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Take Home Test Questions Issue 1 When ChemUnity. com began, Herman Rijks was obviously a 37 year old, Masters of Science finish the Scientific University of Delft, Netherlands. He was created in Southern Yemen and grew up in Africa.
Rijks had knowledge in green-field chemical circulation start-ups, and general managing experience in several chemical companies. He worked well for HCI, a substance company for 3 years, and prior to ChemUnity. com, he was part of the HCI corporate ecommerce task force. Mark-Jan Terwindt was a 34 year old finish Nijenrode Business School in Netherlands.
He worked for eight years in the chemical substance distributions in countries just like: Ecuador, Un Salvador, and Venezuela. Later, he went to the Czech Republic to handle HCI Functions, and before ChemUnity, having been in South Africa managing the mixing of an acquired company. Both the founders chatted Dutch, English, Spanish, and a working understanding of German, plus, Herman talked French. As well, the founding fathers shared related interests, just like sports and traveling (flying), and both have wives and children. The founders include a good amount of encounter in business, ecommerce and the basic industry to succeed.
They both have several years tenure in firms related to the industry. As well, they are very educated in areas that are important to the business (for model, Business and Science). The linguistic skills of the founding fathers allow them to understand and communicate with partners and customers in Western European countries, improving connection channels and service top quality. The distributed interests they have could mean that they will understand the other person more, have got a good friendship, and allow these to work together for the company more frequently than just standard founders.
Additionally, this could signify they will strengthen each other peoples ideas without truly looking at all the factors involved. Query 2 The item that ChemUnity provides suits extremely well with an online exchange because 2 weeks . commodity. And therefore all variables (grade, attention & packaging) can be standard and price is the determinate factor. The machine used helps to protect the buyers and sellers, and produces a serious and profitable environment for all, and makes buying and selling easy.
A buyer’s order has a preferred and highest suitable price, and later the preferred cost is transferred to the suppliers. Potential suppliers inside the right physical region are forwarded the message through email and SMS. The supplier offers 25 several hours to respond which has a bid, which only happens once to stop price chafing of auction-like bids. ChemUnity compares the offer, informs the buyer and supplier who acquired the deal, and in addition they take care of the transaction. Additionally , no parties can withdraw from the deal, and inquiries are very significant.
The simplicity in the factors makes products easy to control in an online exchange and the business model manufactured by ChemUnity provides an impressive profitable, secure, and easy buying & selling environment. You will of the goods fit, and can be successfully marketed online within an online exchange. Question several Steps (1) through (5) explain the trading method at ChemUnity and are here. (1) An inquiry is posted via a buyer on the ChemUnity website that includes the identity, grade, concentration, and packing of the item based on a predetermined list, delivery time, geographical area of the buyer, and an amount indication. cost indication includes preferred and highest satisfactory price, and the preferred has transferred to suppliers) (2) Potential suppliers, based on information given by companies, are forwarded the inquiry. (Both supplier and buyer can easily exclude functions or parts outside of all their scope to trade. ) (3) Once an email or perhaps SMS message is received by the distributor they have 25 hours as a solution with its wager. (Which only can be made once to avoid price erosion) (4) ChemUnity compares the bids, shows the supplier who got the deal, and connects the customer and retailer where the transaction is managed between the two parties. purchase is holding and because of credit insurance, supplier payment is certain) (5) The supplier ships the product and the buyer obtains it. The trading procedure is streamlined and basic in a exact number of steps. This kind of seems like a very efficient procedure that does not actually revision and it will serve its goal. Question some Value Task for Both Buyers and Sellers * Time efficiency in ordering & selling products. * Access to good client & owner track documents. * Feelings free deals with no place for confusion. * Multiple ways to access: internet or WAP telephone capability. Crystal clear legal platform adds simpleness. * No time zones. 5. Future entrave to your order entry. * Credit insurance. * More effective supply string. * Optionally available usage and ability to react whenever needed. * Larger margins because non-value added middlemen are eliminated. Benefit Proposition to get Buyers 2. No need to get in touch with multiple sellers with every single purchase of items. * Quick responses to requests. 