Chapter 12

1. Explain the differences between total B2B commerce, and B2B e-commerce.

Total B2B commerce describes all types of computer assisted, inter-firm trade.
B2B e-commerce specifically describes that portion of B2B commerce that uses the Internet to assist firms in buying and selling a variety of goods to each other.

5. Name and define the two methods of purchasing goods.

The two methods of purchasing goods are contract purchases and spot purchases. Contract purchases are long-term agreements to buy a specified amount of a product. There are pre-specified quality requirements and pre-specified terms. Spot purchases are for goods that meet the immediate needs of a firm. Indirect purchases are most often made on a spot purchase basis in a large marketplace that includes many suppliers.

10. Identify and briefly explain the anti-competitive possibilities inherent in Net marketplaces.

The anti-competitive possibilities inherent in Net marketplaces include:

         The possibility that they may provide some firms with an ideal platform to collude on pricing, market sharing, and market access. For example, in a Net marketplace owned by large industry players, owner-members could collude with one another on the prices they are willing to pay for inputs.

         The sharing of information in order to reach market-sharing agreements in which they divide the market up into segments and agree to produce only enough for their allocated segment.

         The coordination of a reduction in purchases, forcing the suppliers to sell their inputs below market prices.

         The restriction of market access if large industry players exclude smaller rivals, thus forcing them to pay higher prices for their inputs.

15. What are the barriers to the complete implementation of private industrial networks?

One barrier is that participating firms are required to share sensitive data with their business partners up and down the supply chain.
This is a huge corporate mindset change since what was previously considered proprietary and secret must now be shared. Furthermore, in the digital environment, it can be difficult to control the limits of this information sharing. Information that a firm willingly gives to its largest customer may wind up being shared with its closest competitor.

Other barriers include difficulties in integrating private industrial networks into existing ERP (enterprise resource planning) systems and EDI (electronic data interchange) networks. Most ERP systems were not designed initially to work with extranets or even to be particularly Internet compliant; they were based on business models that use entirely internal business processes.
Furthermore, changes in corporate culture and attitudes organization-wide and among all employees are essential so that a shifting of allegiances occurs from the firm to the wider trans-organizational enterprise. This is difficult to achieve. Employees must recognize that the firmís fate is intertwined with that of their suppliers and distributors. Suppliers in turn, must change how they manage and allocate resources because their own production is closely aligned with the demands of the private industrial network partners. A loss of independence among all participants in the supply and distribution chains occurs and this requires huge behavioral changes in individual organizations in order for their participation to reap the benefits of participation.

20. What is a cloud-based B2B platform and what advantages does it offer?

In cloud-based B2B systems, much of the expense of B2B systems is shifted from the firm to a B2B network provider, sometimes called a data hub or B2B platform. The cloud platform owner provides the computing and telecommunications capability; establishes connections with the firmís partners; provides software on-demand (software-as-a-service or SAAS) to connect the firmís systems to its partnersí systems; performs data coordination and cleaning; and manages data quality for all members. Network effects apply here: the cost of these tasks and capabilities is spread over all members, reducing costs for all. B2B network providers also provide communication environments and file storage services that allow partners to work together more closely, and to collaborate on improving the flow of goods and transactions. B2B network providers charge customers on a demand basis, rather than on a percentage of their transactionsí value, depending on their utilization of the network. Another advantage of cloud-based B2B systems is that, unlike traditional firm-based B2B systems, cloud-based B2B data networks can be implemented in short periods of time to respond to corporate mergers and rapidly changing markets.