Based on Arrow's financial statements, explain whether Express's 6% fee is justified. Express Parts, Inc. Express Parts,
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Based on Arrow's financial statements, explain whether Express's 6% fee is justified.
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Express Parts, Inc. Express Parts, Inc., was a new, independent distributor that developed an Internet-based trading system around a multi-distributor bulletin board. Express claimed that its search engine could quickly cross-reference equivalent parts from multiple manufacturers based either on part number or technical description and estimated that more than 50,000 OEMs throughout the United States would have access to the service. Express proposed that access to such a large market would enable A/S to increase sales at less than half the cost of doing so via its branch network. Express's program was to work as follows. 1. A/S's full list of available inventory and associated prices, transmitted to Express nightly, was to be combined with similar lists from a limited number of other distributors. 2. Express's customers would sign onto its service via the Internet and search by part number or description. Upon making a selection, a customer would view a screen displaying all products that matched the search criteria, together with prices and quantities available for shipment (individual distributors identified only by an arbitrary letter, not by name). (See Exhibit 6.) 3. A customer could select any supplier/distributor combination, enter the quantity desired, and click the mouse to place the order, which would instantly be transmitted to Express. Express would review the order, perform a credit check, and acknowledge accepted orders to the customer and route them electronically to the appropriate distributor. 4. Shippers appointed by Express would pick parts from the distributor and ship orders directly to customers, notifying Express electronically once the shipment had been made. Express then billed customers directly. 5. Payment, minus Express's fee of 6%, was made to distributors 30 days after orders shipped. Express Parts, Inc. Express Parts, Inc., was a new, independent distributor that developed an Internet-based trading system around a multi-distributor bulletin board. Express claimed that its search engine could quickly cross-reference equivalent parts from multiple manufacturers based either on part number or technical description and estimated that more than 50,000 OEMs throughout the United States would have access to the service. Express proposed that access to such a large market would enable A/S to increase sales at less than half the cost of doing so via its branch network. Express's program was to work as follows. 1. A/S's full list of available inventory and associated prices, transmitted to Express nightly, was to be combined with similar lists from a limited number of other distributors. 2. Express's customers would sign onto its service via the Internet and search by part number or description. Upon making a selection, a customer would view a screen displaying all products that matched the search criteria, together with prices and quantities available for shipment (individual distributors identified only by an arbitrary letter, not by name). (See Exhibit 6.) 3. A customer could select any supplier/distributor combination, enter the quantity desired, and click the mouse to place the order, which would instantly be transmitted to Express. Express would review the order, perform a credit check, and acknowledge accepted orders to the customer and route them electronically to the appropriate distributor. 4. Shippers appointed by Express would pick parts from the distributor and ship orders directly to customers, notifying Express electronically once the shipment had been made. Express then billed customers directly. 5. Payment, minus Express's fee of 6%, was made to distributors 30 days after orders shipped.
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Related Book For
Understanding Business Ethics
ISBN: 9781506303239
3rd Edition
Authors: Peter A. Stanwick, Sarah D. Stanwick
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