1. Includes a link to the article.
http://www.businessweek.com/technology/content/aug2008/tc20080813_371494.htm
2. Includes a short summary of the article:
The article is about Electronic commerce giant, Ebay attempting to expand overseas and to increase its growth by acquiring a minority stake in in Korean e-commerce giant Gmarket worth $404 million as of Aug 12.
3. Identifies the topic(s) from our syllabus that the article covers.
1.7 – Growth and Evolution
- External Growth
4. Applies one business tool/theory/technique to the organization.
The article had shown that in order to increase competitiveness within the global market, expansion would be necessary. Therefore, I believe it was a wise strategy that it has made a decision to expand into the Asian market as development in developing countries, such as China that are increasing rapidly in recent years. By purchasing the stake, it would benefit the company in numerous ways. As the article mentioned, it would counter competition for Asian e-commerce from Yahoo and help to expand its core shopping business to new markets. This would also increase customer base resulting in more profit made. Due to the increased competition within the Asian market in recent years, such acquisition would also help E-bay to achieve its long-held aim of expanding beyond only U.S. and Europe.
The company’s decision to expand was because it was making profit and therefore can “lookout to make acquisitions to bolster its shopping business”. Although in this acquisition, e-Bay only purchased a minority stake, the company was successful in using it for acquisition or takeover even though e-Bay does not plan to acquire all of Gmarket yet.
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Hey Jason. Cool article!
ReplyDeleteGreat analysis! I like the fact you mentioned that eBay, in trying to acquire this minority stake in Gmarket, makes a good attempt at increasing its competitiveness in the global market. It is a good strategy, which is even more appropriate in eBay's context since internet is a fast-growing and very accessible market. Perhaps you could have discussed the implications of trading on an international basis by relating to the globalization unit. That said, I think you did a great job in outlining the main aspects of this article.
Good work.
Cool article Jason!
ReplyDeleteI really enjoyed reading the article and your analysis.
I agree, I think that this is a wise move for eBay for several reasons. First, I think that this was a brilliant way to penetrate the Asian market. Ebay, being an American company, may experience cultural clash and differences if they were to lay roots in Asia. With the purchase of a minority stake in a local Asian company, they can use it to their advantage, and not have to face the cultural differences that would occur if eBay penetrated the market on their own. Gmarket would be more familiar with the needs of Asians and be able to provide best suited service possible.
This also sets eBay in an advantageous strategic position. Since they have only purchased a minority stake, they can gain experience in managing an Asian company, while keeping risks to a minimal. They can only lose the amount they have invested, which is one of the advantages of investing in a limited company (see 1.2 Business and Management). If all goes well, and they receive good sales and profits, eBay has a chance to make an entire acquisition of GMarket.
I also agree with Olivier, who posted the 1st comment, I think you can relate Globalization to this article too.
Futhermore, I think you can look into the aspects of growth more deeply, perhaps using the Ansoff matrix, to calculate risks for this form of growth. In addition, I think marketing concepts can be tied into this case study, since the needs of Asian customers may be different from the American ones. An example of this would be channels of distribution, where Asians and Americans have very different purchasing patterns, and have differences between where and how they purchase a product. Perhaps you can look into theses topics in more detail.
What is your view on my opinion?
Cheers,
Calvin Tsui
Cool article. I just want to add some more advantages of inorganic growth. First, EBay will gain greater market share,therefore reducing competition in the market. It can also share good practices and ideas with Gmarket, and take advantage of the local knowledge of Gmarket. It is extremely important for EBay to expand into foreign markets like Korea, because Asia has the most potential customers in the world. As the living standard of Asia continue to rise, more and more people will have access to E-commerce and the vast size of the Asian market is immeasurable.
ReplyDeleteNice, I really like this article and your analysis. I think that this article really shows how much interests American firms have on the Asian market. I think that this incident is an indication of Ebay's expansion of its Asian market, as ebay has already established market in China and other relatively developed countries (such as Japan). In response to your last paragraph about the potentiality of Ebay aquiring majority stakes of the Gmarket, Ebay has already announced a take-over of Gmarket as indicated in this article: http://www.koreatimes.co.kr/www/news/biz/2009/04/123_43301.html
ReplyDeleteI think you can further analyze on why Ebay buy a minority stakes of Gmarket before the real takeover of Gmarket and on how Ebay's competitors in Asia will see this incident.
Also, I am very fascinated in what will Ebay do after penetrating into Korean market- will Ebay further expand its Asian market by penetrating into other countries' market? What other countries will it try to expand to?
But anyways, this is a very good article.
Jason Tang
I think it is a benefit for Asian countries having eBay expanding overseas. It would be more convenient for people who are in Asia.
ReplyDeleteAdditionally, as Olivier and Calvin have mentioned, globalization can also be considered. As eBay expands, I think it will be "globalized". This is because it will become more and more common as people will start purchasing from eBay who have actual access to it.
Which one do you think is the best place to expand in next?
:)