By: Corey Daigle, Megan Foreman, and Seth Fraser
Overview
Who we are, What we sell, and Where we are
Mission and Vision
Internal Assessment
- Financial Condition
- IFE Matrix
External Assessment
- EFE Matrix
- CPM Matrix
Strategy Formulation
- SWOT Matrix
- Space Matrix
- IE Matrix
- Grand Strategy Matrix
- QSPM Matrix
- Matrix Analysis
Strategic Planning for the Future
EPS/EBIT
Decisions/Implementation/Evaluation
2004 Financials
eBay press releases
Headquarters:
eBay Inc.
2145 Hamilton Avenue
San Jose, California 95125
Stock Symbol: EBAY (NASDAQ)
* All graphics and information were found on the eBay website www.ebay.com
Who we Are
Founded in September 1995, eBay is The
World's Online Marketplace® for the sale of
goods and services by a diverse community of
individuals and small businesses. Today, the
eBay community includes more than a hundred
million registered members from around the
world. People spend more time on eBay than
any other online site, making it the most popular
shopping destination on the Internet.
What we Sell
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.
Where we Are
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,
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.
eBay’s Community Values
eBay is a community that encourages open and
honest communication among all its members.
Our community is guided by five fundamental
values:
 We believe people are basically good.
 We believe everyone has something to contribute.
 We believe that an honest, open environment can
bring out the best in people.
 We recognize and respect everyone as a unique
individual.
 We encourage you to treat others the way you
want to be treated.
Existing Mission Statement
eBay's mission is to provide a global trading
platform where practically anyone can
trade practically anything.
1
Proposed Mission Statement
eBay’s mission is to be the world’s most
utilized and profitable “trading post.”
Having bright and talented employees that
are dedicated to serving both customers
and communities, eBay provides the most
technologically advanced, reliable, and
secure trading platform available to
anyone, anywhere, while always doing
business in a highly ethical manner.
1
Proposed Vision Statement
Our vision at eBay is provide an online
business to enable anyone to auction
practically anything.
1
External Audit
Opportunities
1.
Current Internet usage estimated to be 420 million worldwide including 180
million in the US.
2.
Generation X and Y entering the workforce.
3.
Foreign markets especially in Asia are improving.
4.
US and Mexico exceeded $3 trillion in online sales in 2003.
5.
E-commerce in Latin America expected to grow to $82 billion in 2004.
6.
Under 25 percent of online North American households made an auction
purchase in 2003.
7.
Online auction sales are estimated to reach $54 billion in 2007.
8.
The price of personal computers continues to fall.
9.
Internet sales remain tax free.
10.
Some customers prefer to finance large purchases "in house"
2
Threats
1.
Online businesses could possibly be subject to future taxation.
