Review of Book by Gary Fields

Territories of Profit: Communications , Capitalist

Development and the Innovative Enterprises of GF Swift and Dell

Computer

- Gary Fields

The Railroad and Telegraph as Commerce System and Market Space

• Communications and Commerce

• Infrastructure Interconnection

– Connecting the Atlantic and Pacific Coasts with wire in 1861 and rails in 1869.

– Single transport and communication medium.

– Twins of the 19th century commerce

• Markets before railroad and telegraph

• Rail and telegraph based trade

– Completion of Galena and Chicago Union Railroad

– East-West Railroad lines

• Advantages

– Speed

– Reliability

The Railroad and Telegraph as Commerce System and Market Space• Increase in livestock shipping.

• Institutionalization of Interregional trade.

– Standards and Futures

• Urban impacts

– Increase in urban population

– Emergence of cities as manufacturing enters.

– Mass Markets and manufacturing

• Govt. Policies

– Single National market

The Business Enterprise of G.F.Swift & Company

• Organization of Swift– Dispersed Branch distribution houses– Pull system– Vertically integrated, Large scale Enterprise– Territorial Spread and localized concentration

• Early Meatpacking– Perishable Nature of Meat– Lack of refrigeration facilities– Long distance transport of cattle

• The Stockyards• Cattle commission houses

The Business Organization of G.F.Swift & Company

• Pooling arrangements between live-stock carrying railroads.– Inedible portion of the animal was also charged.

• Integrated production and distribution strategy.• Refrigeration, transportation, communication and

organization• Improvised refrigerated rail car• Consignment arrangements with the local butchers

The Business Organization of G.F.Swift & Company

• Butcher Aristocracy– Butcher workman Industrial laborer

• Increase in no. of wage earners from 8000 to 70000 from 1870 to 1900.

• By 1903, swift became the largest meat packing firm in the world.• Dressed beef trust• Investments by firms in the cattle stockyards.• Direct system of operations

– Relied on orders from retail butchers– High volume throughput– Customization– Balancing supply and demand – using telegraph

• Vertically Integrated Organization• Ancillary operations– Swift refrigerator transportation company– Ice manufacturing and distribution– Swift fertilizer works

Internet as commerce system and Market Space

• Revolution in communication as a platform fro reorganizing competitive activity.

• Commercialization of Internet– Invention of core infrastructure technology– Transformation into system for delivering profit– Exploitation of the built system

• Infrastructure Users• Users as innovators• Internet commercialization

– Splitting ARPANET into 2 pieces– Local Area networks(LANs)– World Wide Web and Internet Browser

Internet as commerce system and Market Space

• Host Computers– 1984 – 1000+ 1986 – 313,000

• The Web, the Browser and Web Commerce• Web commerce

– “pulled” information channel– Goods Information , user buyer– Explosion of web portals, web hosting-services and search engines.

• Internet commerce and Govt. policy– Telecommunications Act of 1996

• Open competition for construction of internet infrastructure

– Framework for Global Electronic commerce• Predictable legal environment for Internet commerce

Internet as commerce system and Market Space

• Internet retail space– Amazon.com and Internet Market Space– Internet Efficiency and Internet Geography

• Interfirm sales

The Business Organization of Dell Computer

• “build-to-order”• Dell’s process relies on

– Absent intermediaries– Customization– Use of internet for procurement and assembly operations

• Dell accumulates profit as a logistics firm• Levels of inventory

– 1994 – 32 days of inventory– 2002 – 4 days of inventory

• Collaborative relationship – between Dell and its Network partners

The Business Organization of Dell Computer

• Open standards and modularity– Constant technological change, constant downward price pressure

• Indirect channel• Perishable quality of computers – price and time• Inventory problem• Genesis of DELL

– Custom Direct• The company did not stock the retailer and reseller

– Target – corporate customers– Problems with component inventory– Shift in sales mechanism

• Using indirect channels for sale – Value added resellers(VAR)

The Business Organization of Dell Computer

• Online selling– PCs configurable online– Reduction in transaction cost from $50 to $5 per order

• Internet-generated information and communication as substitute to inventory– Central to this was an ERP system by SAP

• i2 business organization– Business with “internet at its core”– All geographical regions use this web-based information system

• Burst Capacity• DSi2 – i2+Burst Capacity

– Global supply planning• Master Production Plan

– Demand fulfillment

The Business Organization of Dell Computer

• Virtually Integrated Firm– Systems Compatible with dell’s i2 system– Organization built on nonmarket foundations

• Geography and the Dell Organization– Centralized form of control– Spatial proximity between key nodes in Dell’s network– Influencing location of network partners

• Geography of Assembly– Locations – Penang(Malaysia), Xiamen (Taiwan), Austin & Nashville

(North America), Eldorado do Sul (Brazil), Limerick (Ireland)

• Geography of supply– East Asia, Mexico, United States

Structural Foundations for e-commerce Adoption : A

comparative organization of retail trade between Japan and

the United States

- Yuko Aoyama

Characteristics of Retail Trade

• The characteristics of trade are historically determined• Sell products available at brick-and-mortar store online – US• Selling products available online at brick and mortar stores –

Japan• Neighborhood stores – access points of e-commerce for

Japanese customers• In Tokyo there are 16 convenience stores/mi2.• Preexisting practices, cultural preferences and Institutional

environment - alter patterns of technology use in consumption.

• Convenience, familiarity and social habits• E-commerce technological requirements

– Computer literacy– PC ownership– Availability of credit cards

• Organizational characteristics of retail trade– Economic variables– Population growth and density

• 55% of food and beverage sales were in small stores in Japan

Evolution of Nonstore Retailing in USA and Japan

• USA :• Direct marketing for import goods

– Horticulture

• Mail order trade• Mass-market based approach to niche markets

– Avg. Household income > $75000 per annum– Well versed with the procedures of receiving refunds, returns and

exchanges.

NonStore trade in Japan

• Japan:• Introduced in 1875• They combined store-front sales with catalog businesses.• Problems faced

– Densely populated spatial structure– Mistrust of merchants– Undeveloped printing technologies and postal system– Limited market size for Japanese catalogs

• 1973 Large Scale Retail Law– For sustaining mom-and-pop stores

• Virtual stand still of Japanese economy and decline in consumer demand.

Convenience Stores in Japan

• Starting market from ground zero• Exchange of cash for goods• Seven eleven Japan• High energy cost – lack of refregiration• Advantages of Convenience store chains

– Assistance from the chain

• Innovation – Locational Strategy– Marketing Strategy– Adoption of IT

• Heavy investment in IT – better supply routes

Convenience Stores in Japan

• Second stage of Informatization

• Delivery of online based services• Alliances between convenience stores and e-commerce

vendors • Easy access and legitimacy to online retailers