strategy planning for group a10 georgia lefa ergin iren tom wang young sam park lam yau group a10...
TRANSCRIPT
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Strategy Planningfor
Group A10
Georgia Lefa Ergin Iren
Tom WangYoung Sam Park
Lam Yau
Group A10
Georgia Lefa Ergin Iren
Tom WangYoung Sam Park
Lam Yau
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Content
• Background - Georgia
• Industry Audit - Lam
• Value Proposition - Yong Sam
• Company Audit - Tom
• Strategy Innovation - Ergin
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BackgroundBy Georgia
Global Sources Story- The evolution of B2B
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There are marketplaces…
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But there are also E-marketplaces…
Virtual marketplaces where business clients come to:
• Buy or sell goods or services real-time from each other.
• Collaborate on new product design or planning (e.g., forecasting, VMI, supply planning).
Purpose:
•Lower transaction and/or procurement costs (e.g., volume discounts).•Improve market efficiency (locating buyer/sellers, price discovery).•Optimized planning along the entire supply chain (e.g., lower inventory, better capacity utilization).
Requirements (3 Cs): Community, Commerce, and Collaboration
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B2B OR NOT TO BE?
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GLOBAL SOURCES ON-LINE
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Why Global Sources?
• Very good example of virtual company (B2B)• China, India (emerging market)• Initiator, fast mover• B2B future• Global reach – office in Turkey, India
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MILESTONES• 1971 Established Asian Sources• magazine• 1985 Launched first magazine for China• market• 1991 Launched trade management• software• 1995 Launched Global Sources Online• 1998 Introduced Private Buyer Catalogs• 1998 Reached 100,000 RFIs per month• 1/00 Introduced Private Supplier Catalogs• 4/00 First Asian B2B to list on Nasdaq• 2002 Buyer community tops 306,000
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WHO IS GLOBAL SOURCES?
Products and Services• On-line B2B marketplace• Private buyer catalogues• Private supplier catalogues• Connecting Platform• Transaction Platform• Trade Magazines and CD-ROMs
Production technologies and capabilities
Financial position•2003 Sales: $91.7m•2003 Net Income: $7.3m
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Where is GLOBAL SOURCES?
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Industry auditBy lam
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B2B Marketplaces
We will analyze the B2B Marketplaces in the following 3 dimensions
1. Market Provision
2. Service Provision
3. Value Provision
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B2B Marketplaces
Market Provision
Five Models of Online B2B Market Places
1. Buyer-centric Marketplaces
2. Supplier-centric Marketplaces
3. Distribution Portals
4. Procurement Portals
5. Independent Marketplaces
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B2B Marketplaces
IntermediaryIntermediary
Buyer
Sellers
IntermediaryIntermediary
Seller
Buyers
Buyer-centric Marketplaces Seller-centric Marketplaces
A lot of B2B activities being channeled through these 2 channels
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B2B Marketplaces
IntermediaryIntermediary
Buyers
Sellers
IntermediaryIntermediary
Sellers
Buyers
Distribution PortalsProcurement Portals
They are also known as consortium or more often called
Industral Sponsored Marketplaces (ISMs)