2.
Medium fixed cost structure - barrier to entry not significantly high.
3.
Ongoining fraud issues, with merchants not sending payment or products.
4.
Many people feel the Internet is an unsafe medium to conduct financial
business.
5.
Many households still do not own a PC.
6.
Despite improvements, many foreign economies are still unstable.
7.
High unemployment rates in the US.
8.
Transportation systems in foreign countries could be poor for delivering
products.
9.
Fluctuations in currency and exchange rates, could limit international business.
10.
Possible website security problems such as hacking.
2
EFE Matrix
External Factor Evaluation Matrix (EFE)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Opportunities
Current Internet usage estimated to be 420 million worldwide
including 180 million in the US.
Generation X and Y entering the workforce.
Foreign markets especially in Asia are improving.
US and Mexico exceeded $3 trillion in online sales in 2003.
E-commerce in Latin America expected to grow to $82 billion in
2004.
Under 25 percent of online North American households made an
auction purchase in 2003.
Online auction sales are estimated to reach $54 billion in 2007.
The price of personal computers continues to fall.
Internet sales remain tax free.
Some customers prefer to finance large purchases "in house"
Weight Rating Weighted Score
0.07
4
0.28
0.02
0.03
0.04
3
2
3
0.06
0.06
0.12
0.03
2
0.06
0.07
2
0.14
0.08
0.04
0.04
0.03
4
3
3
1
0.32
0.12
0.12
0.03
3
1.
2.
3.
Threats
Online businesses could possibly be subject to future taxation.
Medium fixed cost structure - barrier to entry not significantly high.
Ongoining fraud issues, with merchants not sending payment or
products.
Many people feel the Internet is an unsafe medium to conduct
financial business.
Many households still do not own a PC.
Weight Rating Weighted Score
0.04
3
0.12
0.10
3
0.30
0.08
3
0.24
0.07
2
0.14
0.07
1
0.07
6. Despite improvements, many foreign economies are still unstable.
7. High unemployment rates in the US.
8. Transportation systems in foreign countries could be poor for
delivering products.
9. Fluctuations in currency and exchange rates, could limit international
business.
10. Possible website security problems such as hacking.
0.03
0.05
2
1
0.06
0.05
0.02
1
0.02
0.02
2
0.04
0.07
3
0.21
TOTALS
1.00
4.
5.
2.56
CPM
Competitive Profile Matrix (CPM)
eBay
Critical Success Factors
Advertising
Market Penetration
Customer Service
Brand Awareness
User friendly website
Revenue Growth
Financial Condition
Customer Loyalty
Market Share
Product Quality
Information about user
Price Competitiveness
Totals
Weight
0.05
0.06
0.08
0.10
0.05
0.15
0.15
0.05
0.10
0.08
0.05
0.08
1.00
Rating
2
4
3
4
3
3
3
4
4
4
4
3
Score
0.10
0.24
0.24
0.40
0.15
0.45
0.45
0.20
0.40
0.32
0.20
0.24
3.39
Amazon
Rating
4
4
4
4
4
4
2
3
4
4
4
3
Score
0.20
0.24
0.32
0.40
0.20
0.60
0.30
0.15
0.40
0.32
0.20
0.24
3.57
Yahoo! Auction
Rating
1
2
2
2
2
2
2
3
1
4
3
3
Score
0.05
0.12
0.16
0.20
0.10
0.30
0.30
0.15
0.10
0.32
0.15
0.24
2.19
4
Internal Audit
Key Financials

