The internet has dramatically increased global e-commerce activities. Both traditional “brick and mortar” businesses and new dot-com businesses use the internet to meet business objectives. For example, eBay successfully offers online auctions as well as goods for sale in a fixed-price format.
a. Identify three specific business strategies that explain eBay’s decision to offer goods for sale at fixed prices.
b. Describe three business risks related to eBay’s operations. How do these risks affect your assessment of eBay’s client business risk?
c. Acquisitions by eBay include PayPal, an online payment service, and Skype, an internet communications company. Discuss possible reasons why eBay made these strategic acquisitions.
d. Identify possible risks that could lead to material misstatements in the eBay financial statements if business risks related to its operations, including recent acquisitions, are not effectively managed.