five Forces Model

Porter’s Five Forces is a framework that consists of five competitive forces, threat of entry, power of supplier and buyer, threat of substitution and competitive rivalry. These forces facilitate the analysis of the task environment of an industry or company (Wheelen and Hunger, 2009).

EBay has paved the wave in this industry and being in a billion dollar industry making things happen to benefit consumers in many ways.[5]

Dembosky, A. (2012). Ebay moves beyond its dotcom roots. Available:http://www.ft.com/cms/s/0/df3723ca-1773-11e2-8cbe-00144feabdc0.html#axzz2EbzDqb5Y. Last accessed 10th Dec 2012

​A Porter analysis will be performed throughout this paper, on the internet sales industry. Included in the Porter analysis is six relative competitive forces; threat of new entrants, rivalry amongst firms, threat of substitute services, bargaining power of buyers, bargaining power of suppliers, and relative power of other stakeholders.

eBay has a choice preferred standpoint. Regularly contributed similar to the world 's greatest store, and have a bigger number of things available to be purchased than anyplace else. However its maintainability props on patch up unstable ground as omnichannel world envision, for arranging purposes, that everything is available to be purchased in each commercial center, each methods, and each channel. Partaking connected shoppers may never get to that world, yet it 's a helpful arranging presumption.

Porter's Five Forces is a simple but powerful tool that consist of 5 different forces to understand the competitiveness of your business environment, and for identifying your strategy's potential profitability. The five forces are degree of rivalry, threat of entry, threat of substitutions, buyer power, and supplier power. Each force is helpful in their own way to get to know your rivals a lot better and get to know what can happen in your market.

Ebay is primarily service providers who connect the sellers and buyers by providing platform to sell and buy any goods.

The new entrants requires a big capital, experience, understanding the advance technology system, learning online grocery and access to suppliers and distributors (Low).

The Five Forces Model (developed by Dr. Michael Porter of Harvard University) is a powerful tool for evaluating the competitiveness of your business environment and for identifying your business‘s potential risks and profitability.

Porter 's five forces framework assesses the competitive pressures a company faces within the industry. The five forces of competitive pressure include: competition from rival sellers, competition from potential new entrants to the industry, competition from producers of substitute products, supplier bargaining power and customer bargaining power. The model helps us determine the strength of competitive pressures and profitability of an industry. [3]

The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.

The major problem our company currently faces is the departure of our in-house payment service PayPal that will occur in the third quarter of 2015. First, and most obvious, the split of PayPal will cause loss of revenue. In 2013, PayPal accounted for 40% of our company’s revenue and 36% of total profit. PayPal also gave us a competitive advantage over the Amazon and ALbaiba. The simplicity and security of PayPal is very hard to replace, and the consumer data we receive from PayPal allows us to accurately target specific markets. eBay will continue to accept other forms of payment but there will be no advantages for us accepting PayPayl. The departure of PayPal will also affect our projected future growth of the company. A problem that eBay faces with or without PayPal is the growing completion and loss of market share for online retailing. eBay’s main marketplace division grew

eBay is The World’s Online Marketplace®. Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay and its subsidiaries, half.com and shopping.com, to name a few (“eBay Inc Outlines Global Business Strategy”, 2000.) Retrieved October 31, 2008 from http://investor.ebay.com). eBay enables trade on a local, national, and international basis with customized sites in markets around the world. eBay is leading the way in Internet auctions over competitors, Amazon.com and Yahoo.com. The Internet brings together a larger number of

EBay states "Who We Are”: "Global Commerce Leadership EBay presents a robust proposal where merchants of all sizes can participate and succeed. EBay mission is to become mobile, EBay will open up new traditions for consumers to shop and pay for any connected piece of equipment. This mission will have Consumer Experience how eBay gives power to consumers to “buy and sell anything, anytime, anywhere"(EBay Inc).

The fact that eBay does have some successful competition means that its strategic capability has become less unique. There is a hint in their competitor profile that innovation and perhaps adaptability to different cultures as they innovate is not core to eBay and something which has been developed more successfully by others working within their own national culture. Indeed, eBay rules in its own territory of North America and in Europe. The search capability of eBay also means that niche players do not really make sense, whereas the consumer trust that comes from being a big player is worth everything when trading on-line, as is the notion that whatever you want it will be on eBay because of its size. Thus, the so-called network effects of eBay (the bigger the company, the more successful it will be) and its first mover advantage that has led to this level are key to its success.