Challenges facing Market Dojo - Case Study Example

VIRTUAL BUSINESS Student’s name Code & Course Professor’s name University City Date Table of Contents Introduction 2 Business background 2 Software-as-a-service market 3 Business strategies 3 Credit-based pricing 3 Online reverse auctions 4 Unique features for clients 4 Fostering development, growth and marketing 5 Challenges facing Market Dojo 6 Conclusion 7 Introduction Market dojo is a groundbreaking e-procurement software company, located in the UK. The company emphasizes on professional, affordable and intuitive e-sourcing software. The customers of this e-software are priced on-demand. Market dojo offers online solutions in a combination of easy-to-use products and best practice by professional procurement personnel. They have three solutions namely market dojo, category dojo and innovation dojo. Market dojo, which is the focus of this paper, provides online auctions, RFQs and questionnaires (Sourcing innovation 2013). Category dojo enables customers to compare, discover and find priorities for procurement. This reduces time wastage in compiling and managing category plans while cutting costs incurred during procurements. Innovation dojo helps users to request for ideas in a supply chain, which serves as the link between procurement and Research and Development. Market dojo’s e auctioning has so far enabled clients to save up to 25% with the e-auction solution alone. Business background Market dojo is one of the youngest companies in the sector, with only five years of operation. It competes with other established players such as Ariba, Coupa, Bravosolution and Tradeshift among others. The founders of the company, Nick Drewe, Nic Martin and Alun Rafique are all competent in their jobs. Rafique and Drewe worked as cost reduction consultants for about ten years collectively; they helped companies including Rolls-Royce, Meggitt, Tarmac, Asda and BP in reducing their risks and costs. They used managed e-auctions, supplier workshops, tactical negotiations and strategic sourcing of the respective supply chains (Sourcing innovation 2013). Nic Martin, a complex data analysis designer has helped companies such as Best Buy, Argos and Tesco. The team of three offers a competitive advantage for the company against its competitors in the market due to their experience in the market as well as their expertise. Market Dojo was established upon realization of a market shift driving companies to carry out their activities on an in-house basis. Software-as-a-service market During the establishment of Market Dojo in 2010, SMEs spent about 1.6billion pounds on SaaS and other business application software. Market Dojo mostly serves this market, whose spending in software was projected to be 2.1billion pounds by the end of 2015 (Fernandes & Veiera 2015). This rate is faster compared to large enterprises. The UK is currently experiencing galloping rates of subsidiaries of multinational companies expansions, overseas enterprise expansions and rapidly growing startups. This is a great opportunity for Market Dojo, A SaaS supplier (Market Dojo.com). There is however, variability with respect to customer needs in the SME market. Similarly, there is a major shift towards cloud-based services. In this respect, the UK’s SaaS market has doubled its size this year (2015), reaching above 500million pounds. The company operates in the cloud where it pays per use for customer support systems, CRM System (Zoho), phone system (Skype), accountancy system (Clearbooks) and others such as data storage and calendar sharing systems. Business strategies Credit-based pricing The credit-based pricing model adopted by Market Dojo allows the company and its clients’ flexibility. The company provides a solution catering for 90 per cent of the e-auction markets as a guideline. However, the other 10 per cent is catered for by means of modular functionality; this is done by use of advanced reporting or bespoke categorized member database (Chartered Institute for Procurement and Supply 2012). The clients are free to choose pay credits to make their accounts functional in this respect at their convenience. By use of credits, clients are able to use their accounts perpetually while consolidating their invoicing transactions and purchases. They can buy the credits from the company and use them however they want, at their own convenience. Online reverse auctions Market Dojo uses reverse auctions for its business-to-business procurements. In this strategy, the roles of the sellers and buyers are reversed so that purchase prices are competed downwards (Tassabehji 2012). This strategy offers time efficiency in that awarding decisions take place in terms of weeks as opposed to the traditional tendering which is in terms of months. The strategy informs a bidder how competitive they are in relation to ranking with other bidders. There is increased transparency by using reverse auctions while paper work is reduced; this is very useful for the public sector. Cartels are also reduced through the strategy. Unique features for clients The company provides self-managed e-auctions for all its clients. Clients therefore have perfect knowledge about what to expect alongside being provided with more than 20 free fully packed guides of knowledge and experience in consultancy (Market Dojo.com). The clients also enjoy a free community site where they can share market knowledge concerning e-auctions (community Dojo); they learn from each other through exchanging of knowledge on real time basis. Tips, information and advice from button and action as well as information help are offered professionally by use of step by step software. Finally, the company offers professional support via Live Chat, phone and e-mail. Fostering development, growth and marketing Market Dojo has been successful this far. However, it is arguably true that the company is failing in several areas. To begin with, just like other players in the