These three strengths of their content methodology, depth of expertise in the Asian manufacturing sector, and commitment to being a leader in electronic enablement and IT form a defensible competitive position. As a result, the company is well positioned to attract investors.
In supporting the contention that Global Sources is well positioned to attract investors based on the three unique strengths of a scalable content collection and management methodology, expertise with the Asian manufacturing community and that communities' unique needs and requirements, and an emerging strength in electronic enablement and IT, the following points need to be kept in mind. When these three factors are combined, the potential exists for Global Sources to move beyond just being a provider of content management services to leads for Asian manufacturers on the one hand, and sourcing, procurement and buy-side contacts for companies globally on the other. Taking into account the aggregation of all these factors together could easily lead to the monetization of their technologies and their resale in addition to the creation of online services for other supplier networks and exchanges as well. In the current timeframe of social networking-dominated development cycles and the need for scalable architectures, Amazon.com and the launch of their Elastic Computer Cloud (EC2), Simple Storage Service (S3), and Dynamo platform (Vogels, 2009) provide an example of what Global Sources could potentially do with the collection of technologies they are fine-tuning based on the constraints of content collection and management on the one hand and the need for scaling to meet the needs of Asian manufacturers on the other.
Second, Global Sources is well positioned given their triad of strengths mentioned to all redefine the entire exchange-based arena. As they have an extensive amount of content already, this would be possible to do rather quickly. When this strategy is considered, Figure 4 in the case study is shown to be more of a blurry image than a high resolution image of the market. In addition to looking across the five key success factors that are included in the case study, Mr. Hinrichs also needs to consider the following strategy as well that capitalizes on the three strengths mentioned. Offering a Portal Platform that includes a Web-based interface, identity management and personalization, content management, data integration and analytics could be the low-end offering of Global Sources' strategy of monetizing their systems and content. At the high end, Global Sources could offer an Exchange Platform would have all the modules of the Portal in addition to a Process Integration Engine and Transaction Engine. The Transaction Engine already in fact exists in the order management application Global Sources originally created in 1989. As Global Sources lands clients for these two solutions, value-added services could also be sold for streamlining clients' finance and logistics workflows, defining strategies for ensuring adherence to compliance initiatives including Sarbanes-Oxley (SOX) and others, in addition to launching an aggregate supplier rating application as well. Creating this services-based strategy will transition Global Services out of what will become a highly competitive content management-based exchange market and into portal and private exchange development and services. Presuming the company continues to mature in these areas they will be significantly more profitable than if they stayed only in their current business.
3.Identify the critical success factors for any company competing in an online B2B marketplace. Briefly describe each with an explanation of why or how each is critical to a company in this industry. There are more than the five listed in the case. For example, Liquidity & Profitability are two dimensions of one factor: financial strength. Limit your list to no more than eight factors. Prepare a Competitive Profile Matrix (CPM)* using Global Sources, Alibaba and VerticalNet. What is your conclusion about Global Sources' competitive position?
The following are the critical success factors for companies competing in the online B2B marketplace in the timeframes of the Global Sources case study. These factors form the basis of the Competitive Profile Matrix shown in Figure 2. These factors include the following. First, there is the financial strength of the vendors, and included in this definition are their ability to be self-funding from operations and the propensity they have to generate outside funding from venture capital on other sources. Second, the ability to generate unique, differentiated content of value to enterprises is a key critical success factor that defines the relative market positions of competitors in the exchange market in the timeframes of this case study. The fact that other exchanges are focused on shared transactions and even experimenting with auctions as Covisint is during this time period (Schwartz, 2000) shows the breadth of exchange-based business models occurring. Integration expertise at the process level is the third critical success factor, and this deliberately stands independent of information technology (IT) as integration at the process level between buyers and suppliers forms the basis by which these types of electronically enabled platforms for nurture learning and knowledge generation over the coming years. The Network Effect (Funk, 2009) that is critically important for any exchange to attain critical mass, is enabled through interprocess communication. For this multiplicative effect of communication to lead to greater efficiencies throughout the entire exchange, there has to be accurate, reliable process integration at the foundational level of the exchange. That is why process integration deserves to be a separate critical success factor. The fourth critical success factor is expertise in supply chain management, specifically measuring supply chain competency and influence in the context of the specific industries they serve. This is a highly differentiating factor in the B2B marketplace arena during the case study's timeframe in addition to later. Consider how B2B marketplace entrants with high supply chain competency and high influence are the most focused on collaborative processes first, and also have the most advanced IT platforms as well. Conversely Global Sources finds itself with relatively low supply chain competency and high supply chain influence, therefore giving them strength in external interchanges and giving them a document-centric strategy during the time period the case study is evaluating. There are B2B marketplaces with low supply chain competency and low supply chain influence, and they are characterized by an intensive number of external connections, are very message-centric in their approach to defining the value chains, and have a core competency in sell-side processes and Electronic Data Interchange (EDI). B2B marketplaces in this quadrant of the supply chain competency/supply chain influence model have connectivity as their core strength overall. The last of the four segments of the quadrant, where are those B2B marketplaces that have high supply chain competency and low supply chain influence. B2B marketplaces that fit into this quadrant are those that are entering this market based on their e-commerce capability, and as a result have strong process skills het lack the ability to provide collaborative workflows which are critical for any B2B marketplace to scale. The following table compares the competitive dynamics of these four areas of supply chain competency vs. supply chain influence and illustrates why this is a critical success factor for B2B marketplaces.
Figure 1: Comparing Supply Chain Influence and Competency: B2B Marketplaces
Supply Chain Influence
Dominated by e-commerce vendors
Support for Enterprise Application Integration (EAI)
Sell-side or sales channel focused; Electronic Data Interchange
Enterprise Applications dominated
Dominated by Legacy & Homegrown Systems
Difficulty of real-time process integration
When the dynamics of the B2B marketplace are taken into account from the perspective of the above matrix, it is clear that the last critical success factor, Information Technologies (IT) expertise, only plays a partial, not complete role in the success of any B2B marketplace. Over time the role of IT will become subordinate to process expertise as B2B marketplaces become more process- and supply chain centric than IT centric. Scalability attributable to IT is in the context of the case shifting from being a differentiator to being a requirement. While not explicitly stated it is inferred from the direction of competitors in the case. The sixth and last factor is the ability of a B2B marketplace is the affinity of each company compared to sustain their unique relationships with manufacturers in their specific regions. Global Sources has been able to do this and has begun the transformation inside their company of transitioning away from content and towards process, beginning with the lead generation workflows and processes small and medium businesses rely on to generate business. The result of this analysis is the B2B Marketplace Key Success Factors Analysis as shown in Figure 2: B2B Marketplace Key Success Factors, Competitive Profile Matrix.