Submarino.

com
Case Analysis

By Group Q2, Section 3

Q1. How can Submarino provide value to its stakeholders?

Submarino is a pure-play e-retailer company. Customers, Investors,

Employees and Suppliers can be regarded as the concerned stakeholders.
In this regard, they can deliver value as follows
Customers:
The end goal of delivering value to a customer would be through the
service provided which would result in delight rather than just meeting
expectations. This can be achieved in the by

Variety of products
Customer support
On time delivery
Convenient payment options
Ease of search
Gift wrapping options

Investors:
Investors are primarily concerned with the associated profits that the firm
generates through its operations. Profits being the end goal is the major
part, the means of achieving this through efficient and credible operations
would be the minor part. Fulfilling these objectives a company can deliver
value to its stakeholders.

On time business disclosures

Efficiency in operations
High rate of return

Employees:
Employees form an integral part of any organisation. They are the
deciding factor when it comes to the success or failure of any company.
These factors contribute towards adding value to its employees

Industry standard pay

Work satisfaction and talent recognition

Adopting system integration between order management and

warehouse inventory.
Implementation of ERP systems in back-end office work to improve
their efficiency.
Training for employees which would enable growth and career
progression.

Q2. How and when should Submarino return value to its

investors/owners?
Submarino largely relies on funding from investors as it is not publicly
listed. Going by their projections, Submarino should reach the sales mark
of $120 million before it achieves profitability. So they should wait till
break even before providing returns to their investors/owners. First they
have to streamline their operations in order to tackle the high operating
costs associated with their business in Portugal and Spain. They can also
think of other strategies which could help them fulfil their objectives of
reaching profitability. Achieving breakeven is not the only way by which a
company can return value to its investors, building a loyal customer base,
brand image and credibility in operations can all increase the market
value of the company and therefore return value to its investors.
Q3. Submarino should modify its operating budget for 2001 in the
following ways
1. Invest more in the Latin American countries and focus on expansion
since its currently doing good.
2. Increase marketing expenditure or exit these markets of Portugal
and Argentina as Gross margin of Portugal and Argentina is the
lowest among all of the countries where the company is operating.
3. In Spain, the competition is intense in this space. So, the company
should market aggressively to become the market leader.
4. The Company can try and reduce its operating costs. The inventory
model can be completely outsourced. This will reduce the inventory
and warehouse cost.
5. Invest in logistics and telecommunications to improve the fulfilment
rate which is currently at 75-85%
6. Select appropriate marketing channels to achieve a satisfactory
ROI. Currently only 17% of the revenue is generated through online
portals.
7. Implement ERP for inventory and order management systems
Q4. What advice would you give to Antonio and other senior executives
at Submarino in early 2001?
We would advise Antonio and other Senior Executives at Submarino on the 4E
strategy.

Enhance
Marketing offers
Dynamically updated web content
Customer service and fulfilment
Expand
Product offerings

Focus on high margin products

Exit
Spain and Portugal Markets
Extend
Auction Service in C2C markets
Adopt exchange business model

The team can concentrate on the following aspects:

Marketing campaign which targets mobile phone users

Enhance its current CRM program

Go for ERP implementation and undertake the following steps to ascertain

Submarino has achieved positive technological benefits:

Logistics benchmarking with competitors like amazon and MSN

Inventory control benchmark
Benchmark turnaround rates of back office operations