Information Technology – 2 Case Studies

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INFORMATION TECHNOLOGY (80 Marks) NB: 1) There are two major case studies in paper. 2) Each case study is of 40 mark each 3) Solve the questions given below the case study 4) Be analytical in your approach. Google. Com — The World’s Number One Internet Search Engine “A profitable dot. com is a rare thing. For one founded only in late 1998, and – ivorse – a dotcom that includes advertising as one half of its business plan, Google’s progress is a feat. But then it could be argued that Google has been flying in the face of conventional wisdom since its launch. – Neil McIntosh, ‘Seeking Search Engine Perfection,’ (The Guardian), January 2002. “Google had not had a single print or television advertisement so far and most people felt that when it was launched there was not a market for another search engine. But with all other search engines developing into portals, Google stuck to the basics and now it is better than every other search engine. ” – Matthew Ragas, Consultant, ‘The Cult Runs Deep,’ (The Economic Times), March 2003. THE MOST PREFERRED SEARCH ENGINE’ In early 2003. Googlc. com (Google). he California (US) based company Google Inc. ’s search engine, was named the ‘Best Search Engine’ by Pandecta magazine. Google also received the ‘Outstanding Search Service’ award by Search Engine Watch. 2 The Search Engine Watch newsletter claimed that Google was the most heavily used search site by Internet browsers. These developments were not a major surprise for Google, which had received many such awards and recognitions since its inception in 1998 (Refer Exhibit I). Google was preferred by millions of browsers over search engines such as Alta Vista, Infoseek, Netscape and Lycos. Not only did Google rank much higher than other search engines in terms of efficiency and effectiveness, it also scored over others in terms of layout due to its uncluttered look (Refer Exhibit II for a comparison of popular search engines). Google searched more than three billion web pages and processed more than 200 million search requests every day. The search engine could search for every possible file type on the World Wide Web, in 36 languages and provided interface in 86 languages. The fact that Google had become a household name (reportedly, even a generic term for search engines) without even spending a penny on print/television advertisements or online banners was regarded as a commendable achievement, Its success was largely attributed to its constant focus on providing the best search services online, both in terms of speed as well as accuracy. Larry Page (Larry), CEO and co-founder of Google commented. ‘It is through our maniac pursuit to offer only the best technology and search experience that Google has earned its reputation. ” _________________________________ A search engine is an Internet based utility that helps surfers search for specified keywords by displaying a list of documents (web pages) on the World Wide Web that contain those keywords. Different search engines use their on proprietary software to provide faster, more accurate and meaningful search results to their users. Most popular search engines, such as Google and Alta Vista, are free-to-use. 2Pandecta is a monthly c-business magazine for Internet entrepreneurs. Search Engine Watch is a leading Internet technical guide for web developers and search engine users. BACKGROUND NOTE ____________ The founders of Google. Lam Page (Larry) and Sergey Brin (Sergey) graduated in computer science from Stanford University in 1995. By January 1996, the duo began working on extending their summer project work on a search engine. They wanted to develop a technology that would retrieve a relevant set of data from a massive database of information. They named their search engine ‘BackRub’ because of its ability to identify and analyze ‘back links’ that pointed to a given website. Larry began creating a new kind of server3 environment that used low-end personal computers (PCs) instead of costly big machines. For this, they needed to buy several low cost PCs. However, due to shortage of cash, they had to borrow PCs from the university. By 1997, BackRub gained a lot of popularity due to its unique approach to solving search problems on the. Internet. Throughout the first half of 1998, Larry and Sergey’ focused on perfecting their technology. To store huge amounts of data, they bought a terabyte of memory disks (one trillion bytes equal one terabyte) at bargain prices. Larry used his dormitory room as a data center, while Sergey used his room to set up a business office. By now they knew that their search technology was superior to any other technology available. They actively started looking for potential partners interested in licensing the same. They contacted many people including friends and family. One of the people whom they got in touch with was David Fib (Fib), the founder of Yahoo, a leading portal. 