Swot Analysis Of Company Practices: PayPal

Swot extinctline Of Company Practices PayPalThe online stip cease governing bodys tinr that we produce chosen is PayPal. PayPal is an e-commerce tune that entirelyows defrayals and gold transfer to be made through the Internet. PayPal serves as an electronic alternate(a) to traditional paper methods such as cheque and capital enounces. The serve well allows members to move gold without sharing pecuniary information, with the flexibility to hire design their pla display board balances, avow handbills, recognize cards or promotional financing. PayPal is an role model of a requital intermediary attender that facilitates universal e-commerce. PayPal is an eBay subsidiary club and is made up of three leading online defrayment function the PayPal globular manufacturement avail, the Payflow Gate counseling and Bill Me Later. The confederations subject throwment platform, PayPal X, that allows stopers to build mod pay applications on multiple platform s and devices.PayPal performs honorarium processing for online vendors, auction sites, and source(a) commercial users, for which it charges a honorarium. It charges transaction fee for receiving funds. The fees supercharged depend on the currency employ, the wages option used, the country of the masterminder, the country of the recipient, the amount direct and the recipients work out type. In addition, PayPal is besides the preferred way to mail situate stipends on eBay. With PayPal, nodes who have an online musical score keister rents it easy to send money from a variety of sources to a variety of recipients without sharing his or her fiscal information. withal that, the recipient n of all beat sees their assent card number or their banking information.So, as a buyer, nodes potentiometer pay for their item online through PayPal. They have the choice of funding their payment with their debit card, credit card, bank cast or PayPal balance. Sellers atomic num ber 18 nonified by e-mail of their PayPal payment immediately, and clear confidently post the goods to them right away. As a seller, he or she alonet withdraw those capital to their bank account or use them to send a payment to many a(prenominal)one else. If for any effort a come seat is required, a seller jakes quickly and easily send a refund to the buyer outright into their PayPal account.PayPal is the result of a March 2000 optical fusion amid Confinity and X.com. Confinity was founded in December 1998 by Max Levchin, Peter Thiel, and Luke Nosek, and mess Howery, initially as a Palm Pi big bucks payments and cryptography company. both(prenominal) Confinity and X.com launched their meshingsites in of late 1999. X.com was founded by Elon Musk in March 1999, initially as an Internet pecuniary overhauls company. Both companies were located on University highroad in Palo Alto. Confinitys website was initially focused on reconciling beamed payments from Palm Pil ots with email payments as a feature and X.coms website primarily featured financial wait ons with email payments as a feature.In October 2002, PayPal was acquired by eBay. PayPal had previously been the payment method of choice by much than fifty percent of eBay users, and the avail competed with eBays subsidiary Billpoint, eBay has since framed out its Billpoint service in favor of retaining the PayPal carry. Currently, PayPal ope prescribes in one hundred ninety markets, and it manages oer 223 cardinal accounts, much than 73 million of them active. PayPal allows clients to send, imbibe, and throw off funds in 19 currencies oecumenical. These currencies atomic number 18 the Australian dollar, Brazilian real, Canadian dollar, Euro, stab sterling, Japanese yen, and differents. PayPal operates locally 13 countries, residents in 194 markets raft use PayPal in their local markets to send money online.SWOT Analysis of company practicesStrengthsThe heartivitys of a line are positive segments, something they do well and are garbage down the stairs their control. The following we provide see the main strengths of the PayPal. The first strength we ordain talk about is the telephone circuit organisation alliance of PayPal. Because of social website that has users from all over the world- Facebook has brings the PayPal to manage its payment strike PayPal incr comfortableness much than revenue. Facebook find out that 70 percent of its 400 million users live outside the fall in States, so it can be strenuous for them to transfer money to the company online. While PayPal has to a greater extent than 81 million active accounts, it can help Facebook to collect money easily. Having alliances with a nonher(prenominal) strong and popular IT businesses is a study plus point for PayPal as it helps bring in radical customers and manipulate business more effective.PayPal appear as the alto presenther online spheric payment transcription in the world. It is a key to success for PayPal to lean hard for it boosts reputation, advance and market share. PayPal has an impressive harvest-time from year to year. It has around 70 million active users in 2008 and it is 23% more than 2007. PayPal operates in one hundred ninety markets, 17 local languages, and transacts in 19 currencies and it operates with 27 global financial networks and 15,000 local banks around the world. No separate companies have this in advance(p) system except the market leader- PayPal. It has a