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Strategic Planning for Global Sources: Advancing B2B Innovations

Explore the evolution and strategic insights of Global Sources in the B2B marketplace, analyzing market provisions, service offerings, and value propositions. Understand the Porters Five Forces framework and competitive dynamics shaping the industry.

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Strategic Planning for Global Sources: Advancing B2B Innovations

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

  2. Content • Background - Georgia • Industry Audit - Lam • Value Proposition - Yong Sam • Company Audit - Tom • Strategy Innovation - Ergin

  3. Background By Georgia Global Sources Story - The evolution of B2B

  4. There are marketplaces…

  5. But there are also E-marketplaces… Virtual marketplaces where business clientscome 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

  6. B2B OR NOT TO BE?

  7. GLOBAL SOURCES ON-LINE

  8. 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

  9. 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

  10. 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

  11. Where is GLOBAL SOURCES?

  12. Industry audit By lam

  13. B2B Marketplaces We will analyze the B2B Marketplaces in the following 3 dimensions • Market Provision • Service Provision • Value Provision

  14. B2B Marketplaces Market Provision Five Models of Online B2B Market Places • Buyer-centric Marketplaces • Supplier-centric Marketplaces • Distribution Portals • Procurement Portals • Independent Marketplaces

  15. B2B Marketplaces Buyer Seller Intermediary Intermediary Sellers Buyers Seller-centric Marketplaces Buyer-centric Marketplaces A lot of B2B activities being channeled through these 2 channels

  16. B2B Marketplaces Buyers Intermediary Sellers Sellers Intermediary Buyers Procurement Portals DistributionPortals They are also known as consortium or more often called Industral Sponsored Marketplaces (ISMs)

  17. B2B Marketplaces Buyers Sellers Intermediary Independent/Neutral Marketplaces All other are known as Biased Marketplaces Global Sources position itself as the intermediary of this marketplace

  18. B2B Marketplaces Service Provision • Information Management • Buyer Functionality • Seller Functionality

  19. B2B Marketplaces

  20. B2B Marketplaces Value Provision • Transaction facilitators • Project managers • Aggregators • Auctioneers • Liquidity creators.

  21. Global Sources Market Offering Market Provision – Independent/Neutral Marketplace Service Provision – Mainly Information Management Value Provision – Transaction facilitator, Aggregator and Liquidity Creator

  22. Porters Five Forces Analysis Threat of Substitute Buyers Competitors Barriers to Entry • Negligible • Software/Platform Upgrades Suppliers

  23. Porters Five Forces Analysis Threat of Substitute Suppliers Competitors Barriers to Entry Buyers • Scope of Services • Security • Low Transaction Costs

  24. Porters Five Forces Analysis Threat of Substitute Buyers Suppliers Barriers to Entry • Biased Marketplaces • New IT, infrastructure • Increasing Vertical Integration Competitors

  25. Porters Five Forces Analysis Threat of Substitute Buyers Suppliers Barriers to Entry Competitors • Size Matters • Lock In & Media Circulation • Low Entry Barrier

  26. Porters Five Forces Analysis Threat of Substitute Buyers Suppliers Competitors Barriers to Entry • Services offered • Market Size • Matching Capability

  27. Competitors From the West From the East (China mainly) Almost identical in services Compete by size and brand Retreated to Software & Spend Management SinoBNet Leading Trade media in China

  28. value proposition By yong sam

  29. Vision and Mission Essential Trade Infomediary & Market-maker Create & Facilitate Global Trade Value Core Competencies Buyers cost speed Sellers

  30. Value, Cost and Speed Deliver Understand Extract Choose Communicate Create 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 -

  31. 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

  32. Value Engine & Marketing Mix • Product • Geographic e-Marketplaces & CD-ROMs • Magazines: industries, specialists • B2B platform: Catalog, Connect, Transact • Trade Fair • Trade Consulting • Promotion • 700 marketing/sales men(9 countries) • China Sourcing Fair • Trade show participation (over 80 events) • Pricing • Mostly Subscription Fees • Banner Advertisement: $700/M • Private Catalog: $750/Y • Connect(Order Mgmt): $1,100/M • Place • e-MP for 9 Asia-Pacificcountries • Mostly China to West • Not engage in Transport and Inventory

  33. 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

  34. company audit By tom

  35. Business Model Revenue Supplier Buyer On- line subscription CD, catalogue, report and magazine Tuition for Export course training Sell sourcing fair booth, advertising and ticket

  36. Core competence VS Key success factors Global Sources BtoB online market Market size Strong financial condition Reputable brand Convincing profit generator Huge number of buyers and suppliers Appropriate market approach Trade media experience Customer acquisition and retention ability Classified information Source: Global sources annual report; Global sources, Ivey

  37. No end to be perfect because…… Leading BtoB marketplace for global trade and host to China’s leading domestic BtoB trade community • 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 Jack Ma, Founder, Chairman and CEO Source: Global sources, Ivey; Alibaba, Insead Euro-Asia Centre;Nasdaq

  38. Successful or not? Balance Scorecard Financial perspective Customer perspective Innovation and learning Perspective Internal business perspective Source: Global sources & Nasdaq

  39. Successful or not? Balance Scorecard • Financial 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

  40. Successful or not? Balance Scorecard • Customer 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

  41. Successful or not? Balance Scorecard • Internal business perspective • Cost/customer • 1999 - US$ 436 • 2002 - US$ 219 • Labor force expense/revenue • 2000 - 81.8% • 2002 - 49.8% Source: Global sources & Nasdaq

  42. Successful or not? Balance Scorecard • Innovation 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

  43. Challange to make TRADE as REAL!! Strategy innovation By ergin

  44. Running after Revenue Contribution of each revenue stream to total eMarket revenue Global sources should concentrate on value added services

  45. Winning position in Star WARS War & Alliance Insurrection The empire strikes back Reconstruction Peace & Stability Volume Up to 80% of digital marketplaces are expected to fail 50% Current Position Time Total b2b online revenue Number of digital marketplaces % total b2b revenue digital marketplaces

  46. Name of the WarAdding value in high complexity Where will we see Global sources in future? ? Meta-Marketplace (Commerce,collaboration!!!) Exchange E-hubs (Commerce Transactions) (Collaboration) Complexity Catalog (Merchandise listing) Portal, Vortal (Community meeting place) Added Value

  47. Structure comes FirstBuilding Out from the Buy Side

  48. Where are the value added services? Suppliers Customers Trading Inventory Sourcing Bidding Contract Order Fulfillment Payment Delivery Inspection Return Inventory Sellers Assembly Buyers Assembly Suppliers Distributors Manufacturing Manufacturing Consumers Suppliers Inspection Supply chain Demand Chain Integration Source : IDC, 2000 Value Everywhere Extract and create VALUE

  49. Essence of Success∆ value + ∆ cost + ∆ speed Extract & Create ∆ Value • Quality Inspection • Quality Assurance • Logistics • After Sale • Dispute resolution • Supplier adaptation • Transaction finance Squeeze ∆ Cost Do it FAST ∆ Speed • Preparation • Implementation • Operation • Speed to value realization • Dictating speed

  50. Market driven solutionSegmentation Strategy Quality seeking Buyer Low Price seeking Buyer Buyer Pool Seller Pool

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