Master thesis Report No E 2008 124

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Creation of a business model for e-business Master of Science Thesis

CHRISTIAN STRANDBERG NIKLAS JOHANSSON

Department of Technology Management and Economics Division of Innovation Engineering and Management CHALMERS UNIVERSITY OF TECHNOLOGY Göteborg, Sweden, 2008 Report No. E 2008:124

REPORT NO. E 2008:124

Creation of a business model for e-business

CHRISTIAN STRANDBERG NIKLAS JOHANSSON

Department of Technology Management and Economics Division of Innovation Engineering and Management

CHALMERS UNIVERSITY OF TECHNOLOGY Göteborg, Sweden, 2008

Creation of a business model for e-business CHRISTIAN STRANDBERG NIKLAS JOHANSSON © CHRISTIAN STRANDBERG, NIKLAS JOHANSSON, 2008. Technical report no. E 2008:124 Department of Technology Management and Economics Division of Innovation Engineering and Management Chalmers University of Technology SE-412 96 Göteborg Sweden Telephone + 46 (0)31-772 1000 Chalmers Reproservice Göteborg, Sweden, 2008

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Abstract The Assigner has its origin as an exporter/importer firm. During the year of 2004 they discovered that there was scarce of electronic support for their business processes. In combination with the IT-background of the employees, a new business idea was born, to create an e-marketplace. The Assigner has received a venture capital from an investor in the UAE and is at present stage of developing the EM, but need more knowledge about the e-business in general, primarily the e-marketplace industry.

The purpose of the report is to give the Assigner improved knowledge about the industry, history, its different actors, market situation, and dynamics in the industry. Based on this a business model will be recommended to expose these ingredients. Several research questions are created to direct the research and to find the business model.

Answers to the research questions are got from two market analyses, one for Europe and one for the UAE. These are conducted to generate knowledge about the industry in both regions. Tools for the market analyses are Porter’s Five Forces, SLEPT-analysis and Dominant Design-model. Complementary facts needed to answer the questions properly, which are not found from market analyses, are picked from different literatures.

Outcomes from the study shows that the e-marketplace business is very mature and have reached a consolidation phase where the largest e-marketplaces are acquisitionists. There was a hype around 2000 when lots of e-marketplaces were popping up. Many of them were later merged or went bankrupt. The value proposition from the e-marketplaces has stagnated and one has to come up with new innovations to differentiate from other alternatives.

The components of the recommended business model for Europe and the UAE are almost the same. The matter that separates the regions is that in the UAE, the Assigner already has the critical resources needed in a network of business contacts and financial means. The main points that the two regions have in common is that the Assigner have to differentiate their value proposition to a specific industry. Large companies already have integrated the e-business solutions they want, therefore they have to approach SME:s.

Keywords: e-business, business model, B2B, e-marketplace

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Terminology list B2B Business to Business

B2C Business to Consumer

BM Business Model

DIC Dubai Internet City

EDI Electronic Data Interchange

EM E-marketplace

ERP Enterprise Resource Planning

FMIS Financial Management Information System

GCC Gulf Co-operation Council

ICT Information and Communication Technology

IS Information Systems

IT Information Technology

LLC Limited Liability Company

LSA Local Service Agent

MRP Material Requirement Planning

PFF Porter’s Five Forces

RQ Research questions

RBV Resource Based View

SaaS Software as a Service

SGA Strategic Group Analysis

STC Swedish Trade Council

SME Small and Medium size Enterprise

TRA Telecommunications Regulatory Authority

UAE United Arab Emirates

XML Extensible Mark-up Language

WTO World Trade Organisation

WWW World Wide Web

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Table of contents1 Introduction ......................................................................................................................1 2 Literature review...............................................................................................................3

2.1 Definition of used terms.............................................................................................3 2.1.1 Terminology..........................................................................................................3 2.1.2 E-business .............................................................................................................4 2.1.3 E-marketplace .......................................................................................................5 2.1.4 Enterprise Resource Planning systems...................................................................5 2.1.5 Software as a Service.............................................................................................5

2.2 Business model ..........................................................................................................6 2.3 SLEPT-analysis..........................................................................................................10 2.4 Porter's Five Forces ..................................................................................................11

2.4.1 Bargaining power of suppliers .............................................................................11 2.4.2 Bargaining power of buyers (users) .....................................................................12 2.4.3 Threat of new entrants........................................................................................12 2.4.4 Threat of substitute products ..............................................................................12 2.4.5 Rivalry between existing competitors..................................................................13 2.4.6 Criticism of Porter Five Forces model ..................................................................13

2.5 Structural analysis ....................................................................................................13 2.5.1 Strategic Group Analysis......................................................................................14

2.6 Dominant design and shake out ...............................................................................15 2.7 Kano-model .............................................................................................................17

2.7.1 Basic attributes ...................................................................................................17 2.7.2 Performance attributes .......................................................................................17 2.7.3 Excitement attributes..........................................................................................18 2.7.4 Other attributes ..................................................................................................18

3 Methodology ..................................................................................................................19 3.1 Research methods....................................................................................................19 3.2 Main steps of the research.......................................................................................20

3.2.1 Pre-study ............................................................................................................21 3.2.2 Definition of research questions..........................................................................21 3.2.3 Analysis of the e-marketplace industry................................................................23 3.2.4 Answering the research questions.......................................................................23 3.2.5 Recommendation of a business model ................................................................23

3.3 Validity and reliability...............................................................................................23 4 Concepts of e-marketplaces ............................................................................................26

4.1 History of e-business................................................................................................26 4.2 Models of e-business ...............................................................................................26 4.3 Limitations of e-marketplaces ..................................................................................29

5 Market analysis of Europe ...............................................................................................32 5.1 Dominant design......................................................................................................32 5.2 Porter’s Five Forces ..................................................................................................34

5.2.1 Bargaining power of suppliers .............................................................................34 5.2.2 Bargaining power of users ...................................................................................34 5.2.3 Threats from new entrants..................................................................................35 5.2.4 Threats from substitutes .....................................................................................35 5.2.5 Rivalry between competitors...............................................................................39 5.2.6 Summary of Porter’s Five Forces .........................................................................41

5.3 Kano-model .............................................................................................................41 5.4 Analysis....................................................................................................................43

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6 Market analysis of United Arab Emirates.........................................................................45 6.1 Macro-analysis.........................................................................................................45

6.1.1 Social factors.......................................................................................................45 6.1.2 Legal factors........................................................................................................47 6.1.3 Economical factors ..............................................................................................49 6.1.4 Political factors....................................................................................................50 6.1.5 Technical factors .................................................................................................52 6.1.6 Summary of the SLEPT-analysis ...........................................................................53

6.2 Porter’s Five Forces ..................................................................................................55 6.2.1 Bargaining power of suppliers .............................................................................55 6.2.2 Bargaining power of users ...................................................................................55 6.2.3 Threat from new entrants ...................................................................................55 6.2.4 Threat from substitutes.......................................................................................55 6.2.5 Rivalry between competitors...............................................................................56 6.2.6 Summary of Porter’s Five Forces .........................................................................58

6.3 Kano-model .............................................................................................................58 6.4 Analysis of the United Arab Emirates........................................................................58

7 Compilation of business model........................................................................................60 7.1 The tentative business model...................................................................................60 7.2 Summary of the research questions and answers .....................................................67 7.3 Recommended business model ................................................................................68

8 Conclusions.....................................................................................................................72 References..............................................................................................................................73 Appendices ............................................................................................................................... I

Appendix A: A narrow investigation of features of seven competitors ................................... I Appendix B: Value creating processes in e-business (Keeney, 1999) .................................... IV Appendix C: Adoption of e-business among SME:s .............................................................. VI Appendix D: Proposed stage model for e-commerce penetration in manufacturing SMEs. . VII Appendix E: Information about competitors for the SGA................................................... VIII

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1 Introduction

1.1 Background

The Assigner started their business in 2004 as an importer/exporter trading firm. While the company was doing business, employees discovered that there were scarce of support for business processes in Information Systems (IS)/Information Technologies (IT) software. It was found to be very expensive and therefore inappropriate for small and new-established companies to implement and maintain Enterprise Resource Planning (ERP) systems. The employees of the Assigner had through previous employments a lot of experience and competence in IT and therefore a new business idea was formed.

The new business idea implied to create an e-marketplace (EM) where small and medium size enterprises (SME), who do not have financial resources or need a whole ERP system, could connect to a hub and create business-to-business (B2B) relations, minimise paperwork which would lead to less administration and do the procurement activities online. Through the EM users (buyers and sellers) could dispose whatever actions they needed who are included in the general business processes.

The Assigner had a broad know-how and experience in system integration and programming, whereas the knowledge about the EM-business and its dynamics were scarce. The vision was set to include several business ideas which are given in the list below:

• Create and maintain a B2B EM; • Open for all - Everyone should be able to use it; • System integration – The EM should be compatible to integrate with present ERP

systems so companies already using an ERP-system may connect; • Software as a Service (SaaS) – Software which is provided online and not necessary to

install; • Approaching SME:s at a global level; • Not being industry specified.

Dai and Kauffman (2002) claimed that B2B-EM in various industries have opened up “real opportunities for online transactions”, in sectors such as industrial metals, chemicals, energy supply, food, construction and automotive. EM:s are becoming the new venues for buying, selling and supporting customers, products and services (Engström and Salehi-Sangari, 2007).

Since EM brings together buyers and sellers, and also provides the opportunity to automate transactions, doing business through the Internet is undoubtedly appealing. EM:s provides a larger product and service base to buyers and give sellers possibilities to access new customers and reduces transaction costs for all actors (Kaplan & Sawhney, 2000). Not all EM:s manage to successfully meet these challenges, although EM are a fairly recent phenomenon, there are already several examples of successes and failures among them (Bruun, Jensen & Skovgaard, 2002).

The Assigner identified the lack of these applications in their trading firm and changed business from trading, to develop a new EM after getting financial support from an investor in the United Arab Emirates (UAE), to create a new B2B-EM.

From the scarce knowledge about the B2B-EM business in the company, the main aim with this research is to give the Assigner essential facts about the B2B-EM industry and the interactions among its actors. This should create a basis for further directions of development and decision making in the company. As the Assigner have a very technical based background and is not

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familiar with models and language in business, a lot of effort will therefore be put to describe the dynamics in the business, which will provide the Assigner with a deeper and broader understanding of the report.

1.2 Purpose

Create and recommend an approach in form of a suitable business model for the Assigner to use and introduce to the business-to-business e-marketplace industry.

1.3 Research questions

To find relevant facts and create a BM, several research questions (RQ) were generated which are presented below. For a more consistent definition of the questions, see chapter 3.2.2 “Definition of research questions”.

Who is the customer?

-How large is the customer segments?

How to create value for the customers?

-How do current actors compete about customers?

Who are the competitors?

-How are their BM:s formed?

How is the revenue model structure in the market?

Are there any substitutes or complementary solutions to e-B2B-marketplaces?

How is it able to differentiate from the competitors?.

What are the main success factors of current e-B2B-marketplace providers?

What are the trends in the market?

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2 Literature review This chapter will describe tools and models used throughout the study to generate answers to research questions.

2.1 Definition of used terms

When studying the literature it seems not yet to be commonly used definitions of different terms used in business made through electronically support. Many of the terms also overlap each other and sometimes they are also used interchangeably. Therefore this chapter will state how some terms are defined and used in this report.

2.1.1 Terminology

There are several different expressions that have the same meaning in literatures regarding B2B-EM. Therefore some generic re-appearing expressions that are used throughout the report will be defined in this paragraph to reduce misinterpretations.

EM: Is defined by the portal, including tools, features, services and software that make the trade possible to conduct electronically, for further explanation about EM, see chapter 2.1.3 “E-marketplace”.

Portal: Web page (or interface) where users log in to the EM.

Provider: The providers are those who develop, maintain and run the EM.

Seller: Those actors which are using the EM for selling, distribution and exposing their products and services.

Buyer: Buyers are those who purchases products or services from sellers through the EM.

Users: Many times there is only interesting to talk about the users of the EM:s. When there is no need to separate seller and buyers, then the expression user is used throughout the report. In the Porter’s Five Forces model the term users will be substituting buyers throughout the report.

Supplier: The supplier side involves those who supply the EM with services such as banks who take care of the monetary transactions, information flows such as logistics, currency, trading compliance. Suppliers could also be software and hardware suppliers.

Competitor: An already established EM.

Figure 2.1 Actors related to an e-marketplace.

Provider

User User

Seller

Supplier

E-marketplace

Buyer

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These main actors in the EM industry can be connected in several forms and have different interrelations. A simplified shape as seen in Figure 2.1 above, is further developed by Albrecht, et al. (2005) which identifies five architectures of e-business or EM:s, Figure 2.2.

Figure 2.2: E-business architectures (Albrecht, Dean & Hansen, 2005).

Electronic Data Interchange (EDI) was motivated by the need for standard transmission between trading partners. In particular, it reduced cost, delays, and errors inherent in the manual exchange of transaction documents. This effort was primarily driven by large entities in the beginning of the e-business era.

E-procurement systems create automated links to suppliers that allow buyers to reduce the paperwork and overhead associated with the buying process and shorten the purchasing cycle. A main limitation of e-procurement systems is that they are closed and cannot support automated searches and comparisons across all providers.

B2B hubs are EM:s that play the role of digital intermediaries. Ideally, they facilitate product and information exchange and support product search, negotiation, contracting, and settlement. The Assigner would like to build its business idea on the B2B Hub principle.

World Wide Web (WWW) architectures take advantage of the ubiquity of the WWW by using, Extensive Mark-up Language (XML). It use open standards and have been submitted to the WWW Consortium. Users can conduct trade direct between each other or use a search engine to find the most proper business partner or product.

Web Services focus mainly on data type standards, schema expression languages, and common communication methods. The main difference from the WWW architecture is that business partners or products are listed in a register and search is conducted in this register.

2.1.2 E-business

E-business is a generic term for different concepts and possibilities that refer to simplify the business process (www.nea.nu). It encompasses all electronically based exchanges, both within an organisation and with external stakeholders. E-business goes beyond the customers

Seller

Buyer

Web Services World Wide Web

S

B

S

B

S

B

B

SE

S

B

S

B

S

B

B

R

H

R

SE

B

S

Search Engine

Register

Hub

B2B Hub

H

S

B

S B

H

S B

S

B

H

S B S

B

H

S

B

S B

E-procurement

S

S B

S

EDI

S B

S B

S B

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and includes electronically mediated information exchanges with suppliers, employees and regulatory authorities as well (Rodgers, Yen and Chou, 2002). Although there are examples in the literature where the concepts of e-business and e-commerce are defined similarly, and used interchangeably (Turban & King, 2003). E-commerce is generally considered to be a subset of e-business (Chaffey (2002); Rodgers, et al. (2002); Smith & Chaffey (2002). Fredholm (2000) also point on the history of the words and state that e-commerce started to just make business easier. E-business instead was introduced by IBM and their efforts were to make programs that make the business process simpler. In this report e-business will be used and are considered to cover the whole business process and including the technical systems supporting it.

2.1.3 E-marketplace

When study the literature it seem not yet to be a commonly used definition of what an EM actually is. EM:s have been described as inter-organisational information systems (Bakos, 1991), electronic procurement solutions (Segev, Gebauer, & Faeber, 1999), intermediaries (Dai & Kauffman, 2002), meeting points (Kaplan & Sawhney, 2000), or digital EM:s (Raisch, 2001). Additionally, in e-business literature, terms such as EM, e-hub, e-market, and exchange seem to overlap, and different people comprehend these concepts differently (Grieger, 2003). However, the common theme among the various descriptions of EM:s seem to characterise of electronically connect many customers and suppliers to a central marketplace in order to facilitate exchanges of information, goods and services. In line with the view presented by Grieger (2003) this report will consider an EM to be a central marketplace that possesses the unique feature of bringing multiple buyers and sellers together to exchange information, goods and/or services.

2.1.4 Enterprise Resource Planning systems

In start-up phase of e-business, companies had a demand to steer the material demand to reduce the volume needed in storage and these systems were called Material Requirements Planning systems (MRP). The systems got further developed and the next step was to integrate the manufacturing system to be able to plan more efficient over purchasing, the systems then were called Manufacturing Resource Planning systems. Next step was to integrate more parts of the company, therefore different modules were integrated into present systems and these could for instance be Human Resource management applications, financial applications, sales and marketing, delivery and logistics etc. all depending on the demands of the company. These systems are called Enterprise Resource Planning (ERP) systems. The ERP systems have developed further and today ERP systems are a complex program with many modules. Often these systems are covering not only the main company, but also suppliers and/or customers to get a more efficient supply chain system (Slack, Chambers and Johnston, 2004).

2.1.5 Software as a Service

The SaaS methodology is based on the “One-to-many model”, which means that one application can be shared across multiple clients (www.sciquest.com). Users can buy or rent services during a specific period or time (www.newsdesk.se). Examples of SaaS-applications could be IT-support, in shape of an application, a system or a solution that is distributed as a service. The real software is physically installed at the distributor which the customer connects, commonly via Internet. The interface is often accommodated via the internal network or integrated in the user's intranet (Landeström, von Knorring, Johansson, Werner & Löfström, 2006).

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2.2 Business model

The BM used in this report is based on the so called Tentative Business Model found by Björklund, Mohlin and Sunryd (2008). There are nine main components which are included in the Tentative BM, which are identified as the most frequent parts from a study of 13 BM:s. It is important to state that there are no stand alone components and all are influencing each other in different ways. There are linkages between the different components, which is company-specific, that have to be made to find a final BM. This will be made in the end of this chapter, but firstly each component will be presented as Björklund, et al. (2008) defines each part. Whenever components have a scarcity of necessary information, they have been extended with relevant topics from literatures handling BM:s. Some components have also been excluded, due to less importance for the research. The nine components are presented in Figure 2.3 below.

Assets and competences

Strategic assets

Core competences

Organisation structure

How is the company organised?

Activities

Activity map

Core processes

Who, where, when

Value proposition

What value is created at the user?

Differentiation

What separate the company from its competitors?

The company’s position

Market Segment


Customer preferences

Competitors

Competitors in the industry?

Performance in relation to competitors?

Customers

Loyalty?

Information about customer

Raise profitability

Network – Distributors and co-operations

Configuration of external activities.

Figure 2.3 Components of the tentative BM (Björklund, et al. 2008).

Value proposition

This is one of the most common parts in BM:s. The value proposition is heavily linked with chosen differentiation of products or services, and represents the attributes which should satisfy or top the expectations of a customer segment. The value proposition gives an overview of the products and services a company offers and also the value the customer experiences in the offer.

EM:s are service oriented and the main value proposition in this case is to map which of the potential customer’s processes and operations that an EM can do more efficiently than the customer itself.

One of the basic topics when to sell products is that the value for the customers has to be higher than the cost for them. From the pre-study the Authors has identified the revenue model as important on how to create value for the customers by an EM. The BM presented by

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Björklund, et al. (2008) do not put enough emphasis on this aspect, therefore the authors will expand the value proposition by also include a discussion about the revenue model.

Customers / Market segment

Customer relations are the vital force in a company and the capability to satisfy the customers is essential for a company's success. It is at the customers the companies revenues are created and identify their needs is the core of all companies. To achieve a differentiation so the customers prefer your company instead of your competitor is one of the basic reasons for developing a BM.

Different customers have different needs. It could be costly to focus on the wrong group of customers (market segments) in the market. To identify the correct segments could be vital for a company to maximise the utilisation of the assets and competences. The choice of market segment will have a large impact when new products and services are developed. The company has to know the preferences of its customers. Also the geographical aspects of the market segment will be important factor, is it possible to reach customers or do the time zone effect hinder.

Further on three ways are defined to increase the revenues through customer management; find new customers, increase the profits from existing customers or increase volumes or frequent within existing customers. As the Assigner is developing its service and no customer yet uses their EM, the effort has to be on how to find new customers. Market segment is used to find suitable group of customers to approach, when the Assigner not yet has identify either any market segment or customer this two categories will be merged and further on be called “customers” in this research.

When attracting new customers the Assigners will put more emphasis on the potential new customers, rather than what Björklund, et al. (2008) say in their BM. What are the main characteristics that these customers have and how they work today. From present situation the Assigner should try to find improvements that can be achieved for the customer by using an EM solution.

Customers are strongly linked to the value proposition, if the value proposition for the suitable group of customers is not correct the customers will not buy the product or service. What customer need is dynamic and change over time so plans for possible changes in the future are important. This can be harder to achieve due to radical innovations and rapidly changing needs.

This component will also contain identification and analysis of competitive products that are of interest. If any competitor gains strong power or have complementary assets that give them a competitive advantage the efforts of the Assigner to succeed in the market segment raise. On the other hand, identification of any market segment or branch that has low usage of e-business in their business processes or operations indicates a potential market.

Give the right value proposition to suitable group of customers is considered the most important in our business model (BM). It is an iterative process there matching of value proposition to a customer inflecting each other. The possibility for the Assigner to give a proper value proposition is influenced by other factors than just the customers need.

Assets and competencies

The assets could be physical and non-physical assets such as machines or patent and competence is know-how and human resources. This assets and competencies have to be

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evaluated from how strategic they are in the industry. The assets and competencies can be of strategic importance, but used wrongly they are of low value. The utilisation of the assets and competencies creates the competitive advantages for a company.

The component contains what the company is good at and what makes their business concept unique. It is not always the important assets and competencies that are located inside the company, they can be obtained by cooperation or brought in from external resources. If the assets and competencies should be located inside the company or not, depend on several questions; for example how strategic important are they; is it possible to do it by your self; can others do it more efficient?

For EM:s the main component is competence that can build and understand the service that customer demand, assets in the shape of computers, servers and so on is of less importance. Of interest is also how easy it is for the competitors to copy the assets and competencies. Assets and competencies inflect on what value proposition the company are able to offer.


There are several and differentiated opinions of what influences the network has on the company and its BM. Some literatures say that Porter's Five Forces (PFF) are the vital parts (chapter 2.4 “Porter’s Five Forces”), other literatures means that the information flow is as important as the flow of products and services. More opinions say that the logistic flow for internet based enterprises is of high importance to understand the configuration between distributors, partners and the company itself.

For EM:s the value creation are at many times built on how you are able to create the network around your service, for example is payment an important feature, this has to be handled by a bank. Therefore the creation of the network of service providers for the EM:s are an important part of the value proposition.

Competitors

There are different perspectives handled how competitors influence the company's BM. One perspective is to investigate how the company's potential to compete against competitors looks like, another perspective is how to utilise the core competencies to form sustainable competitive advantages. This component aims to visualise the rivals in the industry and also includes threats from potential new entrants. What are the barriers to establish a new business and in what time frame? Could the barriers protect already established firms?

The evaluation of the competitors is mainly made in the development of value proposition, a product or service has to fulfil the customers demand but cannot be priced higher than the competitors. The value created can be priced higher than the competitor if it can be differentiated from the competitors. This is the reasons why there is a connection between competitors, value proposition and differentiation.

The choice of market segment and customer is also inflected by the state of existing or future competitors. If competitors have strong positions or complementary assets in one market segment, it might be more reasonable to use the assets and competences at another market segment.

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Differentiation

Business strategy and differentiation are mentioned mostly in all BM:s that were analysed by Björklund, et al. (2008). Business strategy handles the internal activities which may create a differentiation in relation to its competitors. Positioning is used by several BM constructors as a collection of how a company differentiates on the market.

Organisation structure

This component represents how a company is organised. It inflates in how decisions are made and who that makes the decisions.

As the Assigner only has a few employees this component is irrelevant and will be removed in this investigation of a BM.

Activities

The internal operations and activities can be a vital piece in a BM. Core processes should convert the company's assets and resources to products or services which offers higher customer value than the counterparts of the competitors.

The value creating processes in an EM are mainly made through technical features on the EM server or web-page. The internal operations are mostly based on create and maintain this features. Due to the Assigners current state of developing the software this component will also be erased from the definition of the BM. Later on when the service is up running this will be a more important component, when for example support routines have to be established.

Figure 2.4 Scheme of used business model and the different components relate to each other.

The core process of a BM would be to find the right value proposition for a suitable group of customers. This value should be created in the most efficient way with the assets and competencies and the network the company possess. The value proposition to the customer do also has to be differentiated and put in relation to what the competitors offer today. The components and its relations of the used BM in the research are illustrated in Figure 2.4.

Network


Value proposition

Competitors Customers

/Market Segment

Differentiation

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2.3 SLEPT-analysis

A SLEPT-analysis is a framework to scan an external macro-environment in which a company operates. It is an acronym of the Social-, Legal-, Economical-, Political-, Technological influences on a business. Usage of SLEPT-analysis may vary from business and strategic planning, marketing planning, business and product development to business research. The SLEPT-analysis is similar to the more well-known PEST-analysis but also includes legal factors. The factors are always in the state of change and it is also important to be aware of the competitors. All industries are influenced by the SLEPT-factors (www.valuebasedmanagement.net; www.thetimes100.com).

Social factors: A major component of this is the change of customer behaviour resulting from changes in fashion and styles. Another factor is the age of the population. Understandings of social change give business a better feel for the future market situations.

Legal factors: Laws are continuously being updated in many areas. There could be e.g. consumer protection legislation, environmental legislations, health and safety, employment laws etc.

Economical factors: These factors are related to the social factors. The economy goes through a lot of variations with peaks and slumps in the economic activity. Other changes that could matter are interest rates, wage rates, inflation. Business is more encouraged to invest and take risks when economical conditions are positive.

Political factors: Relates to the government and its influence. Political changes are closely tied up with legislations and its changes.

Technological factors: Changes in technology have become significant in the post-millennium world. Fast and effective information transformation shared and distributed between parties has leaded to cost reductions and improvements in many areas. Organisation need to be aware of the latest relevant technologies to keep up with the changes and their competitors.

Figure 2.5 SLEPT-analysis.

Company

Political

Social

Economical

Tech

nolo

gica

l

Legal Legal

Legal Legal

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2.4 Porter's Five Forces

PFF is a framework for analysing the nature and extent of competition within an industry (Campbell & Craig, 2005). Porter (1980) argued that there are five competitive forces which determine the level of competition within an industry. As seen in Figure 2.6 there is one centric force, Rivalry among existing competitors, which is purposive placed in the middle. The profitability of an industry will depend much upon this factor. If the competition is very intense in an industry, then there will be a pressure on each actor. Low competition or none at all, will generate corresponding affects (Campbell & Craig, 2005). In addition to the centric force, there are four surrounding forces, which briefly will be explained.

Figure 2.6 The driving forces of competition in a branch (Porter, 1980).

2.4.1 Bargaining power of suppliers

If a company or organisation has to pay high prices to their suppliers, the profitability margins will decrease. If instead the company can secure decent prices there will be opportunities to save money and increase the profits. Campbell and Craig (2005) present three different scenarios that may affect this force:

• Market structure: The nearer the organisation tends towards monopsony1 the weaker the supplier will be.

• Personnel: Uniquely qualified personnel cost a lot of money to secure. Trade unions

1 Monopsony – When there is one customer on the market, which several suppliers are competing about.

Branch-specific competitors

Rivalry among existing

companies

Bargaining power of suppliers

Threat of substitute products

Bargaining power of buyers (users)

Threat of new

entrants

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may increase the price of labour inputs when they insist on a certain level of pay in exchange for continued supply of human resources.

• Cost of finance: May also affect of the profitability and even have a bearing on a company’s survival. Large companies are less sensitive to secure long-term loans or debentures as smaller companies are. The interest rates means that this is a can be an important factor for all industries. The interest rates depend upon the bank's estimation of the risks etc. and it will vary from company to company.

A company will tend to have more power over its suppliers and be able to gain savings if following points are fulfilled:

• large organisation which can buy in large proportions; • near or a clean monopolist of a certain input; • the organisation consumes a large quantity of a suppliers products; • large fragmented supplier base; • low labour requirement relive its turnover; • requires relatively low unskilled labour; • has a non-unionised labour force; • low financial gearing.

2.4.2 Bargaining power of buyers (users)

The power a company may obtain over its suppliers reflects the previous discussion. The force explained in this section is the converse. Logically a company has pricing power over its customers, it may increase prices and inflate revenues. On the other hand if a company sells a product which is an important input to the customers operations and it is difficult to get somewhere else, then it follows that suppliers will obtain business power. When the buying power is concentrated then the profitability of the suppliers is expected to be decreased, especially if the supplier base is highly fragmented, which generates bargaining power of the buyers (Campbell & Craig, 2005).

2.4.3 Threat of new entrants

Logically it follows that the fewer competitors a business or market has, the greater the opportunities will be to make larger profits. New entrants may not always realise the reasons why there are few companies in a business. Potentials that new entrants do not understand are why a specific industry is so profitable. The reason could be that it is hard to join and therefore existing providers take the whole cake. Those industries that have a high turnover of companies will tend to return relatively low profits.

It is the characteristics of the entry barriers that decide the number of joiners. Low entry barriers encourage new entrants, and high barriers do the opposite. Entry barriers can take several forms. According to Campbell and Craig (2005) it depends often on the industry in question, as they list a couple of them; capital requirement, legal permission, unique access to supply or distribution channels and intellectual assets. The last one is referred as licenses, patents, brand names (logos, trademarks etc.), uniquely qualified personnel and know-how and formulations and recipes.

2.4.4 Threat of substitute products

Substitute products are products or services that can be used instead of those produced by a specific company. There are two general types of substitutes; direct and indirect.

13

Direct substitutes are products or services of the same kind. Substitution of by a direct substitute requires no change in operation. One can compare drugs that have the same effect. Indirect substitutes are dissimilar but can, under specific circumstances, perform the same role. One can compare with plastic and porcelain mugs.

2.4.5 Rivalry between existing competitors

The relation between businesses differs from industry to industry. Some are friendly and genial, while other is aggressive and less friendly. The way companies behave can have a significant bearing on the profitability of companies. Campbell and Craig (2005) aver that the surrounding forces determine the strength of the rivalry between competitors.

Table 2.1: Summary of Porter's Five Forces

Force Upward pressure on profitability Downward pressure on profitability

Bargaining power of suppliers

Weak suppliers Strong suppliers

Bargaining power of buyers (users)

Weak users Strong users

Threat of new entrants High entry barriers Low entry barriers

Threat of substitute products

Few possible substitutes Many possible substitutes

Competitive rivalry Little rivalry Intense rivalry

Source: Campbell and Craig (2005)

2.4.6 Criticism of Porter Five Forces model

The choice of PFF can be seen to be arbitrary and is no generic model which is exclusive when doing business strategy analyses. The criticism which strategists and other authors have regarding PFF is many and some of them are presented below:

• PFF lacks empirical evidence to support the model; • The model describes an industry as a group of firms that producing products or

services that are close substitutes to each other. One of the weaknesses is that the framework for identifying industries is an arbitrary process and does not address the relative proximity of competitive threats (Winfrey, Michalisin & Acar, 1996);

• PFF is static and cannot capture what occurs during periods of rapid change in the industry environment. Some argues that there is no equilibrium within an industry.

2.5 Structural analysis

The structural analysis of a branch, in the previous chapter, is based on the identification of the Five Forces which determines the competition in the branch and the potential of profitability. To go deeper in this area and to present guidance for the selection of strategic competition, the first step is to divide the branch into so called strategic groups.

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2.5.1 Strategic Group Analysis

Companies’ strategies in a branch may differ in many ways, and therefore, according to Porter (1980) the following examples of strategic dimensions catch the most common grounds for a strategic choice in a branch:

• Specialisation; • Extent of branding; • Distribution channels used; • Product or service quality; • Marketing effort; • Vertical integration; • Cost positioning; • Price policy; • Relation to mother company.

The dimensions will give a total view of the situation of the company. In this study only the first point, Specialisation, will be handled. The dimension implies in what extent the product and service diversity is; what are the target groups; and the extent of geographical coverage (Porter, 1980).

The strategic groups in a branch can be illustrated as in figure 2.7. The map used in this analysis will be based on target groups in terms of industry and geographical coverage.

Figure 2.7 Map over strategic groups in a hypothetical branch (Porter, 1980)

It is important to notice that the Strategic Group Analysis (SGA) is an analytical tool that may be helpful and the first step when doing a structural analysis. It can be seen as a reference point half ways between a branch analysis and each company. There are special cases in a

Group A

High

Spec

ialis

atio

n

Nar

row

Low

Broa

d

Group D Group B

Vertical integration

Group C

15

branch when there only exists one unique strategic group, and then one can use the model of the Five Forces to find the level of profitability (Porter, 1998).

2.6 Dominant design and shake out

Abernathy and Utterback introduced the concept of dominant design in 1978 to describe the emergence of a broadly accepted core design from a number of competing incompatible alternatives. Common examples are the QWERTY keyboard, the VHS video standard and the IBM PC. The primary characteristic of a dominant design is that, once it emerges, innovative activity is directed to improving the process by which the dominant design is delivered rather than exploring alternatives. A dominant design may persist for a considerable period of time, even though it might not represent the best technical solution (e.g. VHS vs. Betamax).

Figure 2.8 Design hierarchies and dominant design over time.

It is however important to point out that a Dominant Design does not always focus on the architecture or the visual side of a product. Dominant Design is also used for a certain set of features (in this case, features of the EM) or a service. A Dominant Design does not necessarily always have the best technical performance or, for that matter, state of the art technology. The Dominant Design is a design (or set of features) that best satisfies the buyer’s needs and expectations is the winning one. This design is often influenced by strong commercial interests between suppliers, users and competitors. Thus it is determined through a compromise between technical possibilities and market choices.

Also, a Dominant Design reduces the number of performance requirements to be met by a product by making many of those requirements a standard in the design itself. For example in EM:s the possibilities to send orders electronically has become a standard feature that all providers offers. The competitive environment of an industry, and therefore the survival of firms in it, is substantially affected by the evolution of the technology on which it is based.

Trajectory B Trajectory A

Dominant Design Time

16

Figure 2.9 Dominant design, shake-out, industry restructuring.

Utterback (1994) continued his research and states that after a Dominant Design is established, product innovation decrease and process innovation increase. That is, before the Dominant Design is established the focus of innovation is centred over product innovation. Companies and organisations are in the progress of figuring out the optimal design and features. During this time there are many competitors that are trying to establish their Dominant Design.

The emergence of a Dominant Design shifts the competitive emphasis in favour of those firms, large or small, that are able to achieve greater skills in process innovation and engineering skills. These companies will be the market leaders and will be able to enjoy the advantages of scale. This implies that the number of players will decrease once the Dominant Design has emerged, this consolidation phase is called “shake out” or “industry restructuring”. Utterback (1994) points out that firms that fail to change their focus from product to process innovation will most likely meet one of two possible destinies; being overtaken by another company or being forced to leave the market.

Utterback (1994) also finds evidence that successful firms that became the dominant players in a sector, very often entered the industry in its early stages. Entering at later stages has proven to be a much riskier strategy and less likely to succeed.

How long time a Dominant Design lasts is depending on obvious reasons like sector (e.g. computer Dominant Design is likely to have shorter periods of Dominant Design than farming machinery) and what state the sector is in (e.g. just beginning to emerge or have been around for decades). But there are also other reasons why a Dominant Design lasts a longer time period despite new technical advances. For example, the Windows environment is not always the best interface for all kinds of programs. But, since a majority of people are used to the interface, it is likely that this dominant design will last for many more years despite that it has been around already a long time in a rapidly changing industry.

Rate

of m

ajor

inno

vatio

ns

Fluid Transnational Stabile Phase

Product innovation

Process innovation

Numbers of providers

Dominant design Shake-out Industry restructuring

17

2.7 Kano-model

To tie and keep customers, the provider has to know the understandings and predicting of their needs and expectations better than the competitors (Bergman & Klefsjö, 2003). Customer needs of a product or service can be separated into three groups:

• Basic attributes

• Performance attributes (expected)

• Excitement attributes

Figure 2.10 Kano-model describing dynamics of customer satisfaction.

2.7.1 Basic attributes

Basic attributes are the expected attributes or “musts” of a product, and do not provide an opportunity for product differentiation. Increasing the performance of these attributes provides diminishing returns in terms of customer satisfaction, however the absence or poor performance of these attributes results in extreme customer dissatisfaction. An example of a threshold attribute would be brakes on a car.

Threshold attributes are not typically captured in Quality Function Deployment or other evaluation tools as products are not rated on the degree to which a threshold attribute is met, the attribute is either satisfied or not.

2.7.2 Performance attributes

Performance attributes are those for which more is generally better, and will improve customer satisfaction. Conversely, an absent or weak performance attribute reduces customer satisfaction. Of the needs customers verbalise, most will fall into the category of performance attributes. These attributes will form the weighted needs against which product concepts will be evaluated. The price for which customer is willing to pay for a product is closely tied to performance attributes. For example, customers would be willing to pay more for a car that provides them with better fuel economy.

Customer satisfaction

Product features

+

-

Insufficient Sufficient

Basic attributes

Excitement attributes

Performance attributes

18

2.7.3 Excitement attributes

Excitement attributes are unspoken and unexpected by customers but can result in high levels of customer satisfaction, however their absence does not lead to dissatisfaction. Excitement attributes often satisfy latent needs – real needs of which customers are currently unaware. In a competitive marketplace where manufacturers’ products provide similar performance, providing excitement attributes that address “unknown needs” can provide a competitive advantage, although they have followed the typical evolution to a performance from a basic attribute. Cup holders for cars were initially excitement attributes but are today considered as basic attributes.

2.7.4 Other attributes

Products often have attributes that cannot be classified according to the Kano-model. These attributes are often of little or no consequence to the customer, and do not factor into consumer decisions. An example of this type of attribute is a plate listing part numbers can be found under the hood on many vehicles for use by repairpersons.

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3 Methodology This chapter will present an outline of how the thesis was conducted practically and aim to give the reader a comprehensive view to understand how the study was executed, including a description of how and what sources used, frameworks and tools used and what literature that were relevant for each area studied.

3.1 Research methods

“A research methodology is a collection of procedures, techniques, tools and documentation aids. It is usually based on some philosophical view; otherwise it is merely a method, like a recipe” (Avison & Fitzgerald, 1995).

There exists a lot of methods how to perform researches, how to collect data, and what kind of sources to use etcetera. Each approach has its strengths and weakness, but is valuable depending on the purpose of the research (Swanson & Holton, 2005).

The Assigner wants to investigate the market of B2B-EM and how a viable BM may be outlined. This is a broad and complicated question which is specific in time and therefore the report will mirror a case study. The case study entails a detailed and intensive analysis of a single case and the research is concerned with the complexity and the particular nature of the case in question.

Given the purpose, the choice of case study will lead the research to mainly use qualitative methods, like deep studies of literature complemented by interviews and some quantitative data like statistical data about economic terms or trends will also be collected. The data collected are then applied on several suitable frameworks to lift forward the essential parts which later could be inserted into the BM.

One of the main drawbacks with qualitative research is that it rapidly generates a large and cumbersome database, because of its reliance on prose in the form of media such as field notes, interview transcripts, or documents. In opposite to analysis of quantitative data, there are a few accepted or well-established rules for analysis of qualitative data. Qualitative methods are particularly strong at attaining detailed and deep understanding about a specific group or sample, this at the expense of generalisation (Bryman & Bell, 2007).

When the components of the BM were found they had to be filled in a certain way. To guide the research 11 RQ:s were formulated based on the components of the BM. Several frameworks and methods were used to answer as many RQ:s as possible. Firstly two market analyses were performed. The scopes of the analyses are set on two markets; the European and the UAE. The European market was interesting because of the location of the company and its origin. The second market analysis is mirroring the UAE market situation due to the investor’s origin and his business contacts in the UAE. This analysis consists by both a micro part and a macro part. When performing the micro analysis PFF (chapter 2.4 “Porter’s Five Forces”) is applied. The UAE macro analysis consists of a SLEPT-analysis (chapter 2.3 “SLEPT-analysis”) and its aim is to give the Assigner knowledge about the UAE in general.

Answers the other RQ:s which are not contributed by the market analyses, other models presented in chapter 2 “Literature review” will be applied. A summary of the RQ:s and the approaches to answer them is presented in table 3.1.

Models that have been under consideration to be applied, but later been excluded by several reasons are e.g. Crossing the Chasm, Resource Based View (RBV) and Stakeholder Analysis. The first one, Crossing the Chasm, handles the problem in the transition between early adopters

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and majority of a product. In the B2B-EM industry the transition stage, a.k.a. the Chasm, have already passed, and is then not of interest.RBV is focused on the assets and resources of a company and what may be achieve with the specific set of them. As the Assigner is in an early stage and do not have that many resources yet, the Kano-model is used instead which set focus on customers. Also the Assigner is developing a product which in its turn provides a service, it is more appropriate to accentuate the customers and value proposition. The third and last model excluded puts stakeholders in focus, such as shareholders, suppliers, employees, customers and society. The Stakeholder analysis does not only take consideration about the shareholder interest and instead includes all actors affected by the company. In this specific case the purpose was to investigate the influences from the market and then PFF was a more suitable framework.

Information may be gathered mainly from three kind of sources; human, papers and electronic (Seely, 2002). The Authors have primarily used books, electronic information and papers because a lot of investigations about related areas are already handled in academic papers or business research. Human contacts, in shape of interviews, have also been used to broaden the base of data, where the present research not was able to answer the RQ:s totally.

3.2 Main steps of the research

This section will present the different steps and disposition of the report. Firstly a pre-study will be undertaken to get an overview of the topic, this knowledge will help the Authors to define the BM and what RQ:s that is needed to answer the purpose. In next phase the analysis of the EM industry will be investigated, here the main part of the data will be collected. From this investigation the answers to RQ:s will be generated and a recommendation of a BM will take over. At last a conclusion of the report and recommendation to further research will be made.

Figure 3.1 Main steps of the research.

Pre-study

Conclusions

Answer the RQ:s

Analysis of the e-marketplace industry

Definition of BM and RQ:s

Recommendation of a BM

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3.2.1 Pre-study

To gather knowledge about the B2B-EM industry search for articles, journals and books at the Internet were made, mainly through Google2 and academic databases. In this initial stage the authors mainly skim through the papers and took notes.

During the pre-study several definitions used in the field were collected and identified. As the Authors discovered, words are used with different purpose in the e-business. Therefore it is important to define how these are going to be used in this report, these are defined and presented in chapter 2.1 “Definition of used terms”. This knowledge is also important when discussions and interview with people from the industry is done.

To raise the knowledge about the industry the pre-study has two more reasons, first to identify what a BM is and give knowledge about what RQ:s that are relevant to divide the purpose in.

There are a lot of different definitions of BM:s, therefore the Authors made a literature study in the area. There exists BM:s that are developed for a certain industry and/or for general use. It has to be mentioned that there is no general BM that can be used for all type of companies, instead it has to be adjusted to fit the specific company at the specific time. Some parts of the BM is more important for a company in the start-up phase while others are more important in later stages. It can also be influenced about what industry that will be studied. Although there exist BM:s specialised for companies operating on the Internet, but the Authors decided to use a general BM and then adjust this to the Assigner’s present situation. To set a general BM the “The Tentative Business Model” found by Björklund, et al. (2008) was used, which is an outcome from a study of 13 different BM:s. Björklund, et al. (2008) have then aggregated the very most frequent components in the literature and summarised them into nine blocks, as shown in Figure 2.3, called The Tentative BM. A detailed definition of the components and their relations is presented in next chapter 2.2 “Business Model”.

In the pre-study, knowledge about the current industry and its historical development helped the Authors to generate relevant RQ:s which will be a guide to find a viable BM. Also general understanding about how B2B-EM business interacts was relevant.

3.2.2 Definition of research questions

The nature of the purpose is to find a BM, which led the Authors to divide it into several RQ:s. The components of the BM are very diffuse to find and therefore suitable models to answer them are not easy to apply. The knowledge from the pre-study was used to identify the most important factors that make influence to a BM. From this, the RQ:s were formulated to find the very most accurate answers to the components.

Below the chosen RQ:s are stated followed by a motivation why these specific questions are asked. Some questions also have sub-questions.


-How large is the customer segments?

The fundamental for a BM is how to create value for the customers, this lead to identification of the customers. Even if no specific customer will be identified it will be important to identify as many characteristics of a customer as possible.

2 The phrase “B2B e-marketplace” gave 1.200.000 hits at Google, 2008-10-06

22


-How do current actors compete about customers?

When the customers are identified, the next question will be how the Assigner is going to create value for them. How would this value be presented to the customer and what is the logic behind this value creating process.


-How are the competitors BM:s designed?

Identification of the competitors is important when conducting a business model for several reasons. The positions the competitors have at the market or in the industry may influence the possibility to compete for the Assigner. The value proposition that is offered has to be compared to the value proposition that the competitors offer. Therefore it is necessary to identify the competitors BM:s and how they are creating value for their customers.


It is important in many cases to look at the revenue models that competitors are using. Firstly to know the level of revenues and secondly how the revenues are gained. If the solution that the Assigner is developing is similar to its competitors, then the revenues have to be at the same level as the competitors. Further on it will also be important to look at the profitability level in the market, to map the level of margins in the B2B-EM business.

Are there any substitutes or complementary solutions to B2B-EM?

There is lot of different way to perform e-business and there are many solutions to this, therefore it is not just only the competitors in the e-market business that are important to investigate. Other firms offer products that perform the same task and these solution can both be substitutes or complementary solutions to the e-marketplaces. Therefore it will be important to investigate companies with similar products.

How is it able to differentiate from the competitors?

A parallel question to the value creation is how this offer can be differentiated from the present solutions. It can be important for a new actor in the market to create something new for the customers.

What are the main success factors of current B2B-EM providers?

To be successful in the business and to set a correct strategy and BM one have to be aware of what factors that played a central role when current providers established themselves at the market.

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If the competitors develop new systems that increase customer value, then the Assigner has to follow this trend to stay competitive. New trends may open up possibilities to enter markets. The Assigner does not have any pre-determinate system, which may generate opportunities to develop new trends and more easily accommodate to changes in future trends.

3.2.3 Analysis of the e-marketplace industry

For the market analysis a deeper study of the articles, journals and books found in the pre-study is made. This is done in a more structured way by help of different academic models. When the data from the market analysis were collected it was applied at models such as PFF, SLEPT-analysis, SGA and the Kano-model.

The SLEPT-analysis model is applied when analysing the UAE in a macro perspective, see chapter 6.1 “Macro-analysis”, due to of the background of the Assigner and its investor.

A more narrow analysis in shape of a micro analysis of the B2B-EM business in Europe and the UAE were conducted with the PFF model. Three more models were used for the B2B-EM business; SGA, Dominant Design and the Kano-model. These three models will provide knowledge and describes the differentiation at the market, the innovation trends and what products or services that generates customer satisfaction.

Further on twenty providers of EM will be mapped to identify if there are any contingent holes in the market that the Assigner may be possible to fill and to visualise the groupings in the industry between the differentiation of products and services contra the geographical coverage, this is made with the SGA. To find more possible value creating services, potential customers and existing buyers and sellers will be interviewed, about how they are doing business today and how an EM may affect and have affected their organisation.

Collection of data to appropriate models is gathered from several sources such as literature, market reports, market researches, articles and interviews. The answers will then be used to examine the total structure of the market and provide answers to the purpose.

3.2.4 Answering the research questions

In this section of the report, answers found to the different RQ:s are stated. Main part of the RQ:s will be answered in the end of the market analysis for Europe and UAE. The discussion about the BM and RQ:s will then continue in chapter 7 “Compilation of a business model”. All RQ:s are then answered before the final recommendation of the BM.

3.2.5 Recommendation of a business model

The final part of the report will answer the purpose by recommendation of a suitable BM for the Assigner to set. This BM is going to be based on the information from the market analyses and answers to the RQ:s.

3.3 Validity and reliability

The two aspects of validity and reliability are concerned in this section. The first one, validity, measures if a method gives the data it is supposed to do, and the second, reliability, measures if the framework or method will give the same results as if other researchers do the same investigation.

As the previous chapter explains, the main source of information will be secondary data from academic reports, business reports and literatures and therefore the validity has to be thought about with care. The secondary data do not always exactly answering the questions that are

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asked in this report and therefore they have to be interpreted correctly to mirror the purpose of the report. To handle this problem, data from more than one source (if possible) has been used to broaden the base of information. In many cases it can be hard to find same data found from different sources. Investigations about how the studied reports were performed were also sources to raise the probability of valid data.

There are a few well-established rules or models for analysis of qualitative data. There are a lot of different models used to handle the interpretation of the market, and none of these cover the full area of our study. Models also have its strengths and weaknesses depending on how they choose to interpret the reality at a specific time. Therefore several academic models from management literature have been used, to get a more complete picture of the reality. The models were chosen to answer the RQ:s in the most proper way as possible.

When analysing competitors, parts of the information collected was brought from one specific source, www.emarketservices.com, where people in general can add information of the EM:s to the site by themselves. This data is then controlled by those who are responsible for the database to see if the data are correct and this data are then considered as a valid source.

Homepages from competitors also have been a source of mapping the competitors, these may work as their main sell channel, where they promote their solutions, and therefore the information can be inflected as commercial interests. This information has to be looked at with care, to distinguish sales arguments and facts when it will be analysed.

Information sources from interviews have had no commercial interest to sell products or services to the Assigner or the Authors. Therefore these can be seen as neutral. Mainly questions about how they perform their work today and why they use system have been asked.

Table 3.1: Summary of research questions, tools applied and its validity and reliability.

Research question Data source Tools applied Validity and reliability


How large is the customer segments?

Literature and interviews with provider, seller and buyer

V: Several sources of data are needed to give relevant results.

R: Could give specific data depending on industry focus.


How do current actors compete about customers?

Literature, interviews with provider, seller and buyer

Kano-model V: Many users have to be interviewed get good results.

R: Difficult to measure.


How are the competitors BM:s designed?

Home pages, interviews

Porter’s Five Forces, Strategic group analysis

V: Facts are easy to collect.

R: Specific in time.

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Literature, Home pages of providers, interviews with user

V: Many providers have to be interviewed find decent data.

R: Specific in time and may depend on individual EM:s.

Are there any substitutes or complementary solutions to B2B-EM?

Literature, articles, market researches

Porter’s Five Forces V: Facts are uneasy to collect due to diffuse borders in e-business.

R: Difficult to define substitutes.


Literature, market researches, articles, Internet

Porter’s Five Forces, Strategic Group Analysis

V: Contains large amount of tacit knowledge.

R: Specific in time.

What are the main success factors of current B2B-EM providers?

Literature, articles, market researches and interviews with provider

V: May differ independently between providers.

R: Depends on the start-up stage in relation to market.


Market researches, articles, interviews

Dominant design and shake-out

V: Historical data will be identical.

R: Prognoses are hard to predict.

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4 Concepts of e-marketplaces This chapter provides different models and concept of the EM business starting with a brief historical view.

4.1 History of e-business

Trade with products and services have been made by humans in ages. In many ways the trades have changed, but in a deeper thought the process is almost the same. Someone has a need and search for someone else that can fulfilled this need, a price is negotiated and the product or service is delivered. E-business has not changed this process much but has speeded up the process and stretched the region that is possible to reach. E-business in its first form has existed as long as the computers have existed. It started between big companies with strong business relationships that needed to exchange lot of information. Even if the initial costs were high big savings were made, but soon it where a demand for creating standards for the information that where send. The files syntactical structure and their context were standardised in a technique called EDI that still is widely used today (Fredholm, 2000).

Next step in the development was in the middle of the 80:s when systems made it possible for buyers to log in to suppliers systems to gain information about stock levels. Even if these systems used modems to connect and there was one way communication, it leads to increased service and less failure in the ordering process.

Late in the 80:s and early in the 90:s the big milestone for e-business appear when the HTML language and web browsers were developed. This created possibilities to build public solutions that not just only make B2B e-business but also business-to-consumer (B2C). In 1994 “CD now” opens the first online store in America, this company is still one of the leading actors in e-business. Soon several others followed but it was not just only B2C that rapidly developed. Several solutions that helped SME:s based on the web technique where developed.

Around the year of 2000 the development went further and the XML standard started to be used. The XML standard was built from the same base as HTML but created much more powerful tools to create web solutions. XML was soon used to connect different systems, databases and all kinds of IT-solutions. Therefore it is used in a lot of different areas outside e-business. The XML standard is growing, but it is still lack of standardisation of its contents before it can be used in full scale in e-business (Fredholm, 2000).

4.2 Models of e-business

To find more information about the B2B-EM concept this chapter will explain the different EM-models handled in the literature.

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Government Business Consumer

Government

G2G

e.g. coordination

G2B

e.g. Information

G2C

e.g. information

Business

B2G

e.g. e-procurement

B2B

e.g. e-markets,

e-commerce

B2C

e.g. e-commerce

(Amazon.com)

Consumer

C2G

e.g. tax compliance

C2B

e.g. price comparison

(pricerunner.com)

C2C

e.g. e-markets

(eBay.com)

Figure 4.1 Internet applications (Coppel, 2000).

As Figure 4.1 shows there are lots of different types of e-business applications that can be undertaken, this report will only handle the B2B part of this whole picture.

Whether markets are electronic or not, their central functions are the same: matching buyers and sellers, facilitating transactions, and providing institutional infrastructure (Bakos, 1998). The matching function involves three main sub-functions: determination of product offerings, search (of buyers for suppliers and suppliers for buyers), and price discovery.

To facilitate the transactions, markets perform sub-functions, such as logistics, settlement of transactions, and the establishment of trust. Institutional infrastructure comprises laws, rules, and regulations that govern market transactions, as well as mechanisms for their enforcement. Some of these sub-functions are also possible to make more efficient through an EM, but not all. (Bakos, 1998; Giaglis, Klein & O’Keefe, 2002)

Bakos (1998) and Giaglis, et al. (2002) continue to state that intermediaries also will continue to be important players within e-business. They argue that much value adding functions performed by middlemen are difficult to move to the direct supplier-buyer channel. For example have Storey, Straub, Stewart and Welke (2000) identified that payment/billing includes both banks and other types of information providers that is likely be major intermediaries. Participants include consumer, merchant, clearinghouse, merchant bank (acquiring bank) and consumer’s card issuing bank.

The value-creation activities are according to Lennstrand, Frey & Johansen (2001) carried out by two distinct categories of e-markets:

• open B2B e-markets; • privatised B2B e-market.

An open trading environment connects many buyers and many sellers in a central hub, which leads to increased transparency. This, in turn, encourages open sourcing and increases competition among the suppliers, as well as the buyers. Contrary to open e-markets, privatised trading environments only connect each buyer with preferred and selected suppliers. Since the aim of privatised e-markets is to streamline buying or selling processes with existing partners,

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rather than enabling companies to find new trading partners, privatised e-markets facilitate collaboration.

Laudon and Traver (2002) also discuss this two generic types of Internet based B2B e-business systems but name them in a different manner. Instead of open B2B e-markets they talk about Net marketplace (also referred to as exchanges or e-hubs and private industrial networks). Net marketplaces potentially bring thousands of buyers and sellers to a single digital marketplace. Private industrial networks, on the other hand, bring few strategic business partner companies together.

Both of these authors mention that between each of these two general categories there are many different sub-types.

Yet another approach to B2B e-business categorisation is presented by Turban and King (2003), who discuss four transaction-based B2B types:

• buy-side B2B (one buyer to many sellers); • sell-side B2B (one seller to many buyers); • exchanges (many sellers to many buyers); • collaborative commerce (communication and sharing of information, design and

planning among business partners).

Trade in most company-centric markets is conducted without intermediaries, and the individual sell-side or buy-side company has complete control over who participates in the selling or buying transaction. In contrast, many-to-many trading exchanges are owned and run by a third party or consortium. For example, the EM owned and run by an independent company that have no deeper connection to the buyers and sellers than just handle the transaction. Finally, in collaborative commerce, businesses deal with other businesses in order to share activities related to, for instance, design and manufacturing.

Another dimension of B2B e-business value creation concerns their roles as either channel enablers or channel disablers. A channel enabler EM aims to facilitate trade between participants in an existing trading network by reducing inefficiencies in the supply chain. (Lennstrand, et al. 2001). The role of channel disabler is instead associated with the idea of facilitating direct trade between producers and retailers, and thus involves the process of remove traditional middlemen, such as agents and wholesalers (Lennstrand, et al. 2001; Turban & King, 2003). Giaglis, et al. (2002) put forward complain about this model that EM:s will take the role as the middlemen. Bakos (1998) also anticipates that such disintermediation will be “more than compensated” by the emergence of new types of electronic intermediaries.

Bruun, et al. (2002), emphasise that it is crucial that EM managers thoroughly understand the benefits facilitated by EM:s, as buyers and suppliers perceive them, in order to make the value proposition compelling for these parties. B2B-EM:s build their value proposition toward participating companies based on three fundamental elements:

• increased market efficiency; • increased supply chain efficiency; • creation of new value.

In addition, Bloch and Catfolis (2001) stress the importance of understanding value creation in the context of B2B-EM and state: “before any company starts using a B2B e-marketplace, it needs to make sure it will create value and therefore revenue for both buyers and sellers.” This can in turn be argued agenised when look at the analysis of the competitors that were made in this report. Many of these EM:s have its origin in big strong company, these would be able to force their suppliers or customers to trade through the EM. If they would force suppliers or

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customers to start trade through the EM it will not necessary create value for both buyers and sellers.

Finding a business model that provides enough value to trading partners to justify the effort and cost of participation is also cited as a substantial challenge associated with the creation of an EM (Rayport & Jaworski, 2002).

In addition to value creation activities, such as providing basic market functions and functions that address management needs, B2B-EM:s are increasingly creating value for buyers and suppliers by providing systems integration, standards implementation, and technology solutions services (Engström & Salehi-Sangari, 2007). Dai and Kauffman (2002) also identify the same trend that in order to maximise the operational efficiency of member companies, B2B-EM:s aim to offer system integration solutions and services to achieve enhanced network connectivity and to accomplish an end-to-end electronic trading channel that seamlessly connects the e-market to the participating companies’ enterprise systems.

Engström and Salehi-Sangari (2007) identify in their conclusions that having a critical mass of companies trading through the EM are crucial to the success. This indicate that many trades through EM:s have strong network externalities. A technology or product exhibits network externalities when it becomes more valuable to users as more people take advantage of it. For example, the more people who are connected to a network within the Internet, the more valuable that network are (Afuah & Tucci, 2001). In the settings, this means that the EM with the largest base of participants within an industry has a great advantage as the network externalities make that EM even more attractive to join (Bruun, et al. 2002).

While the Web Services architecture is a technological step forward, the lack of required standards limits its usefulness and widespread adoption. The technology toolbox of today is sufficient to support e-business, but the standards that must be developed are conceptual standards required for efficient technological implementation (Albrecht, et al. 2005).

4.3 Limitations of e-marketplaces

In the ‘‘purest’’ sense, markets are characterised by an infinite number of anonymous participants, perfect information transparency and instant competition based on (dynamic) price alone (Tapscott, Ticoll & Lowy, 2000). Although such a scenario promises maximum economic welfare via optimal allocation of resources, it is at as the same time highly unrealistic as it results in a situation where corporate profit margins are approaching zero. From the background of this Wise and Morrison (2000) name two fatal flaws of open EM:s: ‘‘First, the value proposition offered, competitive bidding among suppliers allows buyers to get the lowest possible prices, runs counter to the best recent thinking on buyer–supplier relations.’’ The recent thinking that Wise and Morrison (2000) refer to is the supply chain management (SCM). That the supply chain dimension of an EM is largely neglected and poorly managed is also identified by Greiger (2003).

Second, Wise and Morrison state that EM:s deliver little benefit to sellers: ‘‘Yes, suppliers have access to more buyers with only a modest increase in marketing cost, but that benefit is overwhelmed by pricing pressure. Few suppliers want to be anonymous contestants in ruthless bidding wars, and for the highest quality, most innovative suppliers, price battles are anathema.’’

Not all type of product is suitable to trade through an open EM. According to Kaplan and Sawhney (2000) the matching mechanism works best in the following settings:

• products are commodities or near-commodities and can be traded sight unseen; • trading volumes are massive relative to transaction costs;

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• buyers and sellers are sophisticated enough to deal with dynamic pricing; • companies use spot purchasing to smooth the peaks and valleys of supply and

demand; • logistics and fulfilment can be conducted by third parties, often without revealing the

identity of the buyer or seller; • demand and prices are volatile.

Ayers3 describe another model of what products that are traded through Endorsia. He talked about two different kind of products; Components vs. System integrators. The function of a component can be of great importance for the user. If a component break down it can stop the production with great losses as a result. Therefore it is important to find new components and install them quickly in the production again. The function of the component itself is not important, just that it is quickly found and transported to the production facility.

System integrators on the other hand are focused to improve an existing process. The search is based on comparing different techniques and lot of energy is put to find the most suitable one. When the buying decision is made, implementing the system and configuration of its performance is the interesting thing. Logistics can be planned in advance and the time aspect from the buying decision to implementation is longer.

The product trade through Endorsia consists of products that are characterised by components. See the dotted line in the figure 4.2 below.

Figure 4.2 Components vs. System integrators.

Bruner4 discussed that it is easy to sell bearings through the EM, but SKF expand their offer to also include services around the bearings. This service is much more complex and complicated

3 Adam Ayers Sales- and Marketing Manager Endorsia, interview 10th of Oct 2008 4 Ivan Bruner e-Supply Manager SKF, interview 25th of Sep 2008

Components System integrators

Logistics

Technique

Logistics

Technique

EM:s

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to trade through an EM because they need someone to integrate and configure them at the customer and many are unique ones.

Further on Bruner5 discussed that big companies in USA tried to use e-auctions to lower their cost of purchasing, but this was not a success because the relation between the manufacturer and the supplier was lowered and become inefficient. The price was not the important factor, instead it created more efficiency to have a good relation with the supplier. Grieger (2003) explained that General Motors had this approach and Tapscott, et al. (2000) also identify that other factors such as quality, timing of deliveries, and customisation are often more important than price in determining the overall value provided by a supplier.

5 Ivan Bruner e-Supply Manager SKF, interview 25th of Sep 2008

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5 Market analysis of Europe This chapter contains a market analysis of the EM business in Europe. Firstly the Dominant Design is applied on the EM business followed by a micro analysis, of the European EM business, by the Porter’s Five Forces framework. Finally the Kano-model is used when analysing the value proposition within the European market.

5.1 Dominant design

Back in 1999-2000, the hype surrounding EM:s were immense and an average of three new providers were being launched every day (www.emarketservices.com). The number of B2B-EM rose rapidly and in the spring of 2001 Forrester Research estimated that there were 2.500 providers worldwide (Turban & King, 2003). A network of mainly European trade promotion organisations, E-Market Services, provides a directory of EM:s that host a platform for many-to-many interactions. While this directory covered data on more than 1000 providers in 2003, it currently includes information of 600 (E-Market Services, 2008). Later research from Forrester research shows the same trend, this investigation is based on 60 companies that have been followed over time. The figure from this investigation show how many of these 60 companies that have been in operation over time, see Figure 5.1 below. Since the number of EM:s peaked in 2001 a period of consolidation began (Stockdale & Standing, 2002). This has been confirmed Bruner6, responsible for EM used by SKF and Ayers7 at Endorsia.

Figure 5.1 Marketconsolidation in the e-marketplace sector (Forrester Research Inc.).

This trend is showed by Utterback (1994) in his Dominant Design model. The phase when the market starts to consolidate is called “shake out” process. According to Utterback during the shakeout process it is important to make the product or service more efficient because the

6 Ivan Bruner e-Supply Manager SKF, interview 25th of Sep 2008 7 Adam Ayers Sales- and Marketing Manager Endorsia, interview 10th of Oct 2008

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competitors will offer, and the customer will start to demand lower prices on the product or service.

Zällh at the Swedish Trade Council (STC) made a report for E-Market Services in 2005 about significant EM:s. The report list 52 EM:s in 17 different industries, the two main criteria’s used have been how well known they are in the industry and if they have significant traffic. The Authors listed the year of launch of these 52 EM:s, Figure 5.2, and found that a vast majority of all EM:s started around the millennium.

Figure 5.2 Diagram showing start-up year of 52 e-marketplaces.

Deeper investigation about the latest launched EM:s shows that the German based OneAero (launched 2004) is the result of the combined efforts of Overhaul Search, b2b-aero, and ePark Labs. The first two companies have provided the flight industry with overhaul and repair services since 1999 and 2000, including some EM like services. ePark Labs are a software company that has provided the technique behind the portal (www.oneaero.com). OneAero can therefore be seen as a consolidation of these three firms, mainly the two first ones.

Launched in 2003, Cargo Portal Services works as a service portal for the global air cargo. It is possible to look for capacity, book transports, track items and estimate prices. It is owned and run by an independent software company named Unisys (www.cargoportalservices.com). This shows that it have entered very few major EM:s since the hype around the millennium.

According to Fredholm (2000) the latest radical innovation in B2B e-business were when EM:s had build up enough security and trust so the whole buying process were able to be made through the same portal. Fredholm estimates that this was achieved around the millennium, this is also in line with the Dominant Design model by Utterback (1994). Utterback state that when a new innovation appears then many new company and investors are attracted to the industry because they see opportunities to earn money.

Bruner8 explained the situation in the bearing industry; when Endorsia was introduced it was to save money in administration. This also lead to savings and SKF was able to reduce transaction costs and staff. Arround 2000 other bearing manufacturers also joined Endorsia and made the same savings. Therefore it is no competitor advantage to use the EM today so instead SKF have to look away from cost savings and be more efficent how to reach the customer. This strengthens the fact that the B2B-EM has reached a majority phase, there is no


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longer a competitor advantage (for large companies) to use e-business, it is morely a common application.

Another indicator that the market has reached a majority phase will be discussed later in chapter 5.3 “Kano-model”. The features and services that the EM providers offer today are very similar. This proofs that the market has found the most efficent business model to run an EM and no new offers which are of substantial value for the customer are invented. When the market has reach this majority phase it is hard to differentiate from the competitors.

5.2 Porter’s Five Forces

In this section the micro analysis of Europe, in shape of PFF, is handled.


The suppliers to the EM:s consists mainly of software providers, payment services and information providers. The application providers may be assigned to develop the different features and the design of the EM. Some of the EM:s that have been developed inside large companies have used external application developers when they have lacked this knowledge internally. These EM:s have built up lock in effects towards these application providers and are therefore more dependent of these. At the same time there are a lot of suppliers which are able to build the EM:s functions and whole sites. This creates possibilities to change application provider but the systems is rather complex and therefore new application providers would have to spend time and money to start working with a specific EM. The Assigner is developing the technical features internally and therefore the effects of threats are minor from application providers.

One part that Storey, et al. (2000) are handling is that the payment is almost always handled by a third part, this is due to the high entry barriers to start a bank organisation. As the payment is considered a fundamental and basic function in EM:s, then these suppliers are important to handle with care. A tendency about how important this function are is shown in the competitors analysis where many EM:s is partly own by a bank or a credit card company. Sweden is a small country and has only a few providers of these kinds of services, but banking is an international business and providers may be found in all parts of the world. This creates a large base to compare and choose providers for payment services. For the moment the Assigner has not chosen how to handle the payment and what company that should be used to perform this service.

As discussed in the literature background Bakos (1998) and Giaglis, et al. (2002) state that intermediaries will continue to be important players within e-business, other intermediaries that can be mentioned is logistic service, trading compliance, translation services, currency exchange.

5.2.2 Bargaining power of users

Customers (users) to the EM:s includes companies that conduct trade through the portal. It contains of both companies that offer products or services and those who search for products or services to buy.

Values for the customer comes mostly from saving money by making the buying/selling process more efficient. Value may also arrive from extended marketing capabilities.

Mostly large companies have already invested heavily in e-business solutions that make their processes more efficient. SCM-systems connect and integrate both suppliers and customers in an efficient way.

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SME:s in the other hand may not have that many resources to implement e-business solutions. According to www.emarketservice.com there is no problem to show the value for SME:s to use e-business, but the initiative to take the final decision to start trade by e-business is more difficult. To lower the level of investments for SME:s the EM can be built on a SaaS-solution. This will demand less implementation resources for the customer to start trade through an EM. But in the other hand it is easy to change EM for a customer if it is built on a SaaS-solution.

If one or a few customers conduct a large amount of the trade on the EM the users will have large influence on the EM. It is still many providers of EM:s and this give the customers many opportunities and possibilities of negotiation when to choose an EM, presupposed that they operate in the same markets and have the same products and services.

5.2.3 Threats from new entrants

Due to competition the revenues that are able to charge for trade goes down9 and of obvious reasons this will lower the interest for new providers to enter the market. Another aspect that has been discussed in earlier is that the market has become mature. Utterback’s (1994) research has also identified that when markets become mature the lowered revenues tend to not interest new entrants.

Engström and Salehi-Sangari (2007) discusses that the major successful EM:s used an existing network when they started up their business. This network has been important to get enough revenues and also to create customer value from network externalities. To create and build up networks takes time and resources and therefore this create higher entry barriers for new providers. Earlier there is mentioned that strong consolidation in the market where company growth in size through merge or acquisitions. This creates companies with bigger and stronger networks and therefore the entry barriers rise even more.

The trend in the market is the consolidation phase that has been ongoing since around the start of the millennium. The Authors have only seen one or two EM providers that have been established after 2003 and grown to a major size based on the competitor analysis and the literature review.

New entrants are not locked into any concept, structure or administration, therefore they are able to introduce new and more efficient trade through EM. Any trends of radical change from the Dominant Design have not been found by the Authors and can off course not be ignored. Niche markets that have special needs can also be considered possible to attract for new entrants.

5.2.4 Threats from substitutes

Today there are two main techniques to transfer electronically document between actors in the e-business process, EDI and XML. Both these techniques systemise the context of the file that is sent and the same context can be displayed at the receiver. Every user is able to decide what information the file would contain and how it should be structured. This has created several different standardisation organisations that strive to make the context in the files the same for all users. When all users have the same context in the files that are transferred then many of the obstacles to transferee information is overcome.

Almost all programs that are designed to conduct e-trade between companies are based on some of these techniques. Therefore an ERP system can send electronically documents to an EM, or opposite, if the information of the files is the same. This display that it is many types of programs that is able to conduct e-trade, ranging from large ERP solutions to programs that

9 Esmail Salehi-Sangari Professor Luleå University of Technology, interview 2nd of July 2008

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just send invoices electronically instead of ordinary mail. Here will just two substitutes be explained, ERP and SCM solutions. ERP systems may be considered as both a substitute and competitors and SCM systems because it is the trend in the market (Wise & Morrison, 2000).

Figure 5.3 Illustration over how ERP, SCM and e-marketplaces interacts.

These systems are not always able to distinguish, the SCM solutions can be incorporated in the ERP or ERP can offer the same features as EM:s. Therefore it is difficult to always place other e-business systems as either competitor or a substitute product. The model that is used to examine the forces in the market, PFF, clearly distinguishes between substitute products and competitors. In reality, it is a more dynamic and floating border between these forces than in the model. This has to be taken into consideration when conclusions are drawn.

ERP

Hawking, Stein and Foster (2004) defines an ERP system as: “An ERP system is a packaged business solution that is designed to automate and integrate business processes, share common data and practices across the enterprise and provide access to information in a real time environment”. ERP systems strive to integrate the different departments in a company with a single IT supported system. Ideally, ERP delivers a single database that contains all data for the software modules, which for example would include:

• E-procurement • SCP • E-collaboration • Web shop • Warehouse management • APS • Data Warehouse • CRM

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Figure 5.4 Modules which could be intergrated in an ERP system10.

Each of those departments typically has its own computer system optimised for the particular ways that the department does its work. But ERP combines them all together into single, integrated software program that runs of a single database so the various departments can more easily share information and communicate with each other.

Many organisations do not have sufficient internal skills to implement an ERP project. This results in many organisations that offering consulting services for ERP implementation. Typically, a consulting team is responsible for the entire ERP implementation including planning, training, testing, implementation, and delivery of any customised modules. This complexity creates strong lock in effects and high switching cost for ERP systems. When one ERP system is implemented at a company it is difficult to change to another ERP systems due to lack of internal knowledge and high costs of consultants. It is reasoned to believe that if companies use ERP systems today they will turn to its ERP provider first to ask about EM solution, because of these look in effects. Figure 5.5 shows the mean spending over time when implementing an ERP system.

Figure 5.5 Curve over resources and time spent over time when implementing an ERP system11.

10 Stig-Arne Mattsson Professor Chalmers University of Technology, Lecture 5th of Feb 2007

ERP

E-procurement systems SCP systems

Web shop systems

Warehouse management systems

E-collaboration systems

CRM systems APS systems

Data warehousing system

Project start

System implemented

1,5 year

Project start for next system

7 years

Resources and time spent

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The analysis of the competitors also shows that all EM:s have support for integrate ERP systems to trade through their portals, further there is also several of the EM:s that are partly owned by ERP providers. The main ERP companies also have co-operation with EM:s and seem to see those as a complement to their own system rather than a competitor.

Size and growth of ERP market

Around a third of all companies use some kind of ERP system according to E-Business Watch. SAP has around 30 per cent of the market, Oracle around 9 per cent and other providers are outspread on the rest (SAP annual report 2007).

Forrester Research has investigated the market share in the e-procurement and e-sourcing business. According to Forrester they defined e-sourcing as “solutions that help companies identify and negotiate savings on the goods and services that they buy from suppliers”. They have compared the two ERP companies SAP and Oracle with the rest of the top 10 providers of e-procurement and e-sourcing solutions.

The graph in Figure 5.6 shows the market share of ERP companies is rising steadily since 1999, with a gap in 2005 (www.forrester.com).

Figure 5.6 Marketshare of ERP companies compared with Top 10 e-marketplaces.

Lately, also the ERP sector has started to consolidate. From a large set of providers the companies are being merged and partnerships formed. The number of players in the sector has slowly started to decrease.

As the market for ERP system’s ordinary customers is maturing, the ERP providers are forced to look at other markets. Large corporations have mainly been the users of ERP systems, to expand the market ERP providers start to develop solutions for SME:s (www.reuters.com). For SAP it is a stated goal that they try to reach SME with different solutions (www.sap.com). Also Oracle put emphasis on reach and develop solutions for SME:s (www.oraclesmenetwork.com).

11 Stig-Arne Mattsson Professor Chalmers University of Technology, Lecture 5th of Feb 2007

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Supply Chain Management

SCM is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. SCM spans all movement and storage of raw materials, work-in-process inventory and finished goods from point-of-origin to point-of-consumption (Lambert, 2006). As the definition indicates, involvement of both suppliers and customers are needed to make the whole chain efficient.

While many organisations utilise ERP solutions to satisfy supply chain needs, many SCM solutions are available as standalone tools (www.supplychainmechanic.com). SCM systems can be differentiated from ERP solutions as they do not include the wideness of functionality of a full ERP. Stand alone systems include inventory optimisation tools, sourcing tools, supplier relationship management and spend analysis systems which can be used either independently or integrated with ERP solutions.

Dai and Kauffman (2002) indicate that B2B-EM:s could facilitate enhanced efficiency in the supply chain by coordinating buyer’s and supplier’s planning and scheduling activities. Most B2B-EM:s that provide SCM solutions are industry-sponsored and, consequently, not many independent EM:s provide such functions. Dai and Kauffman (2002) explains that “This is so because putting such processes into action requires sophisticated data-processing and network technology, as well as a common data model shared by trade partners”. They continue by indicating it would probably be difficult for independent EM:s to convince their participants to adopt such a solution, and independent EM:s would most likely not be able to benefit from economies of scale as industry sponsored do.

Oracle and SAP are clearly the biggest players in SCM (Aberdeen Group, 2006) and as explained in previous chapter they are also ERP providers, so their overall interests extend far beyond supply management. There is also lot of other SCM providers and below it is showed a list of a few of them. Note that some of the programs are a part of a bigger system, some have already been bought by ERP providers, for example is Peoplesoft bought by Oracle.

• Grow Business (Software Innovation) • Mayflower (Abalon) • Microsoft CRM (Microsoft) • MyCRM (SAP) • Onyx (Onyx) • Peoplesoft (Peoplesoft) • Relationship (Pivotal) • Siebel (Siebel ) • Superoffice (SuperOffice)

5.2.5 Rivalry between competitors

To get a better overview of the competitors an analysis of the largest providers were undertaken. Despite a long period (since 2001) of consolidation in the market it is still a large number of EM providers that offer the services. From this large number of competitors the Authors have made a deeper investigation of seven companies, six from Europe and one from the UAE, see Appendix A. It is difficult to quantify what EM:s that are the most powerful potential competitors to the Assigner, it depends on several things like number of items tradable, monetary value traded, number of company trading, what type of market sectors that trade through the EM etc. Therefore the choice of investigated competitors is based on a combination of the above mentioned factors and it is not intended to cover all possible competitors.

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There exists lot of different names on similar functions or services in the EM business. As earlier discussed in the validity and reliability chapter the information to the analysis about the competitors were collected mainly through the EM:s homepages. On their homepages they also are marketing their services, this will probably be one reason to the variation of names. A problem has also been that some providers bundle together functions and services under the same name while other name them separately. During this analysis the Authors have tried to arrange function and services after their most frequently used names.

The analysis has covered the questions that were relived in the pre-study and have expanded with questions so the research questions can be answered properly.

All EM providers in the analysis have started their business in the beginning of the millennium. As identified before it was in this period the hype of EM:s took place and a number of new providers entered the market. These EM:s have survived the transformation phase of the market that have occurred since then.

The EM:s have its origin from a large companies that have identified a need for more efficient buying processes. These large companies have provided the resources needed to create and start-up the EM:s. When the EM:s finally were running they were extended by inviting other companies to make trading through the EM.

In the study of the competitors and the literature it is showed that existing networks have been used as a base for the start up of the EM:s. All the competitors studied have started inside an organisation or a group of organisations that already had an existing network in the start-up phase. This existent networks is a very important complementary assets and they have helped to reach critical mass in a short time. According to Engström and Salehi-Sangari (2007) critical mass is a success factor and the study of the competitors show that the existing network is of importance to create critical mass soon enough. Big networks also generate network externalities in the EM business. As more companies trade through an EM as more interesting it will be for a new customer start trade at the EM (Engström and Salehi-Sangari, 2007).

It still exist a large number of providers whose features and services are in line with the ideas of the Assigners. E-Market Services lists around 600 EM providers in different categories and 174 of these providers falls in the category “multiple Industry e-marketplaces”. As showed earlier it is a consolidation process going on in the market that leads to fewer but bigger competitors. These growing competitors will gain both larger network externalities and scale of economics.

According to Porter (1980) Strategic Groups can be used to compare competitors. The Authors have found it hard to divide the EM providers in Strategic Groups according to what kind of features or service they offer. Almost all providers have also the same the value creation process. Their Revenue models are almost always based on subscription fees, even if other models exists, they are rarely used. EM:s can be divided in Strategic Groups according to what industry they work in. They can be specialised to support a certain industry or a range of many different. Another way to divide the EM:s is in what geographical area they operate, see chapter 2.4.6.

Another threat from competitors is that it is easy to copy features and services that other providers develop. If the Assigner would develop an efficient EM the concept can easily be copied by their competitors.

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5.2.6 Summary of Porter’s Five Forces

Table 5.1: Summary of key factors from Porter’s Five Forces.

Force Influence Summary

Bargaining power of suppliers Low It is in the suppliers own interest to conduct trade.

Bargaining power of users Medium Negotiation power due to large number of EM:s.

Threat from new entrants Low High competition in the market.

Threat from substitutes Strong Large ERP providers and SCM solutions can offer the same solution.

Rivalry between competitors Strong Many and large competitors.

Consolidation.

5.3 Kano-model

The value creation has to be focussed on the customer perspective of what value really is. The Kano-model describes three different perspectives and how they influence the customer satisfaction. The basic attributes have to be fulfilled if the customers ever will consider the product o service as an alternative to purchase. Performance (or Expected) attributes are the ones that are generally better than the competitors’ offers that will improve the customer satisfaction. Excitement attributes are nothing that customers ask for, but can result in high level of customer satisfaction.

Basic Attributes

The mapping of the competitors shows that there is a group of features and attributes that a majority of the competitors offer, they are listed in table 5.2 below:

Table 5.2: Short list of some basic features at e-marketplaces:

Feature Explanation

Search Engine Tool for searching products or services available to buy.

Order Create an order directly at the e-marketplace.

Invoice Create an invoice directly at the e-marketplace.

Catalogue/Content Suppliers are able to put up their catalogues on the e-marketplace.

Integration ERP systems and other e-trade systems can be integrated.

Support 24 hour support for troubleshooting.

Contract Support to put up a contract at the e-marketplace.

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Payment Pay directly to the seller through the e-marketplace.

Spend Analysis Shows trends how much money that the user has spent during a specific time period.

Statistics Service to see how many transactions are made, values etc.

As the majority of the competitors offer these features they create the base of what a single EM has to handle if a company are willing to change their selling/buying process to a specific EM. A single SME customer does not use all of these features, but will probably want to have the possibility to develop and do so in the future, therefore it become a basic attribute when the SME consider to start trade through an EM. Table 5.2 shows some of the basic attributes that has to be fulfilled if any user would evaluate to purchase with an EM.

Bruner12 discusses the importance of an e-catalogue for SKF with their big assortment of bearings. With an e-catalogue the change can reach the customer the same day the decision of a change is made. Further Bruner also put emphasis on that the support of the EM is located where the customer are and especially where the EM is operating, in different geographical areas and time zones. Also Salehi-Sangari13 state that the support are important to handle correctly in international EM:s.

If an EM does not have one or two of the features above, the customer would probably choose another EM that has.

Performance Attributes

The investigation of the competitors also shows that there are attributes that only a few competitors offer, these are e.g. Scorecard, Content Workbench, Request, User Training and Monitoring. Providers that offer these have found features that can able them to differentiate them from the competitors.

For example content workbenches where a specific order can be discussed or changed to the last minute. This will be valuable for some industries but not for others. The EM performance attribute can be considered connected to what type of industry that is supported by the EM. When the basic attributes become similar to all other providers it will become easier to support and raise the value for a certain industry.

According to the model the price which customers are willing to pay for a product is closely tied to performance attributes. Therefore it is important to identify performance attributes for the industry that is going to use the EM.

Excitement Attributes

When a market reaches a Dominant Design that is explained earlier the providers find it harder and harder to differentiate the value from its competitors. When there is not possible to differentiate value from the competitors the price of the product or service becomes more important. The analysis of the competitors show that almost all competitors offer the same

12 Ivan Bruner e-Supply Manager SKF, interview 25th of Sep 2008 13 Esmail Salehi-Sangari Professor Luleå University of Technology, interview 2nd of July 2008

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solution and no one stick out and offer a complete different solution. To find excitement attributes in the mature EM industry can be considered hard to achieve, but not impossible.

5.4 Analysis

E-Business Watch summarises and states the majority of the market in the sentence “E-Business has become a necessity to stay in business rather than a means to differentiate from competitors”. Another trend in EM business is the consolidation phase that is present for the moment. As mentioned in the previous paragraph the price goes down when a market reach a majority phase. This lead to lower revenues and the providers must make the product or service more efficient to stay competitive. Utterback (1994) identified that when the process innovations decrease in numbers the revenues per customer or product will become lower. When the revenues per customer or product goes down it will be important to raise the volume to get enough revenues. This lead to the consolidation phase was merging, acquisition or bankruptcy will reduce the number of providers. When the actors in the market raise the number of customers the critical mass for new entrants will also rise. The study of the competitors also shows that there are a significant number of big competitors that are growing in size because of consolidation.

Competition in the market is strong, which makes the threat from competitors strong. The companies studied started around the year of 2000 and have its origin in larger companies. These large companies provided the EM with resources and a large network in the start-up phase. Even if the number of EM:s have been reduced since the hype it still exists a significant number of providers. These numbers are further reduced as the consolidation in the market is going on. The situation with strong competition in the market does not attract new entrants to the EM-business. These growing competitors will gain both larger network externalities and scale of economy. Further on it is difficult to protect and it is easy for a competitors to copy new features or services that is developed for an EM.

Treat from substitute products can be considered as the most severe threat to the Assigner. ERP providers have a large part of the e-business market and it is easy for them to offer the same kind of service. The main ERP companies have cooperation with EM:s and seem to see these as a complement to their own system rather than a threat. ERP companies have a big base of customer which are using their systems and also gain strong lock in effects. EM:s which are supported or owned by ERP providers can be supposed to profit from this co-operation.

The trend in business today is identified to be SCM integrations. Relations between companies are regarded more important than price of the product or service. SCM-systems are substitutes when they perform e-business in a similar way, they can be seen as closed EM:s. Usually there is no price comparing, instead they are designed to make the supply chain as efficient as possible.

Threats from customers are at a medium level, the strong competition among the EM providers gives the customer a good position for negotiation. In the other hand large companies already have solutions for e-business and SME:s often have scarcity of resources. If the portal is built on a SaaS-solution the entry and exit barriers are lower, which give the customer more bargaining power. Low lock-in effects are both positive and negative for new providers, it will be easier for new customer to try the new product but at the same time it is easy for customer to change. Network externalities create high value for the customers at the same time the market is in consolidation.

The suppliers cannot be considered as a threat to the Assigner. The Assigner builds their own system and information providers or banks have their own interest that much trading is

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conducted. Despite this, efforts have to be put on having a good relation to the suppliers though they are an essential part of the value creation process at the EM.

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6 Market analysis of United Arab Emirates This chapter starts with a comprehensive view of the UAE as country in shape of a macro analysis. It includes several factors which have contributed to the development of the country the last decades. This is made with a so called SLEPT-analysis. Further on also a micro analysis of the EM business is presented, this is performed with the framework of Porter's Five Forces.

6.1 Macro-analysis

The UAE is on track towards closing the gaps between the well-developed world and themselves. In the last decades they have attained high levels of technologies, standards of living and services, led by Dubai, through an aggressive economy. Use of technology, especially IT and communication technology has played a key role in the development. While the ICT is utilised to improve the living, hospitality and business environment, it is also automatically turned into an economic sector. The approach by both public and private sectors has led to highest rates of ICT adoption among the Arab countries, in parameters of mobile penetration and Internet use (Madar Research, 2006).

The presence of e-government has contributed in several areas. The Dubai government has been the pioneer in developing the most interactive, transactional and dynamic e-government in the region. It is not fully integrated because it is only channelised through the Internet. For e-business, the UAE is already a base to a robust B2B-EM in Tejari.com (chapter 6.2.5), where a large part of the business deals, signed with the UAE, pass through (Madar Research, 2006).

A second vital reason to the development is the duty free zones. There are approximately 7,000 companies operating in 25 freezones (chapter 6.1.2). These free zones are the major driver to the economic growth in UAE. According to Cherif Sayed14 there are suggestions and articles saying that these free zones are going to be phased out, and 100 per cent foreign ownership to be legal against taxes.

Other major points to be listed that enhances the global competitiveness, is the membership of World Trade Organisation (WTO) and trade pacts with blocks as the European Union. The UAE is still under introductions of reforms, amending laws and implementing standards to meet the requirements of WTO and developed countries (Madar Research, 2006).

6.1.1 Social factors

This section is divided into demographics, lifestyle and socio-economic factors.

Demographic indicators

The UAE population had the highest growth rate in the world in 2005, where it was estimated to 8.5 per cent and 4.7 million. In the last 30 years the population has increased almost 1000 per cent.

14 Cherif Sayed Consultant Swedish Trade Council, interview 20th of Aug 2008

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Figure 6.1 Development of the UAE population 1975-2005 (Madar Research)

In 2008 the population still has a high growth rate and is approximately five million inhabitants in the UAE (www.swedishtrade.se). The reason for this is the influx of foreign workers as result of growing labour market needs, where Dubai is the main driver. The pace of global development contributes to the increase in population which also now is taking place across the UAE.

As a result from the high rate of foreign workers and immigrants only 20 per cent of the population is regular inhabitants. Due to the expatriate population, the largest fraction of the population is among the working age. Table 7.1 shows the fraction of population age structure in 2005.

Table 7.1: UAE Demographics 2005

UAE Demographics 2005

Population 4,7 million

0-14 years 25.28

15-64 years 73.77

65+ years 0.95

Population growth rate 8,8

Source: Ministry of Economy and Planning; Madar Research 2006

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Unlike other Arab countries, where the largest fraction is youth population, this group is slowly shrinking in UAE to favour of the 15-64 years. Also the 65+ group is shrinking. The highest population concentration is in the capitol of UAE, Abu Dhabi, where approximately 40 per cent of the population lives. Another 30 per cent reside in Dubai followed by Sharjah, 16 per cent and the rest is spitted in the remaining four emirates.

UAE can be seen as scarcely populated in relation to its size and economy, when considering only local inhabitants. On these grounds the government is expected to turn what has been seen as a weakness to a great advantage, by offer nationality to different categories of professionals to secure the quota of talents needed in the country (Madar Research, 2006).

Lifestyle

The natives of UAE have free education and healthcare. On a higher level the young nation has swiftly grown both in regional and global presence. It has started to tackle several emerging issues and challenges internally and externally to preserve its environment, lifestyles and well-being to ensure is economic wealth. The UAE are striving to create knowledge economy in many areas. The World Bank and most economists agree that knowledge economy includes four main issues:

Education and training; Information Infrastructure; Economic Incentive and Institutional Regime; Innovation Systems.

From the knowledge economy index released by the World Bank, the UAE was at the top of the Arab countries and 42nd in the global rank, above the world average.

Socio-economic factors related to IT and e-business

As an outcome of the economic and socio-economic growth there is also an increase in demand for IT services. The Middle East (ME) is the second fastest growing regions in terms of demand for IT products and solutions after South Africa. As mentioned above UAE have the highest rates of Internet use and numbers tells that PCs installed have more than doubled from 2002 to 2005. Internet users and users of mobile phones almost doubled between 2002 and 2005. As a computer and Internet is the fundamentals in doing e-business there have been a fast development also around e-business, mostly driven by e-government. The projected level of growth for software and IT services spending marks the UAE market's growing maturity compared to several years ago when IT spending and growth relied on heavily on computer hardware and equipment (Madar Research, 2006).

6.1.2 Legal factors

After the entry into the WTO in 1996, the UAE began to review several property laws. These were in accordance to the Trade-Related Aspects of Intellectual Property Rights, which requires its members to legislate national laws, e.g. the IPR-law. In 2002 the UAE ratified three federal laws to govern the different aspects of the IPR-laws; trademarks, industrial regulation and protection of patents, industrial drawings and designs, and copyright and neighbouring rights. The last one includes protection of computer software, applications and databases.

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UAE Cyber law and other e-laws

The emirate of Dubai enacted the Electronic Transactions and Commerce Law in February 2002, which stipulates stiff penalties for committing fraudulent activities using the Internet, including the violation of business contracts that are rendered electronically (Madar Research, 2006).

In January 2006 a new federal Cyber law was issued by the UAE. This law rules over different cyber crimes as cyber squatting, hacking, data theft, credit card fraud, network sabotage, virus distribution, use of digital technology to malign religions, copyright violations, invasion of privacy, trafficking, sale of narcotics, cyber theft and breaching of state security (www.internetcitylaw.com; Madar Research, 2006). In presence of these new legal frameworks it is vital for companies doing business online with as much legitimacy as doing business offline. The net safety is widening for companies to complement their traditional way of procurement with online medium.

Free zones

As mentioned in the introduction to this chapter there exists so called free zones in UAE, where foreign companies can establish businesses.

Dubai Technology and Media Free Zone were created in the year 2000 as part of the UAE's efforts to transform itself into a knowledge economy. The zone was established as a tax-free commercial area with three main hubs:

• Dubai Internet City (DIC) for information and communications technology (ICT) companies;

• Dubai Media City for media companies; • Knowledge Village for knowledge-focused companies.

Subsequently an Outsourcing Zone was added to the Technology and Media Free Zone to capitalise on the countries strategic position to establish outsourcing operations in the region.

Almost all IT development initiatives in the UAE are located in the Dubai Technology and Media Free Zone. The following benefits of business operations in the DIC are promoted by the UAE government (DIC, 2008). The free zones are:

• 100 per cent tax free; • 100 per cent foreign ownership is possible; • No Customs duties inside the free zone, otherwise is five per cent on imported wares; • No restrictions on the repatriation of capital and/or profits; • No trade barriers or quotas; • Full currency convertibility.

Companies that do not want to establish business in a free zone have to approach other strategies. According to STC (2008) a foreign company that wishes to establish a business outside a free zone, have four ways to choose from;

• Choose a Commercial agent or Legal agent to, independently from the foreign company, do business in its local company name;

• Create a Limited Liability Company (LLC) of at least two people to a maximum of 50. A LLC claims a local partner or sponsor to own at least 51 per cent of the capital;

• A Branch Office could be owned 100 per cent by the foreign company, if a Local Service Agent (LSA) is chosen that must be an Emirate. The LSA is not involved in the

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business itself but could act as a link to and take care of questions regarding governmental issues, such as visa and work permit;

• A fourth approach is to establish a Representative Office, which compared to Branch Office only is permitted to marketing their products and services and gather information about the market and ease the ordering process and projects which have been performed by the parent company.

6.1.3 Economical factors

There is no secret that the strong economic growth in UAE is driven by the oil reserves and its high prices, but there is also several booming non-oil sectors and significant growth in foreign direct investment. The UAE's diversification programme has focused on a number of key areas including aviation, port facilities, tourism, finance and telecommunications (Embassy of the UAE in Sweden, 2008). Mostly the investments are made in the Emirate of Dubai where the oil does not play a central role. In Dubai there are investments in construction and tourism that are the driving forces.

The negative factors with this development are that there are only a few end users, but many investors and no one knows if it is sustainable the next 20-30 years15. Abu Dhabi is more dependent of the oil, but is booming in tourism, hotels, and construction as well.

The UAE received $18 billion in foreign direct investments in 2005 which was twice as much compared to the previous year, according to Minister of Economy and Planning. The increase in investments is encouraged by the open trade environment, forward looking government policies and the top-rate infrastructure (Madar Research, 2006). Many companies are also investing and starting up offices in the free zones, and are using these as hubs and windows to the Asian market16.

Figure 6.2 GDP Contributions by Emirate in 2004 (Ministry of Economy and Planning; Madar Research)

15 Cherif Sayed Consultant Swedish Trade Council, interview 20th of Aug 2008 16 Ibid

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The country recorded a fantastic growth in GDP at nearly 31 per cent, which was the highest rate in the world in 2004 (Madar Research, 2006). In 2006 the GDP growth rate still increased and according to STC (2008) the nominal GDP growth rate was at 14 per cent in 2006. In 2005 Abu Dhabi and Dubai accounted for over 88 per cent of UAE's GDP.

The GDP per capita was set to $28,734 in 2005 (Madar Research, 2006) and $42,143 in 2007 (STC, 2008) in comparison to US and EU19, that had a level of 37,752 in 2006 (www.swedenabroad.se) respectively $25.294 was the mean GDP per capita in EU19 (www.SCB.se).

The main reasons for the high ratings are the low number of natives and strong economic growth, which generates large GDP per capita. According to STC, the overall GDP was around $190 billion in 2007.

Figure 6.3 UAE GDP in 2004 (Ministry of Economy and Planning)

6.1.4 Political factors

The UAE was established in 1971 as a federation of seven emirates that had separate relationships with Britain. The emirates have forged a distinct national identity through a consolidation of their status and had a very robust political system. Each emirate had their own local government, but an agreement was made in 1971 to create several mutual constitutions such as a Supreme Council, a Cabinet, Council of Ministers, a parliamentary body, a Federal National Council, and an independent judiciary. In the Supreme Council the rulers of each emirate were members. In 1996 Abu Dhabi was named capitol (Embassy of UAE in Sweden, 2008).

In May 1981 the UAE became the founding member of the Gulf Co-operation Council (GCC), which aims to achieve greater political and economic integration between Gulf countries (UAE Telecommunications Regulatory Authority (TRA), 2005).

When the rulers met in 1971 they agreed to not copy political systems from other states. They chose to work towards a society that would offer the best of modern administration, while

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retaining the traditional forms of government. Despite the massive economic growth and huge increase in population, the state has enjoyed political stability (Embassy of UAE in Sweden, 2008). According to Sayed17 the million of natives in UAE are very happy with the rulers of the state. The emirates have accepted the political system which has contributed a healthy and wealthy society compared to only a generation ago, when the people lived on margins (www.swedenabroad.com). The stability in politics will remain due to the mass of American stakeholders in the country18.

E-government

The e-government project is a federal project launched in the end of 2002. The steering committee set up three phases in the project:

• Creation of a federal e-government strategy; • Contracting out e-government project; • Implementation of projects.

IBM Business consultancy were chosen to carry out the first phase of the project, including 21 government ministries and 18 government agencies, as well as their readiness to introduce and implement the e-services, such as G2B, G2C, and G2G. The second phase was launched in 2004 and was taken care by Etisalat which assignment was to create an infrastructure linking all federal ministries and agencies. The steering committee identified six high-priority projects to be introduced first including e-Portal, e-Project, e-Messaging, Human Resource Management System, Identity Management, and Financial Management Information System (FMIS) Project. The FMIS project was expected to be launched in 2006 at all federal agencies and the ERP system developed was built on Oracle's platform (Madar Research, 2006). Most emirates in the UAE have their own e-government initiatives at different levels of progress.

ICT and e-business in politics

The services of ICT have been provided under monopoly conditions by Etisalat, a company of which the UAE government owns 60 per cent. The Telecom markets and IT market are considered to be the most developed sectors in UAE. Steps are taken by the government to liberalise the ICT market and released a second license to a new telecommunication company. The UAE TRA and the Supreme committee is working to develop and establishing policies to improve the competition and encourage new technologies, products and services (UAE TRA, 2005).

The UAE have taken the main initiative to implement and develop e-business in Middle East. Since the early 1990s the government of UAE has tried to diversify into the non-oil businesses. The government sees e-business as a standard rather than a sub-sector. Therefore a lot of resources and developments have been made in this business. According to UAE TRA (2005) the nation is undertaking every change to market itself as the ideal location for both domestic and foreign companies to undertake e-business ventures: B2B, B2C, G2B, and G2C. There are three major EM:s operating in UAE; Tejari, Builders Portal FZ and Petrocommerce, see chapter 6.2.5 (Madar Research, 2006).

17 Cherif Sayed Consultant Swedish Trade Council, interview 20th of Aug 2008 18 Ibid

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6.1.5 Technical factors

Changes in technology have also become significant in the post-millennium world, this in term of modern communication technologies. Fast and effective information transformation shared and distributed between parties has leaded to cost reductions and improvements in many areas. Organisations need to be aware of the latest relevant technologies to keep up with the changes and their competitors.

Infrastructure

The ICT Infrastructure in the UAE is positioned as one of the top of teledensity and Internet dissemination in addition to advanced satellite and cable services. DIC has positioned itself as the most successful business model in the Middle East to attract foreign ICT companies. The broadband infrastructure is not that developed and customers are demanding increased bandwidth (STC, 2006). Thanks to the attempt of the government to liberalise the telecom industry will be vital for the use of broadband.

Figure 6.4 Difference in connections in the UAE during 2000-2004.

Internet usage

In 1995 Internet was launched in UAE and is available for all users including academies, business, industries, and home users. Since the start up of Internet the number of users has increased exponentially. The regional average broadband penetration is 2.4 per cent but is expected to grow rapidly. In UAE the broadband penetration was just over four per cent in 2005 and the overall internet penetration was 34 per cent (STC, 2006).

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Figure 6.5 Trends of Internet usage.

IT market structure

The market in UAE as well as other Arab countries is dominated by hardware. In 2005 the hardware accounted for 45-60 per cent of the IT market and just over 50 per cent in UAE. Software and serviced accounted for 25 per cent each. As an affect of the large scale spending on hardware there have been an increased investment in software’s as well and it is expected to grow significantly to the year 2010 (STC, 2006). One major hinder to the software market growth is the legislation to control pirated software. ERP market in UAE together with Saudi Arab, are the fastest growing markets in the Gulf. Swedish Trade council reports following: “71 % of 342 senior business managers at medium to large organisations in the GCC contacted by polling firm YouGov admitted to being “not entirely satisfied” with their ERP systems and looking for a better alternate”. The distribution of ERP systems in the Gulf is mirrored by the rest of the world, where SAP has 45 per cent, Oracle 33 per cent and the rest is distributed on smaller providers. As an effect of the security legislations concerning IT a lot of investments have been made on IT security solutions.

6.1.6 Summary of the SLEPT-analysis

In the table below, a summary of the most significant parts of the SLEPT-analysis is presented.

Table 6.1: Summary of the SLEPT-analysis

Factors Summary

Social The growth in population has increased 1000 per cent last 30 years and largest fraction is around working age.

The natives in UAE have free education and free health care and people do not have to pay taxes on their income.

In contrast to other Arab countries UAE is very open to alternative cultures and religions.

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People in the UAE have the highest rates of Internet use and PC:s installed were doubled between 2002 and 2005 which is a sign of better economy and higher spending opportunities for the people.

Legal Several federal IT laws have been instated which protects information transferred between to parties. This has given opportunities for companies to use secure ways of electronic transactions of information. These laws also motivate companies to do business through softwares, such as ERP systems and e-marketplaces.

It is free for foreigners to establish a company in UAE in the so called free zones, which is 100 per cent tax free. If a company wants to establish a business outside the borders of a free zone other directions have to be taken.

Economical The economy in UAE has swelled in the last decades. The drivers are the petro industry together with Emirates of Dubai and Abu Dhabi which are booming in construction, hotels and tourism.

A lot of the capital that is invested comes from foreign investors. Much money is pumped into the country's economy which is refined to the people through buildings, new infrastructure, new technologies, education and healthcare.

Political The UAE is member of several large organisations such as WTO and GCC, and have bonded trade pacts with the European Union which claims a liberalised market and new requirement to be fulfilled. Therefore new laws and regulations have to be instated which supports the requirements have to be instated.

UAE have a very political stability thanks to the economic growth and the government is supported by its people thanks to the improvements in living standards the last decades.

The government has put a lot of resources also in technology change such as e-government and e-readiness to cope with the development in Europe and North America.

Technical DIC is one of the main reasons to the development of ICT in UAE. Foreign business have established and operated their enterprises in the free zone of DIC. The IT-infrastructure is yet to be developed in UAE, because there is a large growth rate in Internet users thanks to the government’s liberised telecom industry. The limitations are in the infrastructure of for instance broad band.

One have seen that the IT market have been dominated by hardware the last years and now there is an increase in spending at softwares, which is a side effect.

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6.2 Porter’s Five Forces

This chapter describes the different forces in PFF which contributes to the competitiveness and profitability in the UAE EM business.


The influence that the suppliers have on the EM provider is general and therefore the reader is referred to chapter 5.2.1, where the topic already is handled in the European market analysis.

6.2.2 Bargaining power of users

This is a weak part of the Five Forces. As the user is the customer of the EM it is using a service provided and is no direct threat to the EM. If a marketplace has a small base of customers and has not reached critical mass, then the customer is more valuable and has increased bargaining power. In a case where the EM has a massive customer base, the customer's bargaining power is negligible. It has the same dynamics in the UAE market as Europe.

6.2.3 Threat from new entrants

There are several new entrants and forthcoming businesses that will enter the EM business thanks to the development of the IT-infrastructure. Though the market is segmented and these known new entrants are niched into individual markets and are off springs from the big actor Tejari. This is a proof that the market is still in growth and that there are market shares to compete about. As these new entrants already have a massive network in Tejari, they will likely reach critical mass soon enough and establish themselves.

6.2.4 Threat from substitutes

Threats from substitutes are similar to the European market study in chapter 5.2.4. As the IT-infrastructure is growing in UAE the demand for ERP systems is likely to increase in the same manner. In line with the market share of ERP systems in Europe, SAP and Oracle are dominating the ERP system market in GCC. Growing number of companies are leveraging mature ERP implementations and deploys more advanced applications such as CRM and SCM solutions (STC, 2006).

Figure 6.6 ERP market share in GCC (STC, 2006)

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6.2.5 Rivalry between competitors

There exists three major online marketplaces in UAE; Tejari, Petrocommerce and Builders Portal FZ, where the first is the largest actor in the Middle East. Petrocommerce and Builders Portal FZ are two niched e-marketplaces in the Petrochemical business respectively the construction business. A fourth e-marketplace, Samsari, is also mentioned which is a niched EM in the real estate business. Almost all focus is laid on Tejari, since it is the dominant and leading EM in UAE and Middle East.

Tejari

Tejari is a Limited Liability Company, which is owned by the investment company Dubai World, which manages and supervises a portfolio of businesses and projects for the Dubai Government. Like current major EM providers in other markets, for instance Europe and North America, those in UAE were also launched around the year 2000 and only a few survived the initial stage of the hype, due to the dynamics of Utterback’s (1994) Dominant Design and Shake out process.

Tejari is no exception and was established in June 2000 and have its origin from Dubai Ports Authority using Oracle exchange platform (Madar Research, 2006; www.gulfnews.com).

Thanks to Dubai's aggressive strategy towards an e-governmental environment, Tejari made a lot of benefits. All governmental institutions and agencies were set to do their business electronically through Tejari. This forced the government's suppliers to join the online marketplace bringing about economies of scale and Tejari reached the critical mass quickly (Madar Research, 2006). Later on Tejari expanded into the private sector and spread out into the Middle East. Tejari's mission was to create a public, efficient, open and transparent procurement platform where buyers and sellers could meet and do business.

Today Tejari operates in 15 countries, including Middle East, North Africa, South Asia and China, where they have ten offices and around 100 employees. Over 190,000 enterprises are members across the world (www.gulfnews.com). Since the start Tejari has operated on a solid business model. Firstly they attracted a base of committed buying organisations that became the primary beneficiaries of the services of Tejari. The buyer’s commitment and adoption of online procurement also lead to committed suppliers, which generated more users, while Tejari's revenue model was based on paid membership fees, to access the services. While having a solid base of users Tejari introduced new value added services to improve the procurement processes (TRA, 2005).

In 2002 Tejari's accumulated transaction value was $365 million and it increased to $963 million during 2005 with 4,659 companies trading, either buyers or sellers (Madar Research, 2006). According to www.business24-7.ae the yearly accumulated transaction value has increased around $1 billion per year and Tejari is aiming to reach 1.5 billion during 2008 as they are expanding into new markets.

Tejari has established partnerships as it has expanded the number of operations. Partnerships with several overseas companies, which has accommodated more trading partners in a wide range of industries such as aviation, hotels, ICT, retail, government automotive and fast moving consumer goods.

Products and services

Similar to the European market study in chapter six, Tejari offers the same services as the big players in Europe and North America, but in other shapes and forms. Buying and selling

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packages which contains different portions of services are offered to customers to support their different needs. As Tejari is expanding into new markets, new services have to be offered to meet new demands and customer needs. This generates new concepts and packages of services.

To improve the level of e-readiness in the region, which is a fundamental part when using online procurement, Tejari has started up programs where they offer, in addition to their standard packages, education in e-readiness and consultancy. In these programs Tejari offer websites and company profiling, where they can showcase their products and services to facilitate trading and gain new customers. This will particularly help SMEs to increase their visibility at the market. In 2005 were the regular fees, charged for Tejari services, in the span of $200 to $10,000 (Madar Research, 2006).

To attract more companies to the EM Tejari has started several sub-communities and portals that support specific industries. For instance a federal service – www.madeintheuae.com – which is a new B2B-EM being developed by the UAE Ministry of Finance, Dubai eGovernment and Tejari, to give the country's manufacturers an exclusive opportunity to expose and promote their products and services. The co-operation with Tejari will benefit in getting access to a strong 75,000 customer base. Madeintheuae.com will provide online product catalogues and offer matchmaking alerts through e-mail and SMS.

Apart from the traditional and regular services of an EM, Tejari also tries to increase the Internet penetration among their members. According to the CEO of Tejari, Omar Hijazi, they provide services like; if a supplier doesn't have a broadband connection they get one for them. Tejari also help SMEs with capacity building and brief them about e-business so they can use their services efficiently. Tejari also drives e-readiness campaigns together with other firms to assure that the members are able to trade online. Hijazi also mentions that Tejari plans to launch 15 new industry-focused communities in the near future (www.business24-7.ae).

Builders Portal FZ

Another EM which is operating from DIC is Builders Portal FZ. This marketplace is niched into the construction and contracting business and had around 5,700 members in 2005 (Madar Research, 2006). The revenue model of Builders Portal FZ is a low annual fee for all members, which is complemented by a percentage fee for transactions over a specific sum (www.buildersv2b.com).

Petrocommerce

A third public EM called Petrocommerce, which is niched into the oil and gas industry, and owned by a group of businessmen supported by partners as IBM, Insyst and KPMG. Petrocommerce serves the region with requirements regarding equipment, materials and services. Unlike Tejari and Builders Portal FZ Petrocommerce is based in Sharjah and is keeping a low market profile since it could be attributed to the strict clauses in the oil industry (Madar Research, 2006).

Simsari

Simsari is a niched EM, owned by Dubai World, where buyers are provided with property information and financial approval. Interested parties from around the world, have the option of purchasing properties using a traditional offer or bidding through an online auction system. The marketplace offers developers and real estate agents tools such as market researches,

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one-step listings and buyer behaviour analysis. Large investments have been made to make the trading as secure and transparent as possible (www.dubaiworld.ae).

6.2.6 Summary of Porter’s Five Forces

In the table below, a summary of the most significant parts of the PFF-analysis is presented.

Table 6.2: Summary of key factors from Porter’s Five Forces.

Force Influence Summary

Bargaining power of suppliers Low It is in the suppliers own interest to conduct trade.

Bargaining power of users Low There are few e-marketplaces in UAE.

Threat from new entrants Medium The IT-infrastructure is in strong growth and several new entrants are entering the business. Many are niched and in co-operation with Tejari.

Threat from substitutes Strong Large ERP providers and SCM systems may offer the same solutions.

Rivalry between competitors Strong One major competitor in Tejari which have a strong owner and have a broad network and member base.

6.3 Kano-model As Tejari was the pioneer in the EM business in the UAE (Madar Research, 2006) and is the most distinct and developed provider, the KANO-model will be based on their product and services. The UAE still have a considerable growth of development in ICT and IS/IT and is aiming to catch up with the West World. The Emirates of Dubai and Abu Dhabi are already considered to have reached and passed some countries but still there are Emirates who are lacking basic IT-competence. Therefore some general attributes which are basics and standards in Europe or America could be performance and also excitement attributes in some parts of the UAE. This could be for instance that Tejari is offering consultancy to educate users in IS/IT, but in developed countries this would have been a basic service or even surplus, because the widespread know-how in IS/IT and ICT.

6.4 Analysis of the United Arab Emirates

The UAE is in large economic growth. The increase of investments in oil, construction and tourism industry has made it possible for the governments to improve the infrastructure and wealth in the society. This is driven mainly by the Emirates of Abu Dhabi and Dubai. New legislations and restrictions in the UAE have made it easier and more attractive for companies to use IT-supported services. The freezones that are specialised in IT for instance Dubai Internet City and JAFZA are two main reasons why the level of IT have emerged in the last decade. Companies from abroad can establish businesses under very decent conditions. The

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government is putting a lot of efforts to improve the e-readiness in the country to keep the same pace of development as in West World.

The UAE have a good IT infrastructure in the rich Emirates of Dubai and Abu Dhabi. But in other emirates the connections are slow and therefore the portals, EM:s and also web pages have to be very simple to recruit users with slow connections. This is a development obstacle and will of course be better in the future.

Tejari, owned by the Government of Dubai, is the largest actor in the EM business and is expanding into several emerging markets as North Africa and Asia to win market shares in the EM business. In UAE many of the SMEs have a scarce education and know-how in IT and therefore Tejari also offers IT-courses and consultancy to learn how to use Internet as a trading media. It is not only supposed to cut down costs and streamline operations in companies Tejari offer services such as learn companies how to use utilise IT, the EM and its applications.

Many newcomers in the B2B-EM business are industry specified and therefore they are no threat against each other. Many of them have a co-operation or are offspring to Tejari and are in their turn sharing customer base which will generate revenues for both parts. They are doing this to reach more users and distributors, reach critical mass and network externalities.

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7 Compilation of business model Areas that have not been fully investigated in the market analyses will in this chapter be examined deeper.

7.1 The tentative business model

This section will provide complementary pieces to the components of the tentative business model, which are not handled in the previous chapters.

Value proposition

It is mainly a service that the Assigner is going to provide and it will be important to identify the processes which the EM would support the customer. The Assigner has to make these processes more efficient than the customer do today to create increased value.

Keeney (1999) list several things that can raise the value for the customers to join an EM, see Appendix B. Traditionally values created by EM:s are cost savings and marketing of products or services. Cost savings is mainly done by reducing the administrative and operational costs, make the procurement/invoice process more efficient, rationalise and create new buy/sell channels. Cost savings may also be achieved by providing system integration, standards implementation, and technology solutions services. Marketing value occurs from the possibility to reach new customers. If the EM would be valuable for the customer to use for marketing, it has to host lots of users with interest in the specific products or services.

The value proposition also has to be put in a context, even if the process can be made more efficient by an EM solution it do not have to be prioritised by the customer. All companies have limited resources and have to prioritise where they put their resources. Companies will always spend their energy on the area there they believe they can decrease their costs or raise their revenues at a maximum. Even if the company recognises that the EM can make the administration more efficient, they instead choose to spend their resources on installing a new machine in production to be able to produce more products.

Even if companies prioritise to make the buying process more efficient other obstacles still may hinder the adoption of an EM solution. E-Market Service states that “For many companies, e-B2B is the most direct way to reduce costs and increase business efficiency. But there are several major barriers that limit growth, such as transaction insecurity, fears of different tax codes, possible problems with complaints and the different national legislation applicable to transactions.” This new process has to fit the organisation of the user company. The EM:s can help change the buying/selling processes, marketing or administration, but the change has to fit into the other processes at the companies. Lefebvre L-A, Lefebvre E, Boeck E and Boeck H (2005) made interviews within companies that had introduced e-trade, one of the CEO stated “Although our previous experience with B-to-B e-commerce was limited, electronic bidding is not difficult per se, at least in this particular platform, but the reengineering of our internal processes in order to respond to the electronic bidding is much harder”.

Käll19 describes other obstacles that may occur for SME:s to make their business processes more efficient with e-trade. They sell products to regulate temperatures individually in apartments. They buy products from several suppliers, of larger size than their own company, and therefore they have little influence over their suppliers. The orders are sent either by phone, fax or e-mail. If they start trading through an EM, with one or two of their suppliers, 19 Andreas Käll Application Engineer CompWell AB, interview 21th of Oct 2008

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they will suddenly have to handle a fourth way of communication. Introducing e-trade in this case will be another burden for the SME instead of rationalise the business process.

Lefebvre, et al. (2005) identifies that the mix of procedures is counterproductive, which hidden costs and can be frustrating for SME:s. Lefebvre, et al. (2005) continues to state that introduction of e-trade in SME:s is largely influenced by powerful stakeholders. This is in line with the findings from the interview with Käll.

Ayers20 mentioned the 80/20 rule and described that the EM takes care of the buying process for many small customers to the large suppliers. The large customers that stand for 20 per cent of revenues trade directly from the supplier company.

Identification of the processes that contributes mainly to the value proposition is of large importance. Despite large growth of EM:s and e-trade since around the millennium, it has not radically changed the buying/selling processes. It is identified that telephone, fax and e-mail still is widely used by companies in their buying/selling processes.

Outcomes of the Kano-model say that the value proposition offered by existing EM providers does not differ much. At the same time the market has reached a maturing phase influenced by reduced revenues and consolidation. This intends that there are difficult for existing EM providers to offer new features that are enough valuable for customers that can differentiate them from other competitors. Instead they have to compete by price for the service, this generates lower revenues and a need to reduce costs.

When there is hard to offer solutions that differ from the competitors, strategies how to offer the solution can instead be used. As it will be discussed later in this chapter, approaching SME:s companies are most suitable for the Assigner. SME:s often have scarcity of resources to implement and learn how to use an EM system. Offering the features in a simple and easy way may attract SME users. Providing SaaS solution to make the installation processes easier will lower the entry barriers. More advanced features can be hidden from users that not need them so they experience the EM easy to use. Tailor-made solutions will reduce resources needed and also provide education for employees.

The trend today is co-operation between companies to make the supply chain more efficient. E-trade solutions in shape of ERP or SCM systems are widely used in co-operations between large companies. Supply chain can make the value creation process more efficient for SME, but e-trade systems between SME are more rarely used. Looking for solutions in the SCM area may be an inspiration how to expand the offer. Then efforts have to be put on relationships with the trading companies using the portal, so they to share their necessary information that are needed to make the supply chain more efficient.

The support is one of the most important ingredients in the value proposition. Referring to the Kano-model support is a basic attribute and essential for the user. The main obstacle with the support is when providers are going global, due to cultural aspects and time differences. Bruner21, Ayers22 and Salehi-Sangari23 mention the support aspect as one of the largest difficulties when providing an EM.

20 Adam Ayers Sales- and Marketing Manager Endorsia, interview 10th of Oct 2008 21 Ivan Bruner e-Supply Manager SKF, interview 25th of Sep 2008 22 Adam Ayers Sales- and Marketing Manager Endorsia, interview 10th of Oct 2008 23 Esmail Salehi-Sangari Professor Luleå University of Technology, interview 2nd of July 2008

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Revenue model

Sculley and Woods (2001); Bruun, et al. (2002); Bloch and Catfolis (2001) have identified several revenue models that might be suitable to use by EM:s:

• Transaction fees; • Subscription fees (also named entrance or membership fees); • License fees; • Advertising fees; • Fees for value-added services.

The standard model that has been developed in the business is to obtain a fixed amount of fee per customer and time unit (subscription fee). This influences the use of the portal when the customers can use it for as many transactions they want or to as high value as they need and therefore also easily can calculate the cost. To be able to charge different prices to different customers the subscription fee is divided in different packages according to how many features they contain. Many EM:s also seem to have a maximum of how many transactions or value of transactions the customers are able to perform, if this limit is passed then a higher fee have to be paid by the customers. This is in line of what Bruun, et al. (2002) suggests, that the revenue model should rest on a combination of fees rather than on a single fee type.

It is unsure how large the revenue levels are in the market today. An investigation made by Bloch and Catfolis (2001) states that “Most transaction fees are based on a percentage of the transaction price, usually amounting to between one and five per cent, but these numbers are expected to decrease as technology evolves”. Much have happened since the investigation was made, but it can be expected to set the revenue level around the lowest level of the investigation. Salehi-Sangari24 discusses revenue levels in the region of one to two per cent of the value of the products, he also mentions that this level is on the way down a little bit more.

Only one EM provider that the Authors have investigated has based its revenues on advertising. The empirical data from Engström and Salehi-Sangari (2007) do not indicate the existence of advertising fees or license fees. To base the revenue model on commercial fees can therefore be a possibility to differentiate from the competitors.

Commercial revenues can be used to lower the entrance barriers for SME:s to start trade through EM:s. This can be made by offer some basic features for free, for example search in catalogues and send order requests. This will gradually introduce the user to the EM and raise knowledge about how the technique works. Above these basic features the users have to pay a subscription fee according to how many features they intend to use. At a certain level the user can also get rid of the commercials.

Lefebvre, et al. (2005) developed a model for how SME:s in the manufacturing industry adopt e-business (see Appendix C & D). The investigation shows that 79 per cent follow this adoption model, even if the sample size was a little bit small. This model can be used as a base when deciding what features that would belong to the different price levels or package offered.

Raising incomes from commercials of directed advertising may be developed. When a user logs into the EM, the user will only receive commercials which are of interest for him. This will raise the value for buyers of commercials, when they reach the right and interested target group with its message. With this method also more commercial space are able to sell. To be able to sell these spaces it has to be identified what companies that would be interested to buy commercial space. Identification of what products or services the user mainly sell or buy would

24 Ibid

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be a start in this process and this will then be communicated to the potential commercial buyers.

A revenue model based on commercials can be created to handle the lower levels of revenues that the EM approaching. Other sources of revenues or incomes make a competitive advantage against competitors that just only based their revenues on fees. In the other hand the concept with commercial fees can easy be copied by other if it is show successful.

Concerning what party to charge (i.e. buyers or suppliers), Bruun, et al. (2002) and Chung, Ephraim, Heckmann, Laseter, Long Oliver, et al. (2001) suggests that the revenue model should charge both parties, based on who benefits from the value created through the EM.

Customers / Market Segment

The Assigner does not have any customers yet and the identification of customer will be based on what characteristics a potential customers will have. This will be based on identified holes in the market which has been identified in the market analysis.

An identified success factor for EM:s is to get a large network of customers to achieve network externalities, get enough revenues and reach critical mass. One way would be to convince a large actor to purchase or sell many of its products or services through the EM, and this would quickly create the necessary network of user. Despite this, attract large customer can be hard to achieve as market analysis show that large companies already using e-business in all areas. Bruner25 indicates that large companies have the EM solutions if they wish to. To attract a large customer for a small company as the Assigner could also lead to problem in resource demand and power balance.

Another way to reach a large network of users would therefore be to approach a network of SME:s. As discussed earlier much of the information between SME:s still are sent by phone, fax and e-mail, therefore it could be potentials to improve and make the buying process more efficient. Identification of potential customers can therefore be made in industries that not contain large corporations that have gained lot of power. A network of SME:s that supply a larger company with products or services is one strategy.

A drawback in approaching SME:s is that they do not have many resources to spend on investments in new technique as large companies. Except the daily work at SME:s, resources that are demanded to invest in improvements are highly prioritised. A value proposition that show the value for the SME:s and have low entry barriers will make the marketing against SME:s easier. On the other hand, SME:s have shorter deciding process. It is also easier to identify the decision making unit in a smaller company.

To be able to clearly specify the value proposition a smaller niche market is suitable to approach. Then the problems and needs that can be made more efficient at the users are easier to identify, when these have been identified the value proposition can be more specific. The niche market has to have a certain size or else there will be problem to get enough revenues to survive.

SME:s do also make business with large companies, to build in features that can handle this will further raise the value for SME:s. Communication with ERP systems or similar has to be able to do through the EM. One problem is that each ERP system is configured to a specific


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company, also the context of the files use to be different between different companies or industries26.

Standard organisations like EBXML and EDIFACT create standards for the context of the files for different industries. Even if these are the largest standard organisations it exist lots of others for standards created outside these organisations. This integration would be easier if an EM is created for a specific industry or niche market.

Create an EM for SME:s would lead to an exchange hub (many sellers to many buyers). This could be extended to make it possible for many users to make collective purchasing to gain purchasing power. Ideas how to create a more collaborative commerce (communication and sharing of information, design and planning among business partners) would be valuable, but this demands more trust from the user to be accepted.

For the Assigner as an independent creator of an EM it would be the easiest strategy to be a system enabler. Letting the users use the existent trade channels and make them more efficient. More trust and dependency have to be achieved if the users drastically want to change their buying behaviour. On the other hand, create a new channel to reach potential new customers would also be valuable for the users.

If the assigner chooses revenue model based on subscription fees it will lead to that the Assigner would have to find many customers that use the portal. With this revenue model the numbers of transaction or their value are of less importance to gain enough revenues. Therefore it will be important to look for networks that contain many customers. Big customers will probably be able to pay higher amounts of money to use the portal but will not contribute to the essential amount of revenues. In the other way they often have a big network of customers that will be potential customers to use the portal. Big company might also have the power to force the smaller companies to trade through the EM.

The customers would most probably be involved in trade with products or services that fall close to the definition of Kaplan and Sawhney (2000) in chapter 4.3 “Limitations of e-marketplaces”, explaining that commodities or near-commodities products work best in the matching process that EM:s offers. It has also been discussed in interviews with Ayers27 and Bruner28 that it is hard to sell more customer specific products through EM:s.

Without sellers, no buyers are interested in joining the EM. Without buyers no sellers are interested. So how do EM:s go about solving the chicken and egg problem and getting the positive feedback loop started (Bruun, et al. 2002). To solve the chicken and egg dilemma Bruun, et al. (2002) argues that EM:s should target key players who are likely to trade the most and get them join early, rather than focus on signing up most number of players. To speed up the adoption process the EM should actively help these key customers migrate transactions to the EM. Another way is to contracting key buyers and sellers or perhaps offering them equity in the EM in exchange for participation.


As the Assigner is developing a service oriented product, the competencies are the most important factor in this category. The competencies have to match what the value proposition is about. All employees have for the moment their background in technical competences. As

26 Adam Ayers Sales- and Marketing Manager Endorsia, interview 10th of Oct 2008 27 Ibid 28 Ivan Bruner e-Supply Manager SKF, interview 25th of Sep 2008

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showed before in this chapter there is important to understand the processes, therefore it would be good to raise the competences in that area within the Assigner.

Hardware like computers, networks etc. which are needed to run the EM are all standard products without any extensive cost to buy or to hire. Therefore they are not a critical factor in the value creation process.

Assets in form of capital, resources and reputation of the owner have been of influence when existing EM:s have started up their business. This factor has not been taken into consideration of the development of the BM when the knowledge about the investor has not been known by the Authors.


Some of the value creation process in the EM is made by external actors such as financial services or logistic providers. Dai and Kauffman (2002) concerns facilitation of transactions, this function can be performed by providing Internet-based financial services. Due to the fact that only specialised institutions can provide such services, EM:s have to create partnerships with financial-service providers to gain a win-win situations. Similar developments toward forming partnerships with specialised service providers are taken place in the area of delivery and logistics (Dai & Kauffman, 2002). Leveraging physical value delivery, such as global logistics, freight forwarding, warehousing and inspection services, are even claimed to be a requirement for the long-term success of EM business models (Raisch, 2001).

Several partnerships have to be created if an EM should be competitive and able to create enough value for the customers. There are examples where financial providers are partly owners of EM:s, this shows that it is important to have strong relations with external actors (www.ketera.com; www.ibxnordic.com).

Competitors

The competitors have already been discussed in the Europe and UAE market analyses, therefore a shorter overview will be handled here. Around 2000 the EM concept become popular and tremendous amounts of companies start to offer the service. The market soon got over crowded and the providers had been reduced in numbers by mergers, acquisitionists or bankruptcy. Today there are still a large number of providers that offer EM:s, but the numbers are expected to shrink further. Revenues continue to be reduced, forcing the EM providers to grow bigger to get economy of scale and network externalities.

Many e-solutions can handle e-trade on the market and them all support different processes in the company. E-trade between systems is also possible to process, even if initial system integration may be necessary. Trade between EM:s and other systems are also commonly used today. This has lead to threat from substitute products are high and not always easy to identify.

The market for ERP systems have become mature and started to consolidate in the latest years. The two biggest ERP providers, SAP and Oracle, have a stated goal to approach the SME market, which is identified as the most reasonable for the Assigner to approach. Both SAP and Oracle are in the same time owners of EM:s and do not see these as competitors.

Competition in the industry is severe and it is dominated by large growing EM providers that have existed since around the start of the millennium.

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Differentiation

Efforts have to be put on how to differentiate from competitors that today have strong networks and resources. Dominant design is reached in the business in shape of what features an EM offers to its users.

One identified opportunity to differentiate from the most EM:s is to use commercial revenues which offer free services. This service is easy to copy for competitors, but at the same time this differentiation might get left alone because of mentally evaluation that commercial is “ugly”, and may be a reason why so few EM:s is using commercial revenues. In the start-up phase commercial revenues could give the Assigner time to grow and create enough revenues to survive.

To see how the EM:s are differentiated in specialisation of products and services vs. markets in a geographical aspect, the SGA was applied. Twenty companies were stochastically chosen from the investigation “Significant E-marketplaces” performed by Susanne Zällh at the Swedish Trade Council in 2005, on behalf of www.emarketservices.com, see Appendix E. The selection of EM:s to Zällh's investigation were based on two main criterions:

1. The EM:s are well known globally in their industries and they have significant global traffic.

2. Other basic criteria for being rated as significant have been that the EM:s should provide the following information:

• Complete contact information; • A statement of privacy; • Information on membership criteria and transaction statistics.

Figure 7.1 Strategic Group Analysis of EM:s in level of niche vs. geographical coverage.

Local

Hig

h

Global

Low

Tender- link

Acambiode

Tejari

Geographical coverage

cc-Hubwoo

Alibaba.com Ariba Inc

Rusbiz Global Sources Cargo Portal-

service Sourcing Parts

Supply on Elemica

Converge Endorsia

GHX One Areo Quadrem FORDAQ

Trade-place

Econstroi

Spec

ialis

atio

n –

Leve

l of n

iche

1

6

3 2

4

5

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The 20 EM:s picked for the SGA got divided into six groups, which is illustrated above in figure 7.1. One can see from the analysis that the biggest part of the selection of EM:s are niched into a specific industry and have a global geographical approach.

Group 1, 2 and 3 have a very wide and general product and service base towards their customers. The EM:s in Group 3 are the largest and well-known providers and these have specific areas where they operate. Therefore they are not clearly global and not local either. Group 1 and 2 are very local EM:s but have a broad assortment of products and services. Though Tejari is aiming to go global and is moving slowly towards group 3.

Group 4 contains the EM:s which are operating at a small user base which have very specified products or services. These EM:s are surely in their start-up phase or in tight partnership with their users to create win-win situations.

Group 5 and 6 contains the largest fraction of EM:s. Group 5 includes providers that have high level of niche products or services and are global. These are operating in different market segments and are not competitors. The EM:s in Group 6 may be competitors because of their level of niche in their assortments in addition to that they are global.

For a new entrant in the business such as the Assigner, the most viable strategy would be to in the initial phase approach the region of Group 4 in partnership with a specific company or industry (could be global) to reach a uniform user base, and develop from that position.

The large providers such as members of Group 3 also started in the region of Group 4 and then through partnerships, acquisitions and merging of companies have moved towards the position of today.

7.2 Summary of the research questions and answers

Before the recommendation of a BM the RQ:s will be summarised and shortly discussed. They are answered from the data and discussions in the chapters Europe, UAE and BM. The RQ:s will then be the base when the recommendation to a BM is made.

Table 7.1: Summary of the research questions and its answers

Research questions Summary

Who is the customer? Networks of SME:s, trade with commodity products.

Trade non-differentiated products in large volumes.

Industry with low rate of e-trade.


How do current actors compete about customers?

Make the purchasing/selling process more efficient.

Lower the transactions cost.

Marketing.

Buy everything from one EM.


How are their BM:s formed?

Mainly established around 2000.

Multinational and large companies.

ERP and SCM systems.

Large networks.

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Subscription fees combined with transaction fees.


Develop to suit SME. SCM solutions for SME:s.

Low price by commercial revenues and efficient SaaS solutions.

Start with a differentiated assortment of products or services in the initial stage to reach a decent user base in local (or global if needed).

Are there any substitutes or complementary solutions to e-B2B-marketplaces?

ERP providers.

Programs that can handle EDI or XML. ERP providers can offer both closed and open e-marketplace solutions. Many other systems that can handle e-trade also exist that are compatible with e-marketplace.

What are the main success factors of current e-B2B-marketplace providers?

Strong owner.

Large networks.

Utilisation of large network within a big company at start up.

Critical mass of users.


Large companies maturing in e-business.

ERP providers make solutions for SME.

Trend is to integrate SCM solutions to the web portals.

Consolidation of companies.

UAE: Growth in economy and e-readiness to catch up with the western world.

7.3 Recommended business model

This chapter presents the final BM that the Assigner is recommended to use.

Value proposition

The value proposition that the Assigner will offer have to contain the basic features and services that all the other EM providers offer. These are identified as the basic attributes in the Kano-model and are necessary if any customer would take in consideration to trade by the Assigners solution.

For many companies the relations to its suppliers and customers become more important than to just only find the best price on a product or service. Another trend in B2B-trading is to make the SCM more efficient. To think in terms of SCM solutions and identify the processes that can be supported by an EM is one way to expand the value proposition. Also how the EM can improve the relations between the users can contribute to the value proposition.

For the Assigner a revenue model that combine the three different models advertising, subscription and value-added service fees are recommended to use. Through advertising it is possible to offer the basic features and services for free to SME:s and this will increase the potentials for testing and get knowledge about the EM. When the customer is familiar with

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the basic features and services, the user will more likely be interested in expanding the use of the EM further.

Then a revenue model based on subscription fee can be used in a combination with value-added service fees. Package with value-added services can be offered by a fixed amount of money. Further on some limitations can be connected to the package to differentiate the revenue model, this can be based on either transaction volume or value.

Customers / Market Segment

There is identified that large companies already have an extensive use of e-business and e-trade. I combination with the fact that the Assigner is a small company it is considered hard to approach these corporations. Therefore it is more suitable to approach the SME segment of users that not have so well developed e-business systems. For many SME:s, e-business is one of the most direct way to reduce costs and increase business efficiency, this is a proof of growing potential in this segment. Despite this, there are other obstacles for SME:s to adopt e-business, like scarcity of resources, influences of large companies or internal processes.

Products or services that contain large number of customer specific features are hard to compare and have to be traded in large amounts to be efficient in an EM. The matching mechanisms that are made by EM:s are most efficient when trading commodity products, this will further narrow down the search for users.

A success factor in the EM industry is to have a critical mass of customers, therefore it is important to find a large network of customers to gain enough revenues and network externalities. This will also be of important if revenues will be based on commercial fees, the value for commercial buyers is then to reach a large amount of potential buyers. Suitable customers for the Assigner would therefore be found in a large network of SME:s that trade with industry specific products, which are commodities in their specific industry.

Above the daily work, SME:s have not large amounts of resources to spend on introducing EM solutions in their business. Therefore the entry barriers for start using an EM solution have to be low. Solutions that make it easy to incorporate EM:s in the daily work is important to develop, identification of what these problems are for SME:s has to be undertaken and solved.

Telephone, fax and e-mail are today the most commonly used methods for SME:s to communicate with other companies. Introducing an EM without reducing some of the other communication methods will probably be a burden for SME:s. A solution to this problem is to introduce the EM simultaneously for a whole network of users and this can lower the entry barriers for SME.


The Assigner has good knowledge about how to handle the software and hardware that make the e-trade possible in an EM. On the other hand they lack knowledge in the business processes that the EM supports. As it is a service that the Assigner want sell, it is important to understand how the business processes works. Hire consultants or start a business department at the company to generate complementary know-how is recommended.

If approaching the UAE the Assigner has to take care of existing competence and assets of the capital venture source. This is essential when to establish an enterprise in the UAE, regarding the legislations.

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It is fundamental to start partnership with external actors like logistic and financial services providers. These services are crucial to the value creation of an EM but are not able or efficient for the Assigner to perform. Creating a network of providers is therefore a basic part in the BM.

Approaching an industry-specific organisation which contain many SME:s that have low level of e-trade will be important. This could later generate the critical success factors that are so important for an EM to establish at the market.

If approaching the UAE it will be essential to utilise the existing network of the owner to reach externalities. It takes time and resources to create an own network, and it lies also in the interest of the investor to get successful.

Competitors

Even if the value proposition is good enough for the users, the competition in the market has to been taken in consideration. Since the hype that surrounded the EM industry around 2001 the consolidation phase has influenced the market. The number of providers becomes less and larger and a very few providers have entered the market in the last five years. The growing providers’ benefits from both network externalities and strong complementary assets, this creates higher entry barriers into the industry.

As the market has matured the value proposition from all providers have become similar. The way that differ them is mainly by geographical coverage and types of industries they are active in.

Supplementary products as ERP- or SCM-systems had a large market share even before the EM:s were introduced. The market for ERP-systems has reached a majority phase where it has become a necessary for large corporations to use the systems to stay alive. To expand their market, ERP vendors also try to attract SME companies.

The threat from competitors looks different in Europe and UAE. Europe has a large number of different providers in different industries while UAE have only one major provider in Tejari that provides many industries, and some minor which are much differentiated. As the government own Tejari and have large power in the UAE there is important to know how relations between the actors influence the possibility to start an EM in UAE.

Compared to its competitors the Assigner is lacking assets, capital and networks. Threats from competitors will therefore be the largest obstacle for the Assigner to succeed.

Differentiation

A first step for a new-established EM is to differentiate and approach a specific industry with the services and features offered by competitors today. Creating partnership with an industry-specific company or organisation at narrow geographical area, where the level of e-trade usage is low would be the first step. This will gain access to reach a uniform user base and at the same time the partnership can help share assets and resources.

Another way to differentiate is to base the revenue model on commercials as mentioned earlier in the start-up phase to gain customers and create a network.

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SCM become more and more important for companies but there is few EM:s that support this features. There is even fewer SCM solutions for SME and this can help to differentiate the offer even more.

Figure 7.2 Recommended business model.

Network -Approach industry specific organisation or network

-Co-operation with service providers to share competence and knowledge -UAE: Utilise the existing business network of the capital venture source

Assets and competencies -Hiring consultants or start a business department to increase business know-how -UAE: Utilise existing competence of the capital venture source

Value Proposition -Free basic features (attributes) funded by commercials -SCM-solution

Competitors -Many differentiated operates globally -Consolidation -The largest getting bigger

Customers / Market Segment -SME:s -Industry with low level of e-trade

Differentiation -Industry-specific products or services at a narrow geographical area -Commercials

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8 Conclusions The EM industry has reached a majority phase where the variation of the value proposition is similar among the providers. This lead to price wars and reduced revenues as an effect, providers would also try to cover new markets that not yet use any EM solutions, which is where the Assigner would start to look. When the existent providers grow because of the mergers and acquisitionists they gain larger network externalities and economic of scales. This severe competition leads to a thought if the Assigner with small resources is more suitable to act as a supportive actor to the existing providers in the BM industry or put their resources on another business area.

E-trade continues its growing trend but it is hard to predict how much market share the EM will gain in the range of e-trade solutions. SCM solutions and partnerships between companies become more important in business today, it has been showed hard for independent and open EM to support this.

Approaching the UAE where a business network already is found will be the soundest strategy. This region is in economic growth and the demand for e-business is growing when the level of e-readiness is increasing. In the UAE the EM-business is not mature, instead there is a trend of newcomers within the EM-industry. Mostly newcomers are industry-specific and differentiated from each other. The UAE could also be a window to the business in Asia where markets are emerging.

Further research to complement this report can be made to more specific find what is the performance attribute in the Kano-model.

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References

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Annual reports

SAP 2007

I

Appendices

Appendix A: A narrow investigation of features of seven competitors

Endorsia (www.endorsia.com)

Started 1999

Founded by SKF but is today owned by several companies:

“In 2001 SKF sold 80% of the company to five other global industrial companies; INA, Timken, Sandvik and Rockwell, all taking an equal share in the company and thereby providing the base for neutrality and further growth.” (Endorsia.com)

Represented in 83 countries

cc-Hubwoo (www.cc-Hubwoo.com)

In its present form it was founded 2005 in a merge and acquisition of 5 different e-marketplaces explained below. All founded in 1999 or 2000.

Avisium: founded in a partnership agreement with SAP

cc-markets: founded by BASF, Degussa, Henkel and SAP

Chemplorer: founded by Bayer, Chemfidence, Deutsche Telekom

Hubwoo.com: founded and the major stockholder was STACI but was “floated on the “New Market” of the Paris Bourse” (SAP becomes a stockholder in July 2000)

Trade-Ranger: founding members Conoco, The Dow Chemical Company, ENI, Equilon Enterprises, Mitsubishi Corporation, Motiva, Phillips Petroleum, Repsol YPF, Royal Dutch/Shell, Statoil, Tosco, Total, Unocal, Occidental Petroleum, and BP

Since 2005 they have made acquisitions of more marketplaces.


Ketera (www.ketera.com)

Started in 2002

Founded by America On Line (AOL)

Owners today is Kleiner Perkins Caufield and Byers, Foundation Capital, Integral Capital Partners, Emergence Capital Partners, and American Express.

IBX Nordic (www.ibxnordic.com)

Started in 2000

Founded by Ericsson, SEB and B2B-business partners.


II

SciQuest (www.sciquest.com)

Perfect Commerce (www.perfect.com)

Tejari (www.tejari.com)

Endo

rsia

Hub

woo

Ket

era

IBX

Nor

dic

SciQ

uest

Perf

ect C

omm

erce

Teja

ri

Features

Order X X X X X X X Invoice X X X X X X X Catalog/Content X X X X X X X Search Engine X X X X X X X Contract X X X X X Statistics X X X X X X Supplier X X X X X X X Sourcing X X X X X X Transaction X X X Spend Analysis X X X X X Integration X X X X X X X Monitoring X X User Training X X X Request X X X Content Workbench X X Scorecard X X Payment X X X X X Support X X X X X X X Market segment

III

Aerospace and Defense X X X Business Services X X X X X Chemicals X X X X X Construction X X X X Consumer Services X X X Financial Services X X X X Food and Beverage X X X X Government X X X Healthcare / Medical X X X X X X Hospitality X X X X Research Institutes X X X Logistic Providers X X X X Manufacturing X X X X X X Media X X X Metals and Mining X X X Oil and Gas X X X X Professional Services X X X Public Sector X X X Real Estate X X X Retail X X X X X Technology X X X X X Telecom X X X Utilities X X X

Markets

Worldwide X X X Asia X X Europe X X North America X X X

Middle East X

IV

Appendix B: Value creating processes in e-business (Keeney, 1999)

V

VI

Appendix C: Adoption of e-business among SME:s

VII

Appendix D: Proposed stage model for e-commerce penetration in manufacturing SMEs.

VIII

Appendix E: Information about competitors for the SGA

Supply On Launched in 2000 in Germany, SupplyOn is a worldwide operating provider of Internet

services for the automotive industry. Founded by several of the largest globally operating

automotive suppliers SupplyOn helps large companies in sourcing from suppliers. Their

solutions also enable significant efficiency improvements in handling of transactions. The

site is available in German and English.

What is sold, where is it sold and what are the costs?

Products and Services Traded Internet services

Geographic Focus Global with a focus on Europe, North America and Asia

Transaction and membership statistics About 50,000 users in more than 13,000 companies from more than 70 different countries (December 2007)

Fees Different fees for different services

What kind of companies use SupplyOn and how do they trade?

Buyers and Sellers Discrete manufacturers from the automotive industry as well as other manufacturing industries

Examples of Buyers and Sellers BERU, BMW, Bosch, Continental, L&L Products Europe, MANN+HUMMEL, Schaeffler (INA-FAG), Schindler, Webasto and ZF

Language English, German

Trading Functions Online-order, Request for Quotation/Proposals/Bid, Reverse auction

Criteria for Membership Registration and verification required

Background information about SupplyOn

Owners Bosch, Continental, Schaeffler (INA-FAG), SAP, ZF Friedrichshafen

Date Established August 2000

Headquarters Hallbergmoos, Germany

Last Analysed Date 2007-11-28

IX

OneAero Launched in 2004, German based OneAero is the result of the combined efforts of Overhaul

Search, b2b-aero, and ePark Labs. The e-market provides the leading airlines and aviation-

repair-stations in Europe, USA and Asia with Aviation inventory, overhaul/repair and

maintenance services. OneAero focuses on helping large companies in sourcing from

suppliers and increase the level of efficiency in handling of transactions. Companies include:

Alitalia, SAS, Finnair, Praxair, SR Technics, Lufthansa Technik, and Air Canada.


Products and Services Traded Aviation inventory, overhaul/repair and maintenance services

Geographic Focus Global

Transaction and membership statistics 18 million transactions in the last year,9000 users from 120 countries

Fees Monthly membership fee, based on the business’s size and the services used

What kind of companies use OneAero and how do they trade?

Buyers and Sellers Airlines, OEM's, third party repair facilities, leasing companies, government agencies, military, etc.

Examples of Buyers and Sellers Jet Airways, EADS SECA, Univeral Avionique, Global Aviation Fuel Systems, Camtronics, Niacc Technologies, Stewart Industries

Language English Trading Functions Classified ads, Request for Quotation/Proposals/Bid

Criteria for Membership Registration is required (online form available)

Background information about OneAero

Owners Overhaul Search, b2b-aero, ePark Labs

Date Established September 2004

Headquarters Alpine , Utah, USA


X

Econstroi E-market founded in 2001 by some of the major players in the Portuguese building and

construction sector, including PT Prime, Espírito Santo Tech Ventures, Somague

Engenharia, Mota-Engil Engenharia, Soares da Costa, Amândio Carvalho S.A., CME,

Rosas Constructores, Zagope, OPCA, Constructora do Tâmega, Jaime Ribeiro, Novopca,

Monte & Monte, Adriano, Sopol, AM Mesquita, H.Hagen, Etermar, and Gabriel Couto.

More than 2,400 companies use the services provided by econstroi.com and the e-market

achieved over € 512 million in transactions in 2004. This makes it an important platform for

companies who wish to find new buyers and sellers in the Portuguese market.


Products and Services Traded All type of products and services for building and construction

Geographic Focus Portugal, Spain

Transaction and membership statistics Currently, 7,028 registered companies (July 2008)

Fees Suppliers pay the fees (different fees for different services)

What kind of companies use Econstroi and how do they trade?

Buyers and Sellers Companies in the building and construction sector

Examples of Buyers and Sellers Edifer, Manuel Pires Paiva, Rubetão, Sociveda, Solancis, Precore, Fixol, Mota Engil, Codepac, Madan Parque

Language English, Portuguese, Spanish

Trading Functions Catalogue, Directory, Online-order, Request for Quotation/Proposals/Bid

Criteria for Membership Registration required (online application form available)

Background information about Econstroi

Owners PT Prime, Tradecom, Espírito Santo Tech Ventures, Somague Engenharia, Mota-Engil Engenharia, Soares da Costa, Amândio Carvalho S.A., CME, Rosas Constructores, Zagope, OPCA, Constructora do Tâmega, Jaime Ribeiro, Novopca, Monte & Adriano, Sopol, AM Mesquita, H.Hagen, Etermar

Date Established December, 2000

Headquarters Lisbon, Portugal


XI

Elemica Founded in August 2000 by 22 of the worlds largest chemical companies including: BASF,

Bayer, BP, Dow, DuPont, Mitsubishi Chemical Corporation, Mitsui Chemicals, Rhodia,

Rohm and Haas, Shell Chemicals, Sumitomo Chemical, and Royal Vopak.

The network provided by Elemica helps companies optimize contract-based buying and

selling. The e-marketplace has interconnectivity with other e-markets including Quadrem

(mining), The RubberNetwork, and Omnexus (plastics). In March 2003 Elemica announced

acquisition of Optimum Logistics Limited, the leading global marine logistics solution in the

chemical industry.


Products and Services Traded Chemicals, Elastomeric materials, equipment, and services


Transaction and membership statistics Over 1,800 active members, $50 billion of annual transaction value and profitable operations (August 2008)


What kind of companies use Elemica and how do they trade?

Buyers and Sellers Buyers and sellers of chemicals and elastomers, including chemical producers, end users, distributors and service providers

Examples of Buyers and Sellers BP Acetyls & Armoatics, Yule Catto, Celanese

Language English

Trading Functions Online-order, Request for Quotation/Proposals/Bid

Criteria for Membership Contact must be made with Elemica

Background information about Elemica

Owners 22 of world big Chemical companies: BASF, Bayer, BP, Dow, DuPont, Mitsubishi Chemical Corporation, Mitsui Chemicals, Rhodia, Rohm and Haas, Shell Chemicals, Sumitomo Chemical, Royal Vopak, & others

Date Established August 2000

Headquarters Wayne, PA, USA


XII

Converge Converge provides semiconductors, electronic components, computer products and

networking equipment. The e-market has a network of more than 6,500 trading partners with

over 28,000 contacts in 139 countries. Since their establishment in 1980 in USA, Converge

has become a large technology exchange platform for many important market players

worldwide. Companies include: CTX, Cisco, Apple, Intel, NEC, Philips, Packard Bell, IBM,

Acer Communications, Compaq, and Belkin.


Products and Services Traded Semiconductors, logic chips, memory devices, microprocessors, computer peripherals, software, finished goods, electronic components, other computer products and networking equipment.


Transaction and membership statistics Converge has a network of more than 6,500 trading partners with almost 29,000 in 139 countries and a database of over 10 billion items. 6.9 million industry standard part numbers, 5,237 component manufacturer names, 346 product categories, 51 product classes (as of January 2008).

Fees Transaction fees, different fees for different services.

What kind of companies use Converge and how do they trade?

Buyers and Sellers Component, original equipment, and contract manufacturers, as well as distributors and resellers.

Examples of Buyers and Sellers CTX, Cisco, Apple, Intel, NEC, Philips, IBM, Acer Communications, Compaq, Belkin, NEC, etc.

Language English

Trading Functions Auction, Online-order, Request for Quotation/Proposals/Bid, Reverse auction Criteria for Membership It is necessary for members to register separately for each area of the site. Online registration form is available. Registration needed to gain access to Converge RFQ/RTS.

Background information about Converge

Owners 'Not disclosed'

Date Established 1980

Headquarters Peabody, MA, USA


XIII

Acambiode Spanish e-marketplace with more than 30, 000 registered members. Established in 2002 by

Grupo Intercom, Acambiode offers products and services to companies of varied size within

the excess inventory and barter sector. The e-market functions as a platform for companies

looking for new buyers and sellers in Spain, Portugal and Latin America. Companies

include: Carrefour, Viajes Ecuador, ZT Hotels, Nominalia, Radio Club 25, Lecturas, and

Editorial Aurum.


Products and Services Traded Exchange and barter of goods and services.

Geographic Focus Spain and Latin America

Transaction and membership statistics 158.122 registered companies (54.714 in Spain) with an spectacular monthly growth. 2.279.916 contacts bewteen companies undertaken (average of 1000 contacts per day) (July 2008).

Fees This is a free e-marketplace, but there are different fees for different additional services.

What kind of companies use Acambiode and how do they trade?

Buyers and Sellers Autonomous, SMEs, big companies

Examples of Buyers and Sellers Cadenza S.L., Status Construcciones S.L., Autos Magi S.L., Dekkar Estudios Informáticos S.L., Catalonian IN TIME

Language Spanish

Trading Functions Classified ads, Directory, Request for Quotation/Proposals/Bid

Criteria for Membership Any supplier (company, autonomous, private persons, freelance workers) or buyer can be member. Registration (free of charge) is required as a first step.

Background information about Acambiode

Owners Comercio Digital S.A. Grupo Intercom.

Date Established January, 2002

Headquarters Barcelona, Catalonia, Spain


XIV

Quadrem Established in 2000 by 14 of the world’s largest mining, minerals and metals companies.

With 19 shareholders, of whom several are listed in the Global Fortune 500, more than 14,

000 suppliers, and over 400 buying locations, Quadrem is the worlds’ biggest e-market for

the Mining, Metals and Minerals industries. Members include: Shell, Michelin, A & M Com E

Ind Ltda, 3M, A-S Chile Energy Groups, Air Control, Inc, Nestlé Brasil Ltda, Schlumberger

Oilfield Services Ltd., and Tarong Coal. Major buyers have committed to a trading volume

for more than USD$4 billion in 2004.

Quadrem has partnered with some of the leading companies in the e-business industry

including Accenture, Compaq, Lante Corporation, PT Mincom Indoservices, Requisite

Technologies, SAP, and webMethods.


Products and Services Traded Services and consumables to support the consumer packaged goods, oil & gas and core mining, minerals and extraction industries such as blasting, smelting, hydrometallurgical and electromagnetic processes


Transaction and membership statistics Over USD$17 billion in transactions and over 55,000 suppliers and 1,100 buyers(June 2008)


What kind of companies use Quadrem and how do they trade?

Buyers and Sellers Mining, metals and mineral processing companies and respective suppliers Examples of Buyers and Sellers Rio Tinto, Shell, ExxonMobil, 3M Worldwide, Nestle IT PL Parma, '3S' - Sermas Supply Services, Martimac, 101 Pipe & Casing, Moldemba - Moldes, Lda., Plasdan

Language English


Criteria for Membership Registration required; contact one of their offices for more information on how to become a member

Background information about Quadrem

Owners The Quadrem Group

Date Established October 2000

Headquarters Amsterdam, North Holland, Netherlands


XV

FORDAQ Launched in Belgium in 2000, FORDAQ provides timber products to wood professionals

such as log producers, sawmills, veneer mills, panel producers, importers and large

industrial users. With a site available in 8 languages and offices in 10 countries, the e-market works as a

platform for companies looking for new buyers and sellers all over the world. FORDAQ has

more than 5000 members and over 90, 000 visitors every month. The e-market is being

owned by Mitiska Net Fund Europe and private investors.


Products and Services Traded Timber products (hardwood, softwood, tropical, pallet wood, veneer, panels, machinery)


Transaction and membership statistics 37,000 members ,1,400,000 monthly visits

Fees Three types of membership available with different annual fees: bronze, silver and gold

What kind of companies use FORDAQ and how do they trade?

Buyers and Sellers Wood professionals: log producers, sawmills, veneer mills, panel producers, importers and large industrial users

Examples of Buyers and Sellers A&W, M + M Blockhausvertriebs, M & N Flooring and Importers, Inc., R&H Timber Co., R. Baumann GmbH

Language Chinese, Czech, Dutch, English, French, German, Italian, Polish, Romanian, Russian, Spanish, Ukrainian

Trading Functions Classified ads, Request for Quotation/Proposals/Bid

Criteria for Membership Registration required (online application forma available)

Background information about FORDAQ

Owners Fordaq S.A.


Headquarters Brussels, Belgium


XVI

Global Healthcare Exchange GHX was founded in March 2000 by important players on the market, including Johnson &

Johnson, GE Medical Systems, Baxter International Inc., Abbott Laboratories, Medtronic,

Inc., Siemens Medical Solutions and Tyco International, Ltd. Products traded include

medical equipment and devices, and healthcare products & services. The e-market has

more than 2,200 hospitals and 140 suppliers among their members, including 3M Medical,

Arrow International, Bayer Diagnostics, and Boston Scientific Corp. In January 2004, GHX

and PLC merged in to create Europe’s largest electronic trading exchange for healthcare.


Products and Services Traded Medical equipment and devices, and healthcare products and services Geographic Focus Global

Transaction and membership statistics Total Transaction Volume (Based on current run rate): $8 billion. Over 300,000 worldwide customers. November 2007

Fees Different fees for different services. There is also an integration fee depending on the level of service needed.

What kind of companies use GHX and how do they trade?

Buyers and Sellers All healthcare provider organizations, distributors, group purchasing organizations, and manufacturers and suppliers of medical and non-medical products

Examples of Buyers and Sellers Supplier Members of GHX include: GE Medical Systems, Siemens, 3M Medical, Arrow International, Bayer Diagnostics, Boston Scientific Corp etc.

Language English, German

Trading Functions System Integration

Criteria for Membership After meeting the potential member a User Agreement is signed.

Background information about GHX

Owners Johnson & Johnson, GE Medical Systems, Baxter International Inc., Abbott Laboratories, Medtronic, Inc. BD(Becton, Dickinson and Company), Boston Scientific Corporation, C.R. Bard, Inc., Guidant Corporation, Siemens Medical Solutions and Tyco International, Ltd.

Date Established March 2000

Headquarters Westminster, Colorado, USA


XVII

SourcingParts SourcingParts works as a platform for European companies looking for new buyers and

sellers within the industrial machinery and equipment sector. The e-market also assists

companies in sourcing from suppliers and in increasing the level of efficiency in handling of

transactions. Approximately 42,000 suppliers have registered with the e-market since the

launch in 2000 in Switzerland. Site is available in several languages such as Czech,

English, French, Hungarian, and Portuguese to name a few. SourcingParts is being owned

by Galileo Partners and COM Ventures Telecom Partners 1 L.P.


Products and Services Traded Sub-contracting for built-to-order parts such as packaging, assembling, electrics/electronics, fabricating, casting, plastic, heat treatment and surface treatment.


Transaction and membership statistics during the past 7 days 722 RFQs,10'846 Supplier Logins,9.39 Millions € treated , 2'352 Items Consulted

Fees Different fees for different services. A basic membership for suppliers is free of charge.

What kind of companies use SourcingParts and how do they trade?

Buyers and Sellers Firms with customized machine needs and suppliers who build them

Examples of Buyers and Sellers ABB, Junker, Areva T&D, Swiss Optic, Rieter, FiMES, armese, metav-shop, SV METAL, STIMECA, FGV, COMEFOR, EX-CELL-O, Graziano Trasmissioni SpA, Inergy, etc.

Language Chinese, Czech, English, French, German, Hungarian, Italian, Portuguese, Spanish

Trading Functions Auction, Catalogue, Online-order, Request for Quotation/Proposals/Bid, System Integration

Criteria for Membership To use the site as a buyer or supplier of goods or services, you need to fill in a registration statement. Every registered company is evaluated.

Background information about SourcingParts

Owners Galileo Partners and ComVentures Telecom Partners 1 L.P.

Date Established January 2000

Headquarters Chavannes-de-Bogis, Switzerland


XVIII

Alibaba.com Based in Hong Kong since 1999, Alibaba is a very high volume trade lead site for goods and

services in 27 different industry categories ranging from textiles to electronics. The site is

available in English, Japanese and Chinese and has offices in China, UK, USA, and Korea.

Alibaba.com has over 1 million registered members from over 220 countries and territories.

The e-market has been awarded "Best of the Web: B2B" by Forbes magazine for the past 5

years.


Products and Services Traded Products and services in various categories including Agriculture, Chemicals, Telecommunications, Office Supplies, Home Appliances, Security & Protection, Food, Gifts & Crafts.

Geographic Focus Global with a special focus on suppliers in China, Korea and Singapore Transaction and membership statistics 24 million registered users from over 200 countries and regions (april 08)

Fees Buyers pay a fee

What kind of companies use Alibaba and how do they trade?

Buyers and Sellers International traders, buyers and manufacturers.

Examples of Buyers and Sellers Heyday, Direct exports, Benruson, Guotai Hualian, Changshu shirts Factory, Shanghai Kaike Co. Ltd., Time Smart Ltd. and many more in 27 industry categories

Language Chinese, English, Japanese

Trading Functions Catalogue, Classified ads, Directory, Request for Quotation/Proposals/Bid

Criteria for Membership Registration required

Background information about Alibaba

Owners Alibaba.com's institutional investors include SOFTBANK Corporation, Fidelity Capital, Granite Global Ventures, Venture TDF Pte Ltd. of Singapore, Japan Asia Investment Co., Ltd. and Transpac Capital.

Date Established March 1999

Headquarters Hong Kong, China


XIX

Ariba Inc Founded in 1996 as a provider of Spend Management solutions to help large companies in

sourcing from suppliers and increase the level of efficiency in handling of transactions. In

2004 Ariba merged with FreeMarkets, Inc. and today 40 of the Fortune 100 use Ariba

technology, including ABN AMRO, BMW, Chevron, Cisco Systems, Hewlett-Packard, and

Unilever. Ariba also provides access to an open business transaction network, The Ariba Supplier Network. It includes 120,000 e-enabled suppliers from 115 countries engaging in

transactions with some of the world’s largest buying organizations. Membership is available

by invitation.


Products and Services Traded Diverse industries such as consumer products, energy, financial services, high technology, manufacturing, pharmaceutical, public sector, higher education, telecommunications and transportation are covered.


Transaction and membership statistics The Network supports over $90 billion in annual purchase order volume and drives 16 million purchase orders each year. Supports over $120 billion in annual sourcing volume

Fees Different fees for different services. Suppliers do not have to pay fees.

What kind of companies use Ariba and how do they trade?

Buyers and Sellers Buyers and sellers in all the afore mentioned industries.

Examples of Buyers and Sellers ABN AMRO, Chevron, Cisco Systems, DuPont, Electrolux, Giant Eagle Inc., Hewlett-Packard, BMW, Morgan Stanley, Unilever and many more

Language English

Trading Functions Auction, Online-order

Criteria for Membership Registration required. Membership is available by invitation or by walk up. Ariba software is not a necessity.

Background information about Ariba

Owners Privately held.


Headquarters Sunnyvale, California, USA


XX

cc-Hubwoo cc-hubwoo is a European integration hub for non-production procurement activities for largecompanies. Formerly known as cc-chemplorer, it was formed in July 2001 by the merger of the two leading e-marketplaces chemplorer and cc-markets. On June 29th of 2004, cc-chemplorer merged with Hubwoo-Avisium and became cc-hubwoo. They cater to more than 40 of the largest European groups (Total, BASF, Michelin, Thomson, Volkswagen, Alcatel, Crédit Agricole, Danone, etc.) and boast a network of more than 9,000 suppliers connected in 44 countries. With 2004 pro-forma sales of over € 22 million, cc-hubwoo is one of the major players on a global level. On May 17, 2005, cc-hubwoo announced the completion of the acquisition of the e-market Trade Ranger. With customers among the top-ranked companies in the world and a network of 2,000 connected suppliers, Trade-Ranger will provide to cc-hubwoo major references in the Oil, Gas and Chemicals industries, an increased geographic coverage in North America, Asia and Europe, and an extended solutions set including solutions in the areas of e-sourcing and e-invoicing.


Products and Services Traded cc-hubwoo is the leading global provider for Source-to-Pay electronic solutions and Supplier Network Management. cc-hubwoo allows large companies to automate procurement processes, connect with suppliers, access customized electronic catalogs and execute electronic transactions.

Geographic Focus Europe, USA, Asia

Transaction and membership statistics 100 buying corporations and over 13,000 connected suppliers in 44 countries worldwide. Processes 2,4 million purchase orders representing €5,2 billion in customer spend value annually.

Fees Not disclosed

What kind of companies use cc-hubwoo and how do they trade?

Buyers and Sellers The company manages the largest Business to Business Community with more than 60 worldwide buying corporations (50 of them among Fortune 1000) and over 12,000 connected suppliers.

Examples of Buyers and Sellers Total, EDF, Gaz de France, Shell, Thomson, Bayer, BASF, Henkel, Degussa, Alcatel, Safran, heineken, ConocoPhillips, The Dow Chemical Company, ENI, Repsol YPF, Solvay and Statoil

Language English, French, German


Criteria for Membership Registration and application approval required. Suppliers are invited by the large buyers

XXI

Background information about cc-hubwoo

Owners Trade Ranger Inc., Banque Federale des Banques Populaires, T-Systems International GmbH, Infraserv, SAP, APAX, Henkel KGAA, BASF AG, Degussa AG, public and miscellaneaous shareholders

Date Established March, 2000

Headquarters Paris, France


XXII

GlobalSources

Established in 2000 in Singapore, GlobalSources facilitates global trade, with a particular

focus on the China market. With over 423,000 active members this e-marketplace works as

a platform for companies who wish to find new buyers and sellers. Global Sources has

formed a strategic alliance with Worldwide Retail Exchange. The company has been named

by Forbes Global as one of 200 Best Small Companies in the World; it has won Darwin

magazine's Fittest 50 Award and the Best B2B Internet Site at Internet World Asia Industry

Awards.


Products and Services Traded A wide variety of products such as gifts and home products, fashion accessories, electronics, textiles, etc

Geographic Focus Global focus

Transaction and membership statistics 10,964 new products posted last week, Global Sources Announced Preliminary Fourth Quarter 2007 Revenue of Approximately $60.8 Million and Full Year 2007 Revenue of Approximately $182.0 Million. 657,178 active buyers worldwide and

Fees Free of charge

What kind of companies use GlobalSources and how do they trade?

Buyers and Sellers Manufacturers, retailers, wholesalers, etc

Examples of Buyers and Sellers Tele Long Enterprise Co Ltd., Billion Technologies Ltd., Wenzhou Huahang Electric Co. Ltd, Pulset Pty Ltd., Goldwyn Technology Limited, Lenthor Engineering, Vertex Technology Corp.

Language Chinese, English

Trading Functions Catalogue, Request for Quotation/Proposals/Bid

Criteria for Membership Registration is required and done through an online application form

Background information about GlobalSources

Owners Global Sources (Nasdaq: GSOL)


Headquarters Hong Kong, China


XXIII

Rusbiz Rusbiz.com, a division of ZAO Sozvezdie Nakosy, is a Russian Business-to-Business (B2B)

market with global focus. The e-market offers a variety of products including: Bio chemicals,

components, fuel additives, lubricants, clothes, food, etc. Rusbiz.com also provides other

services such as an E-catalogue and an Internal Messaging System. Site is available in

English and Russian. Since their launch in 2002, more than 20,000 small and mid size

companies have registered as members at Rusbiz.com.


Products and Services Traded Biochemicals, gas industry, components, fuel additives, lubricants, clothes and footwear, food, beverages...


Transaction and membership statistics Since the portal was launched, more than 20.000 companies from all over the world have registered (November 2007). The product depends on membership: add up to 500 products.

Fees Basic membership is free, Simple membership costs 25 US$/month, Enterprise membership costs 45 US$/month and Corporate membership costs 70 US$/month

What kind of companies use Rusbiz and how do they trade?

Buyers and Sellers Small and mid-size companies of a wide spectrum of activities

Examples of Buyers and Sellers Shandong Heze Aixin, Flying Ltd., Pradeep Chemicals, Royal Trade S.A.E., Lonel Group, Munir Associates

Language English, Russian

Trading Functions Catalogue, Online-order, Request for Quotation/Proposals/Bid

Criteria for Membership Registration is required

Background information about Rusbiz

Owners Rusbiz.com

Date Established September, 2002

Headquarters Moscow, Russia


XXIV

Tejari Launched in Dubai, United Arab Emirates (UAE) in 2000. The e-market offers a variety of

trading functions and related services to their approximately 2000 registered users. With

subsidiary e-markets in Jordan and Kuwait their geographical focus is primarily on countries

in the Middle East and on India. Customers include private companies and Government

organisations such as The National Bank of Dubai, Government of Dubai - Land

Department, Arabian Ethicals Co., Bilal International Company, and Desert TurfCare L.L.C.


Products and Services Traded A wide range of products and services such as agricultural, building and construction, electronics, IT, etc.

Geographic Focus Focus on the Middle East

Transaction and membership statistics Over 104,000 registered companies, 3,100 trade leads and 363 auctions open (January 2008)

Fees Different fees for different services.

What kind of companies use Tejari and how do they trade?

Buyers and Sellers All types of companies

Examples of Buyers and Sellers A & M Gulf Services, A D I Medical Services, A G N Computers (L.L.C), A.R.Q. General Trdg. LLC.

Language Arabic, English

Trading Functions Auction, Catalogue, Directory, Request for Quotation/Proposals/Bid, Reverse auction

Criteria for Membership Registration required (online application form available)

Background information about Tejari

Owners Tejari

Date Established June 2000

Headquarters Dubai, United Arab Emirates


XXV

Tenderlink.com Tenderlink.com was established in 1994 and operates in New Zealand and Australia.

Tenderlink.com advertises tenders from all levels of government, and the private and public

sector. The e-market had approximately 5,000 registered suppliers and 140,000 closed

tenders in December 2004. Buyers and sellers include: 3M Australia, ANZ Banking Group

Ltd, NEC Australia Pty Ltd, Baycorp Advantage Ltd, Siemens Building Technology Ltd, Sony

New Zealand Ltd, Telecom New Zealand Ltd, Vodafone NZ and several others.


Products and Services Traded A variety of industries are represented, excluding property, used vehicles or consumer goods

Geographic Focus Australia and New Zealand

Transaction and membership statistics More than 20,000 suppliers

Fees Purchasers pay an advertising fee to place notices in the portal, and suppliers pay an annual subscription to be notified of new opportunities matching their interests as they are being published.

What kind of companies use Tenderlink.com and how do they trade?

Buyers and Sellers Businesses requiring access to contracts, tenders, RFIs and RFPs called by the Government, Corporate, and Private sector. Also procurers wanting to advertise tender notices, or a supplier requiring a tender notification service.

Examples of Buyers and Sellers 3M Australia, ANZ Banking Group Ltd, NEC Australia Pty Ltd, Baycorp Advantage Ltd, Siemens Building Technology Ltd, Sony New Zealand Ltd, Telecom New Zealand Ltd, Vodafone NZ, Boeing

Language English

Trading Functions Request for Quotation/Proposals/Bid

Criteria for Membership Registration and verification required.

Background information about Tenderlink.com

Owners Private investors


Headquarters New Plymouth, New Zealand


XXVI

Cargo Portal Services Based in Blue Bell, USA since 2003, Cargo Portal Services works as a full service portal for

the global air cargo industry. Companies include: Air Canada Cargo, Austrian Cargo, KLM

Cargo, United Airlines Cargo and NWA Cargo. Although owned by Unisys, the services

provided by CPS are open to all carriers and forwarders on a neutral basis. CPS carriers

serve 430 cities in 117 countries. In order to use the services provided by Cargo Portal

Services companies need an account with one of the CPS participating carriers.


Products and Services Traded Services for carriers and forwarders to efficiently ship cargo by air


Transaction and membership statistics Over 7,500 branch offices of 2,500 forwarder companies in 107 countries are available. (November 2007)

Fees Services are free for forwarders

What kind of companies use Cargo Portal Services and how do they trade?

Buyers and Sellers Forwarders and carriers

Examples of Buyers and Sellers American Airlines, Northwest Airlines, Continental Airlines, Air Canada Cargo, Austrian Cargo, KLM Cargo, United Airlines Cargo, NWA Cargo, etc.

Language English

Trading Functions Online-order

Criteria for Membership It is open to all carriers and forwarders on a neutral basis. Forwarders need to be a client of one of the hosted carriers in order to become a member.

Background information about Cargo Portal Services

Owners Unisys

Date Established January 2003

Headquarters Blue Bell, PA, USA


XXVII

Tradeplace Established in 2001 in Amsterdam, The Netherlands, Tradeplace was founded as a joint

customer service by BSH Bosch und Siemens Hausgeräte GmbH, Electrolux Home

Products, Whirlpool Europe, Indesit Company and Royal Philips Electronics of the

Netherlands. Tradeplace provides a trading service to European retailers of household

appliances and consumer electronics. The e-market aims to eliminate inefficiencies in the

supply chain whilst improving e-enabled communications between manufacturers and

distributors. Registered companies include: BSH Bosch and Siemens Hausgeräte GmbH,

Electrolux Home Products, Whirlpool Europe, Merloni Elettrodomestic, AEG, Philips Consumer

Electronics Europe, and Siemens. The site is available in several different languages such as

Dutch, English, Finnish, French and Italian.


Products and Services Traded Household appliances and consumer electronics industry via online portal or XML Direct Connection.

Geographic Focus Europe

Transaction and membership statistics Over 35,000 member companies are registered for the online portal (June 2007)

Fees No fees for retailers.

What kind of companies use Tradeplace and how do they trade?

Buyers and Sellers Household appliance producers and retailers in Europe, b-2-b only.

Examples of Buyers and Sellers BSH Bosch and Siemens Hausgeräte GmbH, Electrolux Home Products, Whirlpool Europe, Indesit Company.

Language Danish, Dutch, English, Finnish, French, German, Italian, Norwegian, Polish, Spanish, Swedish

Trading Functions Catalogue, Online-order, Request for Quotation/Proposals/Bid

Criteria for Membership Registration required. Retailers and Manufacturers must be European. The service is open to retailers who already have an existing business relationship with the member manufacturers.

Background information about Tradeplace

Owners Founding companies are BSH Bosch and Siemens Hausgeräte GmbH, Electrolux Home Products Europe, Indesit Company and Philips Consumer Electronics Europe.

Date Established December 2001

Headquarters Amsterdam, Netherlands


XXVIII

Endorsia Endorsia delivers support and services to enhance more cost efficient business processes

within the industrial supply chain industry. Established in Sweden in 1999, Endorsia is

equally owned by SKF, Timken, INA, Sandvik and Rockwell Automation. The company has

global coverage with applications translated into 17 languages.

Customers consist of manufacturers, distributors, OEM-customers, and end-users from

around the world. Companies include: SKF, Timken, Tyrolit, FAG, Bahco, ESAB, Rockwell

Automation, INA, Sandvik, Goodyear, Renold, BSL, Carl Werthenbach, Dexis, Momentum,

Sverull, Leitner, and Fimatec.


Products and Services Traded Industrial Engineered Products/Strategic MRO products


Transaction and membership statistics About 10 million transactions per month. More than 3000 active users in 1113 companies. 8000 distributors may access the Exhange.(December 2006)

Fees Using the platform is free for OEM-customers and end-users

What kind of companies use Endorsia and how do they trade?

Buyers and Sellers Sellers are manufacturers. Buyers are OEM-customers, end-users, and distributors

Examples of Buyers and Sellers SKF, Timken, Tyrolit, FAG, Bahco, ESAB, Rockwell Automation, INA, Sandvik, Goodyear, Renold, BSL, Carl Werthenbach, Dexis, Momentum, Sverull, Leitner, Minetti, Fimatec, Ludwig Meister, THF, etc.

Language Chinese, Czech, Dutch, English, Finnish, French, German, Hungarian, Italian, Japanese, Korean, Portuguese, Russian, Spanish, Swedish, Thai

Trading Functions Catalogue, Online-order, System Integration

Criteria for Membership Endorsia is a network of manufacturers of prime branded industrial goods and their respective distributors and end-users. Buyers are granted access to the platform by their respective suppliers.

Background information about Endorsia

Owners Equal ownership between INA-Schaeffler KG, Rockwell Automation, Sandvik Group, SKF Group and Timken Company


Headquarters Gothenburg, Sweden


Documents

Master thesis Report No E 2008 124