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Specialists Sales Case Study On Strategy Management & Acquisition

Question

Task: In this assignment students are required to conduct research and address the following case study questions and find solutions to company problems.
Kramp Group, A Million Spare Parts- and Counting
Kramp Group is Europe’s largest distributor of accessories and parts for motorized equipment, agriculture, and construction machines. That may sound glamourous, but as IT manager Robert Varga explains ‘’Modern agriculture is highly mechanized: it is impossible to run a farm successfully without tractors, harvesters and other machinery. If a critical component fails and puts one of our customers’ machines out of action, the loss of productivity can cost them serious amount of money. We have a catalogue of more than 700,000 spare parts which can be delivered within a single working day from any of our European warehouses to their nearest dealership, helping them get back up and running as quickly as possible’’.
Kramp Group CEO Eddie Perdok says ‘’We believe in the future and the power of E-commerce. Compared to other sales channels, the internet gives us significant cost advantages’’. Yet, to Kramp’s customers using the internet isn’t automatic. Kramp takes more than 50,000 customer orders every day from various channels. Prior to 2010, ‘’nearly 40 per cent of our customers still placed their orders by phone, which means that our call centre staff had to spend a lot of time on basic order- processing, ‘’says Varga. To reduce that figure, Kramp had to make its online store easier to use- but their existing store, which had been developed in- house, did not have the flexibility to achieve this goal.
Kramp turned to software packages from IBM and German software firm Heiler AG to modernize its E-commerce systems. Hans Scholten, a member of Kramp Group’s executive board, says ‘’We deliberately opt for the ‘best of breed’ solution for all packages. That means we choose the best available software for different applications’’. That philosophy helped determine the packages the company chose.
From IBM, the firm obtained WebSphere Commerce for the customer- facing side of its system. This software’s multilanguage capability was important: Operating throughout Europe as Kramp does, being able to have one site that can operate in any of 10 languages was crucial. Nevertheless, Kramp had to translate the content into all the languages because 2012 even the best automatic translating software couldn’t replace a skilled person. However, the advantages was that the company didn’t have to develop and support different sites.
Kramp also uses Heiler Software’s Product Information Management (PIM) solution. That software manages product data in the catalog behind WenSphere Commerce. Kramp wants to expand its deliverable stock to over 1 million items and couldn’t do so without PIM. Expanding to more than 1 million stocked items is crucial to Kramp’s long tail strategy: the concept that each of the slowselling items may not account for much revenue but that the total of all slow-selling items is large enough to make a difference to Kramp’s success. Finally, though Kramp has the in-house capability to manage its E-commerce system, it turned to CDC software to help integrate the pieces. Doing so itself would have required the company to hire additional staff, which it wouldn’t need when the project was done.
The result was that after Kramp’s new system had been online, 90 per cent of their customers chose to order online via the WebSphere Commerce solution. As a result, the company saw a significant reduction in the average cost per transaction. Varga reported ‘’Our call centre staff now has more time to help customers solve complex problems, which improves customer service. Better service and lower operational costs are helping Kramp Group achieve 10 to 12 per cent annual growth, so the solution is making a real continuation to the success of our business’’. Exercise
Imagine you are a manager of a company which is in need of IS solutions to your company needssimilar to Kramp Group, looking for ways that technology can assist with sales. By reading the above article, you want to implement online business. You are required to address the following in your proposal through considerable amount of literature review.
1. Select a company of your choice and provide an overview about the company background, products and services its offering.
2. How do other types of E-Commerce such as business- to- consumer (B2C), consumer- to consumer (C2C), business-to government (B2G), differ from business- to- business (B2B) E-commerce?
3. kramp sees e-commerce as a compliment to its call centre operations. In this light, what risks do you believe your company need to accommodate when creating the IT infrastructure you now process?
4. What is a long tail strategy and why do you think it could be effective or non-effective to your business needs? What other types of businesses and industries might benefit from the use of a long tail strategy?
5. Discuss the pros and cons of outsourcing to your company. Also consider the issue of offshore outsourcing.
6. Suppose you are considering setting up an online business, discuss advantages and disadvantages for using e-commerce as compared to traditional physical store.
7. Choose multiple industries and provide an example company for each industry in which IT plays a strategic role by adding value and providing a competitive advantage through innovative application of IT. Now identify competitive counterpart companies for which IT does not play a strategic role. Report on the successes/failures of each pair of companies.

Answer

1. Overview of the Company: “Specialists Sales”
The present discussion is based on the Specialists sales case study. Numerous agricultural companies in Australia play an important role in Australian farmers. The increasing usage of IT makes those retailers establish their e-commerce stores. Sometimes they even engage with another popular e-commerce website to capture people's attention from the first movement. "Specialists Sales" is an online retail store that contains farm and agricultural materials, and act as a supplier to other businesses from agriculture. The company examined in the given Specialists sales case study makes 'customer-centric' products to advise people about the best farming practices and provide products at a 'value-based' price. “Specialists Sales" provide high-quality products and are registered with "Australian Pesticides and Veterinary Medicines Authority" ('APVMA'). The company website offers "Safety Data Sheets" for each product and supplies essential information on requests, such as product expiry date or product's life cycle (Specialists Sales, 2020).

