Elemica Global Expansion Strategy Business Information Technology Essay

Elemica Global Expansion Strategy Business Information Technology EssayElemica is a globose e-commerce company in the chemical industry which provides electronic network-based grade management and supply chain applications and work. This report aims at outlining the outline for Elemicas e- handicraft trading hub global elaborateness. First, the environmental analysis of Elemica has been discussed. The deck up analysis of Elemicas current business sector is discussed, followed by evaluation of elemicas online B2B industry utilise Porters five forces model. The motley ICT ch exclusivelyenges which ordain be faced by Elemica during global expansion gravel been identify. The various risks, opportunities visible(prenominal), associated be and scathing success factors for the global expansion have been discussed. A strategy map has been defined along with a fit score card which measures the effectiveness of the B2B expansion strategy. After exploring completely the oppor tunities and risks involved and evaluating the effectiveness of the strategy, the following recommendations have been madeSwitch to foul reckoning in tramp to easily expand into foreign market place and be updated with the up-to-the-minute engine room.Follow all the regulatory compliances in its e-business initiative and apply business ethics to be followed in dissimilar countries. undertake that all the cross-border proceedings follow security protocols and be safe and secure.Being sensitive to cultural differences in expanding countries and making the change management process smooth.These recommendations go out thus help Elemica to successfully expand its B2B e-business strategy and establish a dominant position in the world market.Table of ContentsEXECUTIVE abridgment 2Table of Contents 31.INTRODUCTION 42. ENVIRONMENTAL ANALYSIS 52.1 COMPANY ANALYSIS 52.3 CORE COMPETENCIES 82.4 MAJOR rival 82.5 CURRENT melodic line MODEL 82.6 MARKET ANALYSIS AND TRENDS 92.8 INFORMAT ION AND COMMUNICATION TECHNOLOGY CHALLENGES 113. BUSINESS CASE FOR ELEMICA 134.PROPOSED PROJECT PLAN 194.1 PROJECT PLANNING AND CHANGE MANAGEMENT 195.ASSESSING ONLINE B2B INDUSTRY TRADING HUB 215.2STRATEGY MAP 246.RECOMMENDATIONS 266.4 BUSINESS PROCESS REDESIGN AND SYSTEMS INTEGRATION 286.7 SUPPORT SERVICES 29CONCLUSION 30LIST OF REFERENCES 31ANNOTATED BIBLIOGRAPHY 331.INTRODUCTIONThis report aims at sagacity the business of Elemica and hence, develops a strategic plan for the global expansion of e-business at Elemica. As the Chief Information Officer (CIO) of Elemica, an in-depth analysis of the company is presented in the report. It includes environmental analysis of Elemicas online B2B trading industry hub and alike identifies the potential for global expansion of e-business.The report entrust assist the company to expand its core activities in the foreign market. It also highlights the risks associated with expanding the e-business globally. It identifies the target groups, the characterization of target groups, and how to build value into Elemicas dish ups as desired by its invitees, which atomic number 18 essential for the success of e-commerce (Fellenstein Wood 2000). many an(prenominal) inhibiting factors related to assimilation, security, language, legal rules, cross-border selective information flow, ethical regulations etc. which atomic number 18 present in global corpses (Laudon Laudon 2006), have also been discussed. It also evaluates the en wear thin plan by providing a Balanced take Card to measure its effectiveness and a strategy map that will ensure the integration of strategy with writ of execution.The basic routine of this project is to determine whether Elemica should go ahead with the global expansion of its online B2B trading hub or non..2. ENVIRONMENTAL ANALYSISElemica is a global e-commerce company founded by 22 leading corporations in the chemical industry which provides web-based order management and supply chain app lications and services. It provides a unity hub which provides companies with a cardinal-stop end pointant role through which companies raise defile and sell chemicals to one another through their ERP systems or web alternative. It changes companies to link their internal IT systems through a sluggish platform. Elemica is the first e-commerce company in the chemical industry which has successfully commercialized its ERP-to-ERP connectivity. It provides a modular, hosted solution that simplifies sales, procurement and financial processes integrate supply chain partners in order to diminish communication barriers and foreshorten overhead and errors.2.1 COMPANY ANALYSISElemica is a privately held company with 150 employees. It has 2500 partners in its supply chain network and $60 billion in annual proceedings. It is headquartered at Pennsylvania with offices in Frankfurt, Amsterdam, Seoul, London, Singapore, Shanghai and Tokyo.VISION To be the leading provider of supply chain integration and optimization services to the industries we serve tire and rubber, chemical, energy and selected manufacturing industries. Clients rely on Elemica solutions and services to deliver Bottom Line Results, Enhanced Supply Chain Reliability, Quick and Easy Implementation, and Deep Industry Expertise.