2. Proactive & filtered info with no overload or irrelevant postings. 5. Post your selected price. 2. Able to supply from new companies more efficiently with lower prices. Value Proposition pertaining to Sellers Acquire only interesting requests by buyers which have been profitable through filtering details based on seller’s profile. 5. Possibility of offering smaller clients and achieving customers in new physical markets. 2. Freedom for making bids. * Set the own prices. * Repayment coverage and easy credit checks. 2. Ability to rule out regions or parties within a buyers list. * Ability to do normal business and travel as bids only needed to be checked out once a day. 2. Eliminate regional boundaries and ability to reach the whole marketplace. * Some other sellers in market will not get rid of products. Simply no Price erosion from auction like offers. There are several advantages for both parties for what would appear like little to no cost to either party. ChemUnity helps these companies to make transactions when they focus on their respective specializations. This enables for a lot more buying and selling performance. The value proposition is extremely good. The value idea seems great on paper, in fact could be improved tremendously. As the alternative ChemUnity. com Case (2002) suggests the chemicals market is huge one and has a lengthy inefficient supply chain.
A pool might not wipe out all the corporations, and categories and restrictions in European countries is still far from consistent across all countries. A very significant part of customers do not use a Complete Sensitive Management system, they use catalogues. A huge addition to the worthiness added for the supplier and buyer is always to have one of those systems implemented. Sourcing/access to the information will give value added and not simply a yp approach to the machine. Question five There are several main threats towards the ChemUnity Business design and four of them are summarized under.
Potential selling price collusion between suppliers One particular threat to ChemUnity business structure is the complicité of prices among suppliers. In the event they decided to set each of the prices large it could affect the ability for the company to develop value intended for the buyer. As well, even if the values weren’t substantial, it would affect the ability to get ChemUnity to negotiate rates. This threat is solid because it could eliminate the useful, but is very unlikely to occur as the suppliers desire to compete naturally in sales and would need some type of sophisticated conspiracy. Supplier and client post order relationship
One more threat for the ChemUnity business design is if the buyers and sellers opt to keep makings transactions following your first sale without ChemUnity in the picture. This would probably increase seller margins and make goods cheaper pertaining to the buyers. ChemUnity would not have control of the situation all the, due to the fact they bring the buyer and retailer together and let them take care of the deal. Competing websites (Catalogue, Aggregator and Auction) Catalogue, aggregator, and market site business models will be in immediate competition while using ChemUnity business model.
They can remove market share since we all remain competitive for the same consumers. If users have no difficulty searching through the catalogues and finding the package they want, there is not any value added for the looking and period costs that ChemUnity offers. Aggregator business models can also add huge amounts of leveraging to the purchaser as they are most working together for the most powerful prices. Each goes to the dealer, speak for the purchasers and get the best deal. Internet shops can but a lot of pressure in suppliers and will support dumping practices and price chafing. It is very attracting a purchaser when he could possibly get much lower prices as a result of these types of effects.
Classic Distributers These kinds of traditional distributers could be regarded as indirect opponents as they will not compete on-line, but have a presence on the market. They could have strong associations with buyers especially in their local geographical areas. They could compete on convenience and logistics with the purchasers, especially if it had been a practical automatic renewal system, in which the traditional distributers handled every thing. This is primarily based off of the idea that managing something might have more costs than it’s well worth, especially if it’s in small quantities or cost ideals.
Consortiums In line with the alternate ChemUnity. com example (2002), ChemUnity could come across problems when a company’s assembled together to start their own marketplace. This is known as a consortium, and ChemUnity can “find it [hard] to get suppliers and potential buyers to go online, and this is known as a drawback compared to a consortium. This further explains that in the event key suppliers were to launch a holding it would grind the market place credibility of ChemUnity. General Threat Research There are several risks that the ChemUnity business model looks in this environment.
