Business to Business - Assignment Example

?Business to Business Table of Contents Introduction 3 Relevant Literature 4 Discussion 10 Suggestions for future research 12 Conclusion 13 Reference14 Bibliography 15 Introduction Trade or business has always been one of the vital factors that have regulated the growth and development of any civilization. It has not only helped in the advancement of civilization but also been instrumental in the process of globalization. However, with the passage of time, the process of globalization and modernization has brought significant changes in the social, cultural and economic aspects of human race. The most significant change can be observed in the field of technology which has dramatically altered and influenced the business activities1. The process of globalization and modernization has made the global business environment very attractive with business organizations being able to access overseas markets with least constraints compared to earlier times. However, on the other hand, due to globalization, the global business environment has become much more competitive with the introduction of free trade policies. . In this regard, Hope and Maeleng have identified free trade policy as a “competition-enhancing device”2. In order to cope with this increase in competition, business organizations are constantly trying to bring in a number of improvements in their business activities and hence, they clearly identify the importance of business activities and associated stakeholders. Business related transactions can happen between any two individuals, or government and non-government organization. In this age of technological advancements, business organizations are trying to maintain transactions in electronic medium. The use of internet backed technologies like e-commerce has revolutionized all types of business transactions, be it business to business or business to customer transactions3. Relevant Literature In the post-modern business scenario, business models have been transformed with the changing nature of the business environment. In order to survive in the market, business organizations are constantly trying to incorporate technological advancement in their business process. E-commerce and e-business are two most vital technological advancements in this field. There are a number of reasons that has initialized such technological advancements. Barbara Parker has identifies major factors that brought such technological changes in the business process. Some of them are like increased process of innovation through research and developments; necessity of developed working process and lifestyles; demand for better interconnectivity in global market etc4. Due to these initiatives, the business organizations are currently enjoying better leverage for growth and development. The nature of the business model in an organization depends on the nature of commercial activities that they are engaged in. A business to business transaction is one in which a business organization interacts with another business organization. Example, in the case of manufacturers of automobile parts, they will be dealing with other automobile manufacturers who directly supply finished products to the market for sales... However, the company that buys automobile parts from another company and delivers the final product to the customer, is engaged in both commercial transactions, business to business and business to consumers. The primary focus of this paper is on the business to business commercial transaction and hence, the analysis and discussion aim to cater the same. Many post-modern organizations are incorporating latest technologies to enhance the value of their business by offering better customer services. In the process of business to business transactions, technologies like e-business and e-commerce influence the value chain of the company as the traditional value chain transforms to a new upgraded one. Value chain of a business includes its primary and supporting activities. The incorporation of e-business technologies in business to business transaction, enhances the entire value chain process.. Weijun Wang has identified influence of business-to-business e-business on major actions of a value chain and this has been presented in the table below. Figure 1: Influence of B2B E-business5 The above table efficiently points at the remarkable changes that the implementation of technologies on business to business transaction has brought. It is for this reason that it has become one of the major areas for study and a number of researches have been conducted to find out the influence of such technologies on the business to business transactions and in increasing the value of organization. . Since the area of research in this field is quite vast, most of the scholars and researchers have tried to focus on specific areas. In the competitive business environment, business to business e-commerce is being implemented in different types of business and industries. However, a number of dominant factors are needed to be taken into considerations for the successful implementation of business to business e-commerce. In this regard, Nicole Leroux, Max S. Wortman Jr. and Eric D. Mathias (2001) have tried to indentify major dominant factors that influence the growth of business to business e-commerce in the agricultural industry. In this process, they have focused on three major criterions that have impacted the business to business e-commerce. These three major factors are the industry consolidation, product complexity and nature of the commercial transaction6. Each of these factors play a very specific role and a number of strategic options must be taken into consideration while aiming to improve business to business transaction that are backed by e-commerce technology. Authors have stressed that agricultural businesses are facing challenges in their business to business transaction backed by e-commerce. The effective implementation of e-commerce in business to business transactions requires a close understanding of the company’s organizational development, market situation and also the characteristics of the industry. These three aspects form the basis for the strategic options and they are basically influenced by the dominating factors which have been stated earlier (industry consolidation, product complexity and nature of the commercial transaction). This