Introduction
Amesco is a virtual assistant B2C e-Commerce business that uses an online platform to provide faster turn-around times for customers. The company was started two years ago and has grown from a small startup to a progressive enterprise with hundreds of customers across several cities in the United States. The name Amesco is the short form for “American Smart Company”, which is quickly becoming a popular name among many businesses in the market. Currently, the company uses a website and Apps to connect the client businesses and customer in a Business-to-Customer (B2C) approach with an aim providing the client businesses with virtual assistance to help them increase their customer bases, sales, and profits. Currently, the company’s customer base has reached above 4,000 from just 20 in 2019 when it was started. Predictions indicate that the company will have more than 40,000 customers in the next three years. The company’s rapid growth has prompted us to consider advancing our business. Specifically, we are adopting a new strategy with technological advancement. The idea is to develop an Enterprise Resource Planning system (ERP) based on an analysis of the company and analysis of our Management Decision Support System (DSS). Consequently, this report provides a comprehensive analysis of ERP and DSS. The new ERP system will be networked with the systems required to satisfy the business function requirements and it will be built on an infrastructure for future expansion at any locations our company might decide to establish.
Definition of the Business
Amesco is a medium-sized business venture that seeks to ensure a seamless connection between businesses and customers by providing a continuous virtual assistance B2C through our website and Apps for faster turn-around times for our customers. Our marketing is via social media and handout fliers to reach to local and national businesses. Amesco has a single office in Newark, NJ, but most of our employees work remotely through virtual assistance model. Our customers are SMEs and small corporations seeking to expand their customer base and sales through our virtual assistance as we connect them to customers online. These businesses deal with a variety of products in the consumer goods sector. Our website and apps display the various businesses that deal with specific products, their prices, promotions, discounts, locations, contacts, accessibility, delivery methods, and other terms and features that consumers would like to understand. In addition, our online platforms allow consumers to leave feedback when they purchase products from the listed businesses. On their part, the listed businesses (our customers) are able to register on our online platforms and provides a list of their products along with all the details they would like consumers to access. Moreover, we analyze the consumer feedback on behalf of our customers and provide them with comprehensive reports, which they can use to make decisions on how to improve their businesses and increase sales and revenue.
Plan for Growth with Michael Porter’s 3 Generic Strategies
Theoretically, the relative position of an organization in the industry determines whether its profitability is above or below the industry’s average. Achieving a profitability of above the industry above average requires a firm to have a sustainable and effective competitive advantage. According to Michael Porter (2017), there are two basic competitive advantages that any organization can own- low cost or differentiation. When these two types of competitive advantage are combined with the scope of activities that an organization is seeking to achieve, three generic strategies emerge to facilitate growth- focus, cost leadership, and differentiation. Consequently, Amesco is striving to apply this approach in its plan for growth.
Cost Leadership
Our aim is to become a low cost provider of virtual assistance B2C services to our clients. We have an understanding that the sources of cost leadership advantage heavily relies on the structure of the industry. It is worth noting, therefore, that the virtual assistance industry is competitive but a relatively new and rapidly changing sector. Therefore, our aim at Amesco is to pursue specific cost leadership strategies- proprietary technology and economies of scale. First, we plan to provide our services to startups, small and medium-sized businesses as well as small companies within their localities. This customer segment is large and growing but it is made up of businesses that tend to be high cost-conscious or cost-restricted. We plan to conduct a research online and find the number of competitors we have and their pricing strategies and price tags. Then, we will determine the average price and develop our prices to be at the lowest in the list. Secondly, our low pricing strategy is supported by our vision and mission of ensuring that we provide our services entirely virtually through technology, which implies that we will not endure such costs as running offices, salaries, wages, and other advantages for office workers and so on. Consequently, we will sustain a minimum cost of operation (4.5% of all costs). In addition, we will prioritize lowering all overheads. This implies that even if we charge the lowest cost in the market, we will still make profits, given that most of the competitors operate at higher costs.
