Ebay Case Write Up

267 Words2 Pages
eBay first entered China by acquiring a minority stake in EachNet. What are the advantages and disadvantages of this method of market entry? One of the most significant advantage of this method of market entry is that when a foreign company decides to acquire a Chinese domestic company, it needs to learn not only the internal structure of the company, its business segments, its original value propositions to the domestic customers, but also its core competencies in competing domestically. Therefore when acquiring a domestic company such as Eachnet, eBay did a good job of not rushing to take over the company and run it as if it is competing in the US market, instead it let the company continue its business model and operations. However, as mentioned in the case, “senior management had not felt respected by their US headquarters, which had not given them enough autonomy and had directed the from afar instead”, it seemed like as time progressed, Ebay started taking too much control over the company without fully learning the consumer behaviors, nor the significance of cultural differences between China and United States. For example, the DIY culture in the West was not well adapted in China as the Chinese customers preferred the finished products that they don’t have to worry about putting the components together. Ebay was solely operating under the assumption that the Chinese people would prefer it just because its brand image in the United States, therefore it made very little modifications that adjust itself to Chinese consumers’ preferences. As a result of that, it lost market shares to
Open Document