The European e-Business Report The European e ... - empirica

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The European E-Business Report 2005 E-marketplaces offer a variety of services – difficult selection of “right” e-market Electronic marketplaces that serve the M&E sector offer a variety of services. Functions range from mere contact brokerage to the organisation of auctions and sales procedures. Market variety allows moving beyond the trade of standard parts to more sophisticated products and services. It is essential for market operators to gain a critical mass of trade in order to attract customers and suppliers. For potential market participants selecting the right e-market is not easy. Therefore, information on the functionality, the operators, and their reliability, as well as on the size and scope of electronic markets should be made available to support companies in decision-making. Case studies and business examples The sector reports on the M&E industry (July / September 2005) contain short case studies and examples of e-business activity in companies from the sector. These 'activity views' support the analysis of both the survey and from desk research, and provide further insight in current e-business trends and developments. Exhibit 2.5-3 summarises the 'activity views' which are featured in more detail in the two reports. Exhibit 2.5-3: E-Business Activity Views featured in the sector studies E-Business Activity Views Country Topics Case Study: An Extranet Application for Warranty Handling at Palfinger, manufacturer of hydraulic lifting, loading and handling systems Case Study: Digital Parts Transfer, broker of machinery blue prints and production capacity Case Study: Establishment of an ERP- System and a Webshop at Telschig, manufacturer of bulk handling machinery Case Study: Project Management and E-procurement at Köhler and Hörter Compressor Systems, manufacturer of customer-tailored compressors Case Study: Implementation of Quality Management System in Fire Eater A/S, manufacturer of fire prevention tools and fire fighting equipment Case Study: Mosaico Service at Bonfiglioli Riduttori Spa, supplier of speed reducers, gear motors and inverters Case Study: The VDMA-e-Market, electronic marketplace for machinery and equipment manufacturers Austria Netherlands Germany Germany Denmark Italy Germany Implementation of an electronic system for easy handling of warranty registrations and claims in order to strengthen the quality of customer service. A supply service for physical products, linking partners in the global product ownership, production, and distribution, by digitally storing, distributing and processing electronic product definitions. Implementation of an ERP-system and an online shop for the distribution of spare and wear parts in a small company. The e-business project was financially supported by PROZEUS. Efforts and challenges of a small compressor manufacturer associated with the establishment of a project management system for the production of complex and custom-tailored products. A detailed analysis of a Quality Management application. The system allows for the organisation, provision, and distribution of information, for project management, as well as for quick communication. Implementation of a CRM system and the launch of a sales documentation and product configuration portal. Details on the development of the VDMA-emarket as an information platform for the M&E manufacturing industry. 109
The European E-Business Report 2005 2.5.4 Anticipated implications of e-business for the industry The second sector report (of September 2005) assessed the implications of ICT and e-business adoption on the structure of the M&E industry. It applied the 'five-forces-model' developed by Michael E. Porter (1980) as a framework to do so. This chapter summarises the main findings. New entrants In the M&E sector, e-business tools are primarily used to increase the efficiency of processes in established firms or to improve and introduce new service offers for customers. Compared to other sectors (e.g. retail, banking), the potential for mainly internet-based business models seems limited in M&E manufacturing. Thus, the availability and widespread use of ICT in the sector provides little additional opportunities and incentives for new firms to enter the market. In addition, since the M&E sector is a mature industry, with a majority of established and highly specialised firms, entry and exit rates seem comparatively low compared to other industries. Thus, new entrants are a comparatively low strategic threat for most firms in the sector. Overall, this implies that e-business will only have minor impacts for competition in this sector due to new market entry dynamics. Substitution of products / services The degree to which it is possible to substitute products and services in an industry of competitive dynamics. If products are close substitutes, competition will be mainly based on prices, providing advantages to those producers with the most favourable cost structures. Often, in markets with economies of scale, the winners of competition will be a few big players. However, if products and services are targeted at niche markets or if they can be substantially differentiated from competitors’ offers (e.g. via brand names, quality, superior customer service, technological capability or durability), this can limit price competition somewhat, shifting competitive dynamics towards product attributes and service offers. In such markets, specialised small firms can have good business opportunities. In the M&E sector, the degree to which products and services are standardised and substitutable varies among sub-sectors. In many sub-sectors, machines and equipment are highly customised or built to order and require special engineering know-how and experience that is hard to copy. In such markets, competition focuses more on innovativeness and quality than on prices. Against this backdrop, e-business technologies can have varying impacts on competition. On the one hand, e- business provides numerous opportunities for companies to offer customised products or services, which limits the degree to which offers are substitutable. On the other hand, on-going standardisation initiatives (such as eCl@ss 72 ) are expected to make products and components more comparable among different suppliers, thus increasing market transparency, but also increasing the degree to which it is possible to substitute such products among different suppliers. Thus, the net impact of e- business on competition due to the substitution of products or services can vary among different subsectors of the M&E industry. Negotiation power of suppliers The negotiation power of suppliers influences the allocation of rents and profits in an industry. The degree to which suppliers can “dictate” the rules of the game varies among different sub-markets in the M&E sector. Some firms in the industry are influenced by their suppliers in their e-business strategies, which implies that suppliers have negotiation power vis-à-vis these firms. The introduction of e-business solutions can affect the distribution of power between suppliers and customers. On the one hand, if two or more firms commit themselves to common standards and an integrated ICT solution such as SCM), this yields a strategic partnership that can be subject to lock-in effects which can limit competition and increase the dependence of the partners on each other. In particular, firms might get “locked in” to a particular supplier. On the other hand, investments in e- business technologies that are not relationship-specific and accompanied by standardisation initiatives 72 A German project to develop e-standards for SMEs. See www.eclass.de (April 2005). 110
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