CCT 355: E-Business Technologies

CCT 355: E-Business Technologies Lecture 5: E-Business Governance Structures - From Hierarchy to Network

Administrivia • Competitive Intelligence Assignment - ideas for organization? (no one right answer) • Letting interviewees loose on general questions is better than asking 30+ - if you have that many, prepare to reduce or drop • E-commerce or marketing - try to integrate business processes more (not just “how do you sell/market online” - both are done and not really topical for the course, unless really unique.)

Markets vs. Hierarchies • Industrial-era model - bureaucratic hierarchy models, centralized control, “push” model (build it and customers will come…or you hope/arrange they will.) • Information era model - networked market model, flatter, distributed control, “pull” model (build only on customer demand and influence production on trends)

Hierarchical Models • Effective in closed, stable systems where control is essential • In automated systems for simple tasks, efficient and cheap • In complex systems, leads to many interim levels of management and maintenance - extraordinarily expensive to manage process • Examples?

Market/Network Models • Effective in rapidly changing environments, with strong competition, free transfer of information • Can easily morph into hierarchical models when relations stabilize • More consistent with smaller businesses, entrepreneurs - but increasingly evident as larger companies look to leverage change for competitive advantage • Examples?

Transaction Cost Model • Transaction is central unit of analysis • Production & transaction costs reduced to maximize bottom line • Hierarchical influence - streamlining costs in production via process optimization (e.g., EDI), determining prices centrally • Networked influence - B2B e-markets to encourage competition among suppliers and direct-to-consumer sales

Influences on Transaction Cost • Site, physical design, human capital and time specificity • Product complexity and frequency influences on production/transaction • Text interpretation production centered - networks increase costs of specific goods/people, which means managers prefer hierarchical - but can they arrange it? (Ch. 5 reverses itself on this later on….) • Examples?

Resource-Based Models • Resources (of all kinds) is unit of analysis • Broad def. (human, physical, process) • Assets of value are: rare, exclusive, difficult to replicate, not easily substituted • Changes in resource values or competitive changes influence market • Hierarchical vs. networked model - e.g., corporate training

Network-Based Models • Stable vs. dynamic, internal vs. external linkages, strong and weak ties, tightly vs. loosely coupled (last week’s material) • Smaller businesses can be competitive - if: everyone stays small and flexible, network is large so mass collaboration exists,change is constant and productive • Easier said than done, but even larger companies disaggregating to mimic network models internally (MSDN as example, others?)

E-Markets Model • Coordination costs decreased and offloaded to participants due to communication, brokerage and integration improvements • Biased and unbiased markets - too many cooks spoil the broth? • Regional markets - just because you can go global, doesn’t mean it’s a good thing.

Network Interoperability • Depends on: • Transaction vs. Not (e-commerce orientation vs. information facilitation) • Short- vs. long-term (one-off transactions vs. regular interactions) • If short, market vs. intermediary (direct vs. brokered)

Information Reach and Range • Reach - extent of audience (local vs. global) • Range - extent/complexity of information • Low reach, high range and High reach, low range - easy; everything else, a lot harder

Move to the Middle • Outsourcing to decrease costs (transaction model) • Also to increase network connectivity, capacity, flexibility (network model) • But…they also look to solidify and stabilize relationships (resource model) • Similar to dating really - you can play the field for cheap, yes…is it a good idea?

Next week • Ch. 7, 20 - chock full of XML goodness (and last thing before the midterm test…) • Fourth round of presentation • Comp. Intel Assignment due (!)

CCT 355: E-Business Technologies