4 Filo complimented them for the ‘solid technology’ they had built, but did not enter into any agreements with them. Instead, he encouraged them to start their own company. The owners of many other portals also refused to invest in their technology. One such portal’s CEO told them, “As long as we are 80% as good as our competitors. that is good enough. Our users do not really care about search. ” During the late 1990s. the ‘dotcom fever’ was at its peak in the US, and almost everyone was opening a dotcom company. Though Larry and Sergey were not very keen on opening their own company. they decided to set up one since they were unable to attract any partners. 1-however, they had to first clear off the debts they had accumulated to buy the memory disks amid to move out of their ‘dorm office. The duo put their PhD plans on hold, and began looking for a prospective investor for their business. Help came in the form of a faculty member who introduced them to Andy Bechtolsheim (Andy), one of the co-founders of Sun Microsystems. Andy saw their presentation and instantly knew that it had a lot of potential. As Andy was in a great hurry to attend a business meeting that day, he ‘closed’ the deal by writing the duo a check for $100,000. However, the check was made out in the name of Google Inc. 5, an entity that did not yet exist. Since Lam’ and Sergey could not deposit the check in their accounts, they decided to set up a corporation named Google Inc. _______________________________ 3Servers are computers or devices that manage the resources rn a network. For instance, users on a file server can store files on the server, which is essentially a storage device dedicated to storing files. In a search engine, database servers are used to process database queries. 4A portal is a website featuring commonly used services as a starting point and a common gateway to the web (a web portal) or a niche topic (vertical portal/vortal). The services offered by most portals include a search engine, news, email, stock quotes, chat, forums, maps, shopping and customization options. Large portals include many more services apan from the ones mentioned above. 5The name Google was derived from the word Googol, which denotes the number one followed by a hundred zeros. It was coined by Milton Sirotta, nephew of Edward Kasner, an American Mathematician. Larry and Sergey realized that they would have to develop a new kind of server set up to provide a fast and accurate search service. So, Google made use of large clusters (around 10. 000) of Linux9 PCs so that search queries could be quickly answered. The system consisted of three types of servers, a web server, an index server and a doe server. A typical query was answered in the following manner: Google sent the user query to a web server (which acted as a query processor), which in turn forwarded it to the index servers. The index servers searched for keywords and phrases that matched the search query. Thereafter, the doc server did the job of retrieving the actual documents that contained the search results. These results were then returned to the user (Refer Figure Ito see the life cycle of a query). Figure I: Life Cycle of a Search Query on Google [pic] This innovation helped Google achieve greater scalabilily10 at lower costs and faster response times even during peak loads. At the front end. Google made use of a search technology that carried out a series of simultaneous calculations to process a query. This ensured that the entire search look only a fraction of a second to complete. Google had a comprehensive database of web content running into over three billion web pages. In addition, Google stored a cached copy of even indexed web page so that users could access the web page even when the main server was down or the link was broken. Thus, Google accessed more information on the Internet and presented it in a searchable format than any other search engine (Refer Table I for details regarding the database). _________________________________ 9The Linux operating system was developed by l. inus Torvalds at the University of Helsinki in Finland, to provide PC users with a free or very low cost operating system. Traditional systems like UNIX were very expensive. Linux is reputed for being a very efficient and fast operating system. Google’s setup was one of the biggest commercial Linux server clusters ever. 10Scalability is defined as the ability of a computer (hardware or software application) to perform well even when it is changed in size or volume in order to meet a users need. GOOGLE’S BUSINESS MODEL Most search engine companies spent a lot of money on marketing to build their brands. Google, however, focused solely on building a ‘better’ search engine. Its superior search technology was the primary reason for us popularity among Internet surfers and corporate clients. Sergey said, “We developed our approach to search technology to address the very real challenge of finding information on the Internet. Everything we do — from the development of our advanced technology to the design of our user interface — is focused on