End of year 2003



Net Income grew to $442 million, up 77%
Resulted in record operating cash flows of $874
million, up 82%
Year end Balance Sheet
$5.8 billion in total assets
 $2.7 billion in cash and investments

Key Financial Ratios
Company
Industry
Sector
S&P 500
97.12
1.77
41.01
1.30
28.90
0.96
24.01
1.00
Growth Rates %
Sales - 5 Yr Growth Rate
EPS (MRQ) vs Qtr 1 Yr Ago
EPS (TTM) vs TTM 1 Yr Ago
EPS - 5 Yr Growth Rate
90.58
55.07
60.76
111.74
35.47
27.30
27.58
43.79
17.25
15.43
16.37
15.23
9.30
28.69
21.92
12.15
Financial Strength
Quick Ratio (MRQ)
Total Debt to Equity (MRQ)
3.13
0.03
1.22
0.73
0.93
0.82
1.26
0.85
Valuation Ratios
P/E Ratio (TTM)
Beta
5
Key Financial Ratios
Profitability Ratios %
Gross Margin (TTM)
Gross Margin - 5 Yr Avg
Operating Margin (TTM)
Operating Margin - 5 Yr Avg
Net Profit Margin (TTM)
Net Profit Margin - 5 Yr Avg
Management Effectiveness %
Return on Assets (TTM)
Return on Investment (TTM)
Return on Equity (TTM)
www.investor.stockpoint.com
March 2004
Company
Industry
Sector
S&P 500
80.78
79.48
29.01
16.21
21.00
13.53
42.23
41.08
11.97
6.75
7.76
3.74
42.84
42.06
12.90
11.21
7.54
7.62
47.32
47.01
20.33
18.35
13.12
11.59
9.10
10.18
10.50
8.29
11.53
14.04
5.91
7.98
13.51
6.40
9.97
18.71
eBay Stock Information
eBay Stock Information
Strengths
1.
eBay is the most well known online auction company in the world.
2.
Strong auction community of loyal customers.
3.
Excellent financial situation.
4.
Have a fair payment system that encourages merchants to list products.
5.
Strong presence in strategic global markets.
6.
Experienced management team.
7.
eBay has very little inventory since they do not actually take position of items
sold on their site.
8.
Strong customer service.
9.
Percent of revenue in international markets increasing significantly.
10.
Easy URL to remember.
Weaknesses
1.
Weak promotional and marketing activities.
2.
eBay does not pay dividends on their stock.
3.
Some customers feel the website is cluttered.
4.
eBay’s position in the business to business (B2B) market is weak.
5.
eBay has very little debt, therefore the company is not taking advantage of low
interest rates to expand.
6.
eBay has a higher tax rate since they do not take advantage of depreciation as
well as other companies.
7.
The company relies too much on word of mouth advertising, assuming everyone
already knows about eBay.
8.
The company does not do enough to convince leery potential customers that
Internet business is financially safe.
Longer transaction times, since many merchants will not receive payment
until a buyers check clears.
9.
10.
eBay is mainly a cash business.
The Matrices
- O
imated to be
cluding 180
SWOT Matrix
1.
SO Strategi es
Expand operations into Asian markets.
(S1 S2 S5, O1 O3 O8)
ng the
1.
2.
WO - Strategi es
Start B2B operations in Asia. (W4 W5
W10, O4 O7 O9)
Increase advertising (W1 W5 W7 W10,
O1 O3 O4 O6 O8)
y in Asia are
$3 trillion in
erica
illion in
e North
de an auction
stimated to
mputers
ree.
finance large
ossibly be
ure - barrier
high.
ith merchants
oducts.
rnet is an
financial
1.
2.
ST Strategi es
Lobby to keep internet sales tax free.
(S1 S3, T1)
1.
WT - Strategi es
Use extra cash to educate all customers
that Internet transaction are safe (W8,
T4 T10)
Increase fraud awareness (S1 S4 S8,
T3)
7
Financial Strength (FS)
Environmental Stability (ES)
Return on Investment
(ROI)
6
Rate of Inflation
-1
Leverage
2
Technological Changes
-4
Liquidity
6
Price Elasticity of Demand
-3
Working Capital
5
Competitive Pressure
-5
Cash Flow
6
Barriers to Entry into Market
-6
Financial Strength (FS) Average
5
Environmental Stability (ES) Average
-4
9
Competitive Advantage (CA)
Industry Strength (IS)
Market Share
-1
Growth Potential
5
Product Quality
-2
Financial Stability
4
Customer Loyalty
-2
Rivalry Among Competitors
4
Technological know-how
-3
Resource Utilization
4
Profit Potential
6
Control over Suppliers and Distributors
-5
Competitive Advantage (CA) Average -2.6
Industry Strength (IS) Average
5
SPACE Matrix
FS
Conservative
Aggressive
6
5
4
3
2
1
CA
-6
-5
-4
-3
-2
-1
1
2
3
4
-1
-2
-3
-4
-5
-6
Defensive
ES
Competitive
5
6
IS