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Intermediary
Sellers Buyers
B2B Marketplaces
All other are known as Biased Marketplaces
Global Sources position itself as the intermediary of this marketplace
Independent/Neutral Marketplaces
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B2B Marketplaces
Service Provision
• Information Management
• Buyer Functionality
• Seller Functionality
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B2B Marketplaces
Se
ller
fun
cti
on
ali
ty
Bu
yer
fun
cti
on
ali
ty
Shipment/logisticsservice
provisioning
Financialservice
provisioning for buyer
payment
Market servicesoffers
bids
Informationmanagement
Negotiation/Agreement
management
Settlement/Fulfillment
management
traded products information
trading parties information
contracts &purchasing
orders
bill
bills
goods
goods
Financialservice
provisioning for seller
Se
ller
fun
cti
on
ali
ty
Bu
yer
fun
cti
on
ali
ty
Shipment/logisticsservice
provisioning
Financialservice
provisioning for buyer
payment
Market servicesoffers
bids
Informationmanagement
Negotiation/Agreement
management
Settlement/Fulfillment
management
traded products information
trading parties information
contracts &purchasing
orders
bill
bills
goods
goods
Financialservice
provisioning for seller
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B2B Marketplaces
Value Provision
1. Transaction facilitators
2. Project managers
3. Aggregators
4. Auctioneers
5. Liquidity creators.
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Global Sources Market Offering
Market Provision – Independent/Neutral Marketplace
Service Provision – Mainly Information Management
Value Provision – Transaction facilitator, Aggregator and Liquidity Creator
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Porters Five Forces Analysis
SuppliersCompetitors Buyers
Threat of Substitute
Barriers to Entry
• Negligible• Software/Platform
Upgrades
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Porters Five Forces Analysis
Suppliers CompetitorsBuyers
Threat of Substitute
Barriers to Entry
• Scope of Services• Security• Low Transaction
Costs
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Porters Five Forces Analysis
SuppliersCompetitors
Buyers
Threat of Substitute
Barriers to Entry
• Biased Marketplaces• New IT, infrastructure• Increasing Vertical
Integration
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Porters Five Forces Analysis
SuppliersCompetitors
Buyers
Threat of Substitute
Barriers to Entry
• Size Matters• Lock In & Media Circulation• Low Entry Barrier
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Competitors
Porters Five Forces Analysis
Suppliers Buyers
Threat of Substitute
Barriers to Entry
• Services offered• Market Size• Matching
Capability
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Competitors
Retreated to Software & Spend
Management SinoBNetLeading Trade media in China
Almost identical in servicesCompete by size and brand
From the West From the East (China mainly)
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value propositionBy yong sam
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Vision and Mission
Core Competencies
Core Competencies
cost cost speedspeed
Essential Trade Infomediary
& Market-maker
Essential Trade Infomediary
& Market-maker
Value Value
Buyers Buyers SellersSellers
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Value, Cost and Speed
COMPANY COMPE-TITOR
CUSTOMER
COST/SPEED
Extract
DeliverUnderstand
Create
Communicate
Choose
Value
- Provide the cross-border trade environment
- Offer sound technological trade solutions
- Educate trading partners
Cost
- Not engage in real transaction (3rd parties do)
- Help reduce paper-chewing nightmares
- Communication Cost: 50~80% down
- Order processing costs: 90% down
Speed
- Early start of global trade (1971)
- Early launching B2B e-Marketplace(1995)
- Time to Market: 25% down
-
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Value Engine & Marketing Mix
Market Segmentation & Target Market
Worldwide buyers and Asian suppliers
Asia and China’s high-tech specialists
China’s Business Decision-Makers
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Value Engine & Marketing Mix
Product
Geographic e-Marketplaces & CD-ROMs
Magazines: industries, specialists
B2B platform: Catalog, Connect, Transact
Trade Fair
Trade Consulting
Pricing Mostly Subscription Fees
Banner Advertisement: $700/M
Private Catalog: $750/Y
Connect(Order Mgmt): $1,100/M
Promotion
700 marketing/sales men(9 countries)
China Sourcing Fair
Trade show participation (over 80 events)
Place
e-MP for 9 Asia-Pacific countries
Mostly China to West
Not engage in Transport and Inventory
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Business Model
Online B2B Marketplace
- Not dominated by sellers or buyers
- Aggregator and Liquidity Creator
Offline Market-making
- Print Services: Magazine
- China Trade Fair: Booth, Ticket and AD
- Trade Consulting
Software Services
- Order Management, Transaction intermediate
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company auditBy tom
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Business Model
RevenueRevenueSupplierSupplier BuyerBuyer
On- line subscription CD, catalogue, report and magazine
Tuition for Export course training Sell sourcing fair booth, advertising and ticket
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Core competence VS Key success factors
Reputable brand
Customer acquisition and
retention ability
Market size
Convincing profit generator
Appropriate market approach
Strong financial condition
Trade media experience
Classified information
Huge number of buyers and suppliers
Source: Global sources annual report; Global sources, Ivey
Global SourcesGlobal Sources BtoB online marketBtoB online market
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No end to be perfect because……
Leading BtoB marketplace for global trade and host to China’s leading domestic BtoB trade community
Source: Global sources, Ivey; Alibaba, Insead Euro-Asia Centre;Nasdaq
Jack Ma,
Founder, Chairman and CEO
Compete
How? 3S
Smash Alibaba’s reputation
-numbers not audited, by Merle Hinrichs ( CEO and Founder of Global Sources),
Stress information superiority
-tools to slice, dice and compare, by Craig Pepples ( COO of Global Sources)
Support China trade partners
-China sourcing fair
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Successful or not? Balance Scorecard
Financial Financial perspectiveperspective
Customer Customer perspectiveperspective
Internal business Internal business perspectiveperspective
Innovation and Innovation and learning learning
PerspectivePerspective
Source: Global sources & Nasdaq
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Successful or not? Balance Scorecard
Financial perspectiveFinancial perspective
• Cashflow
1997 - US$ 16 million
2003 - US$ 52 million
• Earning
EPS 0.03 to 0.23 US Dollars
in the past 8 consecutive quarters
Source: Global sources & Nasdaq
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Successful or not? Balance Scorecard
Customer perspectiveCustomer perspective
• Sales from new exhibition
2002 - 2.4 million
2003 - 3.3 million
• Active buyers
1999 -180,000
2003 - 378,031
Source: Global sources & Nasdaq
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Successful or not? Balance Scorecard
Internal business perspectiveInternal business perspective
• Cost/customer
1999 - US$ 436
2002 - US$ 219
• Labor force expense/revenue
2000 - 81.8%
2002 - 49.8%
Source: Global sources & Nasdaq
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Successful or not? Balance Scorecard
Innovation and learning PerspectiveInnovation and learning Perspective
• Product focus (%)
1998 online service - 15%
2003 online service - 56%
• Exhibitions
2003 - 3.6%
( should be more without SARS )
Source: Global sources & Nasdaq
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Challange to make TRADE
as REAL!!