delivering the best search experience on the web. We are delighted with the response we have received from Google users around the world who have enthusiastically embraced our approach to search. ” Word-of-mouth recommendation became the main force driving traffic to the Google website. Within three years of its launch, the website was answering more than 200 million searches a day. With traffic increasing constantly, it became clear to Google that it could develop its business around two revenue streams, online advertising programs and search services. Half of Google’s revenues came from the two main search services it provided to its clients: ‘Google WebSearch’ and ‘Google SiteScarch. ’ GOOGLE SEARCH SERVICES Launched in mid-1999, the WebSearch service enabled clients (destination sites and portals) to offer Google’s search services to their members. The client could use the results page for selling its own advertisements on the web. The WebSearch Service provided many useful features like cached links. directory definitions, file types. I’m feeling lucky (a button that allowed users to bypass all results and go to the first page that was returned for a query) and a spell checker. The Google SiteSearch service provided clients with a fully customizable search on the (client) company extranets and public websites. SiteSearch improved site navigation and usability and also increased site stickiness. 12 Visitors to a website using the SiteSearch service could easily locate a specific product or service and find company information. This not only enhanced customer communications, it also reduced the number of customer service calls to the company. This in turn helped clients improve sales opportunities by providing product and service information quickly to the customer. Using SiteSearch thus increased the chances of customer loyalty for the (client) company and also reduced the need for customer support. In 1999, many companies signed up as Google’s clients. The list included Virgilio, an Italian portal: Virgin. net. Britain’s leading online entertainment guide: The Washington Post: Cisco Systems: Son: Procter & Gamble; MarthaStewart. om; Hungary Minds. com; eBoodle. comn; Real Names Corporation; New York Times: Ask Jeeves: AT&T: Bizrate: Dealtime: and Earthlink. The year 1999 also brought with it a lot of awards for Google. Google was ranked first among 13 search and portal sites13 in a survey conducted by NPD Online Research14 for user satisfaction and loyalty. The company received the Technical Excellence Award for Innovation in Web Application Development by PC magazine. A high paint was the company’s inclusion in Time magazine’s Top Ten Best Cybertech list for 1999. _______________________________ 2The stickiness of a website refers to its ability o make visitors stay longer and/or return again and again. 13Oilier companies included AltaVista, AOL, Ask Jeeves, Excite, Go Network, Google, GoTo. comn, HotBot, LookSmart, Lycos, Netscape, WebCrawler, and Yahoo. 14The NPD group is an international marketing information company headquartered in Port Washington, New York. The company was the ninth largest market research firm in the US (based on 1998 revenues). with a set of keywords (as many keywords as required), which Google used to create a text-based advertisement. Each keyword was then matched to different creative executions. Advertisers could also purchase predetermined keywords or keyword phrases (from Google), which were used by Google to match a user’s query to a closely related advertisement. These advertisements appeared as links on top of the search results page (Refer Figure II). Once these advertisements were put in place, the company constantly monitored them to improve their performance (i. e. by selecting more appropriate keywords and rewriting the text of the advertisement). Google charged approximately $10,000 or more per quarter for the premium sponsorship advertisement program. Figure II: Google’s Premium Sponsorship Program [pic] Impressed by the efficiency of the services provided by Google, Yahoo entered into a partnership with it in June 2000. This added to Google’s reputation of being a leading technology provider (by now it was answering 18 million user queries every day). Google entered into partnership deals with companies from other countries as well, including China’s leading portal NetEase arid leading Japanese portal NEC’s BIGLOBE. In mid-2000, Google brought out with a cheaper alternative to Premium Sponsorship in the form of the AdWords program. Under this program, Google allowed its customers to create their own advertisement text or purchase carefully selected key words to target potential customers. The results for Ad Words were highly targeted and advertisements appeared only if a user entered the same keywords or phrases that an advertiser had purchased. For example, if a user entered a query ‘dental insurance’ into the Google search box, it would produce search results and text based advertisements relating to the purchase of dental insurance online. The