FACULTY OF COMMERCE

Corporate Financial Strategy

SUBMITTED TO:

Prof. Aamir Ilyas

SUBMITTED BY:

“BS. COMMERCE”

“G1F17BSCM0025”

AHMAD ALI BUTT

Submitted Date: 23/Jan/2021

 E.F.E (External Factor Evaluation Analysis)

Items Key external Weight Rating Weighted

factor
Opportunity
1 The need for substantial 0.09 4 0.36
resource investments in
technology and
marketing in order to
remain competitive.
2 Buyers and sellers enjoy 0.08 4 0.32
trading among a wide
selection of goods and
services in a secure,
trusted, and efficient
commerce environment.
3 Profitability is also 0.07 3 0.21
affected by currency
exchange rates.
4 Online classifieds help 0.07 3 0.21
people meet, share ideas,
and offer goods/services
at a local city or regional
level.
5 If the U.S. dollar 0.06 3 0.18
weakens against foreign
currencies, transactions
conducted in foreign
currency denominations
will increase and inflate
revenues, operating
expenses, and net
income.
Threats
6 In addition, tax 0.08 4 0.32
compliance will
increase costs.
7 Weak global economic 0.08 4 0.32
conditions, in addition
to the mortgage and
worldwide credit
related financial crisis,
are expected to limit
revenue growth,
particularly in the
marketplaces segment,
which is closely tied to
consumer purchase
 patterns.
8 The resources of 0.07 3 0.21
existing competitor
firms are larger and as
a result, competitors
could weather an
economic downturn.
9 Competition is intense 0.06 3 0.18
in communications
services and subject to
rapid technological
Change.
10 However, Amazon’s 0.06 3 0.18
strong growth and
satisfied customer base
pose the greatest threat
to eBay.
11 Legislation is in effect 0.06 3 0.18
which requires
collection of taxes
beginning after
December 31, 2010.
This new legislation
may cause a reduction
in trading activity that
would negatively affect
several business
segments.
12 Marketplaces: 0.05 3 0.15
Competition is
expected to increase in
the future because
barriers to entry in this
segment are low and
new online sites can be
launched at a nominal
cost.
13 Declining economic 0.05 3 0.15
environment.
14 Dollar and the 0.05 3 0.15
lingering weak
economy with high
unemployment.
15 Alternatively, financial 0.05 3 0.15
measures will be
negatively impacted by
a rise in the value of
the U.S. dollar.
Total 1 3.27
 C.P.M (Competitive Profile Matrix Analysis)
eBay Amazon
Key Success Factors Weight
Rating Score Rating Score
Providing Value to 0.30 3 0.90 4 1.2
Consumers
Reliability & Trustworthy 0.28 3 0.84 4 1.12
Friendly Interface 0.18 4 0.72 4 0.72
Brand Image & Reputation 0.14 3 0.42 4 0.56
Financial Position 0.10 2 0.20 4 0.40
Total 1 3.08 4

I.F.E (Internal Factor Evaluation Analysis)

