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B2B Markets
Making Sense of Emerging
Market Structures in B2BE-Commerce
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The 12 market structures
3 distinctive categories:
Collaborative mechanisms
Quasi-market mechanisms
Neutral market mechanisms.
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Benefits of B2B Sites
Increased reach
Reduction in transaction costs
Deep customization capabilities.
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Collaborative Market Mechanisms
Market structures that fundamentally
enable the market participants to gainfullyexploit electronic integration.
They are enabled when inter-organizationalinformation systems are networked through
Internet infrastructure for the purpose ofsharing vital data of interest to the networkmembers.
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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.
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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 ifrequired. 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 themarket
Reverse (seller-bid) auctions: Sellers compete to obtain thebusiness of the buyer
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Neutral Market Mechanisms
Neutral market mechanisms include
Exchanges
Catalogue Aggregators
Online Communities
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Classification of B2BMarket Structures
Factors used for classification
Fragmentation
Asset specificity
Complexity of product assessment
Complexity of value assessment
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Degree of Fragmentation
The degree of fragmentation in a market is defined bythe 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 forcontrol-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
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Degree of Fragmentation
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Asset Specificity
Asset specificity is a function of the costs of
setting up a relationship between two marketparticipants 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 todeploy a priori in order to transact business.
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Asset Specificity
When asset specificity is high, market participants arebetter off by engaging in collaborative practices andsuperior coordination mechanisms.
When the asset specificity is very low, competitivemarket practices and relationships based on pricebenefit both the buyers and the suppliers.
In the medium asset specific situations, quasi-marketmechanisms that blend both collaboration andcompetition are a viable alternative for the marketparticipants.
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Asset Specificity
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Classification of Neutral Markets
Neutral markets have poor market liquidity
because Complexity of product descriptions: the amount ofinformation a buyer needs to understand thefunctional and technical specifications of the productor service.
Complexity of value assessment: the amount ofinformation needed to estimate accurately the worthof an item and to either arrive at a price or selectitems offered at a price.
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Classification of Neutral Markets
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Conclusions
Organizations have to strategically identify how
they will derive value by exploiting a variety ofmarket structures
To do this, firms must examine Fragmentation
Asset specificity Complexity of product assessment
Complexity of value assessment