Recommendation
Reject the proposal of Express. Prepare for the competition of Express by launching aggressive marketing campaign to match the price of Express in short run. Maintain and improve gross margin on BAS sales by leverage the strong relationship with supplier to get the lowest price. Continue improving the value added content, short delivery lead time and inventory management as main values of the company. Aggressively invest R&D to provide an on-line booking and ordering system to further improve customer’s time-to-market, facilitate the BAS sale order; provide the customer “efficient, low price, one-stop-shop” experience that will differentiate A/S from competitors. Focus on VA sales and improve the service, consistently grow sale volume of VA content.
Support
Values of Arrow/Schweber (A/S): Being as the subsidiary of the No.1 distributor of electronic parts company Arrow Electronic, A/S is able to provide customers low price electronic parts and add-value system design solution. A/S also creates demand and provides the inventory buffer for suppliers. The Customer benefits from A/S of low cost parts, technical support and short delivery lead time. And suppliers benefit from A/S of hassle-free sales. Internet trading service Express creates one more level to the existing value chain (Exhibit 1). Express allows A/S to have opportunity to sell product to potential customers. And customers can place order on different distributors. But whether this business model is valuable to the customer especially to small OEM and CM is questionable. Although transactional customers are price sensitive, time to market is also critical to them. They prefer to place entire order within one company to make sure the short delivery lead time. Under this circumst ...