(Source www.elemica.com)SWOT ANALYSIS It is necessary to conduct a SWOT analysis of Elemica in order to develop a competitive advantage by identifying its strengths, weaknesses, opportunities and threats (Friend, 2009). It will enable Elemica to build on its strengths, overcome its weaknesses, identify the opportunities available and reduce its exposure to threats.STRENGTHSOne of the most sophisticated technology platforms in B2B spaceA single hub for all transactionsOne stop solution to its clientsAddresses e-commerce hires of companies of all sizesHelps companies automate their businessesCreates efficiencies and economies of scaleReduces clients overhead and errorsWEAKNESSE SDoes not buy, sell or own a productHighly fragmented chemical industry with large come in of companiesInternet is required for the serviceOPPORTUNITIESExpansion into internationalist marketsDiversifying its industry such as the rubber and tire industry, etc. where B2B e-business is possibleIncluding reviews and feedback from long term customers so that new companies get attractedFacility of online auctionsProviding for private collaborative hubsTHREATSNon-acceptance of business model in international marketsOutdated technology in some timeEmergence of new competitors with better technology2.2 VALUE PROPOSITION OF ELEMICAValue proposition is the hit that a companys products or services provide to its customers. (Turban et al, 2010, p. 591). The value proposition offered by Elemica is as followsA single hub for all the companies to do all their transactions.Only one connection needed for all transactions unlike some other companies offering alike services.A super platform which c onnects the ERP systems of all participating companies which allows the companies to electronically communicate with each other and to conduct the transactions.Acts as an intermediary which only links all the companies together and then they butt conduct confidential transactions electronically.Enables a company that signs up for its services to conduct business with all the other buyers as well(p) as suppliers which are linked through Elemica.It offers tetrad modules procurement, logistics, and customer replenishment (automate inventory replenishment and ordering), and order management.Provides support of Elemicas Professional Services and Implementation Team to its new clients. This ensures that the on-boarding process is successful and amplifications acceptance of the business value with its major trading partners.Addresses e-commerce needs of chemical companies which are of all sizes.Results in improved operational efficiency, reduced costs and a higher voice of safe and re liable deliveries2.3 CORE COMPETENCIESThe core competency of Elemica is to provide web based order management and supply chain applications and services. It delivers this byProviding four modules procurement, logistics, and customer replenishment (automate inventory replenishment and ordering), and order management.Single hub for all transactions.2.4 MAJOR COMPETITORThe major competitor of Elemica in this space is ChemConnect, which was founded in 1995. It offers services similar to Elemica, but it does not connect the ERP systems of the participants. It has 9000 customers and is spread out in around 150 countries. (Figures as in 2009).2.5 CURRENT BUSINESS MODELElemica provides a one-stop solution to all its customers to carry out transactions. It integ range the flow of information among the trading partners by using a Business Process Network (BPN). Once a client is connected to Elemica, it gets access to thousands of buyers and suppliers. The clients are charged for the service o n the basis of volume of usage.The business model works in the following wayWhen a client is in need of some material, it puts up a put across on its ERP system.This message goes to Elemicas platform asking its members for the availability of the material.Several of Elemicas members respond to the message by responding with quotations.At this point, both the purchaser as well as the seller is anonymous.The client decides from whom to purchase based on the quoted prices.When the shipping is arranged, the identity of the parties is revealed.When the order is confirmed, the platform is apply to paln and co-ordinate delivery, automate invoice and pay one another.Elemicas revenues are generated by charging transaction fees from its clients on a per-transaction basis.Elemicas business model is sustainable because it integrates all the supply chain partners, thus reducing the communication and transaction time. The customers are able to connect to a large number of buyers and suppliers o n a single