[8] 2002 e-business-strategies-for-virtual-organizations

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e-business models for virtual organizations the defining characteristic of an electronic market is the availability of pervasive information and communication technology (ICT) infrastructures available to a critical mass of customers. An organization is both constrained and supported by the ICT adopted within the business ICT environment. Figure 3.1 shows this set of relationships. Despite the growth of online activity, many firms fear a deterioration of profit margins coupled with lack of control as a consequence of market transparency and new forms of intermediation. Nevertheless, as markets are challenged by new entrants using direct channels to undercut prices and increase market share, traditional businesses need new forms to adapt to new marketspaces and channels. The first step is to develop a strategy for creating a widespread presence in the marketplace. 3.3 Strategies for widespread presence 3.3.1 Are you going to develop an online market? The more ordinary and unexciting the commodity, it seems, the better the potential for an online market. With more than 20 industry exchanges now publicly traded at a combined value of more than US$100 billion, high-tech analysts are falling over one another to learn about seafood-spoilage rates, gas-valve supply chains and similar specialized matters. Everyone is on the lookout for the next VerticalNet or Chemdex. Chemdex claims to be the only comprehensive B2B e-commerce solution for the life sciences industry with rapid acceptance among pharmaceutical and biotechnology companies. In March 2000 over 90 major enterprises had signed up with Chemdex for life science product procurement. This list includes customers such as Genentech, Rhône-Poulenc Rorer, and SmithKline Beecham. But finding e-business opportunities is easy compared with your task of judging their prospects. In their brief history, Internet exchanges have gone through three phases, and the accepted successful business model has not been found. � The first phase introduced firms, such as General Electric and Wal-Mart, moving much, if not most, of their buying and selling online to cut costs and speed supplies. At that time (barely five years ago) this looked revolutionary. Today, their original aims of taking transactions online and cutting 35
e-Business Strategies for Virtual Organizations 36 paperwork and time seem pedestrian, even though they have clearly led to big savings in procurement time and cost. � Next came third-party exchanges, independent firms that bring together many buyers and sellers to create a genuine market. The potential is bigger, but gaining critical mass is harder. There are still plenty of companies who fail to see why they should go out of their way to cut their profits by taking part in an open trading system. � Now comes the third phase: when the giants of an industry get together in a consortium. On 25 February 2000 General Motors, Ford and Daimler Chrysler abandoned their standalone efforts and joined forces to create the world’s largest virtual market, which will buy $240 billion worth of parts from tens of thousands of suppliers. Within days Toyota, Renault and its Japanese affiliate, Nissan, had all expressed interest in joining; others will follow. On 28 February 2000 America’s Sears, Roebuck and France’s Carrefour announced a retail consortium, called GlobalNetXchange, that will handle US$80 billion worth of purchases annually. And on 1 March Cargill, DuPont and Cenex Harvest, an American farm cooperative, set up Rooster.com, which will both supply farmers and sell their crops. These consortia are an improvement on previous independent online efforts. How will other markets evolve? The answer depends on the structure of their industries. Compare the following two extremes. Pyramid-shaped industries are exemplified in car manufacturing, the PC industry and chemical markets. These are ones in which there are few big buyers and an enormous and fragmented mass of small suppliers. In PCs, Ingram Micro aggregates big manufacturers and sells to thousands of small resellers. FOB.com aggregates small chemical suppliers for DuPont, Dow and a few other big buyers. Because of the asymmetry in these industries, such exchanges tend to be ‘biased markets’: they naturally favour one side of the deal flow. Exchanges have several advantages. Because of the power they consolidate, they easily reach critical mass and so avoid the Catch-22 of having to persuade sellers to join when buyers are scarce. They can also be financed, or owned, by market participants (as in the car and retail exchanges) without compromising themselves, since small firms are used to the idea of working with big ones.
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e-Business Strategies for Virtual O
Page 4 and 5: e-Business Strategies for Virtual O
Page 6 and 7: Contents Computer Weekly Profession
Page 8 and 9: Contents 6 Globalization and e-busi
Page 10 and 11: Contents 11.6 The increasing power
Page 12 and 13: Computer Weekly Professional Series
Page 14 and 15: Authors’ Preface There are dozens
Page 16 and 17: Authors’ Preface model will there
Page 18 and 19: Authors’ Preface alliances, bette
Page 20 and 21: 1 e-business and the virtual organi
Page 22 and 23: e-business and the virtual organiza
Page 24 and 25: Figure 1.2 e-business and the virtu
Page 28 and 29: 1.5 e-business e-business and the v
Page 30 and 31: Figure 1.3 e-business and the virtu
Page 34 and 35: Figure 1.4 Virtual objects, Scholz
Page 36 and 37: Characteristics of the virtual orga
Page 38 and 39: Figure 2.1 Formation of business al
Page 42 and 43: � empowerment of staff; Character
Page 52 and 53: e-business models for virtual organ
Page 62 and 63: 3.4 Models of efficient response e-
Page 64 and 65: Figure 3.4 Star alliance model e-bu
Page 66 and 67: Figure 3.6 Market alliance model Fi
Page 70 and 71: Figure 3.10 Virtual alliance framew
Page 72 and 73: Figure 3.11 Virtual organizational
Page 74 and 75: References e-business models for vi
Page 76 and 77: IS planning strategies for emerging
Page 80 and 81: Figure 4.1 The evolution of IS/IT p
Page 82 and 83: Figure 4.3 A framework for SISP (Wa
Page 86 and 87: Figure 4.4 Planning adopts a busine
Page 88 and 89: Figure 4.5 Interconnected ecologies
Page 90 and 91: Figure 4.6 The interrelationships b
Page 94 and 95: 4.8 Conclusion IS planning strategi
Page 96 and 97: References IS planning strategies f
Page 98 and 99: Moving from e-business to i-busines
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Moving from e-business to i-busines
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Globalization and e-business strate
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Adoption and deployment of online i
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Table 6.1 Online business models On
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Figure 6.2 VIM strategy Globalizati
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7 Developing knowledge-based strate
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Developing knowledge-based strategi
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8 Evaluating strategies for e-busin
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Figure 8.2 Fitness landscapes Evalu
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Evaluating strategies for e-busines
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Table 8.1 Information economics - v
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Customer view Whatisour image? Eval
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Table 8.6 Matrix for preparing to m
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9 Outsourcing, partnering and the v
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Outsourcing, partnering and the vir
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Figure 9.2 Outsourcing, partnering
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9.9 Summary Outsourcing, partnering
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References Outsourcing, partnering
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e-business strategies in the virtua
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10.10 Summary e-business strategies
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11 Creating virtual cultures for gl
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Creating virtual cultures for globa
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Four stages of market evolution Mar
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Figure 11.4 The four paths of evolu
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References Creating virtual culture
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Advanced knowledge, see Knowledge A
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[8] 2002 e-business-strategies-for-virtual-organizations

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