BUSINES PLAN

Business Plan

Business Plan

Introduction

This paper intends to make a business plan for the company L.A Ritz, which is a fashion house to enhance the business by carrying it to Ebay. The business plan focuses on the Ebay store that how firms like L.A Ritz can successfully take its business online to reach global market. Various aspects are analyzed in term of selling products on Ebay to potential customers, such as marketing plan, competitors, management of operations and financials.

Discussion

Market Plan

Risk of Entry by Potential Competitors

EBay currently has dominant market share of online auction. However, online auction industry doesn't require large initial capital investment in technology, research, and development when firm just started to operate. For instance, any other online auction company could easily emulate eBay's interface since eBay does not hold any key patented technology (eBay, 2009). The most effective barriers are large network and credible reputation. A new entrant would find it is difficult to build a new network that starts with no users. Yahoo and Amazon started their networks in online auction market by deriving from their existing active users (Phillip, Somok, and Zheng, 2005). Moreover, it is also hard for new entrants to get support from credit card companies or other electronic payment providers since sustained profitability is questionable. Thus, in short run, the profitability for new entrants will be low.

Threat of Substitutes

According to eBay's mission statement, “eBay's mission is to provide a global trading platform where anyone can trade practically anything.” online auction market basically provides a channel to consumers (eBay, 2010). Thus, other channels of shopping that consumers can choose are substitutes of online auction market. Substitutes of online auction are traditional shopping and fixed-price online retailers. Many consumers prefer traditional shopping to Internet shopping. Traditional shopping mainly refers to onsite shopping mall (Birol, 2005). Consumers could try before they pay the bill and they could easily return products if they are not satisfied with quality. Moreover, consumers worry about the security of online transactions, which make them favor traditional shopping much more. Fixed-price online retail is another substitute of online auction. Most consumers prefer fixed-price online retail to online auction when they value their time more than the small change of price (Phillips, Somok, and Zheng, 2005). Fixed-price online retail is appealing to the shoppers who prefer straightforward sales. Thus, online auction and fixed-price online retail target different people with different personalities and they do not conflict with each other. eBay added “Buy It Now”, fixed-price features, to its online auction website and acquired Half.com, a fixed price online retail web site (Datamonitor, 2010). Amazon launched its auction feature in 1999 based on its traditional online fixed-price retail website (Yin, 2007). Furthermore, the switching cost from online auction to traditional retail or fixed-price online model is high. For instance, sellers have to pay storage fee and shelf rental fee to traditional retailers. Thus, the overall threat of substitutes is moderate.

Bargaining Power of Suppliers

Suppliers of online auction industry are companies could offer technology patent, legal ...