Page 63 - Introduction to Business

CHAPTER 1 What Is Business? 37

Tata Consulting Services, Infosys, and Wipro have successfully utilized their IT
and software expertise along with their knowledge of the United States’ corpo-
rate needs to attract outsourcing business to India. Companies in the United
States will be forced to compete by focusing attention on developing next-
generation industries in biotechnology, nanotechnology, and digital media.
5. Transparency and openness are crucial for business success. Increasingly, cus-
tomers and markets demand openness (as opposed to secrecy and a strong
emphasis on turf protection) in company culture and transparency in com-
pany information (especially accounting and financial). As companies move
into the digital era, they discover a competitive advantage in making informa-
tion and knowledge available to their networked partners. In the airline indus-
try, for example, special discounted fares were in the past disclosed only to
travel agents who charged a fee to the customer. Now, discount fares are made
readily available on the airline’s website or with online travel services like
Travelocity.com, Orbitz.com, Cheapfares.com, and Expedia.com for easy
access by all customers.
In the emerging business models, success will be achieved by those businesses
that involve their suppliers, their infrastructure providers, and—perhaps most
importantly—their customers in a network in which they can build value together.
The idea of partnership is very real in the new e-business world. 12
Within the e-business environment, there are several specialized sub-
e-businesses that deal with certain segments of the economy. Most customers, stu-
dents in particular, have quite a bit of experience purchasing goods (like CDs, books,
stereos, etc.) directly from online retailers like Amazon.com, www.amazon.com.
Transactions between Amazon.com (the business) and you (the customer) are called
B2C (business-to-consumer) e-commerce. Similarly, when Amazon.com (the busi- B2C Business–to-consumer electronic
ness) purchases this textbook from Houghton Mifflin (this book’s publisher) and commerce
sells it to you, the transaction between Amazon.com and Houghton Mifflin is called
B2B (business-to-business) e-commerce. By improving the flow, accuracy, and B2B Business-to-business electronic
timeliness of information, secure Internet-enabled systems provide greater trans- commerce
parency and efficiency at all points along the supply chain. Simply put, the Internet
is a continuation of technological improvements that deliver information faster and
cheaper, reduce search and transaction costs in online markets, and improve the
management of product transportation and inventories. These savings come from
both cheaper information and cheaper inputs (through increased competition). 13

EXHIBIT 1.11

The Supply Chain
Retail Warehouses Manufacturers Suppliers Suppliers’
outlets and distribution suppliers
centers
External
demand

Customers

Search and information costs; Order lead times Inventory costs
bargaining and decision costs;
policing and enforcement costs
Delivery lead times Transportation costs
Source: From Thomas F. Siems, “B2B E-Commerce: Why the New Economy Lives,” Southwest Economy, Federal Reserve Bank of Dallas, July–August 2001,
p. 3. Reprinted with permission.

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.