Xiameter

A. “What were the top 5 business model decisions that made Xiameter a success?” NB/. Business model decisions define WHAT Xiameters business/strategy is

Dow Corning performance has declined over the last few years largerly because of shifting consumer needs and changing market dynamics.

The top 5 business model decisions that made Xiameter a success was  

1. Web based platform: Xiameter adopted the web based model for the customers who demand high quantity but at low price i.e., price seeker customers. The decision of having a low cost platform offered Xiameter the first mover advantage in the chemical industry and this strategy not only helped in getting a wider customer base but also a loyal customer base
2. Dedicated traders: Forming a team of traders globally was the most critical aspect of the business model. The team will be helpful in a) educating customers and distributors on the need for differentiated business model and operations between Dow Corning and Xiameter b) driving sales not only for Xiameter but Dow Corning as well c) prevent product cannibalization
3. Self-service platform: With no human intervention, customers were offered the liberty to complete the order online and delivered in the shortest time possible (lead time of 7-20 days). The advantage was saving time for the customer’s interaction with the reps
4. Low price/no frills: The products were offered at a larger quantity with lower price and no technical support, this offered Xiameter multiple advantages a) cost of servicing the customer is low resulting in higher profit margins b) differentiate from core business (Dow Corning) and preventing product cannibalization c) attract customers with only large order purchases
5. Sharing the manufacturing sites with Dow corning: With the common supply chain platform, the company had significant cost benefit that provides economies of scale and resulting in higher capacity utilization

B. “What were the most potentially challenging implementation issues?

The potential challenging implementation issues were centered around shifting from traditional selling methods to web-based platform such as:

1. Alignment of senior management and core working team (supply chain, manufacturing and sales force team): As the company was progressing from traditional based model to web-based platform, this required consent and buy-in across stakeholders at every level especially the supply chain and manufacturing as well as specialized sales forces representing the six industries
2. Customers needs: As Xiameter model was entirely dependent on the web-based model, key concerns would be addressing customers needs and educating them about the potential advantages and the difference between the traditional selling platform and web-based platform
3. Product Quality and quantity: The business model was focused on delivering products through third-party suppliers and distributors. If such suppliers/distributors failed to meet the brand’s high standards and quality issues, then that would damage the brand reputation
4. Pricing model: As Xiameter based its web-based business model on “market driven prices”, the potential changes in the current demand and supply situation could trigger variations in the raw materials costs or sales volumes impacting profitability

C. What were the critical implementation decisions that made Xiameter a success?” NB/. Implementation decisions are about HOW Xiameter implemented change

The key implementation decisions that made Xiameter successful was

1. Internal education: To overcome the challenges of mis-alignment between teams, senior management was dedicated to explaining the dual brand strategy to all sites around the world, and personnel about the potential advantages and benefits of Xiameter. The result was positive as all sales personnel were aligned with the strategy and resulted in growth in top line
2. Setting up task forces: Dow Corning ensured to speedup up the process of business idea into reality by setting up dedicated task forces directly reporting to the CEO to ensure there is no delay in decision making. The task forces were given tight deadline to develop the platform and seal the first-mover advantage.
3. Product line: Xiameter offered products that were that are ordered only in high volumes attracting the price-seeker segment. It worked well as the product line was limited to about 350 common silicone compounds (out of more than 7,500). Such product offering was key to successful implementation of web-based model
4. Setting up dedicated traders: Forming a team of traders globally was the most critical aspect of the business model. The team will be helpful in a) educating customers and distributors on the need for differentiated business model and operations between Dow Corning and Xiameter b) driving sales not only for Xiameter but Dow Corning as well c) prevent product cannibalization
5. Incentive model: Re-alignment of sales targets post the dual brand strategy would help the sales personnel, who would face sales decline with introduction of Xiameter as sales of the 350 products would shift away impacting their performance incentives. Hence, the sales personnel of both the brands were offered incentives based on the adjusted performance targets

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