According to the Specialists sales case study, the company delivers products through courier or general transport. They offer 'free delivery' on their phone and online orders throughout Australia. The company provides a refund or exchange facility according to its online shopping guidelines. They made their exchange, return or refund transactions based on the "original tax invoice." For the damage goods, the company needs a photographic proof within the five days from selling that product for providing refunds. The online store receives payments via PayPal. Some of the popular items from their online store are animal medicines, 'farm chemicals,' garden and turf grooming stuff, and pesticides. They offer more than 50,000 products on their e-commerce website, different categories (Specialists Sales, 2020).

However, after operating for twelve long years on online and offline marketing, they are facing some difficulties on their e-commerce site. The company explored in the Specialists sales case study wants to incorporate over 100,000 different products to cover every need from the customers. Since almost 70-80 percent of the customer relies on their e-commerce website, they want to offer every single product from their warehouse on the internet. The company also develops its IT system to make the site more user-friendly and attract a large number of potential customers.

2. Difference between “B2B” e-commerce with “B2C”, “C2C”, and “B2G” e-commerce
“B2B” e-commerce business is different from other forms of e-commerce relationships as it acts as a supplier to various small and medium businesses. While, "business-to-consumer", "customer-to-customer", and "business-to-government" provides different services on their e-commerce sites (Hisrich & Ramadani, 2017). The increasing involvement of IT in our daily life enables various e-commerce businesses to expand their operations on the internet. The main aim of e-commerce businesses is to act as an alternative from the ‘traditional business’ format (Deshmukh, 2020). However, various suppliers from different industries implement IT systems in expanding their business online to make the process more convenient for both ends.

Various existing works of literature considered in the Specialists sales case study analysis have already analyzed the advantages and disadvantages of adopting online business in "B2B" e-commerce transactions. This adoption decision basis the scenario of Specialists sales case study is mainly dependable on the effective decision-making policies of the business stakeholders, understanding over "Information Systems" operations, identification of the success factors, and understanding over the technical capacity of the company (Gorla, Chiravuri, & Chinta, 2017). The "B2B" e-commerce business has enabled to operate a convenient operation without harming other business forms in various supplier industries, from motor parts manufacturer to agricultural material production. While other e-commerce business firms slowly took over the existence of 'traditional stores,' physical auction and bidding process, various governmental organizations, and other physical entities.

3. What the risks related to incorporating new IT infrastructure for sales basis the given Specialists sales case study?
"Specialists Sales" has implemented IT systems in developing its sales and customer engagement more efficiently. However, like any other business and related financial operations on the internet has some risks, the company can also face some of it. It is important to take care of those risk-prone areas for conducting effective business operations. Various disruptions can occur while implementing 'IT infrastructure' for improving sales status, such as emphasizing more on prediction rather than acquiring feedbacks, focusing more on the competitive market, and lack in maintaining product standard.

The company illustrated in the Specialists sales case study needs to implement "Enterprise Control Strategies" (ECSs) by maintaining a service facility, transaction process, and infrastructure (Silver, 2019). The 'IT infrastructure' risks can also be made from the disadvantages of 'offshore' outsourcing. It enables risks into the delivery system, relationship with the clients, and factors of general economics (Mathew & Das Aundhe, 2017). The specific risk prevention areas and mitigating strategy that company can accommodate basis the Specialists sales case study are,

  • Maintaining purchasing confidentiality and secure 'cloud computing' technology on the company's e-commerce website. The secure data documentation process is important to prevent the system from misplacing or leaking any personal information of the clients (Tchernykh, Schwiegelsohn, Talbi, & Babenko, 2019). It is also important to update the stock regularly to not face any uncertain availability situation.
  • The implementation of 'IT infrastructure' in developing e-commerce websites for increasing sales is cost-efficient. However, various 'outsourcing' related services, such as customer care service, software development company, content developer, and online domain, need additional costs than the business investments (Nacer, Godart, Rosinosky, Tari, & Youcef, 2019). “Specialists Sales” needs effective financial planning to resolve these factors.
  • The online transaction in any business is related to huge financial transactions and personal data documentation. If the company's e-commerce website is not secure enough to prevent these factors from getting stolen and misplaced, they can face serious losses related to sales and finance. The "Data Science Business Infrastructure" needs to be incorporated by the company to secure organizational data in the IT system (Christozov, Rasheva-Yordanova, & Toleva-Stoimenova, 2018).

