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


Analysis of PayPal Internally and Externally

















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1. Executive
2. Company

    3. External Analysis
3.1 PayPal Business Model

3.2 Pestle Analysis
3.2 Poster Five Forces

Internal Analysis

Posters Value Chain

     5. SWOT Analysis
     6. Strategic Formulation
               6.1 Ansoffs

      7. Conclusion
      8. References




1. Executive Summary

PayPal is
one of the world’s largest online payment networks and the most popular form of
online payments in the 21st century, holding over 150 million
registered users globally in 25 different currencies.

 It is an American company which is operating
worldwide. It offers electronic payment services which are the alternative to
the traditional paper methods of payments. The company operates as a payment
processor for online vendors, auction sites and other commercial users for a
free of charge.

became an independent company in July 2015. The company provides a secure
wallet system of transferring funds for both receivers and senders. The company
main headquarters are located in San Jose, California USA the company also has
operations in India, Ireland and Germany.

Internal and External
movement within PayPal from customer to transferring the money.

2. Company Overview

Company Name: PayPal

Founded in 1998 by Max Levchin

CEO: Dan Schulman

Sector: Private

Country: USA

Industry Financial Services



  Company Mottos


13,000 Employees

Location United States
of America

3. External Analysis

3.1 Evolution of PayPal Business

Phase one: 1999-2000

At the start
of PayPal, the company received bulk from its purchasers from eBay. This was
when the companies were conjoined now they are both separate. Since growth at
the time was sluggish, PayPal decided to adopt an aggressive marketing
strategy. The company deposited $10 into new user PayPal accounts and gave
another $10 to each user they recruited.

Phase Two: 2000-2005

previous marketing strategy PayPal adopted was unsustainable in the long run,
so PayPal adopted different approaches now lowering transaction charges to
zero, in aim to gain customers interest. PayPal bearing more of the cost of
litigation and fraud offering customers up to $1000 in fraud protection.

Phase Three: 2005-2018

1.     Very low transaction fees for high volume of merchants.

2.     Persuaded credit card providers to now include PayPal as a
form of payment.

3.     Complete shutdown on fees for online music purchases and
other micropayments.

4.     Hired special sales forces to persuade leading brands to
accept PayPal and to work with the company, this proved to be very successful.

5.     Implementing a fast quick mobile online payment services
still free of charge in 2018.





3.2 Pestle Analysis

A pestle analysis is a framework used to analyse the
macro environment that can affect an organisation (external environment). Below
is a pestle analysis for PayPal, within each section there are factors that can
affect the company’s reputation or business if not addressed correctly (Sam,

As you can see from the above anaysis the biggest
impact from the macro enviroment comes from polictical factors and economical
factors for PayPal.

Polictical factors affect PayPal in terms or polictical
stabilty in each different country, for example Brexit, this can create
uncertainty right now in the econmy, because if the inflation rate goes up then
PayPal may not spend as much money as the would if inflation rates were low (Williamson,2003). Ecnomical
factors that create can create uncertainty for PayPal are government inventions
for example brexit as mentioned above.

Also as PayPal employes over 13,000 people worlwide as
a global business it needs to take care of employees welfare too. Curently an
avergae employee is getting paid $98,182 per year and this is in there first
year of employment (Payslace, 2018). People working at PayPal for over 5 years
are on a average salary of $119,374 a year.


3.3 Poster Five Forces


(Google, 2017)



Threats of
new entrants can be seen as high for PayPal because already existing companies
for example Western Union are advancing there technology more, and moneygram
for example. They are also creating apps for mobile devices and are getting
more global. In order for PayPal to control this they need to generate more
ideas and swiftly move to the Asia market as they have planned too.

of substitutes can be seen as high, because local PayPal customers have
alternative 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 PayPal
locally will decrease, but at the same time not all customers want to carry a
wallet or purse around, so they will use the mobile apple for PayPal to make
local transactions. Also, there are many complaints PayPal has received over
the years about security measures against fraud. Users are easily scammed and
their accounts can be hacked.

The bargaining of power is that customers have the ability
to put PayPal under pressure, which can affect a customers sensitive and focus
to price changes. The internet and technology is very much advanced and has
helped reduce switching costs of buyers. PayPal provides a much more of a
better service than its competitors, it also give the customers the ability to
send money in 24 different currencies, and that can be done just online with a
minimum fee of charge. Customers that look to bargain the fees even lower than
what they already are will find it difficult and if PayPal brings its fees down
anymore then it will suffer some great losses, but PayPal will not make any
changes because it would greatly reduce their profits by pleasing a small
number of customers.

