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Unit 14: Global E-Marketing and EDI

"partnership" between trading partners. EDI implementations therefore have a symbolic value Notes
to user firms, being a result of closer relationships and demonstrating their commitment to a
long-term relationship, but not necessarily economically justifiable.
1. As companies develop long-term EDI strategies to scale up to large B2B and EDI projects
with many customers and partners, they must address the following requirements:

2. How to handle the challenges to service global growth markets based on the diversity of
suppliers, the effect of trade regulation and finances, and the complexity of supply chain
delivery. Companies need to respond to all customers and manage all partners cost-
effectively.

3. How to integrate on-premise systems with those systems used from the Cloud.
4. How to integrate with business partners who also use systems and applications in the
Cloud.
Business decision makers responsible for the success of B2B integration found that B2B process
experts and technologies are in short supply. Businesses in search of administrative savings and
vital performance improvements also face the difficulties of obtaining the resources needed to
address these new requirements. Businesses also must address the challenge of managing older
EDI systems complete with the growing numbers of data types, standards, and protocols.
The adoption of an EDI linkage, however, is significantly different from the adoption of an
innovative internal technology. EDI produces changes in the exchange relationship between the
participating firms which have implications for both the internal economy and polity of the
channel. The establishment of a sophisticated computer linkage between firms reflects a
significant commitment to the relationship. Discrete transactions are subsumed in the creation
of a long-term, complex relational exchange. This requires attention not only to the efficiency
effects of the technology, but also to the effect it will have on the business relationship between
the parties.

The relative advantage of EDI over traditional exchange processes not only involves transaction
cost reduction for the channel members, but also permits greater servicing of the channel's
customers in the output market. The quick response to customers' needs permitted by EDI
creates a competitive advantage for the downstream channel member. In highly competitive
output markets, the potential for that competitive advantage has a significant impact on the
likelihood of adoption of new technology.

An essential function of EDI is the formalization of communication within the channel. By
formalizing the communication processes and procedures, it enhances the speed, accuracy, and
completeness of inter-organizational communications. This has important implications for
channel commitment because the sharing of timely and meaningful information has been
associated with increased outcomes versus comparison levels. Moreover, the improvement of
the quality of information flows between channel members has been linked to their ability to
understand each other's goals and to coordinate their efforts to achieve those goals.
Channel buyer satisfaction is derived both from cost saving efficiency gains and from the
enhanced ability to serve their own customers if supplied by channel members using EDI
technology. The differentiation opportunities of EDI can be viewed as the opportunities afforded
by a technological innovation that allows the firm deploying the EDI to provide a level of
service better than that previously experienced in the industry. The uniqueness of the innovation
allows the firm to differentiate itself on the basis of superior service, which increases the likelihood
of channel commitment and source loyalty. This differentiation should have a positive effect on
its share of the linked buyer's business.

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