platform, without having to purchase any internal system for themselves. Also, since they are charged on a transaction basis, the revenues are sustained and sustainable and are more(prenominal) efficient than older EDI based solutions which charged on the basis of inter-company transactions. Also, it addresses the needs of chemical companies of all sizes. It thus results in increase operational efficiency, lowering of costs, little inventory, and safe and speedy deliveries. These results in customer satisfaction and thus result in attracting more new customers.2.6 MARKET ANALYSIS AND TRENDSWith the advent of earnings, on that point has been a major shift in the way companies do business. There has been a high visibility of B2C e-commerce, whereas it is the B2B e-commerce which provides a large amount of marketplace spending ( Pierfrancesco Manenti, 2010). The fit spending by B2B e-commerce is more than 85% of the total spending of B2X e-commerce all over the world ( tally to IDC estimate).Research has shown that B2B e-commerce is more used by the firms in U.S. However, it is suppuration at a fast pace in Europe as well because the manufactures are becoming more acceptable to this concept.It has been found that only 4% of the total turnover in manufacturing sector is generated through B2B e-commerce sales (data from Eurostat). Hence, there is a great scope for e-commerce to expand in new countries as well as expand their business domain, which provides Elemica with a great business opportunity.2.7 EVALUATION OF ELEMICAS ONLINE B2B INDUSTRY TRADING HUBThe beat out way to evaluate Elemicas online B2B industry is by using Porters five forces model. According to the model, there are 5 forces which affect the industry and the economic value that gets divided among the industry players (Turban, 2007).Threat of new entrants Due to continuous advances in technology, there is always a threat of a new company coming up with a latest technology and domi nating the market scenario. This talent make Elemica outdated. Hence, there is a high risk of new entrants coming into the market which makes it inevitable for Elemica to infinitely improvce it systems and be updated with the latest techniques.Bargaining personnel of Suppliers The bargaining force play of suppliers is limited for Elemica because Elemica just provides a platform for them to make transactions. Also, the suppliers in the chemical industry are also buyers themselves, and hence are capable on each other. Also, Elemica provides them with a neutral platform where they can easily transact with intermediate costs and time wastage removed.Threat of substitute products or services Threat of substitute products/services entering the market is high because e-commerce is a very dynamic business. Any new technology or concept can easily replace it. Also, physical transactions can also easily act as a substitute to online services.Bargaining Power of Buyers The bargaining powe r of buyers is again limited because of the interdependence of buyers and suppliers on each other. But since they have a large number of options available, they can easily choose from among them and get the best deals.Rivalry among Existing Competitors There is a large scope for e-commerce online industry to grow as a whole. Also, with limited competitors in this space, there is less of a rivalry and majorly the company providing easy and better services will dominate the market.2.8 INFORMATION AND COMMUNICATION TECHNOLOGY CHALLENGESWith Elemica planning to expand globally, there are several(prenominal) ICT challenges that will be faced by ElemicaAs the customers will cash in ones chips increasingly global, a major chaleenge for Elemica is to manage the relationship between buyers and suppliers who may survive to different countries and cultures. Hence, Elemica mustiness develop a Customer Relationship Management (CRM) system in order to ensure that the customer relationships ar e long term, sustainable and add value.It will also need to be considered as to how Elemica will integrate the legacy systems that the companies currently use. Instead of connecting the ERP systems of the companies to the hub, Elemica can switch to cloud computing which will eliminate the need for integration.In order to keep up with the latest technology, Elemica can switch to cloud computing which will provide all the network facilities over the network without any need for connecting the ERP systems of the clients. The companies will then be able to access their account at any computer with internet access. This will reduce the costs incurred as well as attract more number of customers globally.While handling cross-border transactions, Elemica needs to be extra elaborated about the security issues and the data transfer protocols and standards to be followed. It needs to be in compliance with the international copyright laws and security standards.3. BUSINESS CASE FOR ELEMICA3.1 OPPORTUNITIES AND OBJECTIVESThe