Paper info

IT Threatening Old Relations and Creating New Ones - The Case of Prestige Car Sales and Distribution

Ove Brandes and Per-Olof Brehmer

The paper was published at the 16th IMP-conference in Bath, U.K in 2000.

Internet based new middlemen are attacking the traditional Sales & Distribution in theprestige car segment. Compared to earlier links in the supply chain, e.g. close purchasing andproduct development, (cross-functional integration, outsourcing and partnership) S&D havechanged very little during the last decade.The analysis of the S&D function is complicated. There are several independent actors andvery strong links in the established system. The new middlemen are a common threat toOEMs and dealers that should share the same or a decreasing margin with the newcomers.The only chance for them is to deliver a higher value to the final customer.Our managerial conclusion is that we can expect a stepwise change where the OEMs and thedealers will try to keep the new middlemen out by developing a strong Internet-basedcommunication with the final customer (hybrid system). However, there will be some smallOEMs that will try the new middlemen in new markets as a transaction cost efficient channel.Those OEMs have little to lose with the traditional dealers. Also, the expected deregulation ofEC could put more competitive pressure on the European system to develop in the samedirection as the US system that is leading in the process of change.Theoretically the challenge is to decrease the transaction costs at the same time as thecreation of customer value is to be focused. We propose a combination of learning processesin networks (Håkansson, 1993) and interorganisational competence and knowledgedevelopment driven by dynamic capabilities (Teece, 1998).