AutoXchange Questions and Strategies Assignment
1. Who do you think would pay the cost for suppliers to put their parts catalogs onto these marketplaces like AutoXchange? Who should have paid costs?
In order to understand who is going to pay the cost for suppliers, it is essential to understand who is going to benefit from such deal. The industry itself is going to benefit much from AutoXchange, the suppliers should be the ones covering the costs. This will increase their direct sales made by customers. However since Ford was the first one to introduce the idea, they should be the ones initially paying the costs in order to attract the suppliers. On the other hand, joining together with the other manufacturers and charging them a fee would also benefit everybody. As was mentioned in the video, it is only a matter of time before the other manufacturers are going to join the service. Therefore eventually everyone is going to benefit from the service, however it would be quite difficult at the beginning to convince others in their profitability.
2. What were the benefits of these systems and who would reap them?
Both manufacturers and suppliers are going to benefit from the system. The auto manufacturers would benefit in terms of large-scale B2B marketplaces where thousands of suppliers would compete to sell their product to the large automakers. Suppliers would benefit as well, because they would have to compete on the larger scale, therefore improving the quality and competing not only locally, but also worldwide. Any competition creates a motivation for a change. In terms of quality, service, product itself. There would be fewer costs and therefore the suppliers would benefit from the economy of scale.
3. Why did the Federal Trade Commission open an investigation of these marketplaces?
The answer is quite simple. Since the whole industry (both suppliers and manufacturers) would be connected to the system, there would be a risk of monopoly. Monopolistic control would allow setting the prices and pretty much control the whole business.
4. What role do you think the technology played in the demise of these systems?
To put in simple words, the whole concept of implementation of the system is quite problematic. There are millions of parts available on the market worldwide and they all have to have information about their specifications, prices, technological document, etc. This would take much time and effort and nobody was ready for such amount of information. From a technical point of view, the systems were supposed to operate fine, however there were issues with the databases and data itself.
5. Why would more “closed” private market places be attractive to both the industry giants who buy the parts, and the suppliers?
It is all about personal attitude towards each other between the manufacturers and suppliers. Generally, people tend to do business with the trusted partners and prefer to pay a little extra in order to do business with those they have already …
