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MVP.com
The Beginning
Benchmark Capital, a venture capital firm, is investing $150 million to create the largest eCommerce sporting goods business in the world—the Amazon.com of sporting goods. Sportsline, the largest retail sporting goods venue on the Internet is willing to sell them their domestic eCommerce operation for $100 million; $25 million in cash and the rest in stock. In addition, the spokesmen for the company will be three of the most famous athletes in North America: John Elway (football), Wayne Gretzy (hockey), and Michael Jordan (basketball). The company will be called MVP.com.
Having years of retail experience, you have been recruited as the President/CEO of the company. The rest of the management team is coming from a company called Big Edge, which was made up of executives from Anderson Consulting. Big Edge was also providing some ex-IT guys from Anderson who had previously built major systems for some of the biggest dot-comers.
Sportsline brought you a number of successful eCommerce businesses; including: a golf business, a tennis business, a sports memorabilia business, and a general sporting goods business. The total annual retail sales for Sportsline are approximately $40 million, with $24 million in the golf business alone. MVP.com will have operating businesses from the first day of operation. In addition, your starting out with over $100 million in operating cash.
All the pieces are in place. You’ve got the right concept, the spokesmen, the management, the business, and the technology expertise, and, most important, the money needed to form what should become the most successful on-line sporting goods business in the world.
Shortly after the official start of business, a meeting was held to demonstrate the technology put together by IT. While it was obviously a prototype, it was extremely well done and everyone was duly impressed. The demonstration convinced management that IT understood the processes necessary to run an effective eCommerce business.
While everything seems to be going great, you’ve become aware of some potential problems.
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The technical staff wants 12 weeks to put together the computer system needed to handle purchasing, sales, inventory, and distribution. You’d like it done in 6 weeks.
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Currently, Sportsline has different organizations and warehouses for all of its major businesses. Management believes this is unacceptable; it would be much more cost effective to run everything out of one warehouse. The new warehouse will be ready for occupancy in 6 weeks.
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The most successful business, the golf business, is being run by the original founder of the golf company Sportsline purchased. This is his only experience with online retail, and your management team believes that his operation, while having significant sales, is being run very inefficiently. To make matters worse, he is not cooperating, convinced that he knows as much or more about eCommerce than anyone else on the management team.
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In addition, your IT people don’t like the technology platform that is currently in place and they want their system up and running just as soon as it’s ready. Since they’ve done this many times before, they don’t see any problem with moving forward as soon as the new system is completed.
Your Challenges
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When should you bring the new computer system online?
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When should you begin distributing merchandise out of the new warehouse.
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What should you do about the general manager of the golf business?
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What are the reasons for each of your decisions?
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What assumptions have you made?