EBay started out with a U form, or functional, design. What changes in that design have already occurred as a result of the company’s growth? What kind of changes seem likely for the future? •One of the first things we need to look at is what the u-form design is. The U-form organization (U stands for unity), also called functional design, relies almost exclusively on the functional approach to departmentalization . The U-form design is used to implement a single-product strategy.
Because of the emphasis on functional activities, coordination is extremely important (edugov). Advantages: The costs of staffing each department with experts is lower than in organizations with other configurations. U-form design facilitates wide spans of management and allows the CEO to centralize authority. Drawbacks: U-form design slows decision making. Unit employees may lose sight of overall organizational goals, and it is difficult for the organization to monitor the performance of individual managers in the functional areas (edugov).
The addition of more buyout companies (PayPal, Skype) created an evolution in management design for eBay. The CEO and stockholders still needed to micro manage the company, so the new sub divisions were brought in and this created a change in the U form style was implemented. This new style then evolved into a better structure for faster decision making and somewhat eliminated the loss of sight of the overall goals of the organization. Some of the possible changes in the structure of eBay will include a more goal oriented outlook in the line areas of management.
This is to say the smaller mangers will have more responsibility to guide and make changes that will affect the organizations overall goals. With great power comes great responsibility and the line managers will have to report much more, and be held accountable for their increased responsibilities. Currently, it’s marketplace unit, one of three divisional units, runs eBay’s overseas operations. As the company expands into more foreign markets, what changes may take place in its organizational structure?
In your opinion, what changes should be made to accommodate further overseas expansion? •As eBay expands into more foreign markets, eBay will have to further evolve and allow for a more country centralized execution of its policies and manager control. I can certainly see that in countries that have a high religious influence, such as the Muslim dominated hierarchy, religious dictates will control how eBay presents itself. In the Koran it states that you are not allowed to profit off another. This holds true in examples like banking.
However in some democracies eBay is being stifled in its ability to require payments thru PayPal, as the book states an example of Australian government, curtailing eBay’s ability to require payment thru PayPal (Griffin, 2012). To further accommodate expansion into these diversified markets eBay will of course have to follow religious precepts, government regulations and allow for more targeted products. It would be unwise of eBay to allow many items that are permitted in democracies and free thinking countries to be purchased in a more conservative nation.
In the conservative nations, the potential buyers can still buy off eBay USA. This type of targeted selling of their system has created eBay of Canada, eBay of USA, and eBay of Australian, eBay of Belgium and so on (whoweare). Because of eBay’s presence in over 30 countries, yet PayPal is only used in 16 countries, eBay and PayPal are doing what is necessary to expand in the free thinking counties, However eBay and PayPal are not now in any Muslim type country and this will require a new way of thinking and doing business.
Some products cannot be purchased anywhere but the USA, so the countries that do not have an eBay site, can use any of the 30 countries eBay has a business in and if the buyer wants a USA only product he or she can buy from the USA. In addition to its 3 divisional units, eBay has 3 functional units-finance, human resources and legal-all of which are reported directly to the CEO. As the company grows and expands into more foreign markets, what changes may affect the roles of these units in its organizational structure? The functional units of-finance, human resources and legal-all of which are reported directly to the CEO, will of course have to change the way the provide information to the CEO. I would guess that mid-line managers would translate information form specific countries that they are in charge of into a more USA type report. I see a mini CEO of every division or country, all moving information translated from local currency, human resources and legal, into a report, that is sent to a centralized eBay agency, that in turn, will report to the main CEO of the USA.
The amount of information coming from 30 different countries with 30 different types of similar and radically different, legal and moral systems would be a nightmare for one CEO to assess. So in effect eBay would need a central data processing system for the information to flow, to allow for different summaries for the CEO to access, this is entirely possible to do with an online program that can be accessed from the USA or anywhere there are internet or phone services.
As stated, each functional unit will take on more information and may even have to spin off into a more targeted per country or market control area. By using a data base eBay will have the ability to watch real time profits and loses. There are some set-back to using this type of data for a business scenario, the information is only as good as what is entered and eBay will need to do audits and verification of all data before making any major changes in each nation or in each division. What changes in its external environment are likely to affect the online-auction industry in the next few years?
What impact might these changes have on the organizational structure of eBay and its main competitors? •Some of the changes in its external environment that are likely to affect the online-auction industry in the next few years would be quite simple to speculate on. I would suppose the product type, availability, shipping costs, changes in eBay categories, changes in morals and religious affiliations, are just a few factors that will affect the online auction industry. Acquisitions and search engines also affect the industry directly.
The ability to move with the changes created by eBay or those that affect eBay, will test the organizations ability to make a profit and stay in the market. In the Skype acquisition eBay has already seen major disappointments, but not losses. Sellers just don’t like the product and many buyers feel the same (discuss). The best move eBay made was its purchase of PayPal. PayPal injected itself into the eBay market place by offering the sellers 10. 00 to use their services and paid 10. 00 for any referrals.
Sellers flocked to this type of payment plan when it was offered in 1999 (lands). I have sold on eBay since its inception as “eBay” and the movement to PayPal was astonishing. This is why eBay bought out this start up in less than 3 years after PayPal introduced itself into the market. Now any site that has a product online will most likely accept PayPal as a payment, even eBay’s competitors like amazon, Yahoo and U-bid. While Amazon does not officially accept PayPal, it does allow you to pay for its products with this service (Amazon).
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