Great Ebay Debate
Essay by review • February 3, 2011 • Research Paper • 1,562 Words (7 Pages) • 1,583 Views
Introduction
The object of this paper is to create a balanced scorecard for eBay based on the optimal approach for running an Internet-based auction business. Cases for both sides on whether eBay has met the metric goals as detailed in the balanced scorecard will be discusses along with a discussion on which argument was more compelling and the reasons why.
Company Overview
EBay was founded in 1995. The goal of the company is to connect customers to each other and provide a platform where users can trade goods and merchandise. According to the companyÐŽ¦s website (2006), ÐŽ§On an average day, there are millions of items listed on eBay. People come to eBay to buy and sell items in thousands of categories from collectibles like trading cards, antiques, dolls, and house wares to practical items like used cars, clothing, books and CDs, and electronics. Buyers have the option to purchase items in an auction-style format or items can be purchased at a fixed price through a feature called Buy It Now. People from all over the world buy and sell on eBay. Currently, eBay has local sites that serve Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Malaysia, the Netherlands, New Zealand, Poland, the Philippines, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, the United Kingdom, and the United States. In addition, eBay has a presence in Latin America through its investment MercadoLibre.com.ÐŽÐ
Balanced Scorecard
According to Wikipedia (2006), the balanced scorecard is describes as ÐŽ§a method for measuring a company's activities in terms of its vision and strategies. It gives managers a comprehensive view of the performance of a business. It is a strategic management system that forces managers to focus on the important performance metrics that drive success. It balances a financial perspective with customer, internal process, and learning & growth perspectives. The system consists of four processes: 1. Translating the vision into operational goals; 2. Communicate the vision and link it to individual performance; 3. Business planning; 4. Feedback and learning and adjusting the strategy accordingly.ÐŽÐ
Companies seek to measure the following perspectives:
„X Financial Perspective ÐŽV This perspective measures the companyÐŽ¦s financial performance such as return on investment or the companyÐŽ¦s cash flow.
„X Customer Perspective ÐŽV Measures the customer impacts.
„X Business Process Perspective ÐŽV Measures important business processes.
„X Learning and Growth Perspective ÐŽV Measures that deal with the company learning curve.
Balanced Score Card
The Customer Perspective
- Deliver services consistent in value and quality
- Increase public awareness and visibility
- Engage and expand community support
The Business Process Perspective
- Improve business processes and efficiencies
- Make investments infrastructure
- Acquire additional businesses
The Learning and Growth Perspective
- Recruit and retain a highly skilled workforce
- Increase employee satisfaction
The Financial Perspective
- Increase market share over prior year
- Increase net revenues
- Increase operating cash flow over prior year
Pro Argument
EBay has created, maintained, and expanded the safety and reliability of their site. The site was developed to make it easy for sellers and buyers to trade merchandise. The website has various services available free or at a small fee. There are also software tools to help automate the process of selling merchandise such as sellerÐŽ¦s assistant, selling manager and selling manager pro and turbo lister. EBay also purchased PayPal.com, which is a global platform that allows buyers to purchase merchandise using a variety of methods in over 55 countries or regions. PayPal offers users a sense of safety, user verification, assurance programs, buyer protection programs, authentication, shipping services, escrow, appraisal, and postage services.
In addition, various services make the user pre-trade and post-trade experience easier, faster, and safer. The listing process is simplified by using seller productivity, photo hosting, and authentication software. EBay put users minds at ease by developing the Safe Harbor program. The company regularly solicits feedback through a forum where buyers and sellers can let the company know what features they like and do not like on the site. My EBay gives users reports listing their account balances, bidding and selling activity, and recent feedback. Users may post links to EBay from their own websites or create their own home page. These are free services available to users.
ÐŽ§PayPal, EBay's online payment service, has about 64 million user accounts, more than many major banks and credit card companies. About 9% of all consumer e-commerce in the US, and 5% globally, went through PayPal in 2004. About 73% of the addressable transactions on eBay.com in fourth quarter 2004 were closed with PayPal. PayPal has become the standard for auction payments in the US. Over one-third of US online buyers have PayPal accounts and competition has exited the market.ÐŽÐ (EBay Website, 2006). No other operator has amassed enough users to compete effectively in the marketplace.
Against Argument
PayPal relies on banks or payment processors to process transactions, and pays a fee for this service. From time to time, various credit card associations may increase transaction fees. In April 2005, MasterCard announced an increase in the standard interchange fee for credit cards in online commerce transactions (Gasmin, 2005). The credit card processors may increase interchange fees on platforms such as Pay Pal at will. These fees may have a negative affect on profit margins and operating costs. The company
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