study has find out that the nature of competition is changing and competitors are trying to strengthen their value chain especially the supply chain management. Hence, they combine the supply chain management with physical exchanges and electronic data interchanges. In this process, the business to business e-commerce transaction is a major tool offering better solution. Therefore, for successful implementations and effective results, agricultural firms must take the dominating factors into account7. Transaction cost is a vital factor determining the sustainable competitive advantages and business to business e-commerce is one the dominating factors that influence the transaction cost. Luis Garicano and Steven N. Kaplan have researched on the influence of business to business e-commerce on transaction cost. They have identified and separated the transaction costs as motivation costs and coordination costs. The authors were aware of the influence of business to business e-commerce on transaction cost that determines the value of business but their primary aim was to find out how the transaction costs change due to implementation of business to business e-commerce. The study dealt with automobile auction sector and data was collected from one of the leading internet-based auction firm, Autodaq. The research results have disclosed that business to business e-commerce helps to improve the market benefits and transaction benefits. The researchers found that internet based business to business transactions do not have any kind of negative impact on selection costs. On the other hand, in case of transaction cost, they have found that the direct change in the transaction cost downplays the importance of business to business e-commerce efficiencies. However, they also identified the reason behind this as the participants in the transactions often change their behaviors for better efficiencies8. For an effective business to business e-commerce implementation, the first priority should the development of a favorable business model. Many scholars have analyzed the weaknesses of the current business model used by organizations and have tried to develop a suitable one. Among the business models offered by researcher, the ‘monitored–nested model’ (MNM) developed by Kuechler, Vaishnavi and Kuechler is quite popular. They have developing this particular business model for supporting the optimization of “business-to-business e-commerce relationships”9. Kuechler, Vaishnavi and Kuechler have identified that the basic business to business e-commerce transaction which is via interoperating processes suffers from certain weaknesses that does not make it possible to achieve the optimal efficiency. The following figure shows the basic process used by most of the organizations. Figure 2: Basic and optimized order fulfillment via interoperating processes10 For the betterment, the above process must be restructured and for doing that some major information is required like contractors’ location, communicational format, performance of service in workflow etc. On the other hand, MNM model is helpful in simplifying complexities that exists in the basic process and is also flexible, fast and better monitored. The authors have also explained it with example of business to business e-commerce transaction between Wal-Mart and Procter & Gamble where latter monitors the sales-tracking workflow of the former. This has been presented in following table. Figure 3: MNM optimized transaction: Procter & Gamble monitors Wal-Mart’s sales-tracking workflow11 The overall study has shown that basic interoperability model is not helpful in supporting the entire optimization process; whereas, “the monitored–nested model of work-flow interoperability” developed by the authors “enables considerable flexibility and is sufficient for the proposed benchmark scenarios”11. The companies with business to business e-commerce also face a number of issues related to the proper IT investments. Lin et al (2006) have analyzed this specific issue by comparing the organization from the developed countries Australia, and UK. These organizations are unable to gain greater benefits in comparison to huge IT investment made by them. Researchers identified that the primary weakness in this case is improper evaluation and control system adopted by the top level managements. On the basis of their findings they have recommended that companies should incorporate the IT evaluation process as integral part of strategic management and this process should be very systematic and planned12. Nolan and McFarlan (2005) have offered a model for better evaluation process which is known as IT Strategic Impact Grid. This grid model is useful in identifying the necessity of IT for the betterment of operational process and better products and service offerings13. Discussion The above brief investigation on the business to business e-commerce transaction backed by the internet based technology, e-commerce, is meant to create business value by various means. The above discussion reveals that business to business e-commerce mainly influences the value chain of a business that consists of all the necessary primary and supporting activities. Most the researchers have found that there is a very close relationship between the business to business e-commerce transaction and higher efficiency. However, there are also certain groups of scholars who have questioned the effectiveness of business to business e-commerce in enhancing the supply chain activities. Their questions raise a critical issue and point mainly atunwise investment, lack of proper IT investment evaluation, improper business models etc14. Due to these critical issues, business to business e-commerce has not been able to offer optimal results for enhancing business value. The above discussions have influenced all these aspects that have been already analyzed and discussed previously. Before introducing any new technology or process, the primary task should be to analyze the external and internal environment. The dominating factors of each industry influence the effectiveness of business to business e-commerce and these factors vary from one organization to another. Each organization must be assessed according to three major areas that include industry consolidation, types of commercial transaction and product complexity. The organizations that are engaged in business to business