THE INTERNATIONALIZATION PROCESS OF THE E-MARKETPLACE FOODIT A/S

Akshay Jog

Alys Eleonor Thomas

Anubha Garg

Apoorva Dixit

Justin Arnold Finch

Karl-Maximilian Strobel

FoodIT: Company Overview

Product Overview

What is the product?

An e-commerce system for the trading of food raw materials and ingredients buyers and sellers, including: materials management and comprehensive statistics.

Example of the platform proposed

Services to the Buyer

A website platform

Assistance in sourcing

from suppliers

Handling the transactions efficiently

Selection of new suppliers

Negotiation of framework contracts

To decrease the time and the costs of processing orders

To decrease the final price of the traded product

Traditional e-market trading functions

Describes the products and

services offered by the suppliers

When the buyer sends a request to

buy something

Makes it possible for the buyer to list a product or service which

they would like to buy

Catalogue

Electronic tenders

Reverse auctions

Additional services

Assists in supplier surveillance by giving access to:

• Information about products• Information about trade names• Sales personnel from suppliers

Execute other contract management for both the supplier and the buyer

Handle the call-off of a partial delivery

1

2

3

Services provided to buyers

Professional

Enterprise

Basic

Premium

Ultimate

Advanced

• esourcing on demand module

• esourcing on demand module• esupplychain module• eplanning module• esourcing Enterprise module• esupplychain enterprise module• eplanning Enterprise module• esourcing Enterprise module• esupplychain enterprise module• eplanning Enterprise module• QC management module

Services provided to suppliers

Suppliers enter the platform

Confirm every step of the delivery and quality control

Give access to purchasing and contract statistics as well as the Global product trade statistics

They record and update themselves in the Supplier directory

Suppliers submit offers, lowering the selling price for each bid submitted

Business Model: Two options

Registration fee: right to

use the system

Payment per transaction

Consultant services paid

per hour

Payment on the transaction

0.1% under €150,000

0.2% under €750,000

0.1% from €750,000

Professional

Enterprise

Basic

Premium

Ultimate

Advanced

Cost Structure

Additional Set up cost of Web Site Increase in server space Increase in Bandwidth Graphical design of customized

storefront Employees Country specific licenses Recruitment and Training Travel Expense

Expansion Strategy

2000- to offer an e-market place

to the small and medium sized firms as an alternative to the systems that the big multinationals as Danone, Nestle and Unilever were developing at that time

To establish FoodIT globally 2002-

to focus on firms in Europe that were limited to northern Europe as they could not hire enough people to serve the whole world

2006- to establish in various

countries including USA

Future Strategy Physical presence in

target countries Step by step approach

to internationalization To capture the market

of Bricks-And-Mortar Retailers

Long Term: Diversification

Systemization is the Strategy in the Food Industry Today Food Industry Today

Highly Competitive Big Firms Have The

Systems in-place

Evaluation Parameters: Flexibility Quality Cost Service

Systemization Means: Greater Efficiency Increased Quality Control Decreased Costs Hence, Increased

competitiveness of the Firm

Current Strategy: Local supplier wherever

competitive & possible Long term relationships ‘Cluster’ & ‘Core’ Suppliers Shared information &

technical expertise Value for Money

Getting A Customer’s Procurement Department Ready

A Key Requirement to work with FoodIT Systemized Procurement Process

In relation to who are the suppliers, who are approved, who are preferred, and what is the product specification

Outcome: A Standardized Procurement Process

Forms a Market Entry Barrier SMEs not ‘In’ for Systemization of

above process – Due to Lack of Resources, Know-how

& Scale of Operations

System in Use in the Big Companies Hence, Focus can be on 2-3 ‘big’

customers with a few SMEs

Procurement system needn’t be changed Similar to Normal Procedures -

Feedback Only be Made ‘Online’ Integration Support to be

provided by FoodIT Both Onsite & Offsite

Opportunity for Firm working with FoodIT: Access to Huge Supplier base Firm can have both:

‘Core’ Suppliers ‘Small’ Suppliers

People Required

Support Activities

FoodIT prefers to be with the procurement personnel, first few times they use the system

Support process starts with face to face interaction later supplemented by interaction through internet

Aim to have presence in 20-25 countries, covering the world 24hrs a day

Sales Activities

Need to be physically present in the market to make deals with CEO’s of different companies at different locations

Personal face to face selling is important in order to convince procurement department

To expand globally-Physical presence of FoodIT people to enable procurement department of customer to be ready for FoodIT e-market place

Aim to have presence in 20-25 countries, covering the whole world 24hrs a day

Skills Required

Knowledge of food business General interest in IT Knowledge of language as per

geographic region Industry specific competencies Should be sensitive to different cultures

Trying too much too soon? Planning for presence in

multiple countries within 7 years of establishment without once turning a profit

Requirement of providing multiple interfaces to clients in different countries

Requirement of physical presence (sales and support) in all those countries

Having too few skilled (domain expertise, technical and language skills)employees to support the planned expansion

Internet allows for fast expansion without the requirement of extensive physical infrastructure

Since the supplier base is global, it does not matter in which country is the buyer located

The business is easily scalable

Readiness for the concept of e-sourcing can be very different in two neighbouring countries given the infrastructure and mindsets of businesspeople

I want to know my supplier intimately and I want the lowest prices

Build the confidence of the buyers through careful screening of the suppliers no concerns regarding the quality of the supplied materials

Educate the buyers that e-marketplace precludes the requirement of close relationship lowest possible costs the only criterion

Close relationships and lowest costs is a trade-off

Customers can choose to source only from local suppliers if social contact is important for them

Suggested Organizational Structure

SR: Sales Representative (Number would depend upon the requirements)SeRs: Service/ Support Representatives

Entry barriers customers have to overcome Initial/fixed costs (annual license fee): “Big figures can be a barrier” Different places of interaction between manufacturer and supplier (no

local proximity) supplement and even substitute face-2-face interaction: No sample products: “The price is crucial…that can compromise the quality” No ‘touch and feel’: “Everything becomes black and white” Face-2-Face contact cannot be replaced (salesman), but is important Pre- and after-sales services: Production machinery (sold via FoodIT) requires

local presence of supplier Local presence of the supplier is often crucial Quality cannot be evaluated: Trust is major issue for products and (!) the

system

Ability (physical) and willingness (mental) of potential customers Integration of existing ERP-system is possible but still a hurdle

FoodIT reorganizes the procurement system Buying company has to systemize its suppliers (who?, approved?, preferred?, product

specification=?) Technical infrastructure needs to be available Mindset of the business people: Are they ready to switch? Bad experiences with other e-market places

Thank You