market, the company is focusing solely on cost reductions from suppliers and adding to internal savings (Yu et.al 2012). The company needs to identify some suppliers who will add value to the whole business other than just cost reductions and savings. With regard to buyers, it is not enough to provide apps that are easy to use. The buyers need relevant training on development and collaboration with suppliers to build supplier eco-systems. They also need assessment and compensation with respect to the value added to the organization. With respect to technology, companies are emphasizing on on-demand based solutions, cloud based solutions, niche and best of breed. These tools have proved useful in the e-auction business. Market Dojo has adopted the on-demand solutions, which embraces collaboration and innovation. The organization is able to track and evaluate ideas from its clients which can be useful in innovation. The company should therefore continue with this trend. The processes involved in business are heavily reliant on technology. However, the processes used by most organizations are inclined towards keeping savings by capturing benefits and use of negotiations to get the money (Schoenherr & Mabert 2013). Although this is essential, there is need, as mentioned earlier, to adopt value-based approaches in business. Market Dojo should therefore provide room for its processes to cater for value based innovation. In essence, procurement should not just be about pricing. Innovation Dojo has tried to cater for this, though it is in its early stages. Finally, the stakeholders of the business are vital. Most organizations spend most of their time trying to justifying how a company is better than the others, especially with regard to pricing. However, this is not the best approach to marketing a company. Stakeholders can market the company (De Ruiter & Van Heck 2014). All a company needs to do, in this respect Market Dojo, is to build strong relations with its stakeholders who are oriented towards innovation. This will create value for the business as well as market the business out there. Challenges facing Market Dojo As a start-up, the company faces financial risks in comparison to other companies that have been in the market for long periods. The company is therefore required to have implicit knowledge of their balance sheets. They are also obliged to avoid long term and expensive expenditure such as supply contracts, leases and employees which would pull them towards collapsing during tough phases of the business cycle (Seppanen et.al 2015). Inexperience of a company may obscure its reliability. Being in operation for only five years, clients may be hesitant to work with the company. The company has however been successful in establishing its own customer base and with its unique features and strategies; it is becoming more experienced and reliable. Finally, resource constraints are another major challenge (Brush et.al 2012). Startups are known to become over ambitious at times. This can make clients move to larger companies that can allocate any necessary additional resources. These hurdles can be overcome using simple strategies such as emphasizing on feedback from vendor and ensuring that there are appropriate internal controls in the company. The personnel of the company should continually be trained in-service to ensure that they gain consumer loyalty and confidence. Reverse auctions policies and practices should be reviewed regularly to it with consumer expectations. Conclusion Market Dojo has proven its going concern. Having experienced founders provides it with a competitive advantage. The company has outlived the three years given for a startup to fail. The company has numerous success stories that can be credited to its unique market startegies. Arqiva, a multinational company that operates in mobile, satellite and communications markets was among the first to test Market Dojo’s e-auction. Tara Hunt, Arqiva’s Category manager says, “I managed to generate a 48% saving in 2 hours so was very happy with the result! I would definitely recommend these guys. I honestly don't have a bad word to say about them (https://www.marketdojo.com/case-studies), excellent service, excellent software and a fantastic experience.” Other companies that have endorsed Market Dojo include Metroline, Magna, Bosch and ASDA among others. Reference List Brush, C.G., Greene, P.G. and Hart, M.M., 2012. From initial idea to unique advantage: The entrepreneurial challenge of constructing a resource base. The academy of management executive, 15(1), pp.64-78. De Ruiter, S. and van Heck, E., 2014. The impact of multi-access technologies on consumer electronic auctions. European Management Journal, 22(4), pp.377-392. Fernandes, T. and Vieira, V., 2015. Public e-procurement impacts in small-and medium-enterprises. International Journal of Procurement Management, 8(5), pp.587-607. "marketdojo – A Dojo Where You Can Walk Your Own Way". (2013) Michael Lamoureux, Sourcing Innovation. https://www.marketdojo.com/ https://www.marketdojo.com/case-studies Schoenherr, T. and Mabert, V.A., 2013. Online reverse auctions: common myths versus evolving reality. Business horizons, 50(5), pp.373-384. Seppänen, P., Liukkunen, K. and Oivo, M., 2015. On the Feasibility of Startup Models as a Framework for Research on Competence Needs in Software Startups. In Product-Focused Software Process Improvement (pp. 569-576). Springer International Publishing. Tassabehji, R., Taylor, W.A., Beach, R. and Wood, A., 2012. Reverse e-auctions and supplier-buyer relationships: an exploratory study. International Journal of Operations & Production Management, 26(2), pp.166-184. "Using e-Auctions to reduce the procurement cycle and save money". (2012) Chartered Institute of Procurement and Supply. Yu, Y.W., Yu, H.C., Itoga, H. and Lin, T.R., 2012. Decision-making factors for effective industrial e-procurement. Technology in Society, 30(2), pp.163-169. Read More