Food IT
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The document summarizes FoodIT A/S, an e-marketplace company that aims to internationalize its business. It provides an overview of the company and its e-commerce platform for trading food raw materials between buyers and sellers. The platform offers services to both buyers and suppliers. FoodIT's business model involves registration fees or transaction fees. Its expansion strategy is to establish a presence in target countries to capture the global food industry market and facilitate the systemization of procurement processes. Challenges to its internationalization include having sufficient skilled employees and addressing barriers customers face in adopting an e-procurement system.
Food IT
- 1. THE INTERNATIONALIZATION PROCESS OF THE E-MARKETPLACE FOODIT A/S Akshay Jog Alys Eleonor Thomas Anubha Garg Apoorva Dixit Justin Arnold Finch Karl-Maximilian Strobel
- 3. Product Overview What is the product? An e-commerce system for the trading of food raw materials and ingredients buyers and sellers, including: materials management and comprehensive statistics.
- 4. Example of the platform proposed
- 5. Services to the Buyer A website platform Assistance in sourcing from suppliers Handling the transactions efficiently Selection of new suppliers Negotiation of framework contracts To decrease the time and the costs of processing orders To decrease the final price of the traded product
- 6. Traditional e-market trading functions Describes the products and services offered by the suppliers When the buyer sends a request to buy something Makes it possible for the buyer to list a product or service which they would like to buy Catalogue Electronic tenders Reverse auctions
- 7. Additional services Assists in supplier surveillance by giving access to: Information about products Information about trade names Sales personnel from suppliers Execute other contract management for both the supplier and the buyer Handle the call-off of a partial delivery 1 2 3
- 8. Services provided to buyers Professional Enterprise Basic Premium Ultimate Advanced esourcing on demand module esourcing on demand module esupplychain module eplanning module esourcing Enterprise module esupplychain enterprise module eplanning Enterprise module esourcing Enterprise module esupplychain enterprise module eplanning Enterprise module QC management module
- 9. Services provided to suppliers Suppliers enter the platform Confirm every step of the delivery and quality control Give access to purchasing and contract statistics as well as the Global product trade statistics They record and update themselves in the Supplier directory Suppliers submit offers, lowering the selling price for each bid submitted
- 10. Business Model: Two options Registration fee: right to use the system Payment per transaction Consultant services paid per hour Payment on the transaction 0.1% under €150,000 0.2% under €750,000 0.1% from €750,000 Professional Enterprise Basic Premium Ultimate Advanced
- 11. Cost Structure Additional Set up cost of Web Site Increase in server space Increase in Bandwidth Graphical design of customized storefront Employees Country specific licenses Recruitment and Training Travel Expense
- 12. Expansion Strategy 2000- to offer an e-market place to the small and medium sized firms as an alternative to the systems that the big multinationals as Danone, Nestle and Unilever were developing at that time To establish FoodIT globally 2002- to focus on firms in Europe that were limited to northern Europe as they could not hire enough people to serve the whole world 2006- to establish in various countries including USA Future Strategy Physical presence in target countries Step by step approach to internationalization To capture the market of Bricks-And-Mortar Retailers Long Term: Diversification
- 13. Systemization is the Strategy in the Food Industry Today Food Industry Today Highly Competitive Big Firms Have The Systems in-place Evaluation Parameters: Flexibility Quality Cost Service Systemization Means: Greater Efficiency Increased Quality Control Decreased Costs Hence, Increased competitiveness of the Firm Current Strategy: Local supplier wherever competitive & possible Long term relationships ‘ Cluster’ & ‘Core’ Suppliers Shared information & technical expertise Value for Money
- 14. Getting A Customer’s Procurement Department Ready A Key Requirement to work with FoodIT Systemized Procurement Process In relation to who are the suppliers, who are approved, who are preferred, and what is the product specification Outcome: A Standardized Procurement Process Forms a Market Entry Barrier SMEs not ‘In’ for Systemization of above process – Due to Lack of Resources, Know-how & Scale of Operations System in Use in the Big Companies Hence, Focus can be on 2-3 ‘big’ customers with a few SMEs Procurement system needn’t be changed Similar to Normal Procedures - Feedback Only be Made ‘Online’ Integration Support to be provided by FoodIT Both Onsite & Offsite Opportunity for Firm working with FoodIT: Access to Huge Supplier base Firm can have both: ‘ Core’ Suppliers ‘ Small’ Suppliers
- 15. People Required
- 16. Support Activities FoodIT prefers to be with the procurement personnel, first few times they use the system Support process starts with face to face interaction later supplemented by interaction through internet Aim to have presence in 20-25 countries, covering the world 24hrs a day
- 17. Sales Activities Need to be physically present in the market to make deals with CEO’s of different companies at different locations Personal face to face selling is important in order to convince procurement department To expand globally-Physical presence of FoodIT people to enable procurement department of customer to be ready for FoodIT e-market place Aim to have presence in 20-25 countries, covering the whole world 24hrs a day
- 18. Skills Required Knowledge of food business General interest in IT Knowledge of language as per geographic region Industry specific competencies Should be sensitive to different cultures
- 19. Trying too much too soon? Planning for presence in multiple countries within 7 years of establishment without once turning a profit Requirement of providing multiple interfaces to clients in different countries Requirement of physical presence (sales and support) in all those countries Having too few skilled (domain expertise, technical and language skills)employees to support the planned expansion Internet allows for fast expansion without the requirement of extensive physical infrastructure Since the supplier base is global, it does not matter in which country is the buyer located The business is easily scalable Readiness for the concept of e-sourcing can be very different in two neighbouring countries given the infrastructure and mindsets of businesspeople
- 20. I want to know my supplier intimately and I want the lowest prices Build the confidence of the buyers through careful screening of the suppliers no concerns regarding the quality of the supplied materials Educate the buyers that e-marketplace precludes the requirement of close relationship lowest possible costs the only criterion Close relationships and lowest costs is a trade-off Customers can choose to source only from local suppliers if social contact is important for them
- 21. Suggested Organizational Structure SR: Sales Representative (Number would depend upon the requirements) SeRs: Service/ Support Representatives
- 22. Entry barriers customers have to overcome Initial/fixed costs (annual license fee): “Big figures can be a barrier” Different places of interaction between manufacturer and supplier ( no local proximity ) supplement and even substitute face-2-face interaction: No sample products: “The price is crucial…that can compromise the quality” No ‘touch and feel’: “Everything becomes black and white” Face-2-Face contact cannot be replaced (salesman), but is important Pre- and after-sales services : Production machinery (sold via FoodIT) requires local presence of supplier Local presence of the supplier is often crucial Quality cannot be evaluated: Trust is major issue for products and (!) the system Ability (physical) and willingness ( mental) of potential customers Integration of existing ERP-system is possible but still a hurdle FoodIT reorganizes the procurement system Buying company has to systemize its suppliers (who?, approved?, preferred?, product specification=?) Technical infrastructure needs to be available Mindset of the business people: Are they ready to switch? Bad experiences with other e-market places
- 23. Thank You