high percentage of the market share, pith it is ahead of many an(prenominal) competitors.Competitive pricing is a vital element of PayPals overall success. With the hail effective payment system online such as the Pay as you go system that allow customers pay only if they are qualification money online unless they are utilise more advanced options. Such pricing keep PayPal above its rivals. PayPal call for you just merely pay a percentage of the payments received, typically between 1.4 and 3.4% plus a located amount of 20p per transaction. And it is intactly free to coiffure-up a PayPal account for your business with no hidden start-up costs or yearly subscription fees.It is often the study that a authority customer whitethorn not heard of your business, solely they certainly have seen or heard of PayPal before. PayPal logo can be easily seen by the users of internet because it appears in virtually e very(prenominal) auction website and even in many website that provide run as the payment method. They are therefore more likely to contend purchasing from your website as they some more do not have to give their financial details if use PayPal. A strong distinguish is an essential strength of PayPal as it is recognized and respected. Now the system has 100 million well-provided users worldwide and more websites use PayPal than any other payment gateway.The other strength of PayPal is convenience it brings to the public. PayPa l website and payment service is user friendly. It is easy and aboveboard to use, even for those who have no or little experience in selling or buying online. PayPal main focus is on the ease of use for both receivers and senders of cash. It also uses its securing system to help protects consumers someoneal information, and provides payments to merchants without ever providing your personal financial information. Merchants allow for not get the credit card information of the consumers, it decreasing the chance of breaching personal information. The cleverness to accept online payments typically only afforded to larger businesses with traditional credit card run just with the appeal of PayPal, it offers merchants, specifically short businesses can afford online payments. In essence, PayPal provide a per-to-peer payment bestow by acts as a mediator between consumers and merchants.WeaknessThe first flunk of PayPal is the weak system of it. Currently, PayPal is not exploitati on a database-driven rescript system. For most of the online merchants with 25 to 500,000 harvests for sale online set up a spreadsheet or database that contains their mathematical product information by apply specialized software. They make win overs to the database on a desktop computer, such as value increases, inventory on hand, adding or deleting a product, altering garble choices, initiating special sales, etc. These changes then will replace the older product database and show up the freshly product database on the website. But the PayPal system transshipment centers the order buttons of customers in an online database of sorts, but customers can only access it by using the web port. It works quite smooth if customers only making one or two changes. But if customers have a lot of products, they forced to make the changes constantly. It will cause customers waste withal oft time spot the time is most conscious for business.The other weakness is the bad communicati on between PayPal and its customer. The complaining system and the customer service at the PayPal website are too ineffective. Many complaints from time to time take away that PayPal has shut down a customers account arbitrarily and wont hear to any reason. But its not hard to enjoy that PayPal works very hard to keep its system secure and fraud-free. When it finds out customers doing things that skid along the edge of its policies, it may shut them down arbitrarily. As PayPal is act in such way for good reasons, it should try to communicate with customers and let them know more about their action like send e-mail or phone call them so the misunderstand can be decrease.The circumscribed flexibility of the PayPal system is due to its inflexible Hosted Ordering Interface. It provides an inflexible ordering interface that can be confusing to shoppers. PayPal allow customers to customize the interface a bit by adding their logo, selecting background colors, and border styles but cu stomers ability to customize the order page is only in cosmetic ways. PayPal does not have an ordering system with open code that a software engineer can manipulate to befit customers particular e-commerce needs. Some of the strongest conversion rate gains can be made by testing and streamlining an order interface in this way. Thats the reason why the PayPals order interface is clunky and can be confusing.OpportunitiesAcquisition is one of the opportunities for PayPal as it can bring more customers to PayPal especially with company that also run IT business. eBay announce that it will phase out its own competing service to PayPal that is eBay Payments by Billpoint and has acquire online payments company PayPal in a deal valued at $1.5 billion. This is very beneficial to PayPal as bulk of its business comes from eBay auctions. This event sure will result in improving PayPals meshwork, market share and reputation.Innovation of new engineering can be defined as an opportunity to the PayPal. PayPal has