IE Matrix
The Total IFE Weighted Scores
Strong
4.0 to 3.0
Average
2.99 to 2.0
Weak
1.99 to 1.0
4.0
I
II
III
3.0
IV
V
VI
High
The
EFE
Total
Weighted
Scores
24%
24%
eBay
Medium
76%
76%
Domestic
2.0
VII
International
VIII
IX
Low
1.0
11
Grand Strategy Matrix
Rapid Market Growth
Quadrant II
Quadrant I
Weak
Competitive
Position
Strong
Competitive
Position
Quadrant III
Quadrant IV
Slow Market Growth
10
QSPM
QSPM
Opportunities
1. Current Internet usage estimated to be 420 million worldwide
including 180 million in the US.
2. Generation X and Y entering the workforce.
3. Foreign markets especially in Asia are improving.
4. US and Mexico exceeded $3 trillion in online sales in 2003.
5. E-commerce in Latin America expected to grow to $82 billion in
2004.
6. Under 25 percent of online North American households made an
auction purchase in 2003.
7. Online auction sales are estimated to reach $54 billion in 2007.
8. The price of personal computers continues to fall.
9. Internet sales remain tax free.
10. Some customers prefer to finance large purchases "in house"
Weight
Threats
1. Online businesses could possibly be subject to future taxation.
2. Medium fixed cost structure - barrier to entry not significantly high.
3. Ongoing fraud issues, with merchants not sending payment or
products.
4. Many people feel the Internet is an unsafe medium to conduct
financial business.
5. Many households still do not own a PC.
6. Despite improvements, many foreign economies are still unstable.
7. High unemployment rates in the US.
8. Transportation systems in foreign countries could be poor for
delivering products.
9. Fluctuations in currency and exchange rates, could limit international
business.
10. Possible website security problems such as hacking.
Expand
further into
international
markets
AS
TAS
Expand
operations to
B2B markets
AS
TAS
0.07
4
0.28
2
0.14
0.02
0.03
0.04
0
4
4
0.00
0.12
0.16
0
3
3
0.00
0.09
0.12
0.03
4
0.12
3
0.09
0.07
0
0.00
0
0.00
0.08
0.04
0.04
3
4
2
0.24
0.16
0.08
4
2
4
0.32
0.08
0.16
0.03
0
0.00
0
0.00
Weight
0.04
0.10
AS
1
1
TAS
0.04
0.10
AS
2
2
TAS
0.08
0.20
0.08
1
0.08
2
0.16
0.07
1
0.07
2
0.14
0.07
0.03
0.05
1
1
0
0.07
0.03
0.00
4
3
0
0.28
0.09
0.00
0.02
1
0.02
3
0.06
0.02
1
0.02
4
0.08
0.07
2
0.14
1
0.07
Expand
further into
international
markets
Expand
operations to
B2B markets
Strengths
1. eBay is the most well known online auction company in the world.
2. Strong auction community of loyal customers.
3. Excellent financial situation.
4. Have a fair payment system that encourages merchants to list
products.
5. Strong presence in strategic global markets.
6. Experienced management team.
7. eBay has very little inventory since they do not actually take position
of items sold on their site.
8. Strong customer service.
9. Percent of revenue in international markets increasing significantly.
10. .Easy URL to remember.
Weight
0.08
0.06
0.15
AS
4
4
4
TAS
0.32
0.24
0.60
AS
3
3
3
TAS
0.24
0.18
0.45
0.05
3
0.15
4
0.20
0.05
0.03
4
3
0.20
0.09
3
4
0.15
0.12
0.02
3
0.06
4
0.08
0.02
0.05
3
4
0.06
0.20
4
3
0.08
0.15
0.01
4
0.04
3
0.03
Weaknesses
Weak promotional and marketing activities.
eBay does not pay dividends on their stock.
Some customers feel the website is cluttered.
eBay's position in the business to business (B2B) market is weak.
eBay has very little debt, therefore the company is not taking
advantage of low interest rates to expand.
6. eBay has a higher tax rate since they do not take advantage of
deprecation as well as other companies.
7. The company relies too much on word of mouth advertising,
assuming everyone already knows about eBay.
8. The company does not do enough to convince leery potential
customers that Internet business is financially safe.
9. Longer transaction times, since many merchants will not receive
payment until a buyers check clears.
10. eBay is mainly a cash business.
Weight
0.05
0.01
0.02
0.08
AS
1
0
1
0
TAS
0.05
0.00
0.02
0.00
AS
2
0
2
0
TAS
0.10
0.00
0.04
0.00
0.07
1
0.07
2
0.14
0.07
0
0.00
0
0.00
0.03
1
0.03
2
0.06
0.04
1
0.04
2
0.08
0.03
1
0.03
3
0.09
0.08
2
0.16
1
0.08
1.
2.
3.
4.
5.
TOTALS
4.09
4.43
Suggestion/Recommendations

