Free «Analyzing Exchange Organizations» Essay Sample

Aalsmeer Flower Auction firm is among the world’s top flower auctioning firms. This firm which is located in Netherlands is a central market place for buying and selling of flowers and other potted plants. Due to the threats of elimination from the market that AFA is facing, there is need to improve its information system and its strategic system. This has called for a proposition of modern information systems and information technology strategies. With effective management strategies, the information system strategy present applicable combination that is able to produce working results.

Overview of Aalsmeer Flower Auction

Aalsmeer Flower Auction (usually abbreviated as AFA) is a flower firm in Netherlands that offers market place to trade flowers and plants and all kinds of flowers and plants dealers.  For a very long time, this organization has been considered the largest in such kind of trade in Netherlands. This firm though faces threat of being eliminated from the market dominance due to emerging information technology trends being embraced by the rival firms. Among the threats to AFA dominance is the emergence of electronically driven markets within and outside the Dutch market. The AFA firm has fallen short of the requirements to determine the demand of the consumers so that they can match the consumer demand and their supply. It also emerged that growers, retailers and wholesalers are quickly embracing the emerging trend of technology leaving AFA behind. For success of this firm, a few things have to changed/put in place. The managing board has to strategize on the ways of satisfying the costumers via use of information technology.



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Benefits of Information system

Information system refers to the integrated use and management of technology to benefit the businesses. Information system development in any business is responsible for reduced expenditure in business and hence and hence efficiency in business. Being a large firm, AFA must embrace information technology/systems for the efficiency of its running to beat the threats that are posed by smaller firms that have embraced information technology in their systems. One of the benefits of the information technology in AFA is that it will enable them to switch from manual sales and marketing to e-commerce. E-commerce will ensure innovation, reduce the cost of transacting the flowers, strengthen AFA’s link with growers/suppliers and buyers. Through the information technology AFA will be able to improve on how they network and as such improve their market share. Because of the organized and systematic data as a result of information system, AFA are able to evaluate their strengths and weaknesses as a firm. This is due to the revenue reports and employee performance information which will subsequently push the firm to improve their operations and processes.

With the availability of costumer data and feedback information, AFA are able to align their business and regulate their purchase from the suppliers to avoid further losses. From the feedback information from the costumers and the rest of the industry players, AFA are able to able to perform a rather direct and far reaching marketing and promotional activities. With the information technology in place, the consumer behavior and buying trends are easily predicted by the sales and revenue information from the regions in which the company deals in.

AFA strategic system management

Strategic system of management is development of information system that implements every business strategy that is to be implemented in an organization. The aim of a strategic system is to give the implementing company competitive advantage over the competitors. The system is also developed in response to the corporate business initiative. The ideas basically come from business operators. They are then fed into the information systems to realize the technological capabilities resulting into profitable results. AFA needs to put in place some system strategy in order to implement their auction plans right. With the strategic systems in place, AFA should be able to link the business and computer systems for beneficial flower trade. With the right strategic systems, AFA can roll out new computer technology into the market. Such new capabilities are aimed at gaining competitive advantage over the competitors. For AFA to have successful strategic systems, the employees in the operational management and those in information systems have to brainstorm over the business problems and the solutions to the same. This blended team must realize that new competitive thrust is only possible if the computer methods are applied in new ways. AFA management board therefore need to consider bringing on board a brilliant team of information and computer scientists who are creative enough to come up with business oriented ideas. The systems must be understood by the managers and operators. It must also be remembered that this task requires communication and corporation trickling down from the top management to the last person who implements the task.

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In their strategic system, AFA should aim at having competitive advantage via;

  • Delivering the flowers at lower costs than their counterparts. This would basically mean efficient operational system to lower the over head cost of distributing the flowers.
  • Delivery flowers that are differentiated from the rest of the flowers supplied in the market. This can be achieved by creating unique and attractive packing designs.
  • Focusing on specified market target/segment. The idea here is to identify and establish market niches that have not been explored by the rest of the competitors.  Information technology is important in finding and maintaining the newly explored markets.
  • Innovation and invention of new flower patterns that is not common in the market. AFA can also come up with e-commerce technologies that are new in the market yet appealing to the costumers.