opportunities available with Elemica are as followsExpand its business to other countries and thus provide online supply chain integration by acting as a neutral platform for all the transactions. The challenge is to expand the system into other countries and also take care of the logistics for distribution.Adopting latest technologies so that the live technology does not become obsolete. This will add more customers to the e-business and also make the business model more sustainable.For global expansion, Elemica can shift to cloud computing. This will save the companies from connecting their ERP systems to central software. The applications needed to run the business could be stored on servers. This will save the company costs and companies across the globe can easily do business just by logging into the internet. It will help them connect to anybody and anywhere in the world. Also, the customers can easily collaborate and work on big projects in real time.Another opportunity in the area of expansion for Elemica is that it can allow buyers to compare products from different vendors and customize their product requirements from a variety of vendors.Elemica must also start interaction among the vendors wherein they can post their comments and reviews about its services. This will help attract new customers and also enhance the credibility of the company.3.2 CRITICAL conquest FACTORSCritical success factors (CSFs) are a few key activities that can determine the success or failure for any type of organization (McLeod Schell, 2001). By identifying the critical success factors, companies can develop strategies and also prioritize their activities for future business (Ward Peppard, 2002). The critical success factors for Elemica to go in for a global expansion areNeed to be more customer oriented in order to be sensitive to cultural differences and be responsive to their varying needs.The web interface must also be in the local language of the countries where Elemica plans to expand.Deliver secure and reliable connection to its users. Ensure that all the transactions and data transfers remain confidential and privacy policy is adequate.Compliancy with international standards must be maintained before entering into expansion into international markets.The tax implications must be kept in mind for the success of a business in other countries. It needs to be ensured that the company is in compliance with the local tax rules.Need to be up-to-date with the latest technology so that the business model does not become obsolete and also to prevent competition.3.3 cost AND BENEFITS (ROI)It is essential to calculate the return on investment before taking any business decision to ensure that the returns will be favorable for the business. It is a tool which helps in evaluating information technology and electronic commerce investments (Turban, 2008). The ROI formula divides the total net benefits (revenues less cost s, for eachYear) by the initial cost, resulting in a ratio that measures the ROI for each year or an entire period (Turban 2010).The various costs involved in the expansion of Elemica globally will be merchandise costs A marketing strategy needs to be developed in order to attract customers all across the globe. Also, advertising costs will be incurred to establish the brand image of Elemica in new countries. This will be a significant cost because the marketing campaigns need to be customized according to different locations and local markets.Operating costs Operating costs will differ for each country. This will include the training assistance program costs and other support costs to its customers. These costs will vary because the currency values in each country will vary and the exchange rates also need to be taken into account. Also, operating costs will increase because now the hub needs to be customized for local markets and more number of customers mean higher maintenance c osts.Employee costs More number of employees will be needed to wrap up the expanding business. Local people will have to be recruited in order to understand the local needs and be responsive to them accordingly.Administrative costs Administrative costs will go up with an increasing number of customers.Opportunity costs It is the cost associated with not taking an electronic commerce initiative (Schneider, 2007). If Elemica does not go ahead with the expansion, some costs will be incurred for not going with this plan, called as opportunity costs.The revenue will be generated throughTransaction fees The clients are charged on a per transaction basis. With change magnitude number of customers, the number of transactions will increase and hence the revenue.Training fees The training fees charged for increasing acceptance and making the on-boarding smooth will also increase with increasing number of members.3.4 BENEFITS OF EXPANDING GLOBALLYThe benefits associated with expanding global ly areIt will offset sales decline in the domestic