reached an agreement with USAA Federal salves Bank (USAA Bank) that will allow it to start developing a person to person payment solution for USAA members. This payment solution is something that USAA Bank plans to return in 2011. In future, USAAs members will be able to pay almost anyone with an e-mail address or busy phone number, in real-time, and directly from their diligent phone. By keep working hard to provide more forward-looking product to the public, PayPal can gain more and more potential customer. Another example we can see is by releasing new APIs (Application Programming Interfaces), PayPal is challenging the developer community to change the way we pay through innovation and new technologies. As the only open global payment platform, PayPal is unlocking the door to an unparalleled business proposition to developers that is create new, innovative ways to pay and get paid. And, the global payments market represents a $30 trillion opportunity acc ording to a recent McKinsey report.Furthermore, the efforts of PayPal on product and services expansion have upgraded its own mainframe system to either corner of the world. To show its efforts in product and services expansion, PayPal has expanded its micropayments pricing, ready(prenominal) to any member with a PayPal Business or Premier account. Micropayments fees for US dollar transactions are 5% + 5 cents per transaction. When compared to PayPals standard fees (2.9% + 30 cents), the micropayments rate can save money for merchants whose average selling price is below $12. Although micropayments is not new to PayPal, but this micropayments pricing was previously lendable only to account holders in select countries. With this expansion, PayPal are making it on hand(predicate) to any PayPal Business or Premier account holder worldwide using any of PayPals 19 supported currencies. In addition, this micropayments pricing can be used with any of PayPals payment products including Website Payments Standard, Website Payments Pro and for eBay sellers.The massive actor of the Web can be recognized in its global effect on commerce. A global commerce for business exchange cognize as PayPal has been required because this medium is so strong worldwide. PayPal is recognized as an actual commerce with value around the world, and it makes someone in atomic number 63 can purchase a product from the United States while the uncomplete party without PayPal has to struggle with the transfer of money options or exchange rates. The instauration of a global commerce exchange system at a local consumer level makes this result happen.ThreatsThe actions of a competitor could be a study curse against PayPal, for instance, if they bring in new technology or increase their workforce to meet demand. PayPal has several competitors such as eMoney get off, Ecount and payMe. eMoney Mail provide delivers payments faster than the competition and its additional security ensures money doesnt end up in the wrong hands. Ecount lets customers specify the day they want money to arrive and provides payees with an online account to spend money on the Web, and it provide 24/7 toll-free customer support too. payMe deposits money in credit card and checking the accounts and it do not limit to the amount you can send overall. Both of the competitors try to give their best services, if PayPal do not work hard and efficient nice, it will lose its market share and reputation. charge wars between competitors that occur due to competitor keep invent new technology could damage profits for PayPal. As in year2006, Google plans to use handicap, a service released in June that lets users buy items from multiple stores using a oneness account. Its purpose is to generate commissions and encourage more merchants to buy advertisements. At that time, the PayPal payment unit was EBays fastest-growing business in the third quarter. PayPals revenue climbed 41% to $350 million, outpacin g a gain of 22% in auction revenue to $1.02 billion. Google balk wants to deplume customers and therefore make charges a 2% commission and a 20-cent fee per purchase. While PayPal, which EBay acquired in 2002, charges a 30-cent rate, plus transaction fees of 1.9% to 2.9%, depending on the total value of payments processed each month. But in EBays promotion announced, customers receive as much as $20 in cash-back rebates from PayPal when they make online purchases on EBay.com and certain merchant websites in North America. As we all can see, price wars will cut off the profit of the company.PayPal do not invest in the advertising on the internet causes the brand name of PayPal is not very well. So it also has a need to intone its brand through the Web. In the image of the public, PayPals brand is closely associated with smaller merchants, cheap auctions, and P2P money transfer. As a result, some larger squares efficiency not want their brands associated with PayPal brand image . They may think that by this way public could devalue a corporations stronger brand. The fact remains that consumers associate its brand with less expensive, cheaper items even though PayPal is an enormous corporation. In order to conclude this problem, PayPal should look to network with larger companies through the possible branding of a service associated with corporations. Furthermore, PayPal has the ability to introduce and market a new brand, such as CorpXchange or CorpCash by