Management recommendations

A good management system that supports strategic systems should encourage contact of IT specialists with most of the offices. As opposed to the current AFA system where IT team only communicates up to operational directors, there should be links to commercial directors and general managements. The below chain is recommended for the introduced IS and IT strategy.

Porter five analysis of the AFA

In the Porter Five Forces Analysis of the AFA, the following are focused; the competitors, threat of entry of new market players, possibility of substitutes, the power of the buyers and the supplier power.

Threat of new entrants

AFA is the largest flower firm in Netherlands. This means that it has established capital base and assets. AFA therefore has little threat of new entries into the market as this industry requires firms to have large capital bases to start. This will be in terms of information technology, storage facilities, personnel and finances.   The threat of new entry is low.

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According to Siegel, competitors are best defined as rivals in a given industry. In the flower industry market there are far much more than just a few established competitors. This means that the more AFA feel complacent with their dominance in the market the more they face the threat of being eliminated by the rival firms. AFA should note that there is entry of electronic flower markets in the industry. The management therefore needs to move with speed to make changes and upgrade their information systems to avoid being eliminated from the market.


In terms of the product, there is basically little possibility of substitution since all the firms deal in flowers and potted plants. There is though the threats of substitution in the marketing strategies as other firms embrace various internet marketing strategies.

Buyer power

There is the emerging power of the buyers in the flower industry due to the merger of various retailers and buyers hence thy dictate the prices of the flowers and the potable plants. The survival of AFA is therefore threatened by this increased power of the buyers.

Supplier power

It is clear that the suppliers (growers) are largely switching to electronic market for supply of their goods. In some instances, growers have cartels which dictate the prices at which the flowers are supplied to the auction stores such as AFA.

Diagrammatically, Porter five analyses are presented below;



Threat of New Market Entrants


Due to relatively low capital requirements




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SWOT analysis of AFA

The SWOT analysis of AFA is best done using the table below;

Strength AFA is the top flower firm in Netherlands, and therefore in the world. It uses who-clock, a very efficient method for flower trading. The firm is also centrally positioned in the global market. Being in Netherlands, the firm has a wide access to technology and financial information. Finally, its pricing has been used as the world indicator prices.
Weaknesses AFA have poor technological application prompting the buyers and suppliers to physically present themselves in the auction hall. With the Dutch auction clock method, action prices do decrease in the course of the day. The firm is at times faced with high costs of production and operation. Due to the multiple handling of the flowers, there is the possibility of lower ratings and finally, the Value chain is under immense pressure.   
Opportunities Since the company is large and has the potential to acquire sophisticated systems, it can easily improve its information system. The old system can also be used to back up new system if it is put in place.
Threats The AFA auction rule tends to exclude growers and buyers who do not meet certain standards and as such much favor is on the growers. The AFA firm faces competition from other European firms in the market. There are also emergences of other auction firms that meet the grower’s demand. Mergers and acquisition of buyers and growers strengthen the buying and pricing power of the buyers and growers threatening the survival of AFA.


Recommendations to improve IS and IT strategy

Due to the diversity of information that AFA deals with, the information systems should be classified into groups before integration for final execution. There should be growers’ information systems which should deal exclusively with the interests and requirements and any other data related to the flower growers. The buyer’ information system on the other hand should be responsible for the management of data pertaining to the buyers. In order to coordinate the buyers and the growers, there is need for logistics information system to coordinate all these operations. There is then the internal information system which deals with the internal management of the daily operations of AFA, including the board deliberations (Barnes & Mieczkowska, 2003).

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            Each information system is based on the data originating from the AFA data integration. All the business processes must in turn be integrated together for the joint execution of the collected data deliberated on. According to Komada, Kaboyashi and Tamaki (2003), this is termed as Traverse integration. They also introduced the concept of longitudinal extension which is the indication of the extension of the managing function. For instance, the AFA information system management can brand the supplier data management as Supplier Management. This entails gathering of the registration information for suppliers. The buyers also had their management system branded as the Buyer Information Management.   In the integration of these information centers, there is an attempt to consider both the buyer and supplier’s wants, needs and even their behaviors in order to give them better services.

