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Arrow Electronics: Abhishek Priyadarshi (003) Ronak Vankawala

Arrow/Schweber (A/S) is contemplating using Express, an internet-based trading platform, to sell its products. A/S currently has transactional customers that request quotes but represent only 25% of sales. It also has relational customers that buy a basket of products and make up over half of business. Using Express could gain new customers but reduce margins due to increased customer bargaining power. It also risks commoditizing products and reducing suppliers' control. The document concludes that for now, the internet should only be used to create demand without quoting prices, in order to facilitate sales while avoiding threats to margins and relationships.

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84 views6 pages

Arrow Electronics: Abhishek Priyadarshi (003) Ronak Vankawala

Arrow/Schweber (A/S) is contemplating using Express, an internet-based trading platform, to sell its products. A/S currently has transactional customers that request quotes but represent only 25% of sales. It also has relational customers that buy a basket of products and make up over half of business. Using Express could gain new customers but reduce margins due to increased customer bargaining power. It also risks commoditizing products and reducing suppliers' control. The document concludes that for now, the internet should only be used to create demand without quoting prices, in order to facilitate sales while avoiding threats to margins and relationships.

Uploaded by

Abhishek Priyadarshi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 6

ARROW

ELECTRONICS
Abhishek Priyadarshi (003)
Ronak Vankawala (046)

Case facts
Arrow/Schweber
It

(A/S) group is a subsidiary of Arrow Electronics

sells its products to OEMs from large suppliers

A/S

was contemplating on Express (internet based trading)

A/Ss Relationship with Suppliers


Needs

Relationsh
ip

To win business in their standardized


products.(profits and market share)
To represent new technologies and
proprietary products to our customers.
PRICE PROTECTION-Suppliers refuse to
honor warranties of products purchased
through channels other than the ones
they designated.
Suppliers ship their proprietary &
standardized product at list price or
marginally below it.

Relationship with Customers


Transactional

Customers

Customers that placed request for quotes(RFQ) for one or a few products with a
number of distributors.
25% of sales come from Transactional Customers .
Transactional Customers are major source of relationship customer in long run.

Relational

Customers

More than half business done with top distributors


Buy basket of products: mostly VAS and some B&S

Factors

affecting these Relationships

Price of VAS which is very sensitive and can cause termination of relations

SWOT of Express
Strengths
All transactional, some relational customers to switch
Scope of reaching new customers, hence additional
business

Opportunities
Less time to build new customer relations

Weaknesses
Reduced margins due to increased bargaining power
Express can only react to demand. Cannot create as in
case of Design Wins
Even without Express, AE was able to get lowest
prices for standardized products

Threats
Commodities might cause reduction in profit margins
Relationship customers might use this to commoditize
products from A/S
Suppliers might lose control

Internet: Friend/Foe? Ways to


facilitate sales effort through
internet
Internet will be considered as a foe as of now. Due to internet, they

could face problems related to increased bargaining power of


customer

As

they are already running in losses, they could incur loss if their
products become commoditized and VAS cannot be provided

Sales

effort through internet could be facilitated only if price is not


quoted. Only demand will be created

Cost

of customer acquisition could be reduced which could boost


their margins

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