Chemunity.Com Case Study Analysis

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Question 1
When ChemUnity.com began, Herman Rijks was a 37 year old, Masters of Science graduate from the Technological University of Delft, Netherlands. He was born in South Yemen and grew up in Africa. Rijks had experience in green-field chemical distribution start-ups, and general management experience in various chemical companies. He worked for HCI, a chemical company for three years, and prior to ChemUnity.com, he was part of the HCI corporate e-commerce task force.

Mark-Jan Terwindt was a 34 year old graduate from Nijenrode Business School in Netherlands. He worked for eight years in the chemical distributions in countries such as: Ecuador, El Salvador, and Venezuela. Later, he went to the Czech Republic to manage HCI Operations, and before ChemUnity, he was in South Africa managing the integration of an acquired company.

Both the founders spoke Dutch, English, Spanish, and a working knowledge of German, and additionally, Herman spoke French. Also, the founders shared similar interests, like sports and traveling (flying), and both have wives and children.

The founders have a good amount of experience in business, e-commerce and the general industry to succeed. They both have several years tenure in companies related to the industry. Also, they are highly educated in areas that are important to the company (for example, Business and Science). The linguistic abilities of the founders allow them to understand and communicate with partners and customers in Western Europe, improving communication channels and service quality. The shared interests they have could mean that they understand each other more, have a good friendship, and allow them to work together on the company more frequently than just regular founders. Alternatively, this could mean that they will reinforce each other’s ideas without truly considering all the factors involved.

Question 2
The product that ChemUnity provides fits extremely well with an online exchange because it’s a commodity. Meaning that all variables (grade, concentration & packaging) can be standardized and price is the determinate factor.

The system used protects the buyers and sellers, and creates a serious and profitable environment for all, and makes buying and selling easy. A buyer’s order has a preferred and highest acceptable price, and only the preferred price is transferred to the suppliers. Potential suppliers within the right geographical region are forwarded the message via email and SMS. The supplier has 25 hours to respond with a bid, and this only happens once to avoid price erosion of auction-like bids. ChemUnity compares the bid, informs the buyer and supplier who got the deal, and they take care of the transaction. Additionally, no parties can withdraw from the deal, and inquiries are very serious.

The simplicity in the variables makes commodities easy to trade in an online exchange and the business model developed by ChemUnity creates a profitable, safe, and easy buying & selling environment. The characteristics of the products fit, and can be successfully sold online in an online exchange.

Question 3
Steps (1) through (5) explain the trading process at ChemUnity and are listed below.

(1) An inquiry is posted from a buyer on the ChemUnity website that includes the name, grade, concentration, and packing of the commodity based on a predetermined list, delivery date, geographical region of the buyer, and a price indication. (price indication includes preferred and highest acceptable price, and the preferred is given transferred to suppliers) (2) Potential suppliers, determined by information given by companies, are forwarded the inquiry. (Both supplier and buyer can exclude parties or regions outside of their scope to trade.) (3) Once an email or SMS message is received by the supplier they have 25 hours to respond with its bid. (Which only can be made once to prevent price erosion) (4)...
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