Strategy Planning for Group A10 Georgia Lefa Ergin Iren Tom Wang Young Sam Park Lam Yau Group A10...

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

Content

• Background - Georgia

• Industry Audit - Lam

• Value Proposition - Yong Sam

• Company Audit - Tom

• Strategy Innovation - Ergin

BackgroundBy Georgia

Global Sources Story- The evolution of B2B

There are marketplaces…

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

B2B OR NOT TO BE?

GLOBAL SOURCES ON-LINE

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

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

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

Where is GLOBAL SOURCES?

Industry auditBy lam

B2B Marketplaces

We will analyze the B2B Marketplaces in the following 3 dimensions

1. Market Provision

2. Service Provision

3. Value Provision

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

B2B Marketplaces

IntermediaryIntermediary

Buyer

Sellers


Seller

Buyers

Buyer-centric Marketplaces Seller-centric Marketplaces

A lot of B2B activities being channeled through these 2 channels

B2B Marketplaces


Buyers

Sellers


Sellers

Buyers

Distribution PortalsProcurement Portals

They are also known as consortium or more often called

Industral Sponsored Marketplaces (ISMs)

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

B2B Marketplaces

Service Provision

• Information Management

• Buyer Functionality

• Seller Functionality

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

B2B Marketplaces

Value Provision

1. Transaction facilitators

2. Project managers

3. Aggregators

4. Auctioneers

5. Liquidity creators.

Global Sources Market Offering

Market Provision – Independent/Neutral Marketplace

Service Provision – Mainly Information Management

Value Provision – Transaction facilitator, Aggregator and Liquidity Creator

Porters Five Forces Analysis

SuppliersCompetitors Buyers

Threat of Substitute

Barriers to Entry

• Negligible• Software/Platform

Upgrades


Suppliers CompetitorsBuyers


Barriers to Entry

• Scope of Services• Security• Low Transaction

Costs


SuppliersCompetitors

Buyers


Barriers to Entry

• Biased Marketplaces• New IT, infrastructure• Increasing Vertical

Integration


SuppliersCompetitors

Buyers


Barriers to Entry

• Size Matters• Lock In & Media Circulation• Low Entry Barrier

Competitors


Suppliers Buyers


Barriers to Entry

• Services offered• Market Size• Matching

Capability

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)

value propositionBy yong sam

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

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

-

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

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

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

company auditBy tom

Business Model

RevenueRevenueSupplierSupplier BuyerBuyer

On- line subscription CD, catalogue, report and magazine

Tuition for Export course training Sell sourcing fair booth, advertising and ticket

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

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

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


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



Customer perspectiveCustomer perspective

• Sales from new exhibition

2002 - 2.4 million

2003 - 3.3 million

• Active buyers

1999 -180,000

2003 - 378,031



Internal business perspectiveInternal business perspective

• Cost/customer

1999 - US$ 436

2002 - US$ 219

• Labor force expense/revenue

2000 - 81.8%

2002 - 49.8%



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 )


Challange to make TRADE

as REAL!!

Strategy innovationBy ergin

Running after Revenue

Contribution of each revenue stream to total eMarket revenue

Global sources should concentrate on value added services

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

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!!!)

?

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

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

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

Market driven solutionSegmentation Strategy

Buyer PoolSeller Pool

Quality seeking Buyer

Low Price seeking Buyer

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

Providing Problem, Technology driven solutions

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

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

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

Strategy Planning for Group A10 Georgia Lefa Ergin Iren Tom Wang Young Sam Park Lam Yau Group A10...

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