1. Describe the Webvan business model and then analyze it using the value chain and competitive forces models. What were the assumptions that drove this business model?
2. Describe the role of technology in the Webvan model. What Webvan problems could computer technology solve, and what could it not solve? Explain your answer
3. What management, organization, and technology factors were responsible for Webvan’s failure? Explain.
4. Critique the Webvan strategy and give your views as to whether this strategy is or can ever be viable. Write about what you would have done as the founder of Webvan that would have been different, and would have resulted in a different outcome
Description of Webvan business model.
Webvan business model was an online credit and delivery grocery business founded in the year 1996 but went bankrupt in the year 2001.Its headquarters were in Foster City, California. It delivered products to customers within a short period of request time. The ordering procedure began when clients put their orders on Webvan’s Web site. After completion of order, customers wisely choose an open 30-minute delivery time slot in any of the next seven days.
Assumptions that drove Webvan business model.
Assumptions that drove this business model were that management believed that they could succeed where others were using a different model. Also, the administration claimed that one distribution Midpoint could retail as many productions in one day as 18 metropolitan-area superstores.
Role of technology in Webvan model.
The role of technology in Webvan model was, to automatically increase online ordering and deliveries from and to their customers. After an order has been made it could be transmitted electronically to the relevant storeroom for completion Technology also enhanced the development of software’s that that could even compute the time vital for each part of order. The computer could solve some problems delay of deliveries, also, could enhance a high number of orders, notify that delivery is completed, ensured that Webvan could determine what to order based on both actual and expected demand. The problem of forcing Webvan suppliers into endowing in supply chain technology was not solved as it did little to automate its supply chain because it was too small.
Webvan strategy and views whether this model is or can ever be viable.
Webvan strategy was to connect the power of the internet to deliver groceries to shoppers. A strategy Webvan applied made enormous bets on internet capability to change customer’s manners. The strategy made the company use vast sums trying to build a product and a customer base. My views that whether this plan could be feasible are that it cannot be. The reason as to why am saying it cannot, it is because Webvan didn’t use their available brand and consumers to drive its operational business.
Factors that led to failure of Webvan.
Management factor that led to its misfortune was, it claimed that one delivery channel could retail as many products in a day as compared to 18 metropolitan-area supermarkets, as the broader the distributions channel, the higher the amount of sale.
Organization factor leading to its failure, wrong target audience. In this case, the audience targeted was not selected to be price insensitive. Those customers going for whole food are more price insensitive as they believe they are getting the high-quality product, so price matters less.
In conclusion, According, to Webvan model could have tried not to significantly rely on extremely sophisticated, highly automated systems that fail now and then, also, should have employed their available brands and customers to drive its business