Competitive Opportunities in the Online Auction Industry

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Table of Contents

Online auctions
eBay
Works Cited

Online auctions

The Internet became an essential part of human life. It is possible not only to search for the necessary information online but also to communicate with people who may live either next door to you or on another continent, to order different products, buy or sell something. The appearance of different online auctions is a great opportunity for those who want to buy something special and for the price he/she wants to establish.

The main idea of this paper is to consider the competitive pressures in the industry with the attention on eBay and to analyze the competitive power of resource strength, as well as the competencies and competitive capabilities in the industry of online auctions.

How Strong Are Competitive Forces?

Identify the specific competitive pressures associated with each of the five forces

Online auctions are numerous on the Internet. The most famous are Amazon and eBay, still, there are a lot of other online auctions and their number constantly increases. This means that the industry is rather competitive. With this in mind, it should be stated that several competitive pressures influence the industry. The competitive pressures may be different from one specific industry to another one.

The competitive pressures in the industry under consideration may be easily considered if to relate those to the five-forces model of competition. The main idea of the model is “that the state of competition in an industry is a composite of competitive pressures operating in five areas of the overall market” (Thompson, Strickland and Gamble 60). Using eBay as an example, the industry competitive pressures are going to be identified based on the five-forces model of competition.

From “buyer patronage that goes on among rival sellers in the industry” (Thompson, Strickland, and Gamble 60) the main rivals for eBay remain Amazon as these two companies are the most popular among buyers on the Internet. Organizing different charity and environmental auctions, eBay attracts the attention of many people. Dwelling upon the threats of new entrants, it should be mentioned that this is good competitive pressure.

Being afraid of the appearance of new participants in the industry, the companies try to increase the number of their customers and to attach them to the company. Moreover, the main characteristic feature of the industry is that everyone can enter the market, it is open and free for other companies to participate in the competition. The Internet market is one of the examples. There are some cases when an appropriate thing may be bought in the Internet shop cheaper than in the online auction.

It is obvious that many people still buy things on auctions which are held in the real world. EBay and other companies in the industry try to attract clients who do not use online auctions and remain faithful to traditional methods. One of the main persuasive arguments eBay uses is the opportunity to remain anonymous. All the personal information people provide the company with (due to the necessity) is confidential. The company is responsible for keeping that information secret.

The communication between the company and its clients is essential. Because the Internet provides eBay with numerous opportunities, the company has a right to send the information to the subscribers about new items and the time left for taking a chance and bid for an item. Moreover, the e-mails from the company allow the customers to follow the situation and know whether their price was bidden or not. The buyers also can be suppliers. One of the specifics of eBay auction is that the customers may present their items for purchase. EBay in this case is like a mediator.

Evaluate how strong the pressures comprising each of the five forces are (fierce, strong, moderate to normal, or weak)

Evaluating each of the competitive pressures from the characteristics of intensity, the schedule should be stated. Thus, we are going to classify the information in the following way, fierce, strong, moderate to normal, or weak. The rival sellers’ competitive pressure has a fierce influence. The threats of new entrants are also rather high, but because most of the companies have already created a client base, this influence may be characterized as strong. The competitive pressure from real life auctions is not strong. It can be even characterized as from moderate to normal. The “stemming from supplier bargaining power and supplier-seller collaboration” and “stemming from buyer bargaining power and seller-buyer collaboration” (Thompson, Strickland, and Gamble 60) may be characterized as strong competitive pressure.

eBay

Dwelling upon the online auction industry in general and eBay in particular, the competitive power of the company resource strengths of eBay is going to be considered. The company resource strength is defined as its possibility to function successfully in the marketplace. It should be mentioned that resource strength may be reflected via several forms, like skill, physical assets, intellectual capital, organization assets, intangible assets, company achievements, cooperative ventures, etc.

EBay is an online company which deals with auctions. It is important to remember that there are several different resource strengths which may be considered as the most powerful. Thus, the company provides its customers with specific accounts. This means that each client may buy an item without showing his/her real name. This is very convenient, especially for people who do not want to identify themselves for several reasons.

Moreover, the auction lasts for several days. It is convenient. Customers can conduct research and decide whether they want to buy an item, or not. A customer has an opportunity to buy a thing without leaving home, to pay for it and to have it. All those operations may be provided by the chair in front of the computer. To analyze whether the resource strength of the company is powerful or not, one specific item should be chosen. The opportunity to remain anonymous is the resource strength which is going to be analyzed.

To understand whether the competitive power of a resource strength of eBay is high, we should consider whether the resource is competitively valuable, whether the resource strength is rare and whether there is something rivals may lack, whether it is difficult to copy the resource strength to the company and whether the resource strength can be trumped by substitute resource strength and competitive capabilities.

The resources in the company are competitively valuable. Being one of the leaders in the industry, eBay managed to organize the auctions in such a way that people can easily access the items they want to buy and to check the information related to this item. The very idea of the auction is rather innovative and valuable. Some people may be interested in this very thing and the seller is unable to state the price. The buyers establish the price they are ready to pay for the item.

Moreover, the ability to remain anonymous is another feature that makes eBay and other online companies which deal with auctions competitively valuable in the relation to real-life auctions and sellers. Being anonymous is considered to be one of the competitively valuable resources.

Living in a world where almost everything may be found out, people try to hide as much information as they can. The opportunity to access the system of online auction under the authorized account is perfect for those who have some reasons to hide a name. A person may be sure that no one will find out his personal information which is available only for the company managers for being able to accept payment and deliver the order.

If to consider the industry, the resource is not rare as many companies organize the auctions and make it possible for the clients to establish their price and buy a product remaining unknown. This is the priority of the Internet, so all the companies which function online use this system. Nevertheless, other industries may not have an opportunity to keep a client’s name in secret. Thus, buying products in the real world, people usually show their faces and they may be easily identified. Online auction is the industry that has some specific rear resources which their rivals in other industries may lack. Those people who have some reasons to hide their names would use only online auctions because of this opportunity leaving without attention to other auction companies.

Furthermore, the resource strength of the companies in the sphere of online auctions is not hard to copy. Being aware of the principle, it is possible to create a similar company with the same resource strength. But, the company has to operate on the Internet. It may be rather difficult and sometimes even impossible to utilize the same system in another industry even because it is easy-copied. Still, it should be noted that this resource strength is not the main reason for company success.

There are many other marketing facilities which make it valuable in the market place. The appearance of the company with the copied resource strength will not influence the popularity of eBay greatly. Still, the company will have to work hard not to lose the clients it has.

At the same time, there is no other substitute resource strength that could trump an eBay resource strength of remaining anonymous. Being present on any real-life auction, a person is unable to hide a face, all around see him her. So, it is impossible to remain anonymous. Internet and online auctions are the only possibilities for this. It is impossible to trump this possibility with another competitive capability as a human desire to remain unauthorized is supported by the development of the Internet. Moreover, this strength helps a customer to buy things without being afraid of condemnation.

Works Cited

Thompson, Arthur, Strickland, A. J. and John Gamble. Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. New York: The McGraw−Hill Companies, 2010. Print.

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