threats are coming from the marketplaces segment. In order to differentiate the segment, I have provided another table for the list of opportunities and threats for Communications and Payments segment. But for Pest analysis the results remains the same.
3.6 Opportunities and Threats for Marketplaces segment The List of Opportunities
No. Case Fact Prioritize
Opportunities Resulted from PEST Analysis and Competitive Analysis 1. Profitability is also affected by currency exchange rates (page 269,
Para3)
3
2. 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 (Page 269, Para3)
5
3. Buyers and sellers enjoy trading among a wide selection of goods and services in a secure, trusted, and efficient commerce environment.(Page 265, Para5).
2
4. Online classifieds help people meet, share ideas, and offer goods/services at a local city or regional level(Page 266, Para4)
4
5. The need for substantial resource investments in technology and marketing in order to remain competitive (Page 268, Para1)
1 6. Amazon achieved Low gross profit margins. Low in gross profit margin
can be considered as a weakness for Amazon (Financial analysis)
6
Opportunities Resulted from Industry Analysis (Porter’s 5 Forces)
N/A
32 Strategic Management/SEM II/ 2011/2012
The list of threats
No. Case Fact Prioritize
Threats Resulted from PEST Analysis and Competitive Analysis 1 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 (Page 269, Para 6)
6
2 In addition, tax compliance will increase costs. (Page 269, Para 6) 1
3 Legislation has also been proposed to prohibit sharing of certain information over the Internet, (Page 270, Para2)
17
4 The resources of existing competitor firms are larger and as a result, competitors could weather an economic downturn (Page 268, Para2)
3
5 The company continued its turnaround strategy in a harsh climate for consumer spending (Page 263, Para2)
16
6 Weak global economic 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 (Page 269, Para2)
2
7 Alternatively, financial measures will be negatively impacted by a rise in the value of the U.S. dollar (Page 269, Para3)
7
8 Declining economic environment (Page 268, Para4) 10
9 Dollar and the lingering weak economy with high unemployment (Page 274, Para1)
8
10 The revenue drop was attributable to the impact of the stronger. 11 11 Competition is intense in communications services and subject to rapid
technological
Change(Page 268, Para2)
4
12 Breaches in data security are on the rise (Page 270, Para3) 12 13 Amazon states their success is based on: the ability to attract buyers and
sellers; the volume of transactions, price, and selection of goods; customer
13
33 Strategic Management/SEM II/ 2011/2012
service; brand recognition, community cohesion, interaction, and size;
system reliability; delivery and payment reliability; Web site convenience and accessibility; level of service fees; and quality of search tools (eBay, 2006).(Page 269,Para1)
14 Several other online marketing channels such as: (1) syndicated store programs, (2) sponsored searches, (3) portal advertising, and (4) e-mail campaigns Amazon.com, 2006, p. 37).(Page 269, Para1)
18
15 Amazon has initiated alliances with partners to gains sales by referring customers to Amazon.com (Page 269, Para1)
20
16 The success of Amazon is built on similar customer-centric entrepreneurial business models that focus on customer-driven value creation. (Page 268, para1)
14
17 Amazon, a leading online retailer, reported net revenues of $19.2 billion as of year end 2008. (Page 268, Para4)
22
Threats Resulted from Industry Analysis (Porter’s 5 Forces) 18 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 (Page 268, Para2)
9
19 Competitors include traditional
department, warehouse, discount, and general merchandise stores, emerging online
retailers, online classified services, and other offline and online home shopping networks
such as Wal-Mart, Target, Sears, Macy’s, J.C. Penney, Costco, Office Depot, Staples,
OfficeMax, Sam’s Club, Amazon.com, Buy.com, AOL.com, Yahoo!
Shopping, MSN,
QVC, and Home Shopping Network.(Page 268, Para2)
19
20 Companies such as Google Base and Microsoft Live
Expo also offer similar online services and classified ads. (Page 268, Para2)
21
21
However, Amazon’s strong growth and satisfied customer base pose the greatest threat to eBay (Page 267, Para6)
5
34 Strategic Management/SEM II/ 2011/2012
22 Marketplaces segment, which is closely tied to consumer purchase patterns.(Page 269, Para2)
15
b) Opportunities and Threats for Communications segments The List of Opportunities
No. Case Fact Prioritize
Opportunities Resulted from PEST Analysis 1. Profitability is also affected by currency exchange rates (page 269,
Para3)
3
2. 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 (Page 269, Para3)
5
3. Buyers and sellers enjoy trading among a wide selection of goods and services in a secure, trusted, and efficient commerce environment.(Page 265, Para5).