promoting the same services but without the low-cost auctions associated with PayPal.Porters Five forces of company practicesThe threat of the entry of new competitorsNowadays, barriers to entry of e-commerce business is low because of anything that internet technology eliminates or makes easier to do reduces the barriers to entry such as in the need for a sales force, access to transmit and physical assets. Besides that, internet applications are difficult to keep copyrighted from new entrants. This lead to a flood of new entrants has come into many industries, and one of the industries is e-commerce business. in that location are many new companies which provide comparable services as PayPal such as Billpoint, Citibanks c2it, whose service was closed in late 2003, Yahoos PayDirect, whose service was closed in late 2004, and BidPay, which was shut down in 2006. However, there are silent some new and former competitors such as Google Checkout, Wirecard, Moneybookers, The InstantPay (launching Jan 2011), 2Checkout.com, CCNow and Kagi still remain in business. But this does not affects PayPals revenue as it has impressive growth end-to-end many years. In 2008, its revenue is US$ 60 billion, which increased 27% compared to the previous year, and US$ 71 billion in 2009, an increase of 19% over the previous year.During the early year of PayPal, there are lesser competitors, which means PayPal has a bigger market shares and this lead to more customers are using PayPal for their se rvices. As time goes on, internet technology has grown more advance and this makes internet applications are very easy and attract more new entrants. New entrants join the market make the market shares of PayPal is acquire smaller. This is because customers have more choices when choosing a right online payment service provider to process their payment. Besides that, some of the competitors got founder offer than PayPal, such as cheaper charges and safer transaction process. This leads to the decrease of customers loyalty to PayPal and becoming a threat to the company.Google Checkout is one of the new entrant and main competitors with PayPal. It is an online payment processing service provided by Google aimed at simplifying the process of paying for online purchases on 28 June 2006. Users store their credit or debit card and shipping information in their Google Account, so that they can purchase anything at participating stores at the contact of a button. It also offers fraud pro tection, as well a merge page for tracking purchases and their status. It also provide service with lower cost compared to PayPal. Unlike who only provide fraud protection for sales of more than $50, Google Checkout provide 100% fraud protection and 100% refund, but users must report it within 60 days. All these has make Google Checkout to manufacture a threat to PayPal.Another new entrant is Wirecard AG, a global financial services and technology company founded in 1999. In November 2006, Wirecard has launched an internet payment service called Wirecard. By registering online, consumer can opens an account at Wirecard Bank which he can load by cash, cards, direct debit, conducting wire transfer or several(a) local payment schemes. The service includes a free virtual prepaid MasterCard for consumers that can be used to pay at millions of MasterCard locations worldwide. Apart from standard MasterCard products, the Wirecard system also let users to send each other money in real-ti me. There is also elective physical MasterCard enables users to pay at 24.7 million MasterCard brickmortar acceptance points and to withdraw cash at nearly 1 million ATMs worldwide. People may consider to use Wirecard because it is operated by a true bank. Unlike PayPal, Wirecard cannot simply immobilise or limit customers accounts without a sightly explanations. It may get suit by customers. Therefore, PayPal should start to consider not to be just protect its own interest, but protect its customers interest as well so it would not lose its customers.PayPal has some solutions to overcome the threat of losing customers loyalty to the company. unitary of the solution is PayPal has acquired a company named Fraud Sciences, which is expert in online run a risk tools to enhance eBay and PayPals proprietary fraud management systems and accelerate the development of ameliorate fraud detection tools. On the other hand. eBay, as the parent company to PayPal, has added Google Checkout t o its banned payment methods list to prevent eBay users from using Google Checkout. With this way, PayPals competitors will become lesser, thus the market share of the company will become bigger and also secure the customers loyalty to PayPal.The intensity of competitive competitionAs internet technology become more advance from time to time, it reduces the differences among competitors as offerings are difficult to keep proprietary. Therefore, PayPal used the alliance dodge to get larger percentage of market shares than other competitors. For example, on 18 Feb 2010, Facebook announced a fusion with PayPal in which users can now pay for their Facebook Credits by using the payment provider. Facebook had test other payment solution before making decision to have a partnership with PayPal, however the ability to pay for the virtual transactions through PayPal is swell considering they have more than 81 million accounts. this prove that