RecommendationReject Express's proposal. Prepare for competition from Express by launching an aggressive marketing campaign to match Express' price in the short term. Maintain and improve gross margin on LOW sales by leveraging strong supplier relationship to achieve lowest price. Continue to improve value-added content, short delivery times and inventory management as the main company values. Aggressively invest in R&D to provide online reservation and ordering system to further improve customers' time-to-market and facilitate LOW sales ordering; providing the customer with an “efficient, low-cost, one-stop-shop” experience that will differentiate A/S from its competitors. Focus on VA sales and improve service, constantly increase the sales volume of VA content. SupportValues ​​of Arrow/Schweber (A/S): Being the subsidiary of the No.1 distributor of electronic parts company Arrow Electronic, A/S is able to provide customers with low-cost electronic parts and system design solution added value. A/S also creates demand and provides inventory reserve to suppliers. The Customer benefits from low-cost parts A/S, technical support and short delivery times. And suppliers benefit from A/S for hassle-free sales. The Express Internet Commerce service creates an additional layer in the existing value chain (Figure 1). Express allows A/S to have the ability to sell products to potential customers. And customers can place orders from different distributors. But it is questionable whether this business model is useful to the customer, especially small OEMs and CMs. Although transactional customers are price sensitive, time to market is also essential for them. They prefer to place the entire order within one company to ensure a short delivery time. Under these circumstances, jumping on the Express boat is not a wise decision for A/S.VA Business--Key business for A/S: Among A/S's overall business, VA sales increase by 2 % in 1977 to 62%. % in 1996, and it aims to reach 80% in 2000. Although the VA gross margin is only 10-15%, it is the key activity for A/S to create demand. For example, one vendor, Altera, sells 80% of the PLD to its two distributors due to the value-added programming required by individual customers. Suppliers rely on the distributor to generate demand. In return, they offer A/S: price protection and limited return privileges, warranties not available to others, and control prices by offering discounts. Due to the importance of the VA activity, it has evolved from a simple buffer stock allowing components to be modified to meet customer needs through programming or kitting of parts, to a virtual organization and order cycle management..