Development of the Online Broker Industry

Introduction

The reason for this survey is to gain a knowledge of the organization development by studying the Openshaw case and the introduction of the web broker industry since then and likely improvements in the future.

Openshaw Plant Machinery is an online equipment broker that was established in 1998. The founders Neville and Sue Openshaw recognized the lacking of an central and convenient place for business to trade new or second-hand equipment and equipment in the industry. Openshaw staffs have extensive experience from employed in many regions of various establishments and can deliver excellent service to its customers. An array of contracts is durability of Openshaw (Openshaw Seed Equipment 2011).

Discussion

In this section, I'll firstly provide a brief qualifications about the online broker/trade industry. Macro-environment and industry environment research will be reviewed including analysis of recent trends and likely future advancements on the market.

The industry

Openshaw belongs offers a system for buying, selling, and sourcing new and used equipment and machinery. It has extensive links with machinery manufactory industry as well as brokerage industry. Inside the report, I will focus on the online brokerage industry.

The online brokerage sector is relatively new. However, the traditional retail brokerage industry has been around for a long time. Online equipment brokerage might be a bit under the radar since the majority of the brokerage companies or specific brokers focus on financial services, such as stock exchange, mutual fund, insurance, and real house. It was permitted after the development of internet and World Wide Web. Since that time, as the information technology evolves, the industry has grown rapidly and presents one of the most successful applications of e-commerce (Bakeos et al 2005).

Nowadays, because of the volatile nature of most companies, companies have to change new technologies to keep competitive and match the society. It, especially Internet, offers astonishing degree of convenience and flexibility and eventually has changed the way the business usually run. People now have the technology to speak from basically wherever and every time they like (Lonney, Jessup & Valacich 2004). In online brokerage sector, although the grade of online brokerage service might be less than traditional approach, it provides lower associated cost and even more flexibility and develops speedily worldwide (Bakeos et al 2005). In the foreseeable future, there are a number of areas that are worthwhile to watch out for.

  • More customers generated content - this is will be very useful for improve the awareness and ventures, because customers trust other customers somewhat than what the website claim. Therefore, providing the ability and pushing customers to write a review or blog about their trading experience on the website could turn out to be an advantage for a web brokerage business.
  • Improvement on products and services- Without doubt, the expansion and success of e-commerce will encourage more business type in the industry. Existing online brokerage companies have to constantly enhance their products and tools, improve the overall flexibility and convenience, and develop better customer care.
  • Video and aesthetic information - Once we known, human being obtain information quicker with images than simply plain text (Audette 2010). Although content material is very beneficial and requires less effort to create, videos and images will be more eyes finding and catching. Also, people, in many situations, favor information in a far more visualised format. Thus, web-based business can benefit significantly from aesthetic information. Visual surfing around and searching are likely to get more attention in the near future. Nowadays, internet swiftness and technology permit people to view picture and video tutorial easily. People can compare products with on-website videos to help them make the right decision.
  • Engaging social mass media -The success tales about Facebook and twitter shows how important is the sociable media. Twitter acquired increased about 40 million accounts in three months and there are about 110 million Tweets every day around the world (Chiang 2011). Companies have began to employ social marketing for product marketing, customer communication, and idea technology (Menchaca 2010). Similarly, online broker should do the same thing to activate with customers.
  • Service offered through multiple e-channels-Online equipment broker like Openshaw can provide customer the opportunity to be really progressive and take part in the procedure of expanding equipment that fulfills the special needs of customers. Online brokerages can set up video recording and/or skype conference between customers and manufacturers who are 20, 000 kilometres away and discuss the complete design, costing, and building process. Also, the after the equipment is installed, customers will have 24/7 online support to guarantee the machinery working safe and sound.

Macro-environment analysis

The environment for an organisation includes those factors beyond your organisation that influence its strategy. For example, businesses have very little option about the company tax insurance plan in many countries. Macro-environment is one of two sections of the exterior environment. It offers impact on almost all the sectors and overall economical growth. The examination of the macro-environment could potentially provide information in what have damaged the industry in the past as well as what is going to have an impact on the industry in the future. Mangers and scholar have categorised these macro-environment factors in to groups including economic, political, legal, interpersonal/cultural, demographic, sustainability, international, environmental, and technology factors.

Government use political and legal system to modify business environment. The New Zealand government, like other developed countries, mainly allows the market control itself. New Zealand politics and legal systems are extremely stable and are very unlikely to pose any political risk to the companies that operate in New Zealand. Alternatively, policy variance between parties and politics decision afflicted by major situations could have impacts on business procedure. For example, government's support on rebuilding Christchurch CBD may have a positive consequence for online equipment brokerage sector. However, the emission trading plan could have little impact on the industry.

Changes in modern culture and culture change consumers' demand and consequently impact company's strategy and industry's success. If a company can anticipate and plan these changes, the company is likely to succeed. The Do-It-Yourself (DIY) soul is a bit of culture of New Zealand. Online equipment broker industry might use this factor and increase its products range in order to add more equipment that is suitable for DIY goal.

Certainly, the market is one of the environmental factors that could have most effect on industries and businesses. Financial factors include taxation, interest rate, inflation, exchange rate, and GDP. These factors influence not only behaviour of customers, but also the behaviour of companies. For instance, the strong NZ dollar makes the export goods less attractive yet makes transfer goods more affordable to domestic consumers. The global financial crisis has affected New Zealand overall economy although New Zealand and Australia are thought to flee relatively well and have 2-3 3 percent development in the near future (Sunshine 2010). In the online equipment brokerage sector, the reduced interest rate might have a positive effect as the lower rate makes the advantage investment more appealing. On top of that, the tax lowering for both individual and business may improve the revenue of the industry in the future.

