ITS 510ITS 510Information ManagementInformation ManagementCase Study:

An Automobile Manufacturer

IntroductionIntroductionThis case briefly talks about the

benefits of the transition of an automobile manufacturer’s auctioning process using IT (namely the Internet)

Movement from:MARKETPLACE to MARKETSPACE

The Value ChainThe Value ChainPorter presented the value chain as

a competitive advantage in 1985 for the first time

It became a popular & important strategic planning tool

Important activities of value chain:Inbound logistics, Operations,

Outbound logistics, Marketing & Sales, and Services

Supporting activities include:Organizational infrastructure, HRM,

Tech development, and Procurement

The Virtual Value ChainThe Virtual Value ChainThis mainly discusses on:Marketplace: Physical placeMarketspace: Virtual place/space

(online)Q: How can companies create value

in marketspace and marketplace simultaneously leveraging off each other?

They draw on Porter’s value chain in the answer

The Virtual Value Chain The Virtual Value Chain (contd.)(contd.)To compete in marketspace, companies

need to use information to create new value for customers

Creating value in the marketspace also involves a value chain

This is a virtual value chain because the steps are performed:

“with information and through information”

Value added via 5 ways: gathering, organizing, selecting, synthesizing, & distributing

The IS organization hence plays a vital role in marketspace

Mirroring CapabilitiesMirroring CapabilitiesSeemingly firms follow an evolution

in using information to add valueFirstly: By making operations visibleSecondly: Putting in place mirroring

capabilitiesThirdly: By creating space-based

customer relationshipsThis case focuses on the second

stepCompanies begin to substitute

virtual activities for physical ones

An Automobile An Automobile ManufacturerManufacturerCase from report by Roger WoolfeThis auto manufacturer has

dealerships around the USThe dealerships & headquarters

have satellite dishesThese dishes are used by the

manufacturer’s rental car subsidiary to auction off good, clean vehicles (<10,000 miles) to dealers to sell

The Marketspace AuctionThe Marketspace AuctionAn auctioneer is able to use 30

minutes to sell 60 vehiclesAs car comes up for bid, the dealers

view it on a monitor at their premisesThey can:See it from various directionsRead its ratings (cleanliness &

condition)Use a mouse to bid against other

dealers online

Monitoring the AuctionMonitoring the AuctionHeadquarters staff monitors the

progressAdvise can be made on, e.g.,

lowering bids to sell off all the cars

Auctions held 1 or 2 times a month

Satisfaction of dealersSatisfaction of dealersDealers became extremely

satisfied with the technologyIt saves their time to travel to

auctionsThey get good quality used carsGuarantee of manufacturer to

return cars in case of disatisfaction

IT Advantages to the IT Advantages to the ManufacturerManufacturerNo need to bring the cars to the

shops/stores (physical places)Less transportation costsDeliver all information to

dealers/buyersPossibility of global expansion

(no longer confined within the US)

RecommendationsRecommendationsIntroduction of online catalogs to

get information about new carsAccess to general customers

(expansion of business)Ordering of goods at any timeOffering discounts for buyers who

buy directly from the manufacturer (eliminating the middle man)

These points can create a space-based customer relationship