food it
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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