Potential selling price collusion between suppliers removes the value added by the organization and supplier & buyer post order relationship helps prevent revenue via repeat buys. Catalogue, Aggregator, and Internet shops , the direct competition for the company, threaten the company model because they compete for the similar customers. Traditional distributers ” our indirect competitors, still have a occurrence in the industry through customer relationships, convenience, and time saved. Consortiums happen to be future rivals, they can grind the credibility of the organization if produced.
ChemUnity can easily meet it is threats since it a differentiated service than can add a lot of value, but since it simply cannot meet their threats it’ll have huge problems with market transmission. Question six Below you will find a Porter’s Five Causes analysis used to find the attractiveness with the industry. Negotiating Power of Purchasers (-) Bargaining power of customers is very high, because potential buyers are not based upon this way of having a product. Useful to them multiple other channels to purchase it. There is also a high availability of substitute solutions, so purchasers have a whole lot of power in terms of options.
Buyer turning costs are nothing compared to firm switching costs, buyers can make to go everywhere and this assistance has a tiny amount of buyers (because of the large of orders). In addition , there exists high buyer price level of sensitivity and buyer information is quite high. They can search a lot of spots to find information on prices. Lastly, the products do not have uniqueness, they are really simplistic in the amount of variables and standardized. Total, bargaining benefits of buyers is usually high and I rated this as unfavorable for the attractiveness from the industry.
Negotiating Power of Suppliers (+) Generally speaking, there are there are several suppliers whom offer identical products thus there are a lot of alternatives for the firm to work alongside other suppliers who want the need. There is also a excessive presence of substitute advices for these chemical compounds as various other manufactures may create identical chemical goods. There is also a extremely weak division channel hence the suppliers may rely a few of the companies’ companies. Overall, the bargaining power of suppliers is low and i also rated this as confident for the attractiveness with the industry. Threat of New Traders (-)
A site with a related business model may easily always be implemented at a very affordable. Similar computer software that the organization uses can easily become imitated due to very simple variables in commodity companies intuitive thought. Websites could be up in a matter of several weeks or days, and overall it is very possible for new traders to start a company. Alternatively, the exit limitations are very low as well, as being a website could be shut down at any moment and the company contains no inventory or main facilities. Overall, the menace of new traders is substantial and I graded this while negative pertaining to the attractiveness of the sector.
Threat of Substitute Goods and services (-) The threat of substitute providers is very large. Any company may come up with a related idea and several replace business versions that warned the market discuss. Catalogue, Aggregator, and Internet shops can easily be substitutes for the service. Traditional distributers may also easily assistance anyone through this market. In addition , key suppliers could create a consortium and take over instantly while killing the market believability of this support. Overall, the threat of substitute services is high and I rated this since negative intended for the charm of the market.
Intensity of Competitive Rivalry (-) Power of Competitive Rivalry is high in the sector, as the case noted ” there were a lot of players in the market place that founded operations and gathered consumer bottom. These companies, along with us be competitive for the same clients. There are several organizations in the industry rivalling (high company concentration ratio). Strong competition between online and offline service offerings mixed with difficulty in maintaining a sustainable competitive advantage leads to a high intensity of competitive rivalry.
General, the strength of competitive rivalry is definitely high and I rated this as bad for the attractiveness of the industry. Total the charm of the market as observed in the above Porters Five Pushes analysis is one away of five leading me to believe the industry isn’t incredibly appealing. The bargaining power of purchasers, threat of recent entrants, danger of substitute products or services, and intensity of competitive rivalry were almost all negative regarding attractiveness within our analysis. The buyers possess power, entrants can easily get involved, there are many alternatives, and it is very competitive.