4. Overview of “Long Tail Strategy”
The "Long Tail Strategy" is a low-risk business strategy for e-commerce businesses. It allows a company to sell a large range of items rather than targeting a particular group of audience with a popular selling product. It is an innovative online business strategy to target consumers from every group of people interacting with the website. It is innovative because people will feel overwhelmed by the large collection of products and prefer that particular website to others. The readings of Specialists sales case study specifies that it prevents the company from facing frequent market changes and competing with the dominated businesses (Su, Levina, & Ross, 2016). However, "Specialists Sales" is related to a specific industry that produces only a limited number of variants and provides services to the people who only need those items. The agriculture and farm materials manufacturer company does not incorporate "Long Tail Strategy" as it will only serve a specific group of people with their specific needs. Also, a large number of stocks of the less demanding product can lead the company to face financial loss and management issues (Valcarce, Parapar, & Barreiro, 2016).

“Long Tail Strategy” is ‘non-effective’ to the “Specialists Sales” company to serve the requirements of agricultural pesticides, chemicals, and farm 'animal medicines,' and gardening products. The main purpose of "Long Tail Strategy" is to target a large group of people with an extensive range of products that have lower demand (Imgrund, Fischer, Janiesch, & Winkelmann, 2017). It is an effective way of competing with the dominating e-commerce businesses in the contemporary market, and capture the less interesting market easily. The most effective industries and businesses from the "Long Tail Strategy" are those who consist of various suppliers and an extensive range of products from different fields. An ideal example of this strategy is "Amazon" that acquires almost 57 percent of sales from this strategy.

5. Advantages and Disadvantages of ‘Outsourcing’ and Issues Related to ‘Offshore Outsourcing’
The advantages of ‘outsourcing’ in “Specialists sales case study” are,

  • Provide a faster delivery system in the process of online shopping. The process is conducted by expertise that helps in operating this process efficiently (Somjai). It also enables consumers to track their orders and understand the delivery timings in advance.
  • It saves the company’s additional recruitment and operational costs related to product delivery. It allows an internal company to develop the website, remove any bugs, and implement more features. It enhances the company to compete with others by having a healthy financial report (Doval, 2016).

The disadvantages of ‘outsourcing’ in “Specialists Sales” are,

  • Uncertainty in product restocks, and availability makes the company lose some of its potential customers. The limited slots online also restrict the company to offer more products.
  • The lack of understanding of the technical aspects of e-commerce websites makes the company dependable on the external developer company.

According to the Specialists sales case study, the issues related to ‘Offshore Outsourcing’ are the lack of controlling the business process in a different country. It also includes a lack of tracing the operations, and productivity (Bruccoleri, Perrone, Mazzola, & Handfield, 2019). It may be effective for capturing a new market but difficult to observing the processes from sitting in another country. However, "Specialists Sales" has not started ‘Offshore Outsourcing’ outside of Australia.

6. Advantages and Disadvantages of E-commerce in Compare to ‘Physical Store’
The increasing usage of digital devices and internet networks enables the different markets to attract a large number of audiences to expand the business globally. Studies considered to develop this Specialists sales case study analysis show that the e-commerce business generates almost 30 percent 'GDP' in the global market (Rahimzadeh & Heydari, 2017). It will enable advantages in offering thousands of products at the same time, make the shopping process time and cost-effective, provides extensive product details to compare different products easily and get deliveries at the doorstep.

However, 'physical store' can build trust among its regular and potential customers. In many scenarios, people are conducting online research on the same product that they went to buy from the store later (Miquel-Romero, Frasquet, & Molla-Descals, 2020). As stated in the Specialists sales case study, it is still difficult to completely remove the function of ‘physical store’ by promoting e-commerce businesses. ‘Physical store’ still holds almost 70-80 percent of the purchasing market combining various industries.

7. List of Industries and Companies that are or aren’t Reliable on IT: Their Success/ Failure

  • IT Reliable Industries and Companies, and Their Competitiveness

‘Industry’

‘Company’

‘Competitive Advantages for IT Application’

‘Success’

‘Failure’

‘Retailer’

“Amazon”

It provides an extensive range of products combining multiple industries. Considered as largest to its field and dominating other contemporary online retailer stores.

The company delivers an extensive range of products around the world. Dominates the e-commerce business in the retail industry by providing effective customer service and standard quality products.

Sometimes, people experience a poor standard in the product and its service. Some products do not applicable for return or refund facility, even if it's damaged.

‘Pharmacy’

“Chemist Warehouse”

The pharmacy industry is not much popular in the e-commerce business field. The company has the advantage of building the brand as the strongest one.

E-commerce business facility enables this medicine company to provide services to various households with emergency medicines.

Product unavailability is one of the common problems of this store. Also, the restricted product range cannot cover a large market.

