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B2B Strategies and Implementation


B2B Strategies and Implementation Developing a B- Web INBS 510 B2B Module References Tapscott, Ticoll, Lowy. Digital Capital: Harnessing the Power of the Business Webs. – PowerPoint PPT presentation

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Title: B2B Strategies and Implementation

B2B Strategies and Implementation
  • Developing a B- Web
  • INBS 510
  • B2B Module

  • Tapscott, Ticoll, Lowy. Digital Capital
    Harnessing the Power of the Business Webs.
    Harvard Business School Press. 2000.
  • Fingar, Kumar, Sharma. Enterprise E-Commerce.
    Meghan-Kiffer Press.2000
  • Turban, Lee, King, Chung. Electronic Commerce.
    Prentice Hall, 2002
  • Siegel, 2000.

  • www.chemconnect.com th
  • ChemConnect uses a B2C business model where
    customers look for
  • Lowest price
  • Fast shipment
  • Good return policy
  • Helpful customer servicee leading online
    chemical and plastics global marketplace.
  • http//www.chemconnect.com/case.html

ChemConnect Covisint (cont.)
  • ChemConnectworld chemical exchange
  • Provides free membership in trading marketplaces
    and information portals
  • Public exchange floor for anonymous bids
  • Commodities floor for buying and exchanging
  • Corporate trading roomsprivate online auctions
  • Up-to-the-minute market information
  • Large electronic catalog
  • Independent intermediary

ChemConnect Covisint (cont.)
  • Covisinte-market of automotive industry
  • B2B integrated buy-side marketplace
  • General Motors
  • Ford
  • DaimlerChrysler
  • Entire industry gains
  • Lower costs
  • Easier business practices
  • Increased efficiency

ChemConnect Covisint (cont.)
  • Covisint (cont.)
  • Co stands for
  • Connectivity
  • Collaboration
  • Communication
  • Vis stands for visibility provided by the
  • Int stands for integrated solutions

ChemConnect Covisint (cont.)
  • Covisint (cont.)
  • Collaborative commerce
  • Facilitate product design
  • Enable procurement process
  • Provide broad marketplace of buyers and suppliers
  • Vertical consortia trading exchange
  • Few large buyers
  • Many sellers (suppliers to the industry)

Gains and Risks in B2B exchanges
  • Buyers
  • Sellers
  • p.269 Turban for a list

Managing Exchanges
  • Revenue models
  • Transaction fees
  • Fee for service
  • Membership fees
  • Advertisement fees
  • Networks of exchanges
  • Centralized management
  • Finding a CEO and independent management team

Critical Success Factors
  • Early liquidity
  • Liquidity refers to volume of business conducted
  • Businesss chance of survival is best when
    liquidity is achieved early
  • Right owners
  • Partner with companies that can bring liquidity
    to the exchange
  • Best owner may be intermediary that can push both
    buyers and sellers

Critical Success Factors (cont.)
  • Right governance
  • Good management and fair /effective operations
    and rules are critical
  • Governance provides
  • The rules for the exchange
  • Minimized conflicts
  • Decision making support
  • Good management induces necessary liquidity

Critical Success Factors (cont.)
  • Openness
  • Exchanges must be open to all from
  • Organizational point of view
  • Technical point of view
  • Open standards require
  • Commitment by all involved
  • Universal agreement on the standards
  • Using the wrong standards can hurt the exchange

Critical Success Factors (cont.)
  • Full range of services
  • Participants are attracted by an exchange that
    helps cut costs
  • Exchanges team up with banks, logistic services
    and IT companies to help
  • Importance of domain expertise
  • Market makers need an in-depth understanding of
  • The industry
  • Business processes inherent in the industry
  • Knowledge of industry structure
  • Government and policy stipulations

Critical Success Factors (cont.)
  • Targeting inefficient industry processes
  • Contribute to increased costs and time delays
  • Vertical exchanges can add value
  • Targeting right industries
  • Large base of transactions
  • Many fragmented buyers and sellers
  • Difficulties bringing together buyers and sellers
  • High vendor and product search/comparison costs
  • Strong pressure to cut expenses

Critical Success Factors (cont.)
  • Brand building is critical
  • Increase switching costs by adding features and
  • Invest in
  • Gaining brand awareness
  • Attracting businesses to exchange
  • Customer retention

Critical Success Factors (cont.)
  • Exploiting economics of scope
  • Value-added services make exchange compelling
  • Industry news
  • Expert advice
  • Detailed product specification sheets
  • Adjacent services
  • Banks and financial information providers
  • Identification supported by sophisticated digital
    certificate architecture

Critical Success Factors (cont.)
Choice of business/revenue models
  • Critical mass of users will garner more
    value-added services
  • Auction services
  • Financial services
  • Business reporting
  • Data mining services
  • Garner diverse and multiple revenue streams
  • Software licensing
  • Advertising
  • Sponsorship