The only attractive part is that distributor power isn’t that high, although they are nonetheless very important to the firm. Query 7(a) While indicated in case, the major kinds of ChemUnity’s costs were linked to marketing, persons, and THIS. Also, at first marketing was your biggest cost at 60 per cent, leaving thirty percent to people, and 10% to IT. Later on, the people costs were presumed to rise as well as the marketing costs were presumed to go straight down. I approximate this would leave us at 50% marketing, forty percent people and 10% THIS. It was noted in the case that there were two venture capital firms providing early financing inside the amount of ¬1. , 000, 000 (27. 5% of the company). Using this quantity, marketing could cost ¬750, 000, persons would cost ¬600, 000, and It will cost ¬150, 000. Question 7(b) Because noted in the case, the average size of a deal was estimated to get ¬5, 1000 to ¬10, 000. Making use of the 2% purchase fee, plus the most conventional deal estimation, you acquire ¬100 every transaction (¬5000? 2%). This may mean that you will require one particular, 500, 1000 transactions to be able to even with the first financing that was made. This could be attainable after some time but is not prone to happen quickly, especially with the lower amount of buyers the company serves.
Problem 7(c) Making use of the 3000 daily customers to the website in the case, the 1995 just click through rate of 2. 1%, and a estimate of ¬0. nineteen per click ( high pay-per click estimation is due to the fact that these customers are very focused), the website may generate ¬11. 9 daily (3000? installment payments on your 1%? ¬0. 19), and ¬359. 10 monthly. This is simply not a very significant amount of money. The advantages of this sort of income is that it is basically free, so long as you have an online site and requires not much managing of the advertisements to generate the revenue.
The cons will be that there is a really small amount of cash per click, and with just 3000 buyers daily you are very limited to how much you can make. If you got for example one hundred thousand approximately a day, this would be much better. Problem 8 Immediate Challenges The primary short-term challenge was to evaluation the concept using a couple of items to see if the business is on the right course. Successful execution starts from marketing and the business needs to make certain suppliers are aware of the exchange and receive product frontrunners. The belief at the time was that the buyers will come as soon as the sellers were onboard.
When buyers and sellers will be established, the corporation needs to stimulate them to get the market liquidity up. After the company is famous for these products, they have been successful in the initially challenge. The second short-term problem was a human resources issue, they will needed people a substance history backdrop. These people will communicate with suppliers and purchasers and should provide enthusiasm and belief in the commercial idea. The 3rd short-term concern was a great IT concern ” the technology had to work flawlessly in its performance.
The assistance is not perfect at the moment the company is usually working towards improving it. Long-Term Challenges The major long-term challenge was expansion of operations. By targeting several strategic suppliers and many fragmented buyers in each product, they thought they could have a total of 200-500 suppliers, and up to 10, 500 buyers. They believe they need to move forward with 1 product at any given time, giving them the cabability to test the idea and completely focus efforts over a focused segment. The real problem was to find the right products.
They may also expand all their service portfolio, by providing more financial services to achieve revenue. They will could also get involved with transportation, nevertheless would be a tough avenue because they need to pick the best services, very good partners and the proper enlargement location. Earnings has been a concern so the firm needs to increase more financing. A second circular of funding was timed for a couple months after launching the service. The corporation wants to increase another ¬5 ” 15 million from banks, investment capital, and industry players. Appointment Short-Term Difficulties
The company has to begin assessment the concept immediately. Successful implementation begins with marketing work , the business needs to increase supplier awareness of the exchange and acquire product commanders onboard. Another issue is usually raising industry liquidity, this means you will be done by simply activating the sellers and buyers by simply contacting all of them. Once the business raises consciousness about its products, they have prevailed in the 1st short-term concern. The second immediate challenge may be solved by using a headhunter for top level people the organization can find.
This could require a lot of funding but will easily be worth the cost. These folks would need to always be educated for the concepts of the company and know how to communicate well with suppliers and buyers regarding the support, and have passion and a powerful belief in the industry. The final short-term challenge could be solved by simply rigorously testing and improving the technology to operate flawlessly. Meeting Long-Term Issues The development of businesses should be done simply by targeting more suppliers and buyers for much more potential revenue.
