Adding a High Tech Solution to a Low Tech Business

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Adding a High Tech Solution toa Low Tech Business
Manu Kumar Chris Mills Steven Sesar Rahul
Shah Stephen Stokols
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Outline

• Project Overview
• Company Background
• Industry Overview
• Options Analysis
• B2B eCommerce
• ASP Safety Portals
• Disruptive Technology Safety Manager
• Recommendations

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The Project Leveraging New Technologies in an
Old Business

• Identify and assess possible technology solutions
  to help Brenton achieve its strategic objectives
  of
• Increased revenue growth
• Improved profit margins
• Provide recommendation
• Develop marketing plan for recommended technology

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Company Background

• Brenton Safety is a wholesale distributor of
  Safety Equipment supplies including
• Air quality monitoring equipment
• Protective clothing
• Breathing apparatus
• Brenton also derives 20 of its revenues from
  services including regulation compliance,
  product recommendations, and inventory management
• The company was established more than a decade
  ago, currently has 45 employees, and has a
  distribution network encompassing the entire
  Western region
• The company is currently profitable but is
  looking for opportunities to expand its growth
  potential

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Industry Analysis Safety Equipment Distribution
MEDIUM CUSTOMER POWER

• Low consumer concentration
• High price sensitivity

HIGH BARRIERS TO ENTRY/EXIT
HIGH THREAT OF SUBSTITUTES

• Entry
• Economies of scale
• Brand Identity (at least regionally)
• Distribution networkaccess
• Exit
• Inventories
• Specialized skills

• Higher service levels
• Lower price subs.
• Low buyer switching
• More profitable
• industries (capital)

• Low growth/profits
• Many competitors
• Low switching

HIGH RIVALRY

• High supplier concentration
• Risk of forward integration
• Many substitutes

HIGH SUPPLIER POWER
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Current Technology Trends Within Industry

• Merging technologies with operations
• Universal product code identification
• On-line product catalogs
• JIT and Inventory management
• EDI/eCommerce

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Technologies Evaluated

• B2B e-commerce marketplaces
• Internal ASP Safety Portals
• Disruptive Value Added web Safety Manager for
  small businesses

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Technology 1 B2B E-Commerce Marketplaces
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Competitive Landscape

• Horizontal e-marketplace
• Blue292 (advanced catalogs, large selection)
• Pollution Online (basic catalogs, mostly
  environmental safety equipment)
• Environ
• Water Online
• Vertical e-marketplace
• Global Sources (computer safety equipment)

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Analysis

• Low growth for horizontal markets
• Small volume in vertical markets need to join
  multiple markets
• Low profit margins price and delivery are the
  only requirements in B2B
• Low barrier to entry for other distributors and
  manufacturers

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Technology 2 Internal ASP Safety Portals
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Industry Dynamics

• ASP Safety Portal Model
• Brenton currently offers this service with its
  largest customer (PGE)
• Offers Brenton
• Improved customer relations
• Improved demand forecasting
• Reduced inventory costs
• Improved order accuracy
• Reduced Administrative costs
• ASP services forecasted to grow significantly

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Analysis

• Forecasts have proven inaccurate
• Companies unwilling to trust outside vendors to
  administer systems inside their firewalls
• Model has proven successful only with existing
  customers (trusted business partners)
• Although, strategy improves relationships with
  existing customers and increases customer loyalty
  and switching costs
• Does NOT represent significant Revenue Growth
  opportunity

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Technology 3 Website for Small Business
Safety Management
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Competitive Landscape

• No company/technology currently addressing small
  businesses
• Currently manage safety through
• Personal Consultation
• Formal Training
• Internal Safety Management
• Safety Documentation Library

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Competitive Landscape Continued
Side-By-Side Competitors/Substitutes Comparison
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Analysis

• Small businesses segment ignored by safety
  consultants distributors
• 21.2 million small businesses in US
• Small Businesses spend over 1.1 billion in
  safety management
• Current safety management alternatives costly,
  inefficient and/or ineffective

Source US Census Bureau, Statistics of US
Business, 2000
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Disruptive Technology?

• Utilizes existing technologies
• Serves an ignored customer niche
• Scales as demand increases
• Provides a lower performing option than existing
  personal consultants and equipment manufacturers
• Offers a drastically lower price than existing
  options
• Operates beneath large company radars

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Will it Increase Revenues?
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Will it Improve Profit Margins?
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Website for Small Business Safety
Management Recommended Marketing Strategies
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Target Market
Focus on small businesses within the following
industries

• Energy
• Construction
• Resource refinement
• Parts manufacturing
• Maintenance and repair

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Promotion Advertising

• Safety industry journals
• Industry specific business journals in
  aforementioned industries
• Leverage existing word-of-mouth and network
  channels
• Online advertising limited to key word searches
  for safety equipment or safety management.
• Trade shows and conferences already attended by
  Brenton Safety
• Add to existing Brenton Safety promotional
  materials

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Pricing

• Annual Standard membership fee 189/year
• 5 per employee for companies with lt 10 employees
• 4 per employee for companies with 10 to 50
  employees
• 3 per employee for companies with gt 50 employees
• Premium Service includes personal email
  consulting services
• 399/year 1 premium/employee
• Safety Equipment will be priced in accordance
  with Brenton catalog

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Capital Requirements

• Initial capital injection 315,000
• Technology development maintenance
• Initial marketing campaign
• Site management
• Profitable and self supporting after 6 12
  months

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Questions?