eBay To: Board Of Directors From: Management Team Subject: ebay: Facing the Global Growth Challenge Date: October 29, 2008 Summary: Introduction: The Goal is for E-bay to penetrate more international markets; such as Russia, Denmark, Vietnam and Turkey. Additionally, focus on fixed-price options and advance opportunities with more sellers and specialty items. The strategic impact on the issues identified above will be discussed, as well as the best direction in which E-bay should move to progress in business growth and operating margins. Industry Analysis: Internet users worldwide are increasing. People around the world are adapting to using the Internet (see Table 1). With a large increase, eBay would be able to market its products worldwide. The company would make a considerable investment to expand into countries like Russia, Denmark, Vietnam and Turkey. With current investments in 33 countries, a small step to invest more would represent a significant gain in market share. The most positive outlook regarding international market expansion is that barriers to entry are relatively low. Competitors will need to enter the market and know how to attract buyers, what and how much will be sold, and how to control their budget. Competitors also lack the knowledge gained over years and years of experience in the online auction industry. E-bay has the tacit knowledge and experience to continue growing in the international market. The online auction sector will also give a lot of strength to suppliers. With lower sales costs, this will force competitors to prepare the ground to increase the number of suppliers and attract new sellers by offering higher profits per sale. In turn, this will actually benefit E-bay. Competitive Analysis: Amazon, another major competitor, will strive to provide more value to the customer in terms of ease, selection and availability, which in turn will continue its competitive pressure on eBay. EBay, to fully beat the competition, will need to increase fixed price options. Both Yahoo and Amazon offer fixed-price products that attract a diverse customer base. Some may not be looking for a good deal, but an item that is particularly hard to find. Fixed-price trading is expected to reach almost 50% by 2010 (see chart 5). This is of great importance as it is a growing market.