For PayPal its suppliers are companies and the banks because
they provide them with financial networks across the world. The bargaining
power of suppliers is low because through the      internet both companies and PayPal have
equal access. Standardised services and products make the suppliers not charge
high prices because there are too many other similar products that other
suppliers can provide. Banks are the main suppliers to online payment provides
therefore they will be competing amongst themselves and will try and keep low
interest rates with the best quality of service.  PayPal has many different choices when it
comes to its suppliers because they have the upper hand and the most valuable
say in who they want to choose, but however PayPal need to try and choose local
banks and make the most of it, in order to gain customer attraction to PayPal.

technology is becoming more and more advanced over time, and that can reduce
the differences between competitors. PayPal are putting pressure on developing
new technological ideas than there competitors they have in 2018 developed a
thumb print log in other app, where as their rivals such a western union are
not on that level yet. So PayPal is between its competitive rivals and keeping
it low. Also western union in comparison to PayPal have a lot of paperwork
which the PayPal services do not require because everything is done on the
internet.  PayPal also allows customers
to send money in 24 different currencies. PayPal also deals with over 15,000
banks worldwide and has many more financial networks around the world too.

4. Internal Analysis

4.1 Posters Value Chain

(Google, 2017)

Firm Infrastructure

web based money transferring business with a minimum charge.

Human Resources Management

staff employed working for customer services.

around the world from Ireland to, Germany.

training for staff and promotions (PSA, 2015).

Technology Development

website where money can be transferred to other countries across the world.

on the phone Apple store with contactless credit cards access.



to join and create your own personal account where you can regularly transfer
money from and keep a record.

4.2 VRIO



it valuable?

it rare?

it hard to imitate?  


of competence






Sustained competitive advantage

Low pricing strategy





Sustained competitive advantage

Adaptation to new technologies





Completive advantage

Store efficiency





Unused competitive advantage

Training and development





Sustained competitive advantage

International business development





Competitive advantage


The analysis above shows that the company PayPal has a long
term focus on delivering great value, and adaptation to new technologies.
PayPal is a company that values its customers and provides a service free of
charge, its social complexity and based on the companies culture. The majority
of time since PayPal has been in business they have not charged customers much
of a using price. It offers a free service. PayPal will fight against threats to
keep customer value.

5. SWOT Analysis

Above is the
SWOT analysis for PayPal is highlights the key strengths of PayPal for example
that in is available in 24 different currencies and the service is practical
and easy to use. Also the weaknesses have been mentioned in the above analysis
alongside the opportunities that are there for PayPal.

6. Strategic Formulation

6.1 Ansoff Matrix




7. Conclusion

There are
many different success factors but for now they can develop their technology
more 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 is
because PayPal offers a wide range of services for a very low price also there
website is very user friendly. The external and internal analysis above shows
the company PayPal in its strengths and weakness and what can be developed
through the Ansoff matrix model.


8. References (2018). PayPal Stories. Available at:
(Date Accessed 9 Jan. 2018)

Garden, H. and Business, S. (2018). How
PayPal Works Available at: (Accessed
9 Jan. 2018)

Williams, T., & Green, A. (1997). The business
approach to training and Pestle. Gower Publishing, Ltd. (Date Accessed 21st
December 2017)

Williamson, D. (2003). Strategic management and
business analysis chapter 6, 8th edition (pp 123-140) (Date Accessed
21st December 2017)

Paypal, I., (2018). Paypal,
Inc. Salaries | PayScale. Available at: (Date Accessed 9 Jan. 2018)

Jurevicius, O. (2013). Is the VRIO Framework a Key to
Competitive Advantage?. Strategic Management Insight. Available at: (Date Accessed 9
Jan. 2018).

Image- Google, (2017) Available at: www//;_ylt=AwrIRlBR.1N
%2F09%2Fpaypal.jpg& (Date Accessed 28th
December 2017)

Poster five
forces Image- Google (2017)Available at:;_ylt=A2KLj.rWK1Va2ysA_rCe3olQ;_ylu=X3oDMTBsZ29xY3ZzBHNlYwNzZWFyY2gEc2xrA2J1dHRvbg–; (Date Accessed 28th
November 2017)

Poster value
chain Image-  Google (2017) Available at:;_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& (Date Accessed 28th
November 2018)

VIRO model
Image- Google (2017) Available at:;_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& (Date Accessed 28th December 2017