Critical Success Factors (cont.)
  • Blending content, community, and commerce
  • Content and community perspectivestimulate
  • EC transaction perspectivecreates higher level
    of customer stickiness
  • Managing channel conflict
  • Hostile phase as buyers interact directly with
    sellers (disintermediation of supply chain)
  • Short-term revenues impacted by backlash from
    existing fulfillment channels result in price
    erosion affecting medium-term profitability

Shared Vision Inter-enterprise
  • Clear vision
  • Common direction, focus
  • Personal, team, organization
  • Motivate learning
  • Peter Senges 5th discipline
  • General systems learning
  • Big picture view
  • If it aint broke, break it
  • Ask the following questions
  • Peter Drucker- a knowledgeable worker is the
    greatest single asset
  • Hyperarchy versus hierarchy

The Questions to ask
  • What can we do now that we couldnt do before the
  • Who is the current and future e-commerce
  • What can and should we outsource?
  • How can we add value to our present and future
  • How do we design a value chain?
  • Should we cannibalize our present business?
  • How should we reintermediate?

More Questions
  • What roles should we play standalone web site,
    aggregator, Open Market, supply chain portal?
  • What competitive threats do we face?
  • What is the readiness of our trading partners?
  • How do our pricing policies change?
  • How do we create or play a leading role in
    communities-of interest?

And more still.
  • Should we create niche portals that may host our
  • What organizational and ownership forms should
    we create?
  • What are the people and technology requirements
    of the new architecture?
  • How do we bring more buyers together
    electronically and keep them there?

Now analze the gap
  • Answers derived from 2 perspectives
  • Could be
  • As is
  • Analyze the gap
  • Eureka!!
  • Gap revealed
  • People, processes and technology to implement
  • A strategic plan emerges

The Strategic Plan
  1. Conduct necessary education and training
  2. Review current distribution and supply chain
  3. Speed up, shrink, or virtualize the value chain
  4. Wholesalers, distributors, retailers? Are they
  5. Understand the expectations of your customers and

The Strategic Plan
  • 4. Reevaluate your products and services
  • 5. HR demands new role
  • New policies
  • New jobs
  • 6. Extend your current systems to the outside
  • Online links
  • Backend links- extranets
  • 7.track competitors and market shares

The Strategic Plan
  • 8. Develop a Web-Centric Marketing Strategy
  • 9. Participate in the creation and Development of
    Virtual Marketplaces
  • 10. EB Management Style
  • Mougayar, Opening Digital Markets. New York
    McGraw Hill, 1998

New Roles and Responsibilities
  • E-business program manager
  • Bridge tech and business divide
  • Enterprise architect
  • Chief architect and coordinate work info,
    infrastructure and application architects
  • Design
  • Business and Information Architects
  • Create a application neutral models

More roles
  • Infrastructure architects
  • Identify technical infrastructure
  • Application architects
  • They guide solutions development in blending the
    business models with the infrastructure services
    needed to implement them in a platform
  • Solution developers
  • Assemble business solutions from components
  • Use integrated development Environments
  • Configure the ERP
  • Ranks of object oriented developers

And more still
  • Component developers
  • Masters of component technology
  • Progamming in Java, C
  • Modeling in UML and XMI
  • Platforms- Cobra, DCOM and EJB
  • Human Factor Engineers
  • GUI
  • Extremely important more than ever before
  • HCI- Human Computer Interaction
  • Read Donald Normans Design of Everyday Things
  • www.uie.com

Competitive Strategies
  • Frontal assault
  • Amazon vs Barnes and Noble
  • Toys R Us vs E-Toys
  • Flanking Maneuver
  • Attacking a part of market that is weak- niche
  • ETrade competing against major stock brokerage
  • Virtual Vineyards

More competitive strategies
  • Raise structural barriers
  • Block challengers logical avenues of attack
  • Cisco, FedEx and Ebay, DELL
  • Lower the inducement to attack
  • Reduce challengers expectations of future
    profits in the industry
  • www.buycomp.com lowest price on earth

Cooperative Strategies
  • Joint venture- cooperative activity formed by
    separate organizations- preserving autonomy
  • Combine different strengths to achieve value
  • Virtual corporation
  • Value chain partnership
  • Long term arrangement- mutual advantage
  • FedEx as mentioned previously does this with

Web Corporations
  • The confluence of widespread Internet use,
    emerging standards, and the economic crunch may
    hasten the advent of the Web corporation, also
    known as the virtual corporation.
  • A Web corporation "is composed of temporary
    collaborating partnerships for the purpose of
    creating one particular product or service,"
    according to IDC Analyst Gisela Wilson.
  • IDC- article related to Web Corporations