advertisements brought out under the AdWords program appeared adjacent to the search results (Refer Figure II). Google also faced stiff competition from other search engines like Verity and Overture. Verity had grown to become a leader in the corporate search market while Overture had strengthened its position in the paid search listings business. Overture had signed a series of contracts with various businesses, the most significant being contracts with CNN and CNN’s various online properties. These developments were a cause for concern for Google as it earned approximately one third of its revenues in 2002 by being a third party search results supplier. However, Google remained confident of its position for a variety of reasons. Google had a strong tie up with AOL and provided most of the portal’s web search capabilities. According to Nielsen NetRatings, a web traffic tracker. AOL and Google together got six times the search traffic of Yahoo in late 2002. Also, Google had a strong user response from its clients including AOL. Yahoo and many media customers who used Google’s services, most importantly its news sections, to draw’ visitors. Analysts were, however, rather skeptical about optimistic projections regarding Google’s future. Analyst Danny Sullivan of Search Engine Watch said. The bulk of 000gle’s business these days is built around Googlc. com. If partners continue to grumble, the pendulum could swing — and Google may end up facing a mutiny and a world full of hostile competitors, each seeking a piece of the king of search. ” Google faced another setback in February 2003 when Google Watch website22 nominated it for the Privacy International’s 2003 Big Brother Awards. 23 Google was accused of, among other things, recording all the personal information it could through its cookies. 24 retaining all data indefinitely and not mentioning why it needed such data. Google toolbar was also suspected of being a spyware. 25 However, Google did not make it to the final list because Privacy International did not find the company to be a major threat to Internet privacy. An analyst at Search Engine Watch commented. “Nevertheless, the nomination has caused some to wonder about the privacy of their search requests at Google. In addition, some allegations made in the nomination have been transformed by others as proof of privacy violations without being closely examined. ” In spite of these unpleasant developments. Google continued to be popular amoung users. The receipt of Pandecta Magazine Award and the ‘Business People of the car’ award by Wired Magazine in early 2003 indicated that Google had strong growth prospects. Problems and threats notwithstanding, Google continued to be regarded the world over as the perfect search engine. ’ In early 2003, analysts remarked that Google could even go public in the near future like man oilier successful Silicon Valley ventures. Whether or not the company decided in favor of taking on the pressures of stock-market performance, analysts expected Google to continue innovating and developing breakthrough technologies. In line with these expectations, a Google source stated. “Whatever is to come in the way of search technology, you can be assured that Google is working to make it faster, more accurate and even easier to use. ” _______________________________ 22Google Watch was formed by Daniel l3ramht in mid-2002 and is hacked by a non-profit organization named Public Information Research. 23Privacy International’s Big Brother Awards are given to those websites that are found guilty of privacy violations on the Internet. 24Cookies are small text tiles placed on a computer’s hard disk by a website through the web browser. They are used to store information that enables websites to identify users between visits. 25Spyware refers to software that gets installed in a user’s PC and sends information about the user — all without his/her knowledge. The information gathered is typically about the users activities on the internet and is transmitted to the makers of the spyware. This information is used for marketing purposes either by the spyware developers themselves or to third-parties who purchase the information. Questions for Discussion: 1. In what ways were the services offered by Google different from those offered by other search engines? Discuss with specific reference to technology, corporate client servicing and customer friendliness. 