Strengths of Traditional Business Model of SHMEC

y y y y y y

Large and diverse customer base Sales through Multi channel System and franchise Centralized Procurement System Proprietary methods of settlements, review & allocation and users· files Very experienced logistics center staff Relatively less frequent stock outs though the company had to maintain a high inventory to reduce possibility of stock outs

Favorable environmental factors ² Traditional model y y y y y y y Large and diverse customer base Numerous types of products in industry Proper information related to customers and suppliers is known and its proper dissemination mechanism exists State patronage for the enterprise or market run by enterprises using traditional model Seller driven market Less competition Availability of credit .

¶Value· of the service provided by the ¶traditional· SHMEC to its customers y y y y Credit Policy of SHMEC Constant availability of product ² served from the inventory pile of SHMEC Established logistics and distribution facilities and experienced staff Widespread availability of products because of a large chain store model .

Vulnerability of traditional model to changing business environment y y y y y y y y y y Entry of new competitors especially private companies not averse to low profit margins Low entry costs facilitating entry of new entrants Scarcity of liquid capital Fluctuating prices affecting profits Increase in bad debts Risk associated with maintaining huge inventory Increasing importance of information collection and dissemination Decreasing response time for customers or fast processing of orders Decreasing Profits Infeasibility of higher Inventory levels and overheads .

Causes of piling up of inventory and bad debts Lack of proper information maintenance and dissemination system related to inventory and credit sales (common to both) Inventory Pile up: y SHMEC was using Buy First and Sell Later policy (traditional business model) . With increase in sales volume inventory piled up y Supply of mechanical & electrical equipments was greater than their demand y Flawed business and management styles Bad debts: y Ineffective management measures resulted in unlimited rights to sales staff who granted credit randomly. These unsecured credit sales converted to bad debts .It used to buy directly from suppliers through cash transaction and then sell it through its chain stores.

procure standard quality products and attain zero inventory Effective management of information ² collection & dissemination Used an easy to use system Ease of monitoring of orders. discount income of Me-online.Strengths of ¶new· business model y y y y y y y y y Real-time mechanical and electrical equipment trading platform High efficiency Extendible and widely applicable Low inventory Low operation costs Multiple sources of revenue ² sales revenue. transactions and CRM . trading charges and membership fees Enabled members to reduce procurement costs.

internet Widespread marketplace or market-space ± globalization y Universal standards of data exchange across the world y Increased information density which increases price and cost transparency y Cost efficiency y Increasing significance of customization and personalization y Increased emphasis on Quality of Service and order processing speed y Need for improved operational efficiency y y .Favorable environmental factors for ¶new· model Technological advancements .

¶Value· of the service provided by MeMeonline to its customers y y y y Specific customer demands were catered effectively and quickly Orders for small quantities were processed quickly and accurately CRM system was responsible for improved customer response time. leading to customer delight Goods were delivered to customer appointed place directly from manufacturer resulting in reduction of turnaround time .

Key success factors of the MeMe-online business model y y y y y y y High level of transparency Effective monitoring of sales staff led to reduction in bad debts and higher accountability Reduced operational risks due to effective control mechanism Focused CRM system leading to customer delight Order driven approach led to lower inventory and decreased total turn around time needed Highly efficient and easy to use Extendible and adaptable .

adds value and cost effective Easy to use and easily accessible Reliable .Sustainability & Imitability of business model of Me-online MeMe-online business model is sustainable because it is: Competitive .consistent Scalable Institutionally acceptable Standardized and adaptable It can accommodate rapid changes in business scenario It is imitable since the model is a not very complex and with rapid technological advancements. it is easy to implement it or outsource such a project and get it implemented as a software But it should be timely modified with changing business scenarios and to do this it should be understood very well before imitating it otherwise it won·t be as effective as expected .