The overview of the case
Arrow Electronics is a broad-line distributor of electronic parts, including semiconductors and passive components. It was founded in 1935 and grown to the number two position by 1980. When Stephen Kaufman, who became president in 1982 and CEO in 1986, Arrow once more began to climb, reaching the number one position among electronics distributors by 1992. Arrow/Schweber, one of Arrow’s five operating groups and the largest one, which sells semiconductors to different customer bases like Original Equipment Manufacturers (OEM) and Contract Manufacturers (CM). Sales of 2.07$ Billion of 6.5$ Billion of Arrow Electronics’ total Sales. Express Parts, Inc. was a new, independent distributor that developed an internet-based trading system around a multi-distributor bulletin board. It had more than 50,000 OEM through the US would have access to the service. Express would pick parts from the distributors and ship orders to customers. Express will pick 6% sales of each order as the fee.
The Problem Definition
Whether accept the Express’s proposal, which as follows:
A/S’s full list of inventory and price listing.
Express would receive order, do credit check.
Route to respective distributor electronically.
Express shipping facility.
Express’s fee: 6% of sales and paid 30 days after order shipped. Secondary issues:
Our current customers will get the information of all the distributors from the Express system and use it as a starting point to bargain with A/S. 2.
If A/S accepted the Express proposal, they can not sure that all transactional customers and roughly 40% of relationship customers were assumed to switch their purchases from A/S to Express.
1. Products and suppliers
The A/S line card comprised two chip categories: standardized and proprietary. Standardized chips were interchangeable and produced by multiple suppliers. Proprietary chips manufactured by a...
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