1、 Making Sense of Emerging Market Structures in B2B E-Commerce B. Mahadevan Classification of B2B Market Structures For the most part, earlier studies on alternative market structures focused on what the market structures are and the benefits that they offer，to， organizations. Our study, on the other
2、 hand, shifts the， discussion to when alternative market structures are appropriate. Hence, our choice of factors to classify,the market structures was mainly based on: linking the operational features and key value propositions of B2B sites with the governing economic principles； relating them to i
3、ssues of dealing with products and markets in B2B domain and corroborating with evidences , from earlier studies.Based on,these considerations we identified fragmentation, asset specificity complexity of product assessment and complexity of value assessment as the factors for classification. Dramati
4、cally,increased reach provides new alternatives for addressing fragmented supply chains in B2B markets. Reduction in the transaction costs introduces corresponding changes in asset specificity 21 Furthermore, asset specificity can be a useful attribute to differentiate market structures 22 Deep cust
5、omization capabilities help organizations mitigate problems arising out of complexities in product description and value assessment. Degree of Fragmentation The degree of fragmentation in a market is defined by the number of players and the geographical spread. The key motivation behind this definit
6、ion of degree of fragmentation is the degree of control or influence the buyers or the suppliers can exert on the marketplace. Fragmentation may exist either in the buyer side or in the seller side or both. We identify four sub-classifications of fragmentation of market participants . The degree of
7、fragmentation points to a few behavioral patterns in the market.When there is less fragmentation, there When the degree of fragmentation is high on both the,supplier and the buyer side, the market tends to be open and,competitive is an opportunity for control-oriented mechanisms to char the market.H
8、owever,when the degree of fragmentation is very low, organizations tend to benefit from collaborative practices as opposed to control. Asset Specificity Asset specificity is a function of the costs of setting up a relationship between two market participants in order to manage business transactions
9、in a cost-effective manner. The costs arise because of specific resources,that the two market participants have to deploy a in order to transact business. These investments can be in machine tools dies information systems or investment in people with special skills. Clearly, all these investments ar
10、e specific to the relationship between the two market participants and are irreversible. For instance, in the case of an aircraft manufacturer, the asset,specificity will be very high in the case of procurement of engines from a supplier. On the other hand, the aircraft manufacturer needs no relatio
11、nship-specific investments to procure office stationery. This has important implications to the behavior of the market participants. When the asset specificity is high the market participants are better off by engaging in collaborative practices and superior coordination mechanisms. On the other han
12、d, when the asset specificity is very low, competitive market practices and relationships based on price benefit both the buyers and the suppliers. In the medium,asset specific situations quasi-market mechanisms that blend both collaboration and competition are a viable alternative for the market pa
13、rticipants.Figure 3 shows a classification of the market structures on the basis of degree of fragmentation and asset specificity. Asset specificity and degree of fragmentation have a direct relationship, especially in the extreme cases. When the asset specificity is very low, the market is likely t
14、o be highly fragmented.Hence, the two diagonal grid locations in the figure are not relevant. Our classification of the twelve market structures falls into this two dimensional framework. The framework suggests that when the fragmentation of market,participants is high neutral market structures are
15、appropriate.Consequently,neutral market structures are grouped together into two grid positions in Figure 3. While it is generally the case, the framework still lacks clarity and does not indicate when organizations should use these neutral markets.Other factors influence the choice of one neutral m
16、arket structure over the other. Classification of Neutral Markets Neutral markets suffer from poor market liquidity because of several factors. Prominent among them are complexity of product description and complexity of value assessment. Clearly, electronic markets add substantial value in situatio
17、ns involving complex product characteristics. Complexity of Product Description Complexity of product description relates to the amount of information a buyer needs to understand the functional and technical specifications of the product or service 24 For instance, an automobile is highly complex in
18、 description. Similarly, an airline ticket is another example of product-description complexity.There are numerous alternatives for routing and several conditions are attached to each category of fare structure. Electronic components bearings and valves and many catalogue items can also introduce me
19、dium to high complexity because of the large variety in their offerings and the detailed technical and commercial specifications pertaining to each variety.Further such a large menu of offerings induces additional costs related to maintaining price lists and repeated communication of changes in pric
20、e lists . Complexity of Value Assessment Complexity of value assessment refers to the amount of information needed to estimate accurately the worth of an item and to either arrive at a price or select items offered at a price. It is easier to assess the value of a new item than to assess the value o
21、f second-hand items and unique products.Furthermore, products with no complexity in product description can pose complexity in value assessment as in the case of commodities.The complexity arises because of several factors. First, the price-setting mechanism can be dynamic through a set of bids and
22、offers. The benefits of operating in such markets are directly a function of the size of the market participants. Second is the amount of information and pre-assessment required before making a choice as in the case of auctions and exchanges. Finally, the complexity of value assessment is also due t
23、o information asymmetry problems. Electronic markets substantially eliminate these problems and help reduce the complexity of value assessment. Figure 4 shows the classification of the neutral markets on this basis.Catalogue aggregation seeks to address the problems arising out of complexity in product description. On the other hand, exchanges address.value-assessment problems arising out of dynamic price setting.Exchanges,bring together a vast set of buyers and sellers and facilitate the trade. Auction sites address the problems of medium complexity