transaction and want to develop, it is very necessary that they focus on e-market and necessary infrastructure which still remains the basis necessity. These two basic factors should be included in the suitable business model for business to business e-commerce15. Moreover, as suggested by Kuechler, Vaishnavi and Kuechler that the prevailing interoperating processes used for business to business e-commerce should be restructured and there should be better communicational process and flexibility for better information. Similarly, Afsarmanesh, Rabelo, and Matos have argued that for business to business e-commerce, the organization must build a strong and advanced virtual enterprise which will in turn be helpful in trading between other infrastructure and IT infrastructure16. Suggestions for future research With increasing complexities in the global business world, business related activities have become a major area of study. The prime aim of this paper is to analyze the implementation of business to business e-commerce for enhancing business values. This paper has focused on the necessary criterion that must be incorporated for gaining optimal benefit from business to business e-commerce. It is hard to deny that technology based transaction system is not viable for the creation of business value. The major areas that must be considered for better outcome from the business to business e-commerce are proper business model, proper IT investment and its evolution etc. However, there are still major areas which have not been covered in this paper. Firstly, from the beginning of this paper it has been assumed that e-commerce strives to bring better business process and helps to increase business value but has not discussed the impact of business to business e-commerce on overall business value creation and other financial impacts. Moreover, the paper has also not focused on any specific industry rather it has discussed the main topic area with the reference to some of the industries. Hence, the future research can also be conducted on the field of specific requirements for specific industry in order to create better business value through this technology. Besides, consideration of human resource management in business to business e-commerce can also be an area for future research.. Conclusion This paper has presented investigation of previous literatures to analyze the necessary criterions for enhancing business value through business to business e-commerce. A number of journals have been reviewed and the recommendations offered by those papers have been analyzed. The study of the previous journals and research work has pointed out that efficacy of business to business transaction e-commerce depends on the effective implementation and assessment process. In the process, basic virtual business model is required and it must be established by considering the nature of the business and industry. Besides, the study has also focused on the lack of proper IT investment evaluation and considered it as a major issue that hampers the efficiencies of business to business e-commerce. . Reference Afsarmanesh, Hamideh., Rabelo, Ricardo J. and Matos, Luis Camarinha: “E-business and virtual enterprises: managing business-to-business cooperation”. Springer, 2001. Chopra, Sunil. and Darren Dougan, and Gareth Taylor. “e-Commerce Opportunities”. (May /June 2001) Supply Chain Management Review. http://www.kellogg.northwestern.edu/faculty/chopra/htm/research/scm0120ecommerce.pdf. Dave, Chaffey. “E-Business and E-Commerce Management”. Pearson Education India, 2008. Garicano, Luis. and Kaplan, Steven. N. “The Effects of Business to Business E-commerce on Transaction cost”. The Journal of Industrial Economics, Volume XLIX, Issue no 4. (December 2001). p.463-485. http://www.econ.jhu.edu/people/harrington/375/gk01.pdf. Hope, Einar. and Maeleng, Per. “Competition and trade policies: coherence or conflict”. Routledge, 1998. Khurana, Vijay Kumar. “Management of Technology & Innovation”. Ane Books Pvt Ltd, 2009. Kuechler, William., Vaishnavi, Vijay K. and Kuechler, David. “Supporting optimization of business-to-business e-commerce relationships”. Decision Support Systems 31 (2001). p.363–377. http://www.business.unr.edu/faculty/kuechler/cv/DSS.31.3.01.pdf. Leroux, Nicole., Wortman, Max. S., and Mathias, Eric. D. Dominant Factors impacting the development of business-to-business e-commerce in agriculture” International Food and Agribusiness Management Review 4 (2001) p.205-218. http://ageconsearch.umn.edu/bitstream/34473/1/04020205.pdf. Li, Minsung. and Shea, Raj. “Studying Business Models for E-Commerce from a Market Perspective”. (October 2007). Journal of Technology and Business. http://www.npu.edu/npu_highlights/rd_activities/NPU_Journal/07_journal/studying_shea.pdf. Lin, Chad et al. “An Investigation into Business-to-Business Electronic Commerce Organizations”. (February 2008). Journal of Research and Practice in Information Technology, Vol. 40, No. 1. http://www.jrpit.acs.org.au/jrpit/JRPITVolumes/JRPIT40/JRPIT40.1.3.pdf. Nolan, Richard. and McFarlan, F. Warren. “Information technology and the board of directors”. (2005). Harvard Business Review, 83(10): 96-107. http://www.qualified-audit-partners.be/user_files/ITforBoards/GVIT_Harvard_Business_Review-Nolan_Richard_-_McFarlan_Warren_Information_Technology_and_the_Board_of_Directors_2005%20%28Partial%29.pdf. Parker, Barbara. “Introduction to globalization and business: relationships and responsibilities”. 2nd ed. SAGE, 2005. Wang, Weijun. “Integration and innovation orient to e-society: seventh IFIP International Conference on E-Business, E-Services, and E-Society”. Springer, 2007. Bibliography Botha, J. “E-Commerce”. Juta and Company Ltd, 2004. Botha, J. Bothma, C. and Geldenhuys, Pieter. “Managing E-commerce in Business”. 2nd ed. Juta and Company Ltd, 2008. May, Paul. “The business of ecommerce: from corporate strategy to technology”. Cambridge University Press, 2000. Pinterits, Andreas. “Coordinating internet sales with other channels: a performance measurement model”. Gabler Verlag, 2009. Ratnasingam, Pauline. “Inter-organizational trust in business-to-business e-commerce”. dea Group Inc (IGI), 2003. Thierauf, Robert J. “Effective business intelligence systems”. Greenwood Publishing Group, 2001. Xu, Jun and Quaddus, Mohammed. “E-business in the 21st century: realities, challenges and outlook”. World Scientific, 2010. Read More