Freemarkets

FreeMarkets

The business model of the company can be assessed under four main topics as organization, sales model, market-making process and revenue generation model.

The company uses cross-functional teams to make markets and to develop and build software and information products. This structure enables organizations to use their resources (Especially human resources) efficiently and to create effective data sharing area. Therefore it is a big advantage for the company since it is in a business of selling and delivering a complex conceptual service which requires an eclectic blend of skills.

Also this structure provides flexibility and rapid response to changes, directs attention of everyone toward the production and delivery of value to the customer since each employee has a broader view of organizational goals (Horizontal Structure). But it has some weaknesses like limiting in-depth skill development and requiring significant training of new employees to work effectively in this structure.

How to sell services is an important part of the business model of the company. The company applies direct sales model which consisted of client developers establishing relationships with senior-level purchasing, operations and finance executives at large targeted corporations. These client developers are supported by senior leadership team, Meakem and David Becker. Moreover the company uses media silence policy in its direct sales model till recruiting becomes a bigger part of its challenge.

By this model the company is able to reach senior executives and purchasing decision makers, doesn't lose its competitive advantage since this idea prevents copying and catches opportunity of finding multimillion dollar negotiation projects for purchase of mission critical parts. However it should be noticed that FreeMarkets uses an important portion of its human resources in client development activities. This can be accepted as normal since its credibility and existence heavily depends on its buyer network size although it can use its human resources more efficiently. In addition to this, other weakness can be long establishing presence time that is around 21 months.

The company applies an effective market-making process. By using cross-functional teams in this complex process, FreeMarkets acquires a high customer service level since it nearly guarantees that the inputs obtained from buyers and outputs supplied to suppliers are accurate by providing inspection from different perspectives. Another strength of this process is "lot" determining since it considers both suppliers' perspective and buyer requirements and defines an optimal value satisfying both side.

Scheduling of the events is another strength of the process since simultaneously determining which suppliers to include for bid and "lots" decreases the lead time of the CBEs. The last strength of this process is that it provides significant amount of information about suppliers which help buyers