(No Transcript)
Who are the Business-Webs?http//www.digital4sigh
  • Where Corporation embodied capital in the
    industrial age
  • B-web does the same in the digital economy
  • interconnected, fluid sets of contributors
    coming together to create value for customers and
    wealth for shareholders
  • each participant focuses on a limited set of
    core competencies inventing new value
  • A system of that use the Internet for primary
    communications and transactions

So who are they?
  • MP3
  • Microsoft
  • IBM
  • Oracle
  • Amazon
  • Travelocity
  • Etc

Features of B-Webs
  1. Internet is infrastructure
  2. Value proposition innovation i.e. MP3
  3. Multi-enterprise capability --machine- partnering
  • 4. 5 classes of participants
  • Customers- receive and contribute
  • Context providers- interface
  • Content providers- forms of value
  • Commerce service providers- enable flow
  • Infrastructure providers-deliver

More features of B-Webs
  • 5. Coopetition- cooperate and compete
  • 6. Customer-centricity- customer value
  • Context reigns- choreographs
  • Rules and standards
  • Bathed in knowledge
  • There are corollaries
  • Uncharted territory
  • Potential for high returns
  • Customers have more power than ever before
  • Disaggregation leads to disintermediation and
  • B-web is a revolution not a tea party

Five Types of B-Webs
  • Agora
  • Theme- Dynamic pricing
  • Value-Liquidity converting goods into a
    desirable price
  • Customer is a market player
  • Timing and market intelligence
  • Examples
  • Ebay
  • Priceline
  • FreeMarkets
  • Aggregation
  • Theme- selection and convenience
  • Value-optimization of selection, organization,
    price, convenience
  • Customer is the buyer
  • Know market segments, supplier offerings and
    fulfillment factors
  • Examples
  • Amazon
  • HomeAdvisor
  • ETrade
  • Travelocity

B-web types
  • Value Chain
  • Process integration theme
  • Value- to design and deliver an integrated
    process or service
  • The customer is the value driver
  • Innovation and supply chain management are key
  • Examples
  • Cisco
  • Dell
  • GM
  • Bidcom
  • Alliance
  • Theme is creativity
  • Goal shared across a community of contributors
  • The customer is a contributor
  • Focus on community., creativity and standards and
  • Examples
  • AmericaOnline
  • Linux
  • MP3
  • Wintel

One more b-web type
  • Distributive Network
  • Theme is allocation and distribution
  • Value is to facilitate the exchange and delivery
    of information, goods and services
  • Customer is sender/recipient
  • Focus is network optimization
  • Examples
  • ATT- all telcoms
  • UPS
  • Well Fargo
  • Enron

Six Steps to create B-Web strategy
  • 1. Describe the current value proposition from
    the customers point of view that is why does
    this system exist
  • Who are the end customers as opposed to
    intermediary customers of your products and
  • What products/services are provided to its
  • What is the value proposition?
  • What are the strengths and weaknesses from an
    end-customers perspective? Who delivers more
    value and how?

Value Proposition DescriptionSWOT
Customers Example Products Services Value Proposition Strengths Weaknesses
Retail investors Use of personal broker Advice Research Buy/sell advice Transactions Portfolio mgmt education Counseling Matching choices preferences Quality Personal service Personalized advice and attention Hand holding Quality Professional mgmt Costs Restricted hours Inconsistent quality Limited access No control Conflict of interest Tapscott, 2000
Six Steps continued
  • 2. Disaggregate
  • Identifies the entities that contribute to the
    total value creation system
  • End customer
  • Context provider
  • Content provider
  • Commerce services provider
  • Infrastructure provider

Disaggregation Analysis
Who What they contribute? How? Weaknesses
End customers Context providers Content providers Commerce service providers Infrastructure providers
Six Steps continued..
  • 3. Envision B-web enabled value
  • human advisors
  • Automated alerts- programmed by thresholds
  • Tools
  • Easy linkages wireless, intelligent agents
  • Communities- forums, chat,
  • Virtual advisors- decision support, scenarios
  • Analysis tools
  • Tracking tools

Six steps continued again
  • 4. Reaggregate
  • identify new value contributions
  • Expect reintermediation
  • Technology improvement
  • Identify and engage best for outsourcing

Six steps only one more
  • 5. Prepare a value map
  • Tangible benefits- goods, services, money,
    knowledge if is part of a product.
  • Knowledge- strategic information, planning,
    process and technical knowledge
  • Intangible benefits- brand community, loyalty,
    image enhancements

Reaggregation as a B-Web
Who What will they contribute? How? Key success factors
End customers Context providers Content providers Commerce service providers Infrastructure providers
Finally Step Six is the B-Web Mix
  • Find the right mix for your design
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