Strategy innovationBy ergin
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Running after Revenue
Contribution of each revenue stream to total eMarket revenue
Global sources should concentrate on value added services
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Winning position in Star WARS
ReconstructionThe empire strikes back
Peace & Stability
50%
Insurrection War & Alliance
Number of digital marketplaces
% total b2b revenue digital marketplaces
Total b2b online revenue
Up to 80% of digital marketplaces are expected to fail
Vo
lum
e
TimeCurrentPosition
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Name of the WarAdding value in high complexity
Where will we see Global sources in future?
Added Value
Co
mp
lexi
ty
Portal, Vortal(Community meeting place)
Catalog(Merchandise listing)
Exchange E-hubs(Commerce Transactions) (Collaboration)
Meta-Marketplace(Commerce,collaboration!!!)
?
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Structure comes FirstBuilding Out from the Buy Side
Portal morphs into an exchange or E-Hub
BigBuyer
PPS
S
S
S
S
S
B
B
B
B
X
S
S
S
S
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Where are the value added services?
SourcingBiddingContract
OrderFulfillmentPaymentDelivery
InspectionReturn
Sellers Buyers
Inventory
Assembly
Manufacturing Manufacturing
Assembly
Inventory
Suppliers
Suppliers
Suppliers
Consumers
Distributors
Customers
Supply chain Demand Chain
Integration
Trading
Inspection
Source : IDC, 2000
Value Everywhere
Extract and create VALUE
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Essence of Success∆ value + ∆ cost + ∆ speed
•Quality Inspection•Quality Assurance•Logistics•After Sale•Dispute resolution•Supplier adaptation•Transaction finance
Extract & Create∆ Value
•Preparation•Implementation•Operation
Squeeze∆ Cost
Do it FAST∆ Speed
•Speed to value realization•Dictating speed
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Market driven solutionSegmentation Strategy
Buyer PoolSeller Pool
Quality seeking Buyer
Low Price seeking Buyer
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Buyer Pool
Example: Clustering by Quality and Price
Quality seeking buyer
Seller Pool
Provide High-quality parts
Provide medium-quality parts
Provide low-quality parts
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Providing Problem, Technology driven solutions
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Implications: New strategies requires change management
People•Additional hires in Emerging Markets• Hire local talent
Legal issues•Uncoordinated actions must be avoided•International policy of cooperation should be encouraged
Services• Focus on Market intelligence
Organisation•Change in marketing and sales organisations
Alliences•Key partners in strategic service offerings
Corporate services & finance•Changes in cost allocation• IT infrastructure adjustment
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Risks and mitigation measures
Impact
Likelihood
Constomer-induced risk
Transition
Business partner risk
Competition
Business (E-commerce risk)
Risk mitigation measures:•Response quality•Response time to customers’ enquiries•Security/trust level•Download time•Timeliness of fulfillment•How up-to-date information•Availability•Site effectiveness, ease of use, navigability
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Wraping Up “ The Real Survivor”
• 33 Years Trade magazine publisher serving Global community
• 13 Years Trade Software• 12 Years Manager of Trade
Shows in Asia• 8 Years online Marketplace
operator