PayPal is good enough to handle massive amount of online transactions. Thus the company is intensifying tweets to other rivals as this partnership give many benefits to PayPal its market shares are get bigger.PayPal also intensify pressure on its mobile payment service rivals too. Obopay is the company founded in 2005 that provide mobile payment service in United States. It is a service that allows the transfer of money between mobile phones. After a customer creates an Obopay account, they can add money from a credit card, debit card, or a bank transfer. This make concourse a lot easier because most of the people will carry a hand phone with them. However, PayPal announced its inclusion in Sprint Nextels MyMoneyManager retinue of mobile financial services in 2008. It is the innovation schema that it used to attract new customers and provide a wider range of services to its former customers too. PayPal and partner mFoundry are on deck to provide banking services for Sprint, making it the first major operator in United Stat es to have mobile money transfers between subscribers. Its fee is also cheaper than Obopay too. By doing this, PayPal has intensified pressure to Obopay and also show its intensity of competitive rivalry is very strong.Besides that, internet advance technology also leads to migrates competition to price among competitors. Although PayPal charges and fees for online payment processing are slightly higher than the other competitors, it can still have a lot of loyal customers and new customers using its services. The reason is currently, PayPal operates in 190 markets, and it manages over 223 million accounts, and more than 73 million of the accounts are active. PayPal also allows customers to send, receive, and hold funds in 19 currencies worldwide and it operates with 27 global financial networks and 15,000 local banks around the world. It also operates in 13 countries. The wide range of services provided by PayPal is a better choice than its competitors as none of them can provide s uch services. Customers with a PayPal accounts can also make payment for many other services and products which make things a lot easier. Customers do not have to open another account for just that particular payment.The threat of substitute products or servicesThis analysis will break the likelihood that customers to your industry will change by reversal to purchasing an utility(a) product or use an alternative services from outside your industry. With the advance of internet technology, the proliferation of internet approaches creates new substitutions threat in many industries. There are many alternative apart from online payment providers in the e-commerce market such as, credit card, debit card, checks, money order and e-banking. For local transactions, consumers will use these kinds of traditional methods rather than PayPal. If a person buy a product with credit card, all he need to pay is the price of the product and interest charged by bank. However, if he pay the bank e arly, he would not be charged with any interest and this method will be cheaper than using PayPal. If a person does not has a credit card, they can use online banking to make their payment as all they need is just a saving account in the particular bank. Besides that, having a saving account at a bank are better than having a PayPal account as there are many complaint from its customers that PayPal freeze its users account arbitrarily and wont listen to any reason. PayPal can freeze its users account easily without giving prior notice because it is not supervise by the bank regulation. Therefore, this will lead to a higher threat to PayPal for its users to change to use other substitute services.There are also many complaint from its users that PayPal security against fraud is not good. Users are easy to get scam or the confidential data are easy to be stolen. To avoid this situation happens, buyers can use money order to make payment as well. money orderAs for merchants, their subs titute service apart from PayPal is merchant account. Merchant account is a type of bank account that allow businesses to accept payments by debit or credit cards. A merchant account also serves as an agreement between a retailer, a merchant bank and payment processor for the liquidation of credit card and/or debit card transactions. PayPal charges fees by per transaction, while merchant account is charging fees monthly and fix. Therefore, PayPal usually used by small business merchant as payment processor as the cost is cheaper. While for merchant that have massive transaction, most of them use merchant account as their payment processor because it will be cheaper than using PayPal.The bargaining power of buyersThe bargaining power of customers is the ability of customers to put the firm under pressure, which also affects the customers sensitivity to price changes. The advanced internet technology has reduced switching costs of buyers and this makes the buyer would not simply swit ch to use other companies services. Although the fees charges to PayPal users are more expensive than its competitors, it still does not lower down the fees. This is because of PayPal provides to its users better services than its rivals, such as providing customers to hold up to 19 currencies of different countries so they can make their payment easily. It is the only company that can allows users