Strategic one: 1999-2000 At the start of PayPal, the

 Strategic Analysis of PayPal Internally and Externally                1/4/2018 15011270   Contents 1. Executive Summary 1 2. Company Overview 2     3. External Analysis 3 3.

1 PayPal Business Model 3.2 Pestle Analysis 4 3.2 Poster Five Forces      4. Internal Analysis 5 4.1 Posters Value Chain      5. SWOT Analysis 6      6. Strategic Formulation 7                6.1 Ansoffs Matrix       7.

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Conclusion 8       8. References 9            1. Executive SummaryPayPal isone of the world’s largest online payment networks and the most popular form ofonline payments in the 21st century, holding over 150 millionregistered users globally in 25 different currencies.  It is an American company which is operatingworldwide. It offers electronic payment services which are the alternative tothe traditional paper methods of payments. The company operates as a paymentprocessor for online vendors, auction sites and other commercial users for afree of charge.

PayPalbecame an independent company in July 2015. The company provides a securewallet system of transferring funds for both receivers and senders. The companymain headquarters are located in San Jose, California USA the company also hasoperations in India, Ireland and Germany. Internal and Externalmovement within PayPal from customer to transferring the money. 2. Company Overview Company Name: PayPalFounded in 1998 by Max LevchinCEO: Dan SchulmanSector: PrivateCountry: USAIndustry Financial Services Website: www.

paypal.com                                                                                                                               (PayPal,2018)   Company Mottos 13,000 EmployeesLocation United Statesof America3. External Analysis 3.1 Evolution of PayPal BusinessModel Phase one: 1999-2000At the startof PayPal, the company received bulk from its purchasers from eBay. This waswhen the companies were conjoined now they are both separate. Since growth atthe time was sluggish, PayPal decided to adopt an aggressive marketingstrategy.

The company deposited $10 into new user PayPal accounts and gaveanother $10 to each user they recruited. Phase Two: 2000-2005Thatprevious marketing strategy PayPal adopted was unsustainable in the long run,so PayPal adopted different approaches now lowering transaction charges tozero, in aim to gain customers interest. PayPal bearing more of the cost oflitigation and fraud offering customers up to $1000 in fraud protection. Phase Three: 2005-20181.     Very low transaction fees for high volume of merchants.2.

     Persuaded credit card providers to now include PayPal as aform of payment.3.     Complete shutdown on fees for online music purchases andother micropayments.4.     Hired special sales forces to persuade leading brands toaccept PayPal and to work with the company, this proved to be very successful.

5.     Implementing a fast quick mobile online payment servicesstill free of charge in 2018.    3.2 Pestle Analysis A pestle analysis is a framework used to analyse themacro environment that can affect an organisation (external environment). Belowis a pestle analysis for PayPal, within each section there are factors that canaffect the company’s reputation or business if not addressed correctly (Sam,2001). As you can see from the above anaysis the biggestimpact from the macro enviroment comes from polictical factors and economicalfactors for PayPal.Polictical factors affect PayPal in terms or policticalstabilty in each different country, for example Brexit, this can createuncertainty right now in the econmy, because if the inflation rate goes up thenPayPal may not spend as much money as the would if inflation rates were low (Williamson,2003).

Ecnomicalfactors that create can create uncertainty for PayPal are government inventionsfor example brexit as mentioned above.Also as PayPal employes over 13,000 people worlwide asa global business it needs to take care of employees welfare too. Curently anavergae employee is getting paid $98,182 per year and this is in there firstyear of employment (Payslace, 2018).

People working at PayPal for over 5 yearsare on a average salary of $119,374 a year.  3.3 Poster Five Forces (Google, 2017)  Threats ofnew entrants can be seen as high for PayPal because already existing companiesfor example Western Union are advancing there technology more, and moneygramfor example. They are also creating apps for mobile devices and are gettingmore global. In order for PayPal to control this they need to generate moreideas and swiftly move to the Asia market as they have planned too.Threatsof substitutes can be seen as high, because local PayPal customers havealternative payment methods such as credit cards, debit card or even cash payments.If customers use these traditional forms of payments then it the use of PayPallocally will decrease, but at the same time not all customers want to carry awallet or purse around, so they will use the mobile apple for PayPal to makelocal transactions.

Also, there are many complaints PayPal has received overthe years about security measures against fraud. Users are easily scammed andtheir accounts can be hacked.The bargaining of power is that customers have the abilityto put PayPal under pressure, which can affect a customers sensitive and focusto price changes. The internet and technology is very much advanced and hashelped reduce switching costs of buyers.

PayPal provides a much more of abetter service than its competitors, it also give the customers the ability tosend money in 24 different currencies, and that can be done just online with aminimum fee of charge. Customers that look to bargain the fees even lower thanwhat they already are will find it difficult and if PayPal brings its fees downanymore then it will suffer some great losses, but PayPal will not make anychanges because it would greatly reduce their profits by pleasing a smallnumber of customers. For PayPal its suppliers are companies and the banks becausethey provide them with financial networks across the world. The bargainingpower of suppliers is low because through the      internet both companies and PayPal haveequal access. Standardised services and products make the suppliers not chargehigh prices because there are too many other similar products that othersuppliers can provide. Banks are the main suppliers to online payment providestherefore they will be competing amongst themselves and will try and keep lowinterest rates with the best quality of service.

