B2B Markets

1
B2B Markets

• Making Sense of Emerging
• Market Structures in B2B
• E-Commerce

2
The 12 market structures

• 3 distinctive categories
• Collaborative mechanisms
• Quasi-market mechanisms
• Neutral market mechanisms.

3
Benefits of B2B Sites

• Increased reach
• Reduction in transaction costs
• Deep customization capabilities.

4
Collaborative Market Mechanisms

• Market structures that fundamentally enable the
  market participants to gainfully exploit
  electronic integration.
• They are enabled when inter-organizational
  information systems are networked through
  Internet infrastructure for the purpose of
  sharing vital data of interest to the network
  members.

5
Collaborative Market Mechanisms

• These market structures
• Increase the collaboration capability of the
  network members
• Help in speeding up business processes
• Help eliminate duplication of resources
• Cut costs
• Improve responsiveness of the supply chain.

6
Quasi-Market Mechanisms

• One or a small group of either the buyers or the
  sellers will initiate the marketplace, host and
  monitor, enroll market participants, and moderate
  the market behavior if required.
• Buyer-centric marketplace, buyers take the
  initiative to host the market
• Forward (buyer-bid) auctions Buyers compete to
  obtain the business of the seller
• Seller-centric marketplace, sellers take the
  initiative to host the market
• Reverse (seller-bid) auctions Sellers compete to
  obtain the business of the buyer

7
Neutral Market Mechanisms

• Neutral market mechanisms include
• Exchanges
• Catalogue Aggregators
• Online Communities

8
Classification of B2B Market Structures

• Factors used for classification
• Fragmentation
• Asset specificity
• Complexity of product assessment
• Complexity of value assessment

9
Degree of Fragmentation

• The degree of fragmentation in a market is
  defined by the number of players and the
  geographical spread.
• When the degree of fragmentation is high on both
  the supplier and the buyer side, the market tends
  to be open and competitive.
• When there is less fragmentation, there is an
  opportunity for control-oriented mechanisms to
  characterize the market.
• When the degree of fragmentation is very low,
  organizations tend to benefit from collaborative
  practices as opposed to cont

10
Degree of Fragmentation
11
Asset Specificity

• Asset specificity is a function of the costs of
  setting up a relationship between two market
  participants in order to manage business
  transactions in a cost-effective manner.
• The costs arise because of specific resources
  (assets) that the two market participants have to
  deploy a priori in order to transact business.

12
Asset Specificity

• When asset specificity is high, market
  participants are better off by engaging in
  collaborative practices and superior coordination
  mechanisms.
• When the asset specificity is very low,
  competitive market practices and relationships
  based on price benefit both the buyers and the
  suppliers.
• In the medium asset specific situations,
  quasi-market mechanisms that blend both
  collaboration and competition are a viable
  alternative for the market participants.

13
Asset Specificity
14
Classification of Neutral Markets

• Neutral markets have poor market liquidity
  because
• Complexity of product descriptions the amount of
  information a buyer needs to understand the
  functional and technical specifications of the
  product or service.
• Complexity of value assessment the amount of
  information needed to estimate accurately the
  worth of an item and to either arrive at a price
  or select items offered at a price.

15
Classification of Neutral Markets
16
Conclusions

• Organizations have to strategically identify how
  they will derive value by exploiting a variety of
  market structures
• To do this, firms must examine
• Fragmentation
• Asset specificity
• Complexity of product assessment
• Complexity of value assessment