2. Most dotcom companies relied heavily on online advertisements as the primary source of revenue, and many also spent a lot of money on advertising their brands. However, Google did not do so — and was still rated as the world’s most preferred search engine. Critically discuss Google’s business model in the light of the above. Was Google’s decision not to use conventional advertising a wise one or not? 3. “Over the last three years, Google has stolen 40% of the search market directly at the expense of AOL, MSN, and Yahoo. Do you think Googlcs leadership position is going to become a threat to the company’s future growth and survival? What measures should the company take in order to sustain its position as the leading Internet search services provider in the future? Mercedes Benz’s E-Biz Solution: The Factory Delivery Reservation System “One of our most fundamental goals in developing the system was to strengthen and market the Mercedes-Benz brand in the United States. The fact that we would be one of the first car manufacturers in the United States to have a factory delivery program would be seen as a very positive thing in this regard. – William Engelke, Assistant Manager, IT Systems, Mercedes Benz US International, commenting on the FDRS. LINKING CUSTOMERS By 2000, Mercedes Benz United States International (MBUSI), builder of the high-quality M-Class sports utility vehicle (SUV), established itself as a company that also delivered superior customer services. One such service was the delivery option where by the customer could take delivery of the vehicle at the factory in Alabama. US. The program called the Factory Delivery Reservation System (FDRS), enabled MBUSI to create and validate 1800 orders per hour. FDRS also automatically generated material requirements and Bills of Material1 for 35,000 vehicles per hour. The Customer Relationship Management (CRM) solution that made FDRS possible was based on Lotus Domino2 and IBM Netfinity3 server1. Analysts felt that with its innovative use of the new program, MBUSI not only managed to improve its customer relations by providing the best service, but also demonstrated its commitment to customers by making them an integral part of the process. Customers were, in a way linked directly to the factory floor — which was a powerful sales tool. BACKGROUND: MBUSI AND ITS BUSINESS CHALLENGES MBUSI was a wholly-owned subsidiary of Daimler Chrylser AG5 In 1993, Daimler Benz realized that tile ‘Benz brand could be extended to wider market segments Traditionally, Mercedes Benz6 appealed to older and sophisticated customers only. Daimler Benz wanted to attract customers below 40 years of age, who wanted a rugged vehicle with all tile safety and luxury features of a Mercedes. Daimler Benz decided to develop a SUV known as the M-Class. It expected strong demand for the new vehicle and therefore planned to build its first car-manufacturing facility — MEUSI — in the (Tuscaloosa, Alabama) US. The MBUSI facility had many _____________________________ 1Bill of Material keeps track of all raw materials, parts, and subassemblies used to create a finished product. 2A product of 113M Corp. , Lotus Notes and Domino R5 are the industry’s leading client/server combination for collaborative messaging and e-business solutions. 3The IBM Netfinity server offers solutions for file-and-print and application computing needs. 4A computer or device on a network that manages network resources. For example, a file server is a computer and storage device dedicated to storing files. Any user on the network can store files on the server. A print server is a computer that manages one or more printers, and a network server is a computer that manages network traffic. A database server is a computer system that processes database queries. 5DaimlerChrysler AG was the result of a merger between two leading car manufacturers — Daimler Benz of Germany and Chrysler Corp. of the US in 1998. 6A luxury brand of passenger cars, Sports Utility Vehicles from DaimlerChrysler. advantages. First, labor costs in the US were almost half that of in Germany. Second, the US was the leading geographic market for SUVs. Third, as the vehicles were assembled in the US, they could be distributed to Canada and Mexico more efficiently. In January 1997, the factory started production at partial capacity and by the end of the year, it was producing at full capacity. By 2000, the factory was rolling out around 380 vehicles per day. The new M-Class ‘all-activity’ vehicle represented a new concept for the company. Also, mass customization required that each vehicle be treated as a separate project, with its own Bill of Material. To deal with these challenges, Daimler Benz decided to implement an enterprise wide Information Technology (IT) system, with the help of IBM Global Services7. To further strengthen the image of Mercedes Benz in the US. MBUSI planned to deliver vehicles at the factory, becoming the first international automobile manufacturer in the US to do so. MBUSI also wanted to enrich the customers’ experience. Commented William Engelke. “The factory delivery option gives Mercedes-Benz customers something that they do not get from other automobile manufacturers which is why we think the program will resonate with our customers. We think that having the factory delivery program available to Mercedes customers adds to the overall experience of the customer. ” THE DESIGN OF FDRS The FDRS program was proposed in the first quarter of 1998. In the third quarter of 1998. MBUSI entered into a contract with IBM. A development team was constituted with IBM Global Solutions specialists and IBM c-commerce developers, who worked closely with