            In the information system architecture of this proposed information system, there should be three layers. These are the system layer information management, middle layer information management and the application layer. System layer includes the system hardware, software and middleware. The hardware has the server, network infrastructure and the storage. Software consists of database, the file system and the operation system. The middleware on the other hand consists of the web server, data middleware and the message middleware.  The middle layer system is usually the adopted Server/Browser model. It is supported on internet based technologies like the J2EE among others. Finally, the application layer includes all the applications on the AFA management execution. The information application layer should be designed in such a way that it integrates four multi-level structures. The four include the supplier information integration, buyer information integration, internal management information integration and the whole AFA information integration which integrates all the data for execution.

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Technology aspects recommended Applicability to AFA
Internet Internet provides new and creative ways of marketing/purchasing/supplying of products.  Internet must be efficient for e-business to be effective.
E-business E-business is the process of conducting business electronically using a computerized system.
E-commerce E-commerce narrows down to buying and selling of goods and services via the internet. AFA can apply this to enhance auctioning of flowers instead of having buyers and suppliers coming to the auction hall
Intranet Private network support for employees of a given organization. AFA employees require intranet as strategic information system and management depend so much on a networked employees for corporation and communication for understanding
Extranet In order to include on board small scale growers who don’t have elaborate information systems, extranet is necessary to allow buyers and growers access their information stored in the AFA databases


IT strategy in product sales

Using the above recommended IT aspects, AFA can narrow down on E-bay to help them auction their flowers and potted plants. Types of auctions that are recommended for AFA via e-bay are;

Auction type Application
Auction-style listing Using this method of e-bay auction, AFA allows the growers to offer their flowers/plants online for a given number of days. The AFA sets a reserve price for retailers and wholesalers. 
Fixed price format With this type of auction, AFA helps the growers to offer the flowers for sale at a fixed price. If retailers and wholesalers are comfortable with the fixed price, they win the auction immediately by electronically completing the deal.
Fixed price format but with best offer With this type of auction, AFA in their website allow the growers to display their flowers so before AFA sets the price for buyers.





The following payment methods are useful when e-commerce is involved;

PayPal Using this method, the buyers opens AFA account in the internet, click account tab, choose on one time payment before entering the amount they want to send to AFA. AFA can then send the money to the growers.
Direct debit Clicking on one time payment, one is given direction on how to send money to AFA.
Credit Card With this, one must have a cridet card with identification number. After opening the AFA account, one sends the money electronically to AFA who transfers the money to the growers in the right time.
Cheque This involves sending of cheques for debiting after the e-sales.


AFA system development strategy

In order to ensure constant development and maintenance of their IT system, AFA can use the following methods;

  Advantage Disadvantage Recommendations
Prototyping This is a fast and flexible method of system development. It improves the user participation and communication. With prototype method, difficulties are easily identified. Prototype may be void of methods to keep checks and balances. there is also lack of strictness in approval and control process. Since this is an experimental system that is cheap to evaluate, it is recommended for AFA which is just rolling out its new information system.
SSADM In order to cut cost, SSADM separates the logical and physical system. It also permits for one project to be planed and managed in a timeline.  This method is inflexible and slow due to the tight controls. In its development, there is excess documentation which makes it time consuming. Good for AFA as it focuses on analysis, feasibility and design aspects of development.
Waterfall method Systematic method where each stage is completed before the other. Each stage relies on information from previous stage. It is inflexible slow and expensive method of development. Due to the demand by this method to proceed to next with information from the other, it may not be the best for AFA.


Of the three system development methods, SSADM and Prototype are the best methods for AFA (as recommended above).

Management issues due to acquisition

AFA needs to be careful in their management as there could be weaknesses as a result of poor management. Due to possibility of acquisition of some IT firms to help improve AFA IS, the following must be checked;

Data protection Only authorized persons should access the data that is exclusive to the company. Personal data should also be protected via passwords.  
Disaster preparedness This is the readiness of AFA to deal with data risks and possibility of data hacking.
Security AFA must put in place techniques to ensure that stored or transferred data cannot be stolen.
Resistance to change This happens when IT and IS that the AFA employees are not familiar with are introduced. AFA needs to take their employees through rigorous training as a result of this new IT and IS.


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