Business-to-business commerce
Moazzem Hossain | Sunday, 24 August 2008
THE business environment is qualitatively changing not only around the world but also within the country. The forces of change are incessant and complex. One cannot solely rely on the past as a guide to the future. New terms, processes and techniques are evolving in the world of business. We all need to update ourselves about all such inter-related developments. This is critically important for remaining on track and to be able to process information and to apply the available knowledge (of market, technology or regulation etc.) for understanding the dynamics of the situation.
As an abbreviation for Business-to-Business, B2B encompasses a wide array of business activities relating to exchange of products, services or information between businesses, as distinct from those between businesses and consumers. As a qualifying word or adjective, B2B commerce describes, thus, any activity, be it in marketing, sales or any other transaction made in an industry value-chain before the finished product is sold to the end-consumers. However, such transactions, in essence, are not entirely new phenomena. These have been taking place since a pretty long time. What has now given it a strong currency is "E-" or "electronic" commerce in a business-to-business context. It is primarily a large online platform (B2B portal) or website. This facilitates interactions and/or transactions between buyers and suppliers at organisational or institutional, rather than individual, levels. The adoption of e-commerce technologies by businesses in greater numbers than consumers, particularly in developed or fast developing economies, has facilitated this on-line commerce between business entities.
Admittedly, B2B commerce typically takes the form of automated processes between business partners/entities. But such activity exists -- or, has been in practice for long, long many years --, off-line as well. The readymade garments (RMG) sector in Bangladesh has been involving many B2B deals, both on-line and off-line. Such deals range from transactions for imported inputs via e-commerce to sub-contracting of work-orders and the like (through mainly off-line). The transactions that have been taking place involving the small engineering units in Dholaikhal area in the capital city of Dhaka for supply of their "innovative" auto parts or other machinery or spares thereof to the garage shops and other business enterprises may also be cited here as off-line B2B commerce, largely informal in nature. The farm produces that the small rural vendors or supplies sell to the other city-based 'middlemen' or 'fariahs' may also qualify for B2B-type off-line commerce, though mostly in informal, not organised, sector of the economy. But questions here arise about what real value the latter add to the supply-chain when such produces are retailed to the end-consumers in the urban markets at very high premiums. Supplies from vendors, sub-contractors, indentors etc., may, perhaps, also be considered as B2B commerce. It is not yet certain whether exclusive or distribution contracts fall within the domain of B2B-type transactions or deals.
So far so good. The technalities of the B2B commerce are matters that should better be left to management, marketing or sales' experts, to deal with. However, the potential of B2B commerce, in the given context of the Bangladesh situation, should be assessed in areas of both on-line and off-line activities. Computer literacy, internet access, infrastructural support facilities etc., are not yet favourable factors for Bangladesh to look forward to any marked expansion and growth of electronic B2B in the immediate future. However, the prospects for technology-aided or on-line B2B commerce in the forceable future are not to be overlooked or ignored in any way. And, as the future unfolds, a clear understanding of the pros and cons of this electronic B2B commerce will, sooner than later, become essential for managing the new business realities in to-day's globalised economy. Yet then, the acronym -- B2B -- must not become a hyped-up one, being divorced from the ground-level realities facing our domestic businesses in general.
The media can play a useful role to bridge the gap in harnessing the potential of B2B commerce in Bangladesh. The media, both print and electronic, as we all know, deal primarily with news. And news is, in essence, information. Views are also expressed, as an adjunct function, through the media.
Information is extremely important for to-day's businesses. It was so even four and a half centuries back. International commerce became the main impetus for newspapers in Europe, after the invention of a printing press using movable type in the mid-15th century. Newspapers with international commercial news and advertising appeared in Germany in 1609 and then spread throughout Europe. Because of tight government regulation of information domestic political news became a feature in newspapers only in the middle of the 19th century. Ever since its inception, the press became a catalyst for commerce. Newspapers gave, in their beginning, accounts of commercial voyages and the risks and opportunities of news trading routes. Advertising stimulated the demand for products. Frequent features of financial reports, insolvency proceedings, trials of merchants and manufacturers helped merchants to choose their business partners.
That was how the B2B, the modern acronym for business-to-business commerce, sprouted. And indeed, all this information expanded links beyond tightly knit trading associations and communities, stimulating competition among traders, and manufacturers from different nations.
Given this backdrop, it is only logical that the media has become one of the key points for business activities in this era of information-intensive mass customisation. Now creation of knowledge is taking precedence over creation of wealth. More and more new business organisations are realising that creation of wealth is directly determined by the degree of efficiency of organisation to create, process and transfer knowledge and information within their system of operation.
Business information on products, services, market trends and statistics in general in our country is still sketchy or not adequately available. There is no denying that the coverage of business news in the media, both print and electronic, has expanded over the recent years. This coverage is also faster than before. But accurate and objective coverage remains yet a problem. Inaccurate and confusing reports/news items do harm -- and harm greatly -- at times.
For harnessing the potential of B2B commerce, media can be an important input in the process thereof. This role, can be played effectively by the media only when the concerned personnel are well-positioned to conceptualise the issue or related matters as well as to contextualise the same properly. This conceptualisation and contextualisation will help ensure clarity in writing or presentation, leading to dissemination of factual or objective information or news. The best way to write or present clearly is to make sure that we understand the term we hear or report. This will, in the process, ensure fairness and balance in news coverage.
Comprehending B2B commerce from the media perspective, both as parts of news coverage and newspapers' own business growth, involves a clear understanding of its importance as a value-chain in the broad perspective of marketing. Here the perspective of information -- and knowledge-based competition for businesses -- is critical.
B2B commerce forms a useful part in the supply-line or logistics of business operations or the value chain thereