The entrance of Express Parts in the electronics components distribution market threatens to abruptly change the flow of the channel operations that Arrow electronics is used to. Arrow is faced with a tough, time-constrained decision of making a choice – Should it incorporate Express in it’s distribution channel or not? After a careful examination of the market dynamics that Arrow electronics operates under, it is my recommendation that Arrow Electronics take the following course of action 1.
If possible, devise the Express Parts Internet distribution service for the market segment of X86 only and maintain the traditional Arrow style of distribution system for the rest of the markets. If that is not possible, decline signing onto express Part’s new internet brokerage service. 2.
Strengthen a home-grown web portal and offer it as a registered service to existing customers. This means creating their own internet presence and developing a long-term strategy of using the internet as a direct channel for their customers. It is my belief that by executing the above mentioned plan, Arrow would be able to capitalize on it’s existing strengths and neutralize the looming threat that Express presents. SUPPORT
The Arrow electronics case is a classic example of a third-party delegated channel system in which the supplier(semiconductor manufacturers like Intel, Texas Instruments etc) relies at least partially on a partner (Arrow – an electronic components distributor) to perform the demand generation and fulfillment value chain functions, without having a direct connection to customers all the time. The value proposition that Arrow presents to it’s customers is in the form of the distinct value-added services it provides them. These include credit arrangements, delivery of components in small quantities with little lead-time, programming support for certain devices for individual customers and supplying complete kits for production to contract...
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