Differentiation
According to Porter, the general focus of companies using differentiation focus is to develop different products or make them more attractive than others within the industry, which gives them a competitive advantage. To achieve this objective, Amesco will always be driven by strong market research, development, and innovation. In addition, the company will strive to develop superior quality for its services through innovation and inventions. Third, Amesco will establish recognizable and effective branding and marketing. Market research is crucial to achievement of this objective as the virtual assistance for B2C is highly dynamic and requires frequent adjustments of the online platforms, acquisition, and adoption of new technologies. Noteworthy, we have identified a smaller consumer group to focus on, which gives us an advantage of appealing to the needs and wants of the target segment (Kreutzer, 2019). Through research, the company has realized that the major needs of the consumer goods dealers, especially the SMEs and small companies, is to reach out to the large number of customers through their online and physical stores.
Indeed, most dealers do not have effective strategies and they would like to have a third party playing the role of connecting them with customers, providing them with virtual assistance, conducting market surveys, and analyzing customer feedback and responses. Therefore, they are unable to develop effective marketing strategies because they lack these services within their organizations. Consequently, Amesco will strive to provide these services through its online platforms to ensure that the SMEs and small companies are able to achieve their goals and objectives. Amesco will help these firms understand the dynamics in the market, consumer needs and preferences, and industry dynamics. Therefore, they will be in a position to develop effective unique products that will drive sales in their competitive industries and compete with large corporations.
Focus
Amesco will consider both cost-focus and differentiation-focus approaches. As previously indicated, Amesco has conducted some research and found that the local SMEs and small companies dealing with consumer goods have a unique need- they do not have internal structures for conducting assistance with market research, connection with consumers, and conducting analytics to help develop effective and sustainable strategies. Therefore, they are in need of a third party that will provide these services through virtual assistance. The company will differentiate its services to ensure that that the focus is on the small market segment it targets and then use the cost-focus approach when setting prices. This will enable it to reduce overheads and other costs and establish a low pricing strategy when marketing the differentiated services to the local SMEs and small companies dealing with consumer goods.
Michael Porter’s 5 Forces Model
Power of suppliers
The supplier power in Amesco’s target is quite low, given that the company is providing services through its online platforms, which are uniquely developed by its internal developers and technicians. In its line of business, the company does not need a lot of suppliers as it is not involved in production. Therefore, we have determined that the company does not face the threat of supplier switching of costs relative to its costs. Secondly, even if the company uses cost-focus and differentiation-focus strategy, there will be no impact of inputs on cost and differentiation.
Customer’s Bargaining Power
Unlike the power of suppliers, the bargaining power of customers in the target industry and segment is quite high. Customers, which are SMEs and small companies dealing with consumer goods, are likely to put the company under pressure. It is worth noting that there are several alternatives that the target companies can use. For instance, they can decide to establish their internal structures aimed at providing the same services that Amesco wants to offer. In addition, the target clients can decide to use Amesco’s competitors at any time as the virtual assistance is a highly dynamic sector that any company, whether large or small, can enter and flourish within a short time, given that it is technology-driven.
Threat of Substitutes
The target market has a low volume of substitutes, given that virtual assistance is a relatively new business specialization. Nevertheless, it is worth noting that the SMEs and small companies can decide to use the traditional methods of connecting to customers such as hiring analytical companies to conduct surveys on their behalf. For example, they can decide to use companies like Price Waterhouse Coopers (PWC) and others to conduct surveys and provide almost similar services to those provide by Amesco through its virtual assistance model. However, the buyer propensity to substitutes is low and the relative price performance of substitute is lacking. Also, the number of substitute services available in the market is limited, which gives Amesco an advantage over the buyers’ bargaining power.
Threat of New Entrants
In Amesco’s target market, the threat of entrants is the largest risk to its survival and growth. The industry is not highly regulated as it is a relatively new venture developed through technological advancement in the last two decades. In fact, any company can venture into this market, regardless of its size. Therefore, there are few, if any, barriers to entry that restrict new firms from entering the industry. Besides, the dynamic nature of the technologies involved in the virtual assistance business allows any individual or company to enter any time and start operating with limited restrictions.
Competitive Rivalry
In the target market, competitive rivalry is a major threat that Amesco must face. In fact, the intensity of competitive rivalry is likely to increase with time as more and more firms join the e-commerce business through technological changes and advances. Since technology allows almost any company to enter the market, Amesco must remain aware of the current trends, competitors’ marketing and pricing strategies, and the competition from offline organizations.
