EBay expands around the globe Essay Example | Topics and Well Written Essays - 2500 words

EBay expands around the globe - Essay Example This growth has mainly come in the past 8 years. While expanding globally, eBay has exercised a variety and combination of options that it had available in the first place (Thompson, 2003). The following section discusses various options for businesses while expanding. For moving in the international markets, a business has a number of options that can be considered. The consideration is based on various analyses of cost versus benefit being the major highlight (Davis, 2000). Some of the main options that a business may consider while going international are: Franchising is when a foreign business (parent company) deals with a local business to be their representative in the local markets, with the parent company's name, rules, policies and procedures being followed. The local company operates under the name of the parent company, precisely as per their inherent instructions, and earns the parent company earns the royalty from this set up (Shull, 2000). Examples of such an arrangement are often witnessed in the fast food chain set up or even in gas stations. Mergers occur when two or more businesses decide on merging their set of services to compete in a much enhanced form in the industry. In such a form, the businesses unite and the separate existence and identity seizes (Price, 2003). Glaxo Smith Klime (GSK) is the most renowned merger of recent times, with Sony Ericsson being another one. Acquisitions takes place when one firm is taken over by another and the acquiree seizes to exist as the acquirer takes over the operations and assets under its own books. In such a scenario, the acquirer yields various advantages. The extent of the advantages increases further when the acquirer is a foreign entity, acquiring a local entity to enter into the local markets (Carr, 2004). For example, as Royal Bank of (Scotland RBS) took over ABN AMRO, it instantaneously got access to the countries where it had no existence earlier. Foreign Direct Investment (FDI) takes place when a business having no existence in a certain region or country decides to enter into the local market for purpose of expanding its operations and taking advantage of an existing opportunity. For the industry in which eBay operates, the two most viable options for expanding are either acquisition or FDI. However, on majority of the occasions, eBay has seemed to preferred acquisition over FDI. The following section discusses the pros and cons of this selection and preference in detail. eBay's Policy: Acquisition Vs FDI eBay while expanding globally has chosen the option of acquisition rather than any other mode of expanding. There have been several critiques on the issue because with the likes of funding available at eBay, the firm could have easily gone in with any mode of expansion. The aim of essay is to critically analyze the pros and cons of acquisition vs. FDI. Following are the main advantages for eBay to choose acquisition over FDI as its preferred strategy to enter into the markets (David, 2002): 1) Existing Infrastructure: The major advantage of