MGTO321 Case Presentation

By Group 1FHo Wing Hang, Gary

Lam Wing Man, Mandy

Lee Chiu Wan, Yvonne

Leung Kwok Cheung, Roger

Wong Sze Man, Christine

VerticalNet

Start in 1995

Founder: Mike McNulty and Mark Walsh

$7million from Internet Capital Group

$9million from other firms

Today’s focus!

What should be VerticalNet’s

Growth Strategy: “doing more of

the same”, “doing more than what

we currently do”, or doing both?

Outline:

VerticalNet background and analy

sis Yvonne

VN competitors’ analysis Roger

Suggestion (I) Mandy

Suggestion (II) Chirstine

Q&A

Business model

Business model: B2B business

– Bring suppliers and buyers together

– Services provided: storefront service,

community, information provider

Competitors

Suggestion (I)

Suggestion (II)

VN Background

Revenue

55% sponsorship40% storefront5% e-commerce VerticalNet Revenue

e-commerce5%

Sponsorship55%

Storefront40%

Competitors

Suggestion (I)

Suggestion (II)

VN Background

Resources and Capabilities

Largest creator of targeted B2B vertical trade communities

Powerful database Networking with buyers and sellers Buying or alliance with companies

– Isadra, Tradex

Partnership– BancOne, First USA

Reputation

Competitors

Suggestion (I)

Suggestion (II)

VN Background

VN competitors

VerticalNet’s Competitors

– Market Maker/Information Provider

– E.g. Office.com, Manufacturing.net,

TradeOut.com

VN Background

Suggestion (I)

Suggestion (II)

Competitors

What are their sources of revenue?

Three sources of revenue:– Advertising– Sponsorship– E-commerce

Depends on advertising returns– E.g. Manufacturing.net

• 80%revenue came from advertising fee

VN Background

Suggestion (I)

Suggestion (II)

Competitors

Problem arise!

VN share the same revenue pie with others!– The pie is getting smaller and

smaller

Information providing market is getting mature, too

GO FOR E-BUSINESS!

VN Background

Competitors

Suggestion (II)

Suggestion (I)

VerticalNet’s Focus

Four Areas:– E-commerce Centers or Transaction-ena

bled Storefronts

– Online Auctions – Electronic Marketplaces – On-line Exchanges or Marketplaces for

Near Commodities

VN Background

Competitors

Suggestion (II)

Suggestion (I)

Advantage (1)

More Profit Generation

– Sources of Revenue

1. Setting up Storefronts

2. Commission

3. Online Auction

VN Background

Competitors

Suggestion (II)

Suggestion (I)

Advantage (2)

Sustain Its Competitiveness:

– Fulfill Customers’ Needs

1. Lower Cost

2. Quick Respond

VN Background

Competitors

Suggestion (II)

Suggestion (I)

Challenge (1)

Difficult in Generating Short-term

Revenue

– E-commerce need time to build up a

mature market

VN Background

Competitors

Suggestion (II)

Suggestion (I)

Challenge (2)

Lack of Technology

Example:

– Creating online market, auction, exchan

ge

– Financing vehicles

VN Background

Competitors

Suggestion (II)

Suggestion (I)

Strategy needed to tackle the challenges:

For Challenge 1– VN should work as a B2B solution

provider

For Challenge 2– VN should find alliances and

partners

VN Background

Competitors

Suggestion (I)

Suggestion (II)

VN as a B2B solution provider

E-commerce consulting– Provide solutions and

recommendations for companies who want to go online

– Provide training programs to companies

• E.g. Training for product operations and administrative staff in e-business

VN Background

Competitors

Suggestion (I)

Suggestion (II)

VN as a B2B solution provider

Trade server– Server (hardware & software) for

companies who want to set up online business

Content and Community Management system– Software that help companies in

managing the content and community of their company website

VN Background

Competitors

Suggestion (I)

Suggestion (II)

VN as a B2B solution provider

Commerce Management System– Specialized market design software

and individual commerce modules that help in managing online:

• Auction• Exchange• Catalogs• RFP & RFQ• Negotiation

VN Background

Competitors

Suggestion (I)

Suggestion (II)

Alliances and partners are needed!

Technology– Microsoft, IBM, Liaison, Yantra

Financing– eCredit.com

Security– Escrow.com

VN Background

Competitors

Suggestion (I)

Suggestion (II)

Summary

VerticalNet AnalysisCompetitors’ AnalysisRecommendation

– Go for e-business and setting up online B2B exchange market

– Work as a B2B solution provider

Do more than what we currently do!

THANK YOU!!

Q & AQ & A