People like new technology and almost all of us cannot make it through without it. Internet, mobile phone, video gaming, and HD Televisions are elements of our everyday life. For most products and services, technology can lower bills, increase quality and output, and lead to innovation. Innovations in technology will eventually generate benefit for both consumers and the company offering the products and services. In some industry, scientific factors are essential for building competitive advantages and keep maintaining market position. The industry where Openshaw belongs to particularly requires technology inputs, especially associated with Internet and Web applications. By the end, technology makes the online brokerage system work and it ought to be able to make the industry better.

Industry environment

The other part of the environment examination is the industry environment. The industry environment normally impacts companies' profitability and market position in a particular industry. Industry environment consists with factors like potential buyers' vitality, suppliers' power, challengers, substitutes, and new entrants. Professor Michael Porter suggested that the success of an company in an industry count on five competitive pushes (Porter 2008). These five 'causes' are threat of new entrants, bargaining electricity of clients, bargaining ability of suppliers, threat of substitute products or services, and rivalry among existing competition (Body 1, Porter 2008). Porter's fiver causes model is often used for business research and research. However, it does not consider for creativity and change and it is merely applicable to industry level in many situations.

Existing companies may hold the pressure from new entrants on price and costs and may have to invest more to remain competitive. The threat of new entry may very well be low if the admittance barriers are high. Such obstacles include customer moving over costs, capital investment, economies of range, access to distribution channels, and administration limitation (Porter 2008). For the online equipment broker sector, the threat of new comer is fairly high. The capital requirement for online brokerage business is little and the clients can easily moving over among providers. In addition, there is absolutely no obvious government intervention.

Powerful suppliers can affect an industry by charging higher prices and restricting quality and level of the products. Suppliers will have significantly more ability if there aren't many them, transitioning among suppliers are very costly, suppliers do not be based upon the industry, there is absolutely no substitute for what suppliers provide, and the provider enter into the industry (Porter 2008). However the suppliers, in this case, the gear manufacturers, do not rely upon online brokerages and there is absolutely no replacement products, one of the top features of Openshaw could it be has extensive contacts and can source equipment from many suppliers and countries. Thus, the power of suppliers for online equipment broker agents is average.

Powerful customers, on the other side, can drive the price down and demand better quality and even more variety products and services. The buyers have more bargaining power if there are few customers in the market, the products are undifferentiated, the expense of turning providers is little, and the potential buyers enter the industry and produce the product (Porter 2008). Based on these measurements, because customers do not always have extensive connections with equipment manufacturers and Openshaw's service is differentiated, the clients' electric power for online equipment broker is low. However, the amount of customers for the industry is relatively small.

The risk of a substitute is high if the swap has a better price-performance ratio set alongside the industry offering and the price tag on transitioning to the replacement is low (Porter 2008). In cases like this, direct communication between potential buyers and manufacturers can be the substitute of Openshaw's broker service. However, customers must spend a lot of time and effort on working with manufacturers. Although the cost of switching to replacement is low, the risk of a substitute for online brokerage industry is low.

The degree of competition of an industry is determined by a number of reasons including amounts of similar size competition, industry growth rate, exit barriers, and rivals' business determination. To my knowledge, there aren't many online equipment broker agents within New Zealand and the amount of competition is relatively low. In addition, the expenses of departing the industry are low because the initial capital investment is low and there are not much assets because of this kind of ecommerce.

Overall, if the industry has high accessibility barriers, many small and equivalent suppliers and clients, few substitutes, rather than much hostile competition, the organisations in the industry are likely to make good benefit from the market. Even though the risk of new entrants is high and the customers are moderate powerful for online equipment broker industry, the power of suppliers, risk of a substitute and rivalry among rivals are rather low. The web equipment broker sector should, therefore, has a sound industry environment and potential good profitability.

Conclusion

In the truth of Openshaw, the first mover strategy was the key because of its establishment and success. Starting up Openshaw was an entrepreneurial action because there was no such online equipment broker at that time, which is only 13 years ago. Its success should be attributed by the combination of entrepreneurial activities and strategic management. Entrepreneurial activities and proper management are important for business expansion independently, yet they make synergy that increases the value of the individual final results (Ireland, Camp, Hitt and Sexton 2001). Entrepreneurship is principally about innovation and expansion while strategic management focuses on competitive gain. However, they have a common goal, to create profit. Technology can create competitive benefits and competitive edge subsequently increases growth. The strategy that Openshaw used was the first mover strategy. Data suggested the first movers in a specific industry usually have resilient benefits in the later comer (Suarez and Lanzolla 2008). However, Suarez and Lanzolla (2008) also remarked that this plan likely success if the rate of both market and technology development is smooth. This can be a circumstance of Openshaw. When the company was established, the web technology has been well toned and the consumers have accepted the technology and have started to enjoy the good thing about it.

In the future, the business should keep carefully the focus on integration of entrepreneurship and strategic management. The network approaches to internationalisation might be a good strategy for Openshaw. The analysis carried out by Loane and Bell (2006) signifies that small entrepreneurial companies will obtain knowledge and source of information, such as sites, to internationalise rapidly suggesting social and business sites are valuable source of information for small organizations.

Although, ecommerce business has extraordinary growth potential, it creates unique issues for both existing companies and newbies (Saini and Johnson 2005). The overall environment condition for online equipment broker is reasonable. The domestic and international economic development is one of the major impact factors for the industry in the near future. Openshaw and other existing companies should keep sight on new entrants as well as keep on their entrepreneurial and tactical development and activities.

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