ARROW

ELECTRONICS CASE
STUDY
SUBMITTED BY : GROUP 3
Ankit Lalwani
Keval Boricha
Taneha Verma
Ritisha Choudhary
Piyush Gaurav
Anurag Sarode
Varun Kale

(15PGP007)
(15PGP084)
(15PGP121)
(15PGP100)
(15PGP037)
(15PGP143)
(15PGP023)

Flow of presentation
About ARROW & A/S
About Express Parts
Products and Suppliers
Top 4 Manufacturers
A/S Customers
Customer segments
A/s Suppliers
Express proposal
SWOT Analysis
Advantages and Disadvantages
Analysis
Decision

Arrow Electronics

Broad-line distributor of electronics parts,

including semiconductors and passive
components

Founded in 1935
Reached No 2 spot by 1980
Became number one among electronics
distributors by 1992

Sales of $6.5 billion in 1996

Arrow/Schweber

One of Arrows five operating groups

Sells semi-conductors to different customer bases like
Original Equipment Manufacturers (OEM) and Contract
Manufacturers (CM)
Sales of 2.07$Billion of 6.5$Billion of Arrow Electronics
total Sales

THE WAY THE INDUSTRY WORKS:

Suppliers
(Eg: Motorola, Intel
etc.)--25% to 35%
of sales

Distributor(Eg:
arrow)

Customers (like
OEM)

Express Parts

Independent Distributor

Internet-based trading system around multidistributor bulletin board

50000 OEMs to use its service

Takes care of shipping to customers

Fee worth 6%

Products and Suppliers

75%

Standardized

Multiple
suppliers

A/S

25%
Propriety

Singular
suppliers

The big 4 top

Manufactures
Altera -Proprietary programmable logic
devices
Intel - Mostly Propriety

But no VA Programming or engineering

support required

Texas Instruments
Motorala

A/s Customers
Existing Customers:

13%
11%
56%
20%

Small & Mid Sized

OEMs
Contract
Manufacturers
PC Clones(X86s)
Custom Computer
Products (CCP/ICP)

Customer Segments

OEMs requiring

Short lead times

Orders of small quantities
Credit management
Value Added Services
Engineering support

Why required?
JIT
Hand off material Management

Customer Segments
Contract Manufacturers : Supply OEMs manufacture
Produce Circuit boards
Industrial computer systems

Requisites

Value Added services

Supply Chain management
Quick delivery
Competitive cost
No engineering support

Why required?
Price sensitive
Credit facilities required
More Value added services

Customer Segments

PC clones manufacturers : Intel x86 chip

11% of business
Requirements:
Commoditized or transactional
Credit

Buyers of Computer Product Sub-Assemblies

Requirements
Smaller quantities
Highly customized solutions

A/s and Suppliers

What suppliers want from distributors:
Win business for Standardized products
Represent New technologies - Propriety
products

A/S and suppliers

Financial incentives provided by suppliers
e.g.
Price protection
Limited return privileges
Distributors bring Suppliers closer to
customers
Judges future prospects
Negotiates further discounts
Jump Ball
Design Win

Relationship with suppliers

Supplier end bargaining

Order of names Supplier List
Suppliers order of giving out information
Time taken to respond to distributors price
requests

Distributor end bargaining

On standardized products by different suppliers
buy portfolio offering best margins

Products

Book and ship- Commoditized goods

SMR Discounts from suppliers
40% business

Value Added Programmable goods

Field Engineer and FSR
Design Win Situation
60% business

Relationship with
Customers

Transactional Customers
BAS types
25% of business
Conversion to relationship customers: 50%

Relationship Customers
Initially mostly transactional
Value Added services
75% of business

A/s and Internet

Non franchised distributors

Seen as not very legitimate
Reseller agreements lacking
Hence warranties not provided

Arrows website

Information provision
Fixed Costs
Purchase facility not online
Redirected to national 1-800 no.s

Express Parts

Non franchised distributor

Internet based trading

Multi-Distributor bulletin board

Quick cross reference equivalent parts

Cost competitiveness

Popular with price sensitive customers

Margins narrowing

Express parts proposal

A/Ss full list of inventory and price listing

Express would receive order, do credit

check

Route to respective distributor electronically

Express shipping facility

Express fees 6% of price

Paid 30 days after orders shipped

No. 1 among

Reduction in Operating

electronics

Income in 1996

Distributors

Expenses at 11% with

60% sales from

Gross margins of 15%

Value Added Content

STRENGTHS
OPPORTUNITIES

WEAKNESSES
THREATS

Collaboration with

Express as a

Express

competitor

Learn to how to sell

Cannibalization of BAS

against Going out of

business if Express

business

proposal accepted

Advantages

Disadvantages

Price sensitive customers Transactional

Costs incurred for relation
building - Unnecessary
Eliminated with the advent of
Express
Access to large no of OEMs
Market Leader and favored by
suppliers
Can offer relatively more
competitive prices
Shipping cost taken care by
Express
Less Phantom Inventory
Reduction in time and efforts
to build new customers

Express might be used as

a bargaining tool
Customers gained would
be all price sensitive
Hence lower chances of
conversion

Analysis

Business loss should be compensated

A/S prices are already very competitive

Expenses incurred on account of

transactional customers eliminated

6% service cost charged by Express eat into

A/S margins

Online website of A/S could be improved to

offer purchasing facilities

Decision

Go along with the proposal offered by

Express

Revamp website to facilitate purchase

services
A/S will benefit due to its competitive prices

THANK YOU