New Strategies

Expand to all countries of the world


Advance in security of personal information


N/A
Increase revenues by capturing more customers


1,000,000.00+
Increase in Industry


Cost: $500,000.00-1,000,000.00(advertising)
N/A
Look into new pay system or create own (PayPal
only in 38 countries)

Millions
We believe that our continued profitability at
historical levels will depend in large part on our
ability to do the following:
• attract new users and keep existing users active on our
websites;
• manage the costs of our business, including the costs
associated with maintaining and developing our websites,
customer support, transaction and chargeback rates, and
international and product expansion;
• maintain sufficient transaction volume to attract buyers
and sellers;
• increase the awareness of our brands; and
• provide our customers with superior community, customer
support, and trading experiences.
* excerpt from eBay Annual Report 2003
EPS/EBIT Analysis





$Amount Needed: $1,500
Stock Price $45
Tax Rate 80/162=40%
Interest Rate 5%
#Shares Outstanding 609
14
EBIT
Interest
EBT
Taxes
EAT
# Shares
EPS
Common Stock Financing
Debt Financing
Recession
Normal
Boom
Recession
Normal
Boom
$100,000,000 $400,000,000 $1,000,000,000 $100,000,000 $400,000,000 $1,000,000,000
0
0
0
75,000,000
75,000,000
75,000,000
100,000,000
400,000,000 1,000,000,000
25,000,000
325,000,000
925,000,000
40,000,000
160,000,000
400,000,000
10,000,000
130,000,000
370,000,000
60,000,000
240,000,000
600,000,000
15,000,000
195,000,000
555,000,000
642,333,333
642,333,333
642,333,333
609,000,000
609,000,000
609,000,000
0.09
0.37
0.93
0.02
0.32
0.91
EBIT
Interest
EBT
Taxes
EAT
# Shares
EPS
70 Percent Stock - 30 Percent Debt
70 Percent Debt - 30 Percent Stock
Recession
Normal
Boom
Recession
Normal
Boom
$100,000,000 $400,000,000 $1,000,000,000 $100,000,000 $400,000,000 $1,000,000,000
22,500,000
22,500,000
22,500,000
52,500,000
52,500,000
52,500,000
77,500,000
377,500,000
977,500,000
47,500,000
347,500,000
947,500,000
31,000,000
151,000,000
391,000,000
19,000,000
139,000,000
379,000,000
46,500,000
226,500,000
586,500,000
28,500,000
208,500,000
568,500,000
632,333,333
632,333,333
632,333,333
619,000,000
619,000,000
619,000,000
0.07
0.36
0.93
0.05
0.34
0.92
Decisions
Primary:
Expand aggressively into China
Secondary:
Increase business to business operations
Increase marketing campaigns in Asia
Implementation
Objectives:
Create a fully translated Chinese eBay
site
Increase sales by 35%
Increase number of registered users
Evaluation
Quarterly & Yearly Financial Statements
Annual strategic meetings of division
management and corporate management
2004 Financial Information
More than 104.8 million registered users
327.7 million items
More than $8 billion in gross merchandise sales
* All from first quarter of 2004
eBay in the News
March 8, 2005
eBay Launches Classifieds Web Sites
February 23, 2005
eBay Completes Acquisition of Rent.com
December 1, 2004
eBay Launches Service for Malaysia