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The Business Model

The Business Model. Case study.

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The Business Model

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  1. The Business Model Case study

  2. A business model is a framework for creating economic, social, and/or other forms of value. The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. • Conceptualization of business models try to formalize informal descriptions into building blocks and their relationships. While many different conceptualizations exist, Osterwalder proposed a synthesis of different conceptualizations into a single reference model based on the similarities of a large range of models, and constitutes a business model design template which allows enterprises to describe their business model: • Infrastructure: • Core capabilities: capabilities and competencies necessary to • execute a company's business model. • Partner network: The business alliances which complement • other aspects of the business model. • Value configuration: The rationale which makes a business • mutually beneficial for a business and • its customers. • Offering: • Value proposition: The products and services a business offers. Quoting Osterwalder (2004), a value proposition "is an overall view of products and services that together represent value for a specific customer segment. It describes the way a firm differentiates itself from its competitors and is the reason why customers buy from a certain firm and not from another." • Customer: • Target customer: The target audience for a business' products and services. • Distribution channel: The means by which a company delivers products and services to customers. This includes the company's marketing and distribution strategy. • Customer relationship: The links a company establishes between itself and its different customer segments. The process of managing customer relationships is referred to as customer relationship management. • Finance: • Cost structure: The monetary consequences of the means employed in the business model. A company's DOC. • Revenue: The way a company makes money through a variety of revenue flows. A company's income. The Business Model Business model design template: Nine building blocks and their relationships, Osterwalder 2004

  3. The Business Model -1 eBay Incorporated. The Group's principal activity is to operate online market place and payments platform through the web sites eBay.com and paypal.com respectively. The Group operates in three segments: Marketplaces Segment, Payments Segment and Communication Segment. Marketplaces segment enables online commerce through a variety of platforms, including the traditional eBay.com platform and our other online platforms. The Payments Segment includes the global payments platform. Through its subsidiaries and affiliates, the websites are directed toward the countries which include the United States, Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, India, Italy, Malaysia, the United Kingdom and other countries. EBay has pioneered and internationalized automated online person-to-person auctioning. Previously, such commerce was conducted through garage sales, collectibles shows, flea markets, and classified advertisements. An online marketplace facilitates easy perusing for buyers and enables sellers to list an item for sale within minutes of registering. Browsing and bidding on auctions is free, but sellers are charged transaction fees for the right to sell their goods on eBay. There are two kinds of transaction fees: When an item is listed on eBay, a nonrefundable insertion fee is charged based on the seller's opening bid on the item. Once the auction is completed, a final value fee is charged. This fee generally ranges from 1.25 percent to 5 percent of the final sale price. EBay also upsells its listing fees with enhanced auction features, including highlighted or bold listings, featured status, and other ways for sellers to increase the visibility of their items. Once the auction is finished, eBay notifies the buyer and seller via email. Completing the transaction is then up to the seller and the buyer, and eBay collects its final value fee independent of payment and shipment.

  4. Infrastructure: • Core capabilities: Person to person marketplace (virtual market place) • Partner network: paypal.com and many of auction websites worldwide • Value configuration: Critical size of market more than 200,000,000 registered users • Offering: • Value proposition: efficient online commerce and valuable distribution channels (what ever it is you can get it on ebay) • Customer: • Target customer: all online users willing to sell or buy any items • Distribution channel: Internet • Customer relationship: Good costumer service before and after the sale including: • Automate answering buyer question • Offer repeat purchase incentive • Do e-mail marketing • Finance: • Cost structure: There is no complete document available for ebay cost structure but the some of ebay costs mentioned are as followings: • Emplyee costs • Website handling costs • Transaction taxes • Websites purchased worldwide such as paypal.com and other auction websites worldwide • Revenue: eBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product (Insertion Fee) and fees when the product sells (Final Value Fee), plus several optional adornment fees, all based on various factors and scales. The U.S.-based eBay.com takes $0.10 to $4 (based on the opening price) for a basic listing without any adornments and 8.75% or less of the final price (as of May 2009). The UK based ebay.co.uk (ebay.co.uk offices) takes from GBP £0.15 to a maximum rate of GBP £3 per £100 for an ordinary listing and from 0.75 percent to 10% (writing as of June 2009) percent of the final price. Reduced FVF's are available to business registered customers.In addition, eBay now owns the PayPal payment system which has fees of its own. The Business Model -2

  5. Type: Public (NASDAQ: EBAY) Founded: September 3, 1995 Headquarters: San Jose, California, United States Key people: Pierre Omidyar, Founder and Chairman John Donahoe, CEO Lorrie Norrington, President of eBay Marketplaces IndustryAuctionsProducts Online auction hosting, Electronic commerce, Shopping mall,PayPal, Skype, Gumtree, Kijiji, Revenue : ▲$8.541 billion USD (2008) Net income: ▲$1.779 billion USD (2008) Employees: 15,500 (Q1 2008) Slogan: What ever it is, you can get it on eBay. & Shop victoriously! & From collectibles to cars, buy and sell all kinds of items on eBay & Buy it, sell it, love it Website: www.ebay.comType of site: Online auction - Registration Required to buy and sell Available in: Multilingual The Profile Pierre Omidyar Born: Jun 21, 1967 Paris – France Occupation: Founder and chairman, eBay Inc. Prepared by: Mehrpooyan Inst 1- Yasser Jalali 3- MajidChegini 2- ArmanRezaee 4- ShabnamKhorrami MBA Code 2

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