Freemarkets Case Analysis

20 Pages 5027 Words

E-commerce marketplaces also have the ability to diffuse information more efficiently. Reducing asymmetric information in markets plays an important role in making them more efficient since it reduces the chance of market failure by reducing risk. For example, B2B exchanges often provide escrow and quality verification services in addition to dispersing information regarding buyer and seller reputations. Finally, transaction costs for both buyers and sellers are typically very low when conducted via e-commerce, which adds liquidity to markets and makes them more efficient.

Freemarkets is a leader in creating B2B online markets and providing
E-commerce technology and services for the procurement of industrial parts, raw materials, commodities and services. Freemarkets combines its proprietary technology platform with information on the procurement, or “sourcing” of direct materials, commodity-specific domain knowledge and services to deliver measurable savings to customers.

Freemarkets, however, faces several challenges if they are to retain their industry leadership position. This case analysis will document Freemarkets’ present situation, investigate the overall industry, discuss challenges and, opportunities, and provide recommended actions.

DESCRIPTION OF THE COMPANY

Glen Meakem founded FreeMarkets in Pittsburgh, Pennsylvania in 1995. The son of a corporate executive and stay-at-home mom, Meakem grew up in New York State. He has always been entrepreneurial. From the ages of 12 to 14, Meakem ran a profitable lawn care business. While attending Harvard Business School in 1990, Meakem, a U.S. Army Reserve engineer, volunteered to fight in the Gulf War.

After the war, Meakem returned to the career track. He finished his MBA and landed a job with consulting firm McKinsey & Co. An associate, he worked with companies engaged in industrial sourcing and commodities trading. It wasn’t a flashy job, but he gleaned...