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 BAS sales by leveraging strong supplier relationship to achieve the lowest price. Continue to improve value-added content, short delivery times and inventory management as the company's core values. Aggressively invest in research and development to provide an online booking and ordering system to further improve customer time-to-market and facilitate BAS sales ordering; provide an “efficient, low-cost, one-stop shop” customer 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 branch of the distributor n. 1 electronic component company Arrow Electronic, A/S can provide customers with low-priced electronic components and value-added system design solutions. A/S also creates demand and provides inventory buffer for suppliers. The customer benefits from A/S low-cost parts, technical support and short delivery times. And suppliers benefit from hassle-free sales. The Internet Express commerce service creates an additional layer in the existing value chain (Figure 1). Express allows A/S to have the opportunity to sell products to potential customers. And customers can place orders on different distributors. But it is questionable whether this business model is valuable to the customer, especially for small OEMs and CMs. While transactional customers are price sensitive, time to market is also critical for them. They prefer to place the entire order in-house to ensure short delivery times. Under these circumstances, jumping on the Express ship is not a wise decision for A/S.VA Business--Key Business for A/S: Among A/S's overall business, VA sales increase from 2% in 1977 to 62 % in 1996 and aims to grow to 80% in 2000. Although VA gross margin is only 10-15%, it is the key business for A/S to create demand. For example, one of the suppliers, Altera, sells 80% of PLD to its two distributors because value-added programming is requested by individual customers. Suppliers rely on the distributor to generate demand. In exchange, they offer A/S: limited price protection and return privileges, warranties not available to others, and price control by providing discounts. Given the importance of the VA business, it has evolved from a simple inventory buffer to modify components to meet customer needs by programming or equipping parts, to virtual staging and order cycle management.