Arrow Electronics Inc. Case
Arrow Electronics is a distributor of electronic parts, including semiconductors and passive components. It was founded in 1935 and has reached number one position among electronics distributors by 1992. Arrow’s North American operations were headquartered in Melville, N.Y. Sales and marketing functions were divided among five operating groups. This case study focuses on the largest of Arrow’s groups, Arrow/Schweber (A/S).
Express Parts, Inc. made a proposal about an internet-based trading system which would enable distributors to post inventories and prices to an internet platform and thus give customers the opportunity to shop for prices.
The question is if Arrow/Schweber should accept the offer of Express and sell their products via this internet-based trading system. In the best case A/S could gain transactional customers, who just want to buy a product and have no need for special service. In the worst case A/S could lose relationship customers, because the possibility of getting better prices on the internet platform is higher, since there are more competitors that can be compared.
Customer relationship
The approach of A/S is to use the VA products as the first step to building a relationship with its customers, because it is difficult to get close to a customer through the BAS business.
Although relationship customers also use the BAS system, it is more valuable for transactional customers. Since transactional customers emphasize more on quick delivery and low prices, but less on relationships, A/S focuses its efforts with the BAS system on providing the transactional customers with these values.
In order to satisfy the needs of the relationship customers either, A/S pursues...
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All in all A/S should reject the offer of Express referring because of three crucial aspects:
o Impairment of suppliers,
o Probably losses in gross margin,
o Loss of A/S’s strategy / focus on relationship customers.
After this decision internet distributors and Express respectively has to be considered as strong competitor due to the price-sensitivity of the electronic industry. Therefore A/S should work on its company image to highlight their advantages compared to discounters. Therefore A/S has to point out that they are aware of being not the cheapest but nevertheless will create more benefit for the customers by offering service and competence.
In sum, internet distributors are a foe to A/S because they cheat the price. To them A/S has to respond as convinced anti-internet distributor by satisfying their customer needs instead of disembowel them.
The threat of online competitors is also present to every discount broker that has not switched to online trading or chooses to remain with their current business model and not offer online services. These online trading sites have unique trading capabilities that otherwise are not present at Edward Jones. They offer sound advice on stocks and other investments instantly. Each customer has to call their Edward Jones advisor in order to place a trade. This makes sense to Edward Jones because they want to help prevent the rash decisio...
Amazon.com’s US operation business model is based on “sell all, carry few”. Amazon offers consumers a wide selection of products while keeping inventories at low levels. A major interest for Amazon in the US is optimization of netwo...
VA Business--Key Business for A/S: Among the overall business of A/S, the VA sales increases from 2% in 1977 to 62% in 1996, and it targets to grow to 80% in 2000. Although the VA gross margin is only 10-15%, it is the key business for A/S to create the demand. For example, one of suppliers, Altera, sells 80% of PLD to its two distributors because value-added programming required by individual customers. Suppliers rely on distributor to generate demand. In return, they offer A/S: Price protection & limited return privileges, warranties not available to others, and control prices by providing discounts. Because of the importance of VA business, it evolved from simple inventory buffer to alter components to meet customer needs by programming or kitting parts, to virtual organization, and to order cycle management.
...2013). Cisco channel sales and inspiration in the age of internet. Contemporary Logistics, (12), 14-30. Retrieved from http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1468933047?accountid=3783
The industry has loyal customers with broad customer base that lowers the collective bargaining power of buyers to medium. The switching cost is very low and thus the customers can turn to a service provider who provide faster and innovative service but this is overcome by customized services and integrating into their customer supply chain.
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Li & Fung is a global trading group sourcing and managing the supply chain for high volume, time sensitive consumer goods. The group is associated with strong brands such as The Limited, Gymboree, American Eagle, Warner Brothers, Bed, Bath & Beyond, Levi-Strauss. With the rise of the internet, and the thrive of the B2B intermediaries, this memo will discuss the Li & Fung's E-Commerce strategy and how to use internet to facilitate supply chain management.
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Liang, R. (2013). Cisco channel sales and inspiration in the age of internet. Contemporary Logistics, (12), 14-30. Retrieved from http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1468933047?accountid=3783
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