Arrow Electronics, Inc.

About
Arrow Electronics was founded in the year 1935 to sell radio equipment

Arrow now had become broad-line distributor of electronics parts, including semiconductors and passive
components

By 1980, Arrow had reached the second spot, largely trough acquisitions

By 1992, Arrow had become the number one among electronics distributors

In 1996, sales were $6.5 billion

Business Model
Zeus Anthem Arrow/Schweber
• Sold semiconductors • Sold semiconductors • Sold semiconductors
to military and to industrial to industrial
aerospace companies companies

Five Operating Groups

Gates/Arrow Capstone
• Computer systems, Electronics
peripheral and • Passive components
software

The Way Industry Works Suppliers

(Eg: Motorola, Intel
etc.)--25% to 35% of Distributor(Eg: arrow) Customers (like OEM)
sales
Arrow/Schweber
• One of Arrow’s 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

Standardized
75% Multiple suppliers

A/S

25%

Propriety Singular suppliers

Express – The New Distribution System
An internet trading system providing customers large and small an opportunity to shop for prices.

Estimated 50,000 OEMs having access to the service.

Allow customers to compare prices and to bargain for the best price among competitors

Distributors will transmit the full list of available inventory and corresponding prices every night.

Express then billed customers, then after deducting a fee of 6%, made payments to the distributors 30 days after
orders were shipped.
Decision Alternatives
• Sign up for Express system
• Create Own Internet Presence
• Business as usual STRENGTHS WEAKNESSES

•No. 1 among electronics •Reduction in Operating

Recommendation Distributors
•60% sales from Value
Income in 1996
•Expenses at 11% with Gross
DO BOTH (Sign up for Express and Added Content margins of 15%

Build Website)
SWOT ANALYSIS FOR EXPERT SYSTEMS
• Important to maintain option to
buy from Arrow OPPORTUNITIES THREATS

• Gain access to customers •Collaboration with Express •Express as a competitor

•Learn to how to sell against •Cannibalization of BAS business
previously unavailable
“Going out of business” if Express proposal accepted
• Use Express as an advertising
medium
 Relationship between Arrow and Suppliers
What Suppliers Wanted? Financial Incentives
• Win business for Standardized • Price protection
products • Limited return privileges
• Represent new technologies
(Propriety products)

Rewards Offered • Distributors did design work

• Higher discounts
Design Win
• Depended on the design work, assigned by
“design registration”

• No design by distributors
Jump Ball • The suppliers created demand
Impact of Internet
After the rise of internet in mid 1990’s Home page was established later but did not incorporated purchasing capabilities
rather functioned as INFORMATION CENTRE

Arrow can leverage internet by

Introduce purchasing capabilities on website already in operation

Develop a strategy using the Internet as a direct channel

Serve price-sensitive customers through website

Maintain relationships already established by keeping a direct line of communication while attract
new transactional customers focused on price
Thank You