MBUSI. The program became operational by the first quarter of 1999. The IT team at MBUSI had a clear set of functional specifications for FDRS. However, they relied on IBM to transform the concept into an e-business solution. The FDRS was designed in such a way that customers buying the M-Class SUV could specify that will take delivery of their new vehicle at the factory. They could place the order at an of the 355 Mercedes Benz dealers in the US. An authorized employee at the dealership entered the factory delivery order the web interface. Timing was the most important aspect of the FDRS’ functionality, as it was closely linked with MBUSI’s vehicle production schedule. Mercedes Benz United States of America (MBUSA)8, based in Montvale, NJ, was the first link in the FDRS program. It was (he point where the dealer actually placed the order. MBUSA’s role was to coordinate the distribution of vehicles to dealers across the country. Later, it had to add the order to the company’s Baan Enterprise Resource Planning (ERP)9 system, which scheduled the order for production. About three months before the production date, the dealer could schedule in a window, the date and time of arrival of the customer at the factory for delivery. The window was then automatically computed by the FDRS to give the dealer, the possible delivery dates. Apart from the delivery date, the customer could also specify the accessories for the car and also request a factory tour. _________________________________ IBM Global Services is the services and consultancy division of IBM Corp. that offers extensive c-business solutions. MBUSA is the wholly owned US subsidiary of Daimler-Chrylser. ERP attempts to integrate all departments and functions across a company onto a single computer system that can Serve all those different departments particular needs. Figure 1 : System Architecture of FDRS [pic] FDRS was based on Lotus Domino (Refer Exhibit I). Lotus Enterprise Integrator10 and IBM Netfinity servers. It also interfaced with IBM S/390 Parallel Enterprise Server. Model 9672-R45 located in Montvale. NJ (Refer Figure 1). There were two Domino servers — an IBM Netfinity 5500 and an IBM Netfinity 3000. The former that acted as the “internal Domino server’ was placed behind a firewall. 11 It replicated databases through the firewall to the external server. The replication. which was encrypted, represented the primary means by which the FDRS system achieved security. Netfinity 3000 acted as an ‘external Domino server. ’ It had public information and was also the primary communication linkage for dealers. The back-end of the FDRS was equipped with an Oracle database that updated the internal Domino server database with order information. The updation was done using Lotus Enterprise Integrator. The data which was replicated to the internal Domino _________________________________ 10A server-based data distribution product that enables data exchange between Lotus Domino and a number of host and relational applications. 1A system designed to prevent unauthorized access to or from a private network. Firewalls can be implemented in both hardware and software. Firewalls are frequently used to prevent unauthorized Internet users from accessing private networks connected to the Internet, especially intranets. All messages entering or leaving the intranet pass through the firewall, winch examines each message and blocks those that do not meet the specified security criteria. server included lists of valid dealers and lists of order numbers. When an order was placed by the dealer on the FDRS system, the data as first stored on the external Domino server, after which it was replicated to the internal Domino server. Then it was replicated to the back-end database via the Lotus Enterprise Integrator. Data replication between the Lotus Notes servers happened every 15 minutes and data exchange with the back-end database three times per day. There was also a link between the back end database and an IBM S/39012 mainframe based system located at MBUSA via a T113 line. MBUSA managed the flow of vehicles to Mercedes dealers across (lie United States. This mainframe based system received new vehicle orders (as opposed to factory delivery reservation requests) from individual dealers. The orders were then sent to MBUSIs Baan system and also to the back-end database. The vehicle ordering and factory reservation data were coordinated with each other when the back-end database uploaded the data to the internal Domino server. This coordinated the production and delivery information. FDRS IMPLEMENTATION One of the most challenging aspects of the implementation seemed to be the complexity of the Lotus and Domino scripts. The development tea in had to group all the information from diverse systems. Commented William Engelke. “There was a substantial amount of very complex coding involved in the FDRS solution. This application involves a lot more than having our dealers fill out a form and submitting it. There are many things the servers have to do for the system to