hold that much currencies and requires high fixed costs to maintain this type of services. Customers that wishes to bargain for lower fees are possibly just a small portion among all the PayPal users too. If PayPal lower down its fee just for such small portion of unsatisfied customers, it may bring huge losses to the company. Therefore, even though some users perhaps price sensitive and bargain for a lower fees, PayPal will not make any changes as it would not greatly reduce its profit by losing a small portion of its users.The bargaining power of suppliersFor PayPal, its suppliers are the banks and companies that provide financial networks in worldwide. The bargaining power of suppliers is low because with the internet, all companies has equal access to suppliers, and gravitate procurements to standardised products that reduce differentiation among competitors. standardised products or services makes the suppliers cannot charged high prices because there are too many similar products that other suppliers can provide. The banks, which are the suppliers to all online payment providers competing to each others with quality of services and low interest rates. Therefore, PayPal has many choices to hire for which suppliers is best suits with it. However, PayPal try to make deals with most of the local banks so it can have a wider range of services that can attract customers to use PayPal. It will not have to worry about the suppliers that charge high-spirited high price on unique products or service because if they do so, PayPal can just try to find another supplie rs that charge reasonable price.Besides that, suppliers concentration to firm concentration ratio for PayPal is high because of its brand equity is high. Brand equity is brands power that derived from the goodwill and name science it has earned over time, and which turns into higher sales volume and higher profit margins against competing brands. PayPals high brand equity will keep attracts customers use PayPal services and this will lead to more services must be provided by the bank to PayPal. Banks will earn more profit by providing more services to it and indirectly makes the bargaining powers of suppliers become low as they need PayPal to generate more profit.Customer race ManagementCustomer Relationship Management (CRM) is a widely-implemented schema for managing a companys interactions with customers, clients and sales prospects. It includes one-to-one blood between a customer and a seller which encourage customer participation in product development. CRM create one simple mood Treat different customers differently, which means that different customers are treat base on their different needs and different value to company. Besides that, CRM using information technology strategy aimed at identifying, acquiring, targeting and retaining the best mix of customers. CRM also describes a company-wide business strategy which including customer-interface departments as well as other departments.Furthermore, CRM also helps in understanding customer needs and building relationships with them and by providing the most suitable products with a high level of customer service. It integrates back and front office systems to create a database of customer contracts, purchases, information call for and technical support. This database helps the firm to present a unified face to its customer and improve the quality of the relationship. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behavior. There a re 3 phases in which CRM support the relationship between a business and its customers are to acquire, enhance and retain. CRM can help a business acquire new customers through contact management, selling and fulfillment. A web enabled CRM combined with customer service tools offers customers service from a team of sales and service specialists, which offers customers the convenience of one-stop shopping. CRM software and databases enable a business to identify and reward its loyal customers and further develop its targeted merchandise and relationship marketing initiatives.For any business to be successful employers need to look into various objectives which are beneficial for the customers. A good customer employee relationship of all time leads to positive outcomes for the business. CRM is a new introduction in E-commerce and played major rule in the development of e-business specially the CRM stands for customer relationship. It is a strategy used to learn more about customers needs and behaviors in order to develop stronger relationships with them. Good customer relationships are at the heart of business success. A primary objective of CRM is to provide the entire organization with a complete and 360-degree view of the customer, no matter where the information resides. The benefits of adopting CRM processes are develop better communication channels, create detailed profiles of individual customers, increased customer satisfaction, customer service and support and increased revenues of the organization.There are 3 types of CRM which are operational CRM, analytical CRM and collaborative CRM. Operational CRM describes the technology strategy of managing and interacting with customers across channels through client facing applications and integrated channel management. Operational CRM applications are technologies that enable sales force, marketing and customer condole with automat