market, if any. Even if there is not much decline in revenues in the domestic market, having a global network will act as a safeguard for future.It will increase the life cycle of our services because it may be possible that this technology gets outdated in the domestic market, but in new markets this might mollify be new.If Elemica goes into cloud computing, it will attract a large set of new clients, both in the domestic as well as international market, thus leading to increased revenues and higher market share.It will improve its competitive position and help in establishing itself as a global brand.3.5 RISKS ASSOCIATEDHaving a web based platform makes the system susceptible to risks associated with the internet. Hence, it is important that the problems which will most likely cause damage is addressed (Van der Walt, 2002). Hence, the risks associated with global expansion of Elemicas e-business are as followsSecurity issues With data and transactions scanning across the globe, there might be security concerns and different protocols to be followed in different countries. Also, there might be concerns regarding the misuse of information that is transferred over the internet.Payment issues With difference in currencies and exchange rates, it might become difficult to make payments among the collaborating parties, which might result in loss of cross border transactions.Threat of Frauds Proper mechanism would have to be in place to prevent any fraudulent customers to marijuana cigarette the network and take undue advantage.Server crashes There might be server crashes due to expansion into remote areas which might cause the entire system to fail and thus result in huge losses.Improper integration Risk of improper integration of the hub with ERP systems in remote locations.Violation of laws There might be systems which may violate the home country laws, thus creating troubles for Elemica in future.Cultural diff erences The local people in target countries might not be comfortable with the concept of online buying and selling of stock. This may lead to a failure of the entire business model in that country. Hence, a proper brain of the local culture needs to be developed before entering into expansion.Changing technology Elemica needs to be up to date with the latest technology so that their services do not become obsolete.Lack of IT infrastructure It might be possible that some countries might not have enchant internet infrastructure. This will hamper the expansion of e-business in that country.4.PROPOSED PROJECT PLAN4.1 PROJECT PLANNING AND CHANGE MANAGEMENTElemica needs to develop a detailed project plan to carry out all the planned projects, evaluate the various options available, identify specific milestones, allocate requisite resources, and manage the projects (Turban et al. 2010).There are five basic stages in developing a project (Haughey, 2010)InitiationPlanning and project desi gnExecutionMonitoring and controlling systemsCompletionElemica will first need to identify a project champion who will ensure that proper time, resources, and attention is given to the project throughout its initiation to implementation (Turban, 2008). Then a project team needs to be established who will develop a detailed project implementation plan. For expansion strategy, Elemica can pilot test it in some other country, which will help identify the problems and successes, thus helping in modifying the strategy accordingly (Turban, 2008). Accordingly, staff requirements are identified and fulfilled and training given to them for the latest technology. After the completion of the proposed plan, it should be reviewed at each stage in order to overcome the inefficiencies and loopholes which were identified and then constant monitoring of the project needs to be done.Change management is a major issue which needs to be handled by Elemica during its global expansion because people will resist change. An appropriate communication strategy needs to be developed which will aim at keeping all the employees as well as Elemicas clients up-to-date with the companys strategy and latest happenings. This will help them cope with the changes (Schneider, 2007) and also help them adopt the new changing culture easily. Confidence and buy-in needs to be inculcated within the employees so that their support can be garnered for the project, which will be essential for the success of the business.4.2 RESOURCE ALLOCATIONThe various resources which need to be allocated during Elemicas expansion will be human resources and IT resources.Human resources will include business managers, project managers, web designers, graohic designers, system operators and administrators (Schneider, 2007).IT resources which will be needed are the hardware and software development and its maintenance.5.ASSESSING ONLINE B2B INDUSTRY TRADING HUB5.1BALANCED SCORE CARDThe most popular system for performance management is the use of a balanced scorecard (Turban, 