Isteelasia Case Study

I Steel Asia case

iSteelAsia is a secure, neutral steel trading e-commerce platform created by Andrew Cho Fai in december 1999 for steel industry professionals. Indeed, iSteelAsia enables users to purchase and sell steel, network with a global community of steel traders and find informations and news concerning steel industry.

1) Describe briefly the market itself and the market conditions (positive / negative trends, opportunities / threats) under which iSteelAsia developed. Identify more specifically the threats that the company faces or may face in the near future.

The market under which iSteelAsia developed is the market of the Steel in Asia. After, the crisis of 2001, the global steel market have known a development of the global supply and the prices. This growth is particularly significant in the Asian countries and the Mideast.

Asia is the main leader of the production growth, with a rise of 54% between 1992 and 2002. China is the major player of the industry with a huge expansion of 223% in the decade. The economic boom of the steel industry in China and India has caused a massive increase in the demand for steel in recent years. The global steel market is valued at US$700 billion and the Asia region account for 41% of it.

Swot Analysis

Positive trends

Negative trends

Economic situation is positive for the steel market thanks to the economic boom in the new developing countries. Indeed, strong supply of steel in Asia rises the prices

Late of the 90's: In USA and Europe, web-based companies started to overcome steel trading inneficiencies

Development of the Asia and Hong-kong e-commerce 3 years ago later.

Internet frenzy in Asia

1999: Asian start-up adapted US internet business as model.

Contrarly to the steel market, e-commerce seems a Ð'«Ð' sexyÐ' Ð'» industry for the investors.

There are numerous challenges about developing a start-up in Asia:

The steel industry is the most conservative in the world and very slow to move to online trading

It is an unpopular and unwell-known industry with investors

The asian customers are really wary and are not able to work with Internet tools

Steel stock-holding have a low value-added and a low magin activity.

Decrease of economy due to Asian financial crisis.

Opportunities

Threats

IsteelAsia are precursors in B to B company to launch internet portal for steel trading in Asia. The others companies are late in e-commerce trading

Strong potential of steel industry in Asia

Asia is in full economic development

Steel is a Ð'«Ð' tantalizing fundamentalÐ' Ð'» (in Asia particularly)

1998: 3 of the 6 leading steel-making countries came from Asia

Development of Internet in Asia

Participation of the middlemen in Asia to ad shipping and handling costs to end-users

IsteelAsia has alliances with well-known multinationals, it permits an positive weel-attested for the company

They diversify their products to reach more players .

Many IsteelAsia employees have no computer skills

The network relationship doesn't have enough knowledge concerning the using of computers to sell or buy steel: they may lost their current partnerships because they are reluctant

The supply chain and trading relations in Asia are complex (logistics and informations problems)

E-commerce is a long process in Asia

The middlemen in Asia didn't offer value-added services

Because of the diversification, the players may be confused in the products the company offers

The players don't know that the company offers others products because of the name Ð'«Ð' iSteelAsiaÐ' Ð'»..

There are many threats concerning the future. Indeed, as we said before, the diversification of the products may generate confusion in the players mind. Thus, at the beginning, the company proposed only steel, so the name of the company remind that. Consequently, there is a risk for the company to be not recognized like a p of others product ranges (plastic resins, sanitery wares and kitchen cabinets...). Also, because of the name of the company too, the players confused concerning the fact that it is a steel or a screen company.

Moreover, there is an other danger that the players don't manage or don't want to deal with this new e-commerce kind of trading and finally prefer to trade with tradionnal companies, and that the customers stay cagey of this system of trade. Indeed, the players may not trust new technologies or may not want to change their habits, or don't have enough knowledge to feel confident to deal with this kind of companies.

Eventually, the iSteelAsia have to worried about competitors, notably about US and Europe competitors (they are more advanced in e-commerce technology). So they have to all the time innovate and up-to-date their skills and knowledge to don't lost their market share.

Also, there is an other risk because of the Asian boom technologic. Indeed, there will be a lot of news local start-up, so a lot of news competitors on the market.

Besides, the news competitors should have better knowledge because they just graduated from graduate schools.

2) Describe what iSteelAsia offers to the market (use the value delivered to the customer Ð'«Ð' benefits/costsÐ' Ð'» framework) and more particularly the way through which iSteelAsia used e-commerce to offer more to the customer, compared to its previous, Ð'«Ð' tradionnalÐ' Ð'» operations.

IsteelAsia