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Unit 4: Electronic Commerce and the Digital Organization

7. .................................. businesses transact exchanges of information (such as files or dollar Notes
amounts) between PCs or hand-held computing devices.

4.4 Business-2-Business (B2B) Model

Traditionally, when one thinks of business paradigms, one of the first things that springs to
mind is the concept of companies selling to consumers. The department chain store or the big
box store down the street are prime examples of this business model. Historically, this meant
that the business had a brick-and-mortar location where it employed its own personnel. Even
with the advent of the Information Age, this model changed only slightly, with information
technology being used to support the way that business was done by making standard operations
more efficient.

Example: Manual cash registers have been replaced in most modern businesses by high
tech models that keep track of various aspects of transactions including tender type (i.e., whether
the transaction was cash, check, charge, etc.) and amount paid as well as inventory control
information or other administrative data. Such automated information collection makes closing
the store at night and balancing the books a much easier task and can also help store and chain
managers to make decisions about the type of inventory to carry, new services that could be
offered to customers, and demographics that can be used in marketing efforts.

However, information technology not only allows organizations to perform various business
processes more efficiently, in many cases it also allows them to reengineer organizational
processes by improving the effectiveness and efficiency of the various processes within an
organization. With advances in information systems, however, this model can now be taken a
step further. Electronic business-to-consumer paradigms allow a business to market and sell
directly to consumers.

Example: Business model include Amazon.com, (the online purveyor of books and a
wide variety of other items) and Travelocity (the online travel agency) businesses that sell
electronically directly to consumers.

Task Discuss the various business model of internet.
However, not all businesses sell directly to consumers, nor should they. Automobile parts
manufacturers frequently sell to the automotive industry rather than to the car owner. Precious
stones’ miners sell to the gem industry where the stones are cut and sold, in turn, to jewelers and
suppliers who, in turn, sell to suppliers.

Pharmaceutical companies sell to directly or indirectly to pharmacies and hospitals who sell the
products to customers. As with business to consumer paradigms, the model of business-to-business
(B2B) commerce has been revolutionized by advances in information technology and systems.
Despite the increasing popularity of business-to-consumer e-commerce with its ease of ordering
and comparing items online, many experts predict that business-to-business transactions will
exceed those of business-to-consumer e-commerce. This makes sense.

Example: Although a consumer may order a book over the Internet, the business from
whom the book is purchased not only has to interact with the purchaser but also with the
publisher who printed the book. The publisher, in turn, needs to interact with the paper and ink

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