function properly such as looking at calendars and production schedules. We built a solution with some very advanced communication linkages. ” IBM faced many technical challenges during time implementation of the program. One of them was the different timing schemes of the Lotus Notes databases and backend databases (ERP). This led to discrepancies in the data. Domino server was a Near Real Time (NRT) Server14, and MBUSI’s backend activities were both real time15 and batch processing16. Also, to get the best results, the Domino server was an optimised subset of the ERP table set How ever, the development team achieved a balance between the two ‘sides’ of the solution b focusing on issues of timing, error detection schemes, and alerts. ___________________________________ 2The IBM S/390 servers offer direct high speed access to the c-business application and are used for Enterprise Computing. 13A dedicated phone connection supporting data rates of 1544 Mbits per second. A T1 Line actually consists of 24 individual channels, each of which supports 64 Kbits per second. Each 64 Kbit per second channel can be configured to voice or data traffic. 14The NRT Server System supports real time distribution of near-real time data. 15Real lime refers to events simulated by a computer at the same speed that they would occur in real life. 16Executing a series of noninteractive jobs all at one time. The term dates back to the days when users entered programs on punch cards. They gave a batch of these programmed cards to the system operator, who fed them into the computer. Usually, batch jobs are stored up during working hours and then executed whenever the computer is idle. Batch processing is particularly useful for operations that require the computer or a peripheral device for an extended period of time. Once a batch job begins, it continues until it is done or until an error occurs. Note that batch processing implies that there is no interaction with the user while the rogram is being executed. 17The ERP tables are the database tables, (thousands of them), on which the package is built. The programmers and end users must set these tables to match their business processes. Each table has a decision ‘switch’ that leads the software down one decision Path or another. CUSTOMER SATISFACTION: FDRS’ PRIMARY BENEFIT MBUSI seemed to measure FDRS’ success in terms of increased satisfaction of its customers, The company also believed that the marketing and customer satisfaction aspects outweighed the significance of more traditional cost-based benefits. Apart from the factory delivery experience, the program also offered the customer a factory tour and ride on the off-road course at a low cost. The company also seemed to gain strategic marketing benefits from the FDRS program, as it was able to establish Mercedes-Benz as a premium brand. (Refer Table I for advantages of FDRS in different areas). Customers could also visit the various tourist spots in Alabama after picking up their M-class vehicles. Table 1: Advantages of the FDRS Program AREA |ADVANTAGES | |Strategic Marketing Benefits |FDRS was expected to improve customer satisfaction and brand loyalty, as it enriched Mercedes’ customer’s experience. | | |The program also strengthened the brand image of Mercedes in the US. | |Cost Savings |Development of a web-based solution enabled MBUSI to offer the factory delivery program at substantially lower costs, | | |due to less reliance on administrative personnel. |Regional Economic Development |“Package Marketing” the FDRS program with a ride to tourist sites, enhanced the image of Alabama as a tourist | | |destination. | |DaimlerChrysler |The creation of a similar — albeit smaller — factory delivery system to the European Customer Delivery Center in | |AG |Sindelfingen, Germany, reflected favorably on the MBUSI business unit. | |Source : MBUSI | FUTURE OF FDRS In 2000, MBUSI planned to leverage FDRS’ platform by adding a range of other services. MBUSI built an advanced platform to create communication links to its suppliers. Through the link, MBUSI provided them feedback on the quality of supplies it received. The dealers and suppliers had a user-ID and password, which the system recognized. It then routed them into the appropriate stage of the FDRS. The company also planned to extend the innovative system to include transactional applications such as ordering materials and checking order status on the Web. The company expected that the new system based on FDRS. would be more cost-effective than the Electronic Data Interchange (EDI)18 system. Q. 1) “The factory delivery option gives Mercedes-Benz customers something that they do not get from other automobile manufacturers”. Briefly discuss the salient features of the Factory Delivery Reservation System of MBUSI. Q. 2) “One of the most fundamental goals in developing the FDRS was to strengthen and market the Mercedes-Benz brand in the United States”. Discuss other benefits of the FDRS program. ———————– [pic] [pic]

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