  PayPal has many different choices when itcomes to its suppliers because they have the upper hand and the most valuablesay in who they want to choose, but however PayPal need to try and choose localbanks and make the most of it, in order to gain customer attraction to PayPal. Internettechnology is becoming more and more advanced over time, and that can reducethe differences between competitors. PayPal are putting pressure on developingnew technological ideas than there competitors they have in 2018 developed athumb print log in other app, where as their rivals such a western union arenot on that level yet. So PayPal is between its competitive rivals and keepingit low. Also western union in comparison to PayPal have a lot of paperworkwhich the PayPal services do not require because everything is done on theinternet.  PayPal also allows customersto send money in 24 different currencies. PayPal also deals with over 15,000banks worldwide and has many more financial networks around the world too. 4.

Internal Analysis 4.1 Posters Value Chain (Google, 2017)Firm Infrastructure·       Onlineweb based money transferring business with a minimum charge.Human Resources Management ·       13,000staff employed working for customer services.·       Headquartersaround the world from Ireland to, Germany.·       Annualtraining for staff and promotions (PSA, 2015).Technology Development ·       Onlinewebsite where money can be transferred to other countries across the world.

·       Appson the phone Apple store with contactless credit cards access.  Procurement ·       Accessto join and create your own personal account where you can regularly transfermoney from and keep a record. 4.

2 VRIO(Google,2017) Resource of Capability Is it valuable? Is it rare? Is it hard to imitate?   Organised Degree of competence Brand Yes Yes Yes Yes Sustained competitive advantage Low pricing strategy Yes Yes Yes Yes Sustained competitive advantage Adaptation to new technologies Yes Yes Yes Yes Completive advantage Store efficiency Yes No No No Unused competitive advantage Training and development Yes Yes Yes Yes Sustained competitive advantage International business development Yes No No Yes Competitive advantage  The analysis above shows that the company PayPal has a longterm focus on delivering great value, and adaptation to new technologies.PayPal is a company that values its customers and provides a service free ofcharge, its social complexity and based on the companies culture. The majorityof time since PayPal has been in business they have not charged customers muchof a using price. It offers a free service. PayPal will fight against threats tokeep customer value. 5.

SWOT AnalysisAbove is theSWOT analysis for PayPal is highlights the key strengths of PayPal for examplethat in is available in 24 different currencies and the service is practicaland easy to use. Also the weaknesses have been mentioned in the above analysisalongside the opportunities that are there for PayPal. 6. Strategic Formulation 6.1 Ansoff Matrix (Google.co.uk)  7.

ConclusionThere aremany different success factors but for now they can develop their technologymore and expand more into the Asia continent this will make PayPal successful.Also PayPal is one of the leading online payment systems in the world, this isbecause PayPal offers a wide range of services for a very low price also therewebsite is very user friendly. The external and internal analysis above showsthe company PayPal in its strengths and weakness and what can be developedthrough the Ansoff matrix model.  8. References Paypal.com (2018). PayPal Stories.

Available at: https://www.paypal.com/stories/us(Date Accessed 9 Jan. 2018)Garden, H. and Business, S.

(2018). HowPayPal Works Available at: https://money.howstuffworks.com/paypal2.htm (Accessed9 Jan. 2018)Williams, T., & Green, A.

(1997). The businessapproach to training and Pestle. Gower Publishing, Ltd. (Date Accessed 21stDecember 2017) Williamson, D. (2003). Strategic management andbusiness analysis chapter 6, 8th edition (pp 123-140) (Date Accessed21st December 2017) Paypal, I., (2018). Paypal,Inc.

Salaries | PayScale. Payscale.com. Available at: https://www.payscale.com/research/US/Employer=Paypal%2c_Inc./Salary (Date Accessed 9 Jan.

2018)Jurevicius, O. (2013). Is the VRIO Framework a Key toCompetitive Advantage?. Strategic Management Insight. Available at:https://www.

strategicmanagementinsight.com/tools/vrio.html (Date Accessed 9Jan. 2018).PayPalImage- Google, (2017) Available at: www//uk.images.search.yahoo.com/yhs/search;_ylt=AwrIRlBR.1NmQEAu3R3Bwx.?p=paypal&fr=yhs-blp-default&fr2=piv-%2F09%2Fpaypal.jpg&action=click.co.uk (Date Accessed 28thDecember 2017) Poster fiveforces Image- Google (2017)Available at: https://uk.images.search.yahoo.com/yhs/search;_ylt=A2KLj.rWK1Va2ysA_rCe3olQ;_ylu=X3oDMTBsZ29xY3ZzBHNlYwNzZWFyY2gEc2xrA2J1dHRvbg–;_ylc.co.uk (Date Accessed 28thNovember 2017) Poster valuechain Image-  Google (2017) Available at:https://uk.images.search.yahoo.com/yhs/search;_ylt=AwrIRlGRQVVawA0AUeV3Bwx.?p=Posters+Value+Chain&fr=yhs-elm-001&fr2=piv-web&hspart=elm&hsimp=yhs-001&type=hdr_s_17_45_wbf_daltn_17_43#id=2&iurl=http%3A%2F%2Fhpc5.anamai.moph.go.th%2Fdirector%2Fimages%2Fblueprint%2FPorterValueChain.png&action=click (Date Accessed 28thNovember 2018) VIRO modelImage- Google (2017) Available at: https://uk.images.search.yahoo.com/yhs/search;_ylt=AwrIRhs.LlVaXg4A7XJ3Bwx.?p=viro+model&fr=yhs-elm-001&fr2=piv-web&hspart=elm&hsimp=yhs-001&type=hdr_s_17_45_wbf_daltn_17_43#id=2&iurl=http%3A%2F%2Fwww.business-to-you.com%2Fwp-content%2Fuploads%2F2016%2F11%2FVRIO-Model.png&action=click.co.uk (Date Accessed 28th December 2017