I really believe these have to be higher than the estimates succumbed the case” 200 suppliers and maybe 5000 buyers can be not enough. It is possible they will try aimed towards an additional location, perhaps in South/Central America or Africa where the pioneers worked. In either case, with the marketplace they have today, they need to test a concept and concentrate efforts on a targeted segment and pick the right products. One option for growth was to give financial services, or perhaps get involved with the transportation of the product.
Individually, I am not a enthusiast of this thought because they are dropping focus on what they specialize in. When they were to do these choices, they would ought to hire consultants and rework the business version entirely. Likewise, with travel they need to select the right type of solutions, good companions, and a fantastic expansion area. Finally because of their cash flow problems, they will must ensure they obtain that auto financing by totally disclosing information, addressing the problems they have, and working with venture capitalists to perhaps discuss the discuss of the firm for a given amount of funding.
Question 9 As the different ChemUnity Case Study (2002) suggests, it’s easy to grow figures and play around profits and marketplace volume in writing, but it does not address the habits of a given industry. Experience indicates that many internet service providers include failed because many of them are not focused enough, spent too much money before making virtually any, and don’t bring enough value to its users. The main challenge lies in the art of alter management.
ChemUnity has this challenge for both buyers and seller, but it really remains that these groups could benefit from several significant proper advantages (if it had the ability to support alter management processes) Also the case suggests that for the company to potentially do well, the platform they develop must be flexible and characterized by short development periods that will match the requirements of the marketplace and raise the functionality due to its end users. They also need the perfect blend of personnel with experience during a call and who have are used to traveling change along with a highly skilled sales force.
If they had an internet complete young management system, that they could save time and money and access more effective markets. This is a great chance for the company to operate a vehicle change in the organization ” and also a complete business process reengineering of their exchanging process. If the company used these steps, they might have potential success available in the market. I personally don’t believe they can be powerful unless they certainly these things, and it seems like a big changes are needed. Query 10 (a) The three options for business model changes happen to be below:
Status Quo This option should be to remain the same but focused on its specialty area. Transportation Conjunction with Business Model This approach would be to bring in transportation in to the model to produce more value can be. Financial Services Conjunction with Business Model This method would be to present financial services in to the model to create more value can be. The criteria we all used to determine which business design to use contains the following: Cost, Value Added, Revenue, Expenses, Easy Change, and Adaptability.
I decided to utilize a decision matrix and calculate the principles from 1-10 using subjective data in the case and intuition. The best alternative according to the criteria can be Added Monetary Service to the business model. It will not cost a very high amount to implement, might add a good amount of value and income to the business. The expenditures are quite high, seeing as you need extra cash on hand and also you need to develop this business design, and be able to installation a good financial plan for clients.
The ease of transform is pretty fair, can be pretty easy to adapt with it, and provides a moderate volume of risk involved. Finally, the market share is could increase a lot compared to circumstances. The next close business model might have been transportation, it’s simply a more risky and more rewarding model because it requires huge capital investments, but hard to conform and change into. References Petri Lehtivaara (2002) ChemUnity. com Case Study. Gathered From http://www. supplychain-forum. com/documents/articles/ACF41. df Nielsen Norman Group (2000) Methodology Weaknesses in Poynter Eyetrack Study. Retrieved from http://www. nngroup. com/articles/methodology-weaknesses-poynter/ Wikipedia (2012) Pay Per Click. Retrieved from http://en. wikipedia. org/wiki/Pay_per_click , , , , , , , , , , , , , , , [ two ]. Nielsen Norman Group reports a 2 . 1% click through rate in 1995. [ several ]. Wikipedia reports that in 1997 the ppc was via $. 005 to $. 25 (¬0. 003 to ¬0. 19 using Drive 26, 2013 exchange rates)