Items Key external Weight Rating Weighted
factor Score
Opportunity
1 eBay’s Marketplaces 0.10 4 0.40
platform brings buyers
and sellers together
through fully
automated online Web
sites.
2 In 2008, eBay.com 0.09 4 0.36
generated
approximately $59.7
billion in gross
merchandise revenues
with consumer
electronics accounting
for the largest
percentage of trade at
$6.0 billion or 17
percent.
3 eBay.com offers a 0.09 4 0.36
sense of community to
buyers and sellers that
is sustained by
Communications and
high transaction rates
on a wide\ selection of
goods/services.
4 In 2007, eBay sold 0.07 4 0.24
nearly $60 billion
goods, which equates
to worldwide eBay
users trading more than
$1,900 worth in goods
every second.
5 In August 2009, eBay 0.06 3 0.18
Inc. formed a
partnership with
General Motors
enabling hundreds of
GM dealers in
California to help
consumers negotiate
purchase of new GM
cars and trucks through
the eBay online
 marketplace.
6 The success of eBay is 0.07 3 0.21
built on similar
customer-centric
entrepreneurial
business models that
focus on customer-
driven value creation.
7 eBay provides the 0.06 3 0.18
virtual marketplace
auction where the
market determines the
price of items sold.
8 eBay compared to 0.06 3 0.18
Amazon achieved High
gross profit margins.
High in gross profit
margin can be
considered as a
strength for eBay.
9 As of December 2008, 0.05 3 0.15
approximately 516,000
online storefronts were
listed in locations
across the globe.
Weaknesses
10 eBay’s Marketplaces 0.05 3 0.15
division reported $1.26
billion in revenue, a 14
percent year-over-year-
decline.
11 The German Federal 0.05 3 0.15
Supreme Court has also
ruled that eBay may
owe penalties from
illegal listings of
counterfeit and stolen
goods. These events
may also negatively
affect eBay’s
reputation.
12 eBay has recently been 0.05 2 0.10
involved in litigation
with Tiffany & Co.,
Rolex, Louis Vuitton,
Christian Dior,
L’Oréal, and Lancôme
for a lack of policing
trade and infringement
 on trademarks and
copyrights for the sale
of “not for resale” and
counterfeit items on
eBay’s Websites.
13 Decreased to almost 0.04 2 0.08
double for working
capital is considered as
weakness for eBay.
14 Customer Support. 0.04 2 0.08
Customer support is
challenged from
greater trade activity
and an increased
number of users.
15 If revenue significantly 0.04 2 0.08
declines, eBay may not
be able to meet
contractual obligations.
eBay recently
increased its fee
structure for its
Marketplaces business,
which may negatively
impact the number of
new customers and
revenue from existing
users.
16 eBay Revenue Growth 0.05 2 0.10
of rate has been
decreasing for the last
3 years. Therefore, this
decline trend led to
decreasing the growth
rate in 2009 by 4%.
This revenue decline
trend is considered as
the weakness of eBay.
17 Web Site Stability. 0.03 2 0.06
Increased volume and
greater complexity
require additional
expensive investments
in hardware, software,
and personnel.
Total 1 3.10