2
4. Online classifieds help people meet, share ideas, and offer goods/services at a local city or regional level(Page 266, Para4)
4
5. The need for substantial resource investments in technology and marketing in order to remain competitive (Page 268, Para1)
1 6. Amazon achieved Low gross profit margins. Low in gross profit margin
can be considered as a weakness for Amazon (Financial analysis)
6
Opportunities Resulted from Industry Analysis (Porter’s 5 Forces)
N/A
The list of threats
No. Case Fact Prioritize
Threats Resulted from PEST Analysis
1 Legislation is in effect which requires collection of taxes beginning after 5
35 Strategic Management/SEM II/ 2011/2012
December 31, 2010. This new legislation may cause a reduction in trading activity that would negatively affect several business segments (Page 269, Para 6)
2 In addition, tax compliance will increase costs. (Page 269, Para 6) 1
3 Legislation has also been proposed to prohibit sharing of certain information over the Internet, (Page 270, Para2)
6
4 The resources of existing competitor firms are larger and as a result, competitors could weather an economic downturn (Page 268, Para2)
2
5 The company continued its turnaround strategy in a harsh climate for consumer spending (Page 263, Para2)
7
6 Weak global economic 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 (Page 269, Para2)
8
7 Alternatively, financial measures will be negatively impacted by a rise in the value of the U.S. dollar (Page 269, Para3)
9
8 Declining economic environment (Page 268, Para4) 10
9 Dollar and the lingering weak economy with high unemployment (Page 274, Para1)
12
10 The revenue drop was attributable to the impact of the stronger. 4 11 Competition is intense in communications services and subject to rapid
technological
Change(Page 268, Para2)
3
Threats Resulted from Industry Analysis (Porter’s 5 Forces) 12 Other online payment services and offline payment methods, such as
cash, check, money order, and established credit card merchants (Page 268, Para1)
13
13 The Payments segment
competes against other online payment services and offline payment methods, such as
cash, check, money order, and established credit card merchants (Page 268, Para 1)
11
36 Strategic Management/SEM II/ 2011/2012
c) Opportunities and Threats for Payments segments The List of Opportunities
No. Case Fact Prioritize
Opportunities Resulted from PEST Analysis 1. Profitability is also affected by currency exchange rates (page 269,
Para3)
3
2. 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 (Page 269, Para3)
5
3. Buyers and sellers enjoy trading among a wide selection of goods and services in a secure, trusted, and efficient commerce environment.(Page 265, Para5).
2
4. Online classifieds help people meet, share ideas, and offer goods/services at a local city or regional level(Page 266, Para4)
4
5. The need for substantial resource investments in technology and marketing in order to remain competitive (Page 268, Para1)
1 6. Amazon achieved Low gross profit margins. Low in gross profit margin
can be considered as a weakness for Amazon (Financial analysis)
6
Opportunities Resulted from Industry Analysis (Porter’s 5 Forces)
N/A
37 Strategic Management/SEM II/ 2011/2012
The list of threats
No. Case Fact Prioritize
Threats Resulted from PEST Analysis
1 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 (Page 269, Para 6)
5
2 In addition, tax compliance will increase costs. (Page 269, Para 6) 1
3 Legislation has also been proposed to prohibit sharing of certain information over the Internet, (Page 270, Para2)
6
4 The resources of existing competitor firms are larger and as a result, competitors could weather an economic downturn (Page 268, Para2)
2
5 The company continued its turnaround strategy in a harsh climate for consumer spending (Page 263, Para2)
3
6 Weak global economic 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 (Page 269, Para2)
8
7 Alternatively, financial measures will be negatively impacted by a rise in the value of the U.S. dollar (Page 269, Para3)
4
8 Declining economic environment (Page 268, Para4) 7
9 Dollar and the lingering weak economy with high unemployment (Page 274, Para1)
10
10 The revenue drop was attributable to the impact of the stronger. 9 11 Competition is intense in communications services and subject to rapid
technological
Change(Page 268, Para2)
13
Threats Resulted from Industry Analysis (Porter’s 5 Forces)
38 Strategic Management/SEM II/ 2011/2012
12 Traditional communications companies offer bundled services, such as cable or
satellite television, along with internet and voice communications services (Page268, para2)
12
13 The Communications segment faces competition from local telephone or cable companies and other VoIP providers. Furthermore, eBay anticipates the need for substantial resource investments in technology and marketing in order to remain competitive. (Page 1, Para268)
11
* Because of the lack information given in the case study particularly for competitors information I provided only EFE and CPM analysis for marketplaces segment.
3.7 The External Evaluation Factor (EFE)