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Overview of Week 2

Overview of Week 2. Bush Boake Allen Alibris Both companies on verge of e-something. Bush Boake Allen. Supplies flavors and fragrances to the world's leading consumer products companies

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Overview of Week 2

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  1. Overview of Week 2 Bush Boake Allen Alibris Both companies on verge of e-something

  2. Bush Boake Allen • Supplies flavors and fragrances to the world's leading consumer products companies • Used in foods, beverages, soaps and detergents, cosmetics, toiletries, personal care items and related products. • Aroma chemicals, natural extracts and essential oils serve as raw materials for a wide range of compounded flavors and fragrances. • Conducts operations on six continents • 60 locations in 38 countries worldwide • 1999 worldwide sales of $499 million.

  3. Bush Boake AllenBusiness Environment • Need to produce desired flavors & fragrances quickly • Requires experienced flavorists to mix 500+ ingredients • High margins (40%) on accepted products • Intensive R&D to develop accepted product • Intense competition • 9 companies hold ¾ share of $11 billion market

  4. Bush Boake AllenCompetitive pressures • Need to acknowledge regional differences • Understand and cater to local preferences • Need for regional expertise and knowledge • Requires regional R&D and Mfg centers for rapid response • Bargaining power of customer is increasing • Expecting rebates from “select” suppliers • Reduces margins

  5. Bush Boake AllenEmpowering Customer Design • Project Mercury • Automated flavor prototyping • Hold 500 ingredients • Customer interactive • Collect CRM data • Provide convenient customer access • Locate machines regionally • Install in largest customers

  6. Bush Boake AllenEmpowering Customer Design • Opportunities • Early mover advantage • Increased customer satisfaction • Faster and more flexible flavor delivery • Closer integration between product development and customers • Increased product acceptance • Increased ratio of developed to accepted flavors • Reduced reliance on flavorists • Risks • Reduce perceived value of BBA • Reduced margin • Just an expensive experiment?

  7. Bush Boake AllenIssues • Are there pitfalls in giving the customer a bigger role in the design and delivery of products and services? • Three proposed strategies for using the Spider • Internal use only • On-site with select clients only • Access for everyone online • Which one would your recommend?

  8. Alibris Business Environment • Used Book Industry • Estimated 6500 used book dealers in North America • Estimated $2B / year – expected to grow to $7-8B • Used book dealers geographically dispersed but networked • Exploding growth of Internet (1998) provided opportunity for and trend toward eCommerce

  9. Alibris Interloc Background • Started by Dick Weatherford – rare book dealer • Service to find used or rare books • Book listings only • Income model • Based on record storage charges & use time • Revenue $15K/mo • Used mostly by independent dealers for searches • Simple IT System • Originated as a pre-Web message board

  10. Alibris Background • Brain child of Marty Manley and VC capitalizing on eCommerce trend • Partnered with Weatherford • Interloc becomes Alibris with $1M in venture funding • Manley is CEO

  11. Alibris Business Model • Find and arrange the sale and delivery of rare, hard-to-find and out-of-print books • eCommerce powered by Internet • Dealers list books for free • Change from original Interloc business model • New IT system needed to support eCommerce • Conduct the search and sale functions • Ensure customer orders filled properly

  12. Alibris IT System • Challenge • Handle millions of SKU’s of single unit • Search engine as fast as Amazon & Barnes & Noble • Approach • Implemented a standard Oracle IT system • Hired implementation consultants • Developed code in-house to customize system

  13. Alibris IT SystemImplementation Crisis • Database migrated successfully but … • Oracle eCommerce IT System implementation failed • Debating whether to drop Oracle and start over with original small vendor (Thunderstone) • Loss of investment in time and effort to migrate database to Oracle system • Thunderstone system may not scale with company growth • Additional launch delay • More custom coding

  14. Alibris Current Situation • Launch only weeks away • Funding running out • “White Knight” willing to provide $200K bridge • Many unattractive conditions attached • Considering offer to be a warehouse for another dealer

  15. Current Articles on IT • “Strategy and the Internet” • “The Real New Economy” • “Putting the Enterprise into the Enterprise System” • “Getting IT Right” • “Saving IT’s Soul: Human-Centered Information Management” • “Six IT Decisions Your IT People Shouldn’t Make” • “IT Doesn’t Matter”

  16. “Article Analysis” • Present the main points being developed by the author • Explain these main points to the class using examples from article, experience, etc. • Identify any critical insights or lessons learned • Which ones can be applied to the Bush Boake Allen or Alibris cases

  17. Synthesis • The old analysis and synthesis routine • What are the common messages from these articles?

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