SWOT Matrix
 Strengths Weakness
eBay’s Marketplaces eBay’s Marketplaces
platform brings buyers and division reported $1.26
sellers together through fully billion in revenue, a 14
automated online Web sites. percent year-over-year
decline.
In 2008, eBay.com The German Federal
generated approximately Supreme Court has also
$59.7 billion in gross ruled that eBay may owe
merchandise revenues with penalties from illegal
consumer electronics listings of counterfeit and
accounting for the largest stolen goods. These events
percentage of trade at $6.0 may also negatively affect
billion or 17 percent. eBay’s reputation.
EBay.com offers a sense of eBay has recently been
community to buyers and involved in litigation with
sellers that is sustained by Tiffany & Co., Rolex, Louis
Communications and high Vuitton, Christian Dior,
transaction rates on a wide\ L’Oréal, and Lancôme for a
selection of goods/services. lack of policing trade and
infringement on trademarks
and copyrights for the sale
of “not for resale” and
counterfeit items on eBay’s
Websites.
In 2007, eBay sold nearly Decreased to almost double
$60 billion goods, which for working capital is
equates to worldwide eBay considered as weakness for
users trading more than eBay.
$1,900 worth in goods every
second.
In August 2009, eBay Inc. Customer Support.
formed a partnership with Customer support is
General Motors enabling challenged from greater
hundreds of GM dealers in trade activity and an
California to help consumers increased number of users.
negotiate purchase of new
GM cars and trucks through
the eBay online
marketplace.
The success of eBay is built If revenue significantly
on similar customer-centric declines, eBay may not be
entrepreneurial business able to meet contractual
models that focus on obligations. eBay recently
customer driven value increased its fee structure for
creation. its Marketplaces business,
which may negatively
impact the number of new
customers and revenue from
 existing users.
eBay provides the virtual eBay Revenue Growth of
marketplace auction where rate has been decreasing for
the market determines the the last 3 years. Therefore,
price of items sold. this decline trend led to
decreasing the growth rate in
2009 by 4%. This revenue
decline trend is considered
as the weakness of eBay.
eBay compared to Amazon Web Site Stability.
achieved High gross profit Increased volume and
margins. High in gross profit greater complexity require
margin can be considered as additional expensive
a strength for eBay. investments in hardware,
software, and personnel.
As of December 2008,
approximately 516,000
online storefronts were
listed in locations across the
globe.
Opportunity S-O W-O
The need for substantial With the High in gross profit Improve market services in
resource investments in margin of eBay, this current markets can make
technology and marketing in company should expand large number of potential
order to remain competitive. their market into global, new customers to subscribe. (W
and emerging market 2, W3, W6, O1, O2)
especially new market in
China and India which they
are considered as the most
populated area and it is a
huge opportunity for eBay.
(global expansion) (S2, S4,
S8, S9, O1, O5)
Buyers and sellers enjoy With focus on customer- Strategic Alliance with
trading among a wide driven value creation, eBay courier companies and by
selection of goods and should continuously providing online banking
services in a secure, trusted, maintain simplicity of system can help eBay to
and efficient commerce interaction with the online improve the efficiency of the
environment. community’s capability and operation system and could
meet the demand in the help to give the best service
industry in order to be for customers satisfaction.
competitive. (S3, S4, S6, (W5, W6, W8,02,04)
O1, O2,04)
Profitability is also affected Inability of eBay to measure
by currency exchange. illegal activity on site and
lacking of policing trade
eBay should be able to
provide system for online
verification of products.
 (W2, W3, O1, O2)
Online classifieds help
people meet, share ideas,
and offer goods/services at a
local city or regional level.
If the U.S. dollar weakens
against foreign currencies,
transactions conducted in
foreign currency
denominations will increase
and inflate revenues,
operating expenses, and net
income.
Threat S-T W-T
In addition, tax compliance Through acquisition eBay should alliance with
will increase costs. strategy, eBay should be postal services (W5, W8,
able to expand in global T2, T3, T4, T5)
(global expansion). (S4, S5,
S9, T9)
Weak global economic eBay should reinforce With the issue of stolen
conditions, in addition to the marketing and management goods and lacking in policy,
mortgage and worldwide system. (S1, S2, S6, S8, S9, eBay should invest in
credit related financial crisis, T2, T3, T4, T5, T9) customer service web
are expected to limit revenue security. In addition, eBay
growth, particularly in the also should provide an
Marketplaces segment, authentication consumers
which is closely tied to identity in order to provide a
consumer purchase patterns. secure environment online
system. (W2, W3, W5, T2,
T5)
The resources of existing eBay should recover the
competitor firms are larger financial crisis of the
and as a result, competitors organizations by rearrange
could weather an economic the website policies and
downturn. features to make it user
friendly including wide
range of offering. (W1, W3,
W4, W6, W7, W8, T1, T2,
T 4, T6, T7, T8, T10)
Competition is intense in eBay should be able to
communications services develop its product as well
and subject to rapid as its market (new and
technological Change. emerging market) especially
in the high populated area
like China and India. (W7,
T2, T3, T5)
However, Amazon’s strong
growth and satisfied
customer base pose the
greatest threat to eBay.
Legislation is in effect
which requires collection of
taxes beginning after
December 31, 2010. This
new legislation may cause a
reduction in trading activity
that would negatively affect
several business segments.
Alternatively, financial
measures will be negatively
impacted by a rise in the
value of the U.S. dollar.
Dollar and the lingering
weak economy with high
unemployment
Marketplaces: Competition
is expected to increase in the
future because barriers to
entry in this segment are low
and new online sites can be
launched at a nominal cost
Declining economic
environment