Arrow Electronics Inc. Case Analysisy
Case: Arrow Electronics Inc.
Introduction
Arrow Electronics Inc. is faced with a difficult, time-constrained choice of incorporating Express in its distribution channel or not. Arrow must consider its market dynamics and the value it adds to its suppliers and customers. Arrow also must determine how Express will affect its business model and selling efforts before making a final decision.
Market Dynamics and Value to Suppliers and Customers
Arrow is involved in a third-party delegated channel system where suppliers (of semiconductor manufacturers such as Intel and Texas Instruments) that partially rely on it to generate demand and fulfill value chain functions without a direct link to customers at all times. The value proposition that Arrow provides for its customers is in the form of the distinct value-added services that it provides them, including:
Credit arrangements
Delivery of components in smaller quantities with little notice
Programming support for some devices for individual customers
Supplying complete kits for production to contract manufacturers
It also provides suppliers with a channel to publicize their standardized parts, and assists in placement for their proprietary devices in the customer’s new products. For doing so, the suppliers offer Arrow competitive pricing on products. The suppliers all have invested an interest in stabilizing process through the channel, keeping record of who uses the products, and having desire for distributors to perform value-added services. The customers would desire Arrow to provide them parts in small volume on demand as well as assemble kits so that the production lines can run without interruption.
The entry of Express presents a clear challenge to Arrows business model. There is a presented threat as a distributor as the Express internet-based distribution system as the OEM’s may use the web site as a shopping portal for the lowest price that distributors are able to offer. In turn, this
Introduction
Arrow Electronics Inc. is faced with a difficult, time-constrained choice of incorporating Express in its distribution channel or not. Arrow must consider its market dynamics and the value it adds to its suppliers and customers. Arrow also must determine how Express will affect its business model and selling efforts before making a final decision.
Market Dynamics and Value to Suppliers and Customers
Arrow is involved in a third-party delegated channel system where suppliers (of semiconductor manufacturers such as Intel and Texas Instruments) that partially rely on it to generate demand and fulfill value chain functions without a direct link to customers at all times. The value proposition that Arrow provides for its customers is in the form of the distinct value-added services that it provides them, including:
Credit arrangements
Delivery of components in smaller quantities with little notice
Programming support for some devices for individual customers
Supplying complete kits for production to contract manufacturers
It also provides suppliers with a channel to publicize their standardized parts, and assists in placement for their proprietary devices in the customer’s new products. For doing so, the suppliers offer Arrow competitive pricing on products. The suppliers all have invested an interest in stabilizing process through the channel, keeping record of who uses the products, and having desire for distributors to perform value-added services. The customers would desire Arrow to provide them parts in small volume on demand as well as assemble kits so that the production lines can run without interruption.
The entry of Express presents a clear challenge to Arrows business model. There is a presented threat as a distributor as the Express internet-based distribution system as the OEM’s may use the web site as a shopping portal for the lowest price that distributors are able to offer. In turn, this