‘Grocery Supermarket’

“Woolworths”

Australia's leading online grocery store with a vast range of fresh vegetables and fruits. A time-efficient way to buy groceries online.

The company is already established as one of the largest grocery stores in Australia. The product quality and delivery service make it better than others.

Unavailability of fresh items throughout the day. There’s no responsibility for damaged products.

  • IT Unreliable Industries and Companies, and Their Competitiveness based on the Specialists sales case study

‘Industry’

‘Company’

‘Why IT does not play an important role?’

‘Success’

‘Failure’

‘Retailer’

“Target”

The majority of the people around the world still believe in shopping from a 'physical store' by observing various products in hand. Target is one of the largest retail stores that offer a large number of products from multiple industries.

Providing a broad range of products from lifestyle items, electronics, clothes, and foods that can cover a vast amount of consumers. Hence, the store does not need to dependable on e-commerce business facilities.

Engaged in continuous competition with other physical retailer stores that offer almost the same service.

‘Pharmacy’

“Pharma Save”

Medicine is a crucial product that is important for every people. Most of the hospitals and patients are relying on physical medicine stores.

Provides regular drugs to hospitals, healthcare centers, and regular customers makes the company busy in managing its physical entity

Medicine is one of the most popular products that a locality can have multiple stores. It leads those stores to divide customers and face competition.

‘Grocery Supermarket’

“Coles”

Buying groceries physically is the most important thing for many people. People are not much reliable on online stores to get fruits, vegetables, and other essentials

One of the leading supermarkets that serve thousands of people in a day

The contemporary market is flourishing with other supermarkets to serve a vast number of people. That divides the potential customers.


8. Bibliography

Bruccoleri, M., Perrone, G., Mazzola, E., & Handfield, R. (2019). The magnitude of a product recall: offshore outsourcing vs. captive offshoring effects. Specialists sales case study International Journal of Production Research, 57(13), 4211-4227.

Christozov, D., Rasheva-Yordanova, K., & Toleva-Stoimenova, S. (2018). RISKS MANAGEMENT IN DATA SCIENCE TRAINING. Proceeding of Regional international conference on APPLIED PROTECTION AND ITS TRENDS, Zlatibor, (pp. 7-10).

Deshmukh, S. (2020). Impact of E-Business on Business Association. International Journal of Engineering and Management Research, 9.

Doval, E. (2016). Is outsourcing a strategic tool to enhance the competitive advantage? Review of General Management(23 (1)), 78-87.

Gorla, N., Chiravuri, A., & Chinta, R. (2017). Business-to-business e-commerce adoption: An empirical investigation of business factors. Information Systems Frontiers, 19(3), 645-667.

Hisrich, R., & Ramadani, V. (2017). E-commerce Challenges and Entrepreneurial Manager. In R. Hisrich, & V. Ramadani, Effective Entrepreneurial Management (pp. 159-178). Springer.

Imgrund, F., Fischer, M., Janiesch, C., & Winkelmann, A. (2017). Managing the long tail of business processes.

Mathew, S., & Das Aundhe, M. (2017). Vendor Risks in Remote Infrastructure Management Services. In S. Mathew, & M. Das Aundhe, Global Sourcing Of Services: Strategies, Issues And Challenges (pp. 229-259). Specialists sales case study World Scientific.

Miquel-Romero, M.-J., Frasquet, M., & Molla-Descals, A. (2020). The role of the store in managing postpurchase complaints for omnichannel shoppers. Journal of Business Research, 109, 288-296.

Nacer, A., Godart, C., Rosinosky, G., Tari, A., & Youcef, S. (2019). Business process outsourcing to the cloud: Balancing costs with security risks. Computers in industry, 104, 59-74.

Rahimzadeh, F., & Heydari, M. (2017). A Review of Ecommerce Competitive Advantages in International Trade. JOURNAL OF MANAGEMENT AND ACCOUNTING STUDIES, 5(04), 79-85.

Silver, M. (2019). Comparing Facility Layout Options for Managing Business and Operating Risks.

Somjai, S. (2017). Advantages and disadvantages of outsourcing. The Business and Management Review, 9(1), 157-160.

Specialists Sales. (2020, April 21st). About us and Product Range. Retrieved from Specialists Sales: https://specialistsales.com.au/

Su, N., Levina, N., & Ross, J. (2016). The long-tail strategy of IT outsourcing. MIT Sloan Management Review, 57(2), 81.

Tchernykh, A., Schwiegelsohn, U., Talbi, E.-g., & Babenko, M. (2019). Towards understanding uncertainty in cloud computing with risks of confidentiality, integrity, and availability. Specialists sales case study Journal of Computational Science, 36, 100581.

Valcarce, D., Parapar, J., & Barreiro, Á. (2016). Item-based relevance modelling of recommendations for getting rid of long tail products. Knowledge-Based Systems, 103, 41-51.

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