SWOT Analysis
Strengths
Amesco is an e-commerce business, which means that there are no boundaries affecting its access to the market. There is no mandatory brick structure to do business or specific geographical boundaries (Kreutzer, 2019). Amesco can expand countrywide and beyond as long as the online business is sustainable. Second, the e-commerce business is time saving as transactions through the internet are very fast. Third, there are no time constraints because Amesco can transact business with its clients at any time of the day and year. Fourth, the e-commerce business Amesco provides is cost effective as the online business has eliminated long chain middlemen, which has reduced the need for brick infrastructure and outsourcing logistics. Moreover, e-commerce model allows fast exchange of information between the clients and the company and the company and the consumers.
Weaknesses
Security is the biggest problem in the e-commerce business as clients are likely to feel insecure, especially because they are required to share their crucial information and payment via the online platforms Amesco uses.
Opportunities
The dynamic nature of the e-commerce business model is a major opportunity that Amesco can utilize to enhance its growth. Specifically, conducting research to determine the new technologies, methods, and approaches in the sector will ensure that the company is always ready to tap into new aspects of the business. Secondly, because it is an online-based company, the number of users keeps increasing with time as the number of internet users and companies seeking to sell online increase.
Threats
Competition is a major threat to the survival and growth of Amesco. Indeed, because e-commerce has now entry barriers, any company or individual is free to enter the market and offer competitive prices and services. Secondly, in a relatively new business model, it is expected that laws, regulations, and environment can change any time and affect the business.
Value Chain Analysis
Primary activities
Inbound logistics
Amesco’s inbound logistics include receiving customer requests, managing customer data, receiving consumer requests, and receiving consumer feedback and responses
Operations
The company’s business process is to use data from consumers, analyze it and develop reports to our clients who require this information to improve their businesses. In addition, the company prepares surveys on consumers and analyzes the findings to help our clients make informed decisions for their business strategies.
Outbound activities
Amescom’s outbound activities include distributing reports to the client companies based on the analyses of consumer data and surveys as well as market analysis reports.
Marketing and sales
Amescom’s marketing and sales activities include advertising its services, pricing strategies, and promotions.
After-sale services
The company has a business strategy that ensures a smooth relationship with clients once they have paid for the virtual assistance services. In this case, the company involves such activities as quality assurance, customer service, following-up on clients’’ progress, and post-sale virtual support. In addition, the company provides its clients with advice they need to ensure that they perform better based on the current and ongoing trends in the market.
Secondary Activities
Procurement
Amescom’s procurement activities are obtaining technologies required to support the business, including DSS, ERS, and website support. In addition, the company procures internet support services from service providers and technical support for computers and other equipment.
Technological development
Amescom conducts extensive research and development on the clients’ market. Specifically, the company conducts research on the market, product design, and process development using software technologies to support customers’ decision making processes. In addition, Amescom uses online technologies to provide virtual assistance to the clients.
Infrastructure
Amescom infrastructure-related activities include financing, quality controls, planning, and accounting.
Human Resource Management
The company hires and trains permanent and temporary employees to help run its business. Specifically, the company hires technicians who support the e-commerce business, including IT experts, designers, and content developers. In addition, the company hires data managers, analysts, and statisticians to help in the main business process. Furthermore, non-permanent employees include marketing assistants and fieldwork assistants whose function is to help in offline advertising and collecting market and consumer data.
Step 4: Link between services
- The use of internet-based sourcing reduces costs in data collection and analysis.
- Using the internet in reporting reduces the cost of distribution.
- Online advertisement reduces the cost of sales.
- Large number/volume of after sale services increases costs.
Step 5: Opportunities for reducing costs
- Develop a centralized business model and apply the use of internet and other technologies to reduce costs of data collection, analysis, and reporting.
- Develop an internet-based advertisement and promotion system to cut costs.
References
Kreutzer, R. T. (2019). Toolbox for marketing and management: Creative concepts, forecasting methods, and analytical instruments. Springer.
Porter, E. M. (2017). Competitive strategy: Techniques for analyzing industries and competitors. CreateSpace Independent Publishing Platform.