Impact Of E-Business On Metal Trading.

Assignment 1 Impact of e-business on Metal Trading e-Business-1.

e-Business-1.

Assignment - 1.

Impact of e-business on Metal Trading.

Name : Partha Sinha

ACS Membership No : 2153852

Telephone : + 971 3 7650772

Fax : + 971 3 7650771

Email : psinha@emirates.net.ae.

Address : POB: 80675, Al Ain. UAE.

Partha Sinha 1

Assignment 1 Impact of e-business on Metal Trading e-Business-1.

I declare that this assignment is based on my own work and that all material previously written or published in any source by any other person has been duly acknowledged in the assignment.

Partha Sinha.

07/07/2002.

Partha Sinha 2

Assignment 1 Impact of e-business on Metal Trading e-Business-1.

Impact of e-business on Metal Trading.

Abstract.

The dotcom boom of the mid-nineties, saw the birth of several online exchanges, some click-only and some established by their brick-and-mortar counterparts. All these exchanges saw a huge business potential in terms of volume and profits in bringing buyers and sellers together on a common platform. E-business was the magic word on everybody's mouth. But with time people saw that like their dotcom counterparts, the online trading sites were also going bankrupt. The major reasons identified were lack of globalisation, lack of properly trained personals, hefty transactions fees, lack of transparency and also the lack of any valued added services. This paper examines the impact of e-business in metals trading and what is needed to improve the Online trading in Metals, thereby addressing the shortcoming in the present e-business model and their possible remedies.

Introduction.

Throughout history, businesses big and small have always been trying to device new ways/concepts/tools to improve their business standards in order to draw the attention of more customers. They have been constantly assessing and redesigning their businesses to provide value added services to their customers because it is the customers on which everything depends.

In the 1960's, cost was the main factor by which businesses could differentiate themselves. The low-cost provider almost always swept the field. In the 1970s and 1980s, businesses sought advantage on the basis of quality, service and speed. In the 1980s and 1990s, new strategic tools proliferated. Companies began to find ways to redefine their scope of activity, to reposition themselves as service and solution providers rather than product manufacturers, to seize the opportunities created by dramatic changes in the value chain and so on. (Off the Grid, 2000)

As we enter a new round in this continuing competition, e-business or digital business design is making available a vastly wider array of strategic options to the business designers in terms of obtaining an uniqueness, the ability to offer their customers a set

Partha Sinha 3

Assignment 1 Impact of e-business on Metal Trading e-Business-1.

of value propositions that no other company can match. Furthermore, the flexibility and speed made possible by digital business design enables businesses to respond to change and evolve with their customers to maintain the edge their uniqueness provides.

In this report, I have attempted to analyse the impact of e-business on the Metal Trading industry. First I will try and define e-business, and then I will give a brief introduction on the evolution of the metal trading exchanges, mainly the London Metal Exchange which is one of the oldest exchanges in the world. Next I will discuss the major existing players in Metal Trading worldwide. Then I will discuss the impact of e-business on metal trading and the major challenges and issues faced by the industry. And lastly I will discuss through an example of an imaginary company xMetals.com, how these challenges can be coped with and the future trends of the metal trading market. My motivation in choosing this sector has been my active involvement in metal trading for the last 9 years.

So, what is e-business?

Many organisations use the Internet as a publishing vehicle or a place to sell their products. But this is not e-business.

"e-business is the complex fusion of business processes, enterprise applications, and organisational structure necessary to create a high-performance business model". (ACS Study Guide, Pg 3)

History of Metal Exchanges and the evolution of online trading.

The London Metal exchange has been the most influential of all the metal exchanges through time. International trade in metals could be said to have commenced in Britain when the Romans invaded in AD 43 and extracted the large deposits of copper and tin ore in Cornwall and Wales to satisfy their increasing domestic need for the production of bronze and alloys.

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Assignment 1 Impact of e-business on Metal Trading e-Business-1.

However, the origins of the London Metal Exchange can be traced as far as the opening of the Royal Exchange in London in 1571 during the reign of Queen Elizabeth I. It was there that traders in metals and a range of other commodities began to meet on a regular basis.

With the Industrial Revolution in the 19th century, everything changed almost overnight in the UK. UK started to import large tonnage of metals from abroad and more and more merchants were attracted to the trade and it became necessary to find premises where they could convene each day. They first moved to the Lombard Exchange but once again the intrusion of other traders drove them to find new premises.

In 1877 they formed the London Metal Exchange Company and moved into their first premises over a hot shop in Lombard Court. Telegraphic links were set up and a company secretary was appointed to handle the administration. With increasing memberships and trade volumes, the London Metal Exchange shifted its location many a times and finally in 1994 moved in to its current prestigious home in Leandenhall Street. (History, LME)

So, who are the