2007). It was designed by Kaplan and Norton in 1996 and it describes a holistic measurement system which flows from the overall strategy of the organization and crystallizes into measureable indicators (Kaplan Norton, 1996).A balanced score card evaluates the effectiveness from the following 4 perspectivesFinancialCustomerInternal Business ProcessesLearning and GrowthPERSPECTIVEOBJECTIVEMETRICrationale1) FinancialIncreased market share1) Increase in the number of clients2) Increase in the revenues3) Increase in the number of locations where Elemica provides servicesIncrease in market share is an important metric in determining whether the global expansion of the business has been successful or not. Only if there is an increase in the market share, it will indicate that the business is successful and is gaining more customers.Increased ROI1) Increase in the number of transactions between clients, hence resulting in increased re venues.2) Increase in the number of customers.It is important to measure the revenues earned in order to ensure that even if market share might have increased, the revenues have also increased along with it. Also, it is important to know that the returns are increasing on the money invested.2) CustomerIncreased customer satisfaction1) Increase in the number of repeat transactions2) Decrease in the number of customer complaints3) Increase in the number of positive customer reviews4) Reduction in the receipt time for resolving customer complaints.Customer satisfaction is a top priority for the success of any business. Customer satisfaction ratings will indicate whether the existing customers are satisfied with the services and this in turn will determine the new customers getting added to the network.Increased visibility of Elemica1) Increase in the number of transactions on Elemica.2) Increase in the number of new subscribers.3) Increased visibility among other chemical companies.Th is will determine whether the new marketing campaigns and expansion strategy has worked or not. Whether it will be able to generate more revenues or not.3)Internal business processesIncrease in efficiency1) Increase in the quality of service2) Decrease in the lag time between a complaint and resolving that complaint.3) Increase in the number of transactions that can be handled at a particular time.4) Increase in the speed of transactionsThis will help in delivering best service to the customers and will help in continuously improving upon the existing services.Better technology and transaction security1) Increase in the transaction security even while cross-border transactions take place.2) Adopting the latest technology and making the hub more user friendly and easy to implement.This will take of the security concerns which may arise during the expansion process in different countries. Also, the latest technology will keep Elemica inline with the competitors and help in dominating the market share.4) Learning GrowthBetter skilled staff competent to handle latest techniques and varying cultures1) Increase in % of employees who are highly skilled.2) Develop the competencies in the staff to work in a dynamic and competitive environment.A highly skilled and competent staff will ensure that the company progresses and delivers the best to its customers all across the globe.This will also help in identifying the gaps in the skills of employees and work upon them.Increased organizational learning1) Increase spending on RD to improve the technology used, hence delivering better services.This ensures that the latest and the best technology is used and the organization is ready to respond to the changing environment all across the globe.5.2STRATEGY MAPThe strategy map below shows the linkages between the four perspectives of Balanced Score Card and how they result in achieving the overall business strategy.INCREASED SHAREHOLDER VALUEHIGH ROIMORE MARKET SHAREFINANCIAL P ERSPECTIVE eruditeness GROWTH PERSPECTIVEHIGH EFFICIENCYCUSTOMER SATISFCATIONINCREASED VISIBILITYSECURITY COMPLIANCELATEST TEHCNOLOGYMORE CUSTOMERSMORE CITIESMORE TRANSACTIONS adroitness DEVELOPMENTINCREASE IN RDCOMPETENCIESHIGHLY SKILLED AND COMPETENT WORKFORCEINTERNAL PROCESS PERSPECTIVECUSTOMER PERSPECTIVE6.RECOMMENDATIONSThe following recommendations are in order of their priority. Each one will be needing 5-6 months to implement and can be started concurrently.6.1 OUTSOURCING OF ICT INFRASTRUCTUREIn order to strengthen the ICT infrastructure of Elemica, it should adopt cloud computing. It will hence result in business process automation. All the facilities will then be available over the network without any need for connecting the ERP systems of the clients. This will help in reducing the costs of setting up hardware or software and its maintenance. Clouds are a pool of easily operational as well as accessible virtualized resources such as hardware, development, platforms and /or services (Vaquero et al. 2009, p. 51).Shown below is how cloud c