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Arrow Electronics Inc. - questions and answers.

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Introduction

Arrow Electronics Inc. Group 26: Karthik Sivaraman (224/39), Kishore Warrier (227/39), Rajadhyaksha Narayanan (322/39) 1) How do A/S sales people build their relationships with the customers? Specifically how do they leverage Arrow's product line B & S v/s VA products to add value to their customers? Transactional customers account for 25% of Arrow's sales and a majority of this is of the BAS type. Arrow was able to convert at least half of their transactional customers into relational customers in the long run. Customers want the convenience of submitting an entire bill of items for a quote, finding it more valuable to have a steady partner than rock bottom prices in the long run. At the same time they wished to get the best available prices. A/S provides this convenience and affordable prices. Arrow used the VA products as the first step to build a relationship, where the customers were provided with the best-in-class support. The gross margins on VA products are only 10-15%, as the customer threatens to switch to other distributors. The company in turns looks for commitment from the customers to buy BAS products exclusively from them. ...read more.

Middle

This flexibility will be lost when using express. Overall analysis of the case shows that there is not much to gain from using Express. In the long-term interest of the company it will be better if the company rejects Express proposal. As for the measures the company should take to counter the challenge posed by Express they should focus more on turning present transactional customers into relationship customers. By the year 2000 almost 80% of the business will result from value added services. The company should focus on providing these high value services, creating demand, gaining suppliers support and thus expanding the business. The price and order related information should be provided on the website along with all the services provided by the company. 5) Explore the relationship between Arrow and its suppliers. How do the suppliers reward-franchised distributors? What are design wins? Jump balls? Most electronic component manufacturers (suppliers) relied on distributors to generate demand of the 2 chip categories: proprietary and standardized. Standardized chips were interchangeable and produced by multiple suppliers whereas proprietary chips were manufactured by a single supplier. Many suppliers ship their proprietary and standardized products to arrow at list price or slightly below it. ...read more.

Conclusion

its competitor But Internet can definitely be converted to a friend, if used in a manner which is different for the competitors. The different ways it can be done is by: Incorporating the purchasing capability on the already available web pages of Arrow which at present give the product information and establishing an online store which the customers can directly access and book their orders. This way Arrow will offer something which its competitors not doing at present and get the first mover advantage in the market. By putting up online shop on its own Website, Arrow will be able to retain its contact with relationship customer and covert some of the transactional customers to relationship ones. It can also register at Express portal. This might lead to a loss of sales initially but that can be made up by focusing on Value-add business services which Arrow offers. Also by keeping competitive prizes on the Express portal, the danger of the cannibalization can be made up for. Arrow can use the Website to provide online consultancy and thus provide value-add to its customers and this will help it in focusing on the Value add part of the business which will be the growth area of the future. ...read more.

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