GONZAGA MBUS 676 - Discussion Board
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Ch2 (#6) - Discussion BoardCase 2.2 Diamonds Forever – Online (p.45)Slide 3Slide 4Diamonds Forever Online (cont.)QuestionsSlide 7Real-World Case: Rosenbluth International – A New Way to Compete (p.75)Slide 9Slide 10Case 2.4 Reverse Mortgage Auctions in Singapore (p.54)Case 2.4 Reverse Mortgage Auctions in Singapore (cont.)Slide 13Slide 14Slide 15Slide 16Questions (p.54)Slide 18Case 2.3 Electronic Catalogs at Boise Cascade (p.49)Slide 20Case 2.3 Electronic Catalogs at Boise Cascade (Cont.;p.49)Slide 22Electronic Catalogs at Boise Cascade (cont.)Slide 241Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceCh2 (#6) - Discussion Board•The "name-your-own-price" model is considered a reverse auction. However, this model does not include RFQs or consecutive bidding. Why is it called a reverse auction?•Answer:It is considered a reverse auction because it changes the normal roles of a traditional auction. In this auction, buyers indicate the goods and prices that they are interested in purchasing. Sellers then evaluate this information and decide to either provide the good at a specified price or to forego the bid.2Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceCase 2.2 Diamonds Forever – Online (p.45)•The age-old business of gem buying is very inefficient: Several layers of intermediaries can jack up the price of a gem 1,000% between wholesale and final retail prices3Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce–American Don Kogen made his fortune in Chanthaburi (Thailand)—one of the world’s leading centers for processing gems–He started by purchasing low-grade gems from sellers that arrived early in the morning and then selling them for a small profit to dealers who arrived late in the day–This quick turnover of inventory helped him build up his capital resources–He reached the U.S. gem market using advertising Case 2.2 Diamonds Forever Online (cont.)4Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce–Using faxes, he shortened the order time–In 1998, Kogen decided to use the Internet—establishing thaigem.com and sold his first gem online–By 2001, the revenue from his online business reached $4.3 million, and it more than doubled (to $9.8 million) in 2002–Online sales account for 85 percent of the revenue–The buyers are mostly dealers or retailers such as Wal-Mart or QVCCase 2.2 Diamonds Forever Online (cont.)5Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceDiamonds Forever Online (cont.)–He buys raw or refined gems from all over the world, some online, catering to the demand of his customers –Thaigem’s competitive edge is low prices–The proximity to gem processing factories and the low labor cost enable prices significantly lower than his online competitors–Unsatisfied customers can return merchandise within 30 days, no questions asked–Delivery to any place in the world is made via Federal Express, at about $15 per shipment6Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceQuestions1. Describe Thaigem’s business model, including the revenue model. How are logistics and payments organized? (Visit thaigem.com to find more details.) The model is B2B (selling to distributors). The revenue model is made as an intermediary, increasing the prices he paid manufacturers before selling to buyers. Logistics appear to be handled internally from Asia. Payments appear to be made on account or through a merchant system. 2. Compare this entrepreneurial business to click-and-mortar gem businesses, such as Tiffany’s online business (tiffany.com). Visit the two sites and comment on the differences. Student responses will vary. Thaigem appears to be more focused on selling to distributors, while Tiffany targets individual buyers.7Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceQuestions3. During the 2000-2002 shakeout of dot-coms Thaigem.com was prospering. Why do you think it was not affected by the dot-com downturn? Thaigem’s business model was as a distributor, and it did not rely on some of the less stable business models used by dot-coms. 4. Of the $40 billion annual sales in the gem industry, only about 2 percent are done online. Do you think that selling gems online will grow to more than 2 percent? Why or why not? Student answers will vary. Students will debate between the benefits of EC for businesses and the desire to examine gems before purchase.5.Go to gemcentral.com and compare it with thaigem.com. Please note, gemcentral.com is not a working URL at this time.8Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceReal-World Case: Rosenbluth International – A New Way to Compete (p.75) 1. Describe the strategy the company uses to counter disintermediation.The company is providing additional value to customers by focusing on one market, and then deploying EC applications to assist them.2. Explain how EC facilitated the strategy.The company has embraced EC and uses a variety of IT/EC applications to assist clients.9Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceReal-World Case: Rosenbluth International – A New Way to Compete (p.75)3. Analyze the competitive solution using Porter’s five forces model.Barriers to entry – large threat, Internet-based travel services can be easily deployed (note Rosenbluth’s use of proprietary systems to counter this) Substitutes – marginal threat, customers need to travel (note use of IP conferencing as a threat)Suppliers – large threat, significant power of the airlines to set price and commissionsBuyers – large threat, can bypass the channelRivalry – large threat, as many companies compete for smaller profits4. Check carlson.com to find its EC initiatives. Compare these to Rosenbluth’s.Both firms provide corporate travel management services. This outsourcing is what was done internally in some companies. Both companies focus on corporations, and provide a wide variety of EC enabled services.10Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce11Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic CommerceCase 2.4 Reverse Mortgage Auctions in Singapore (p.54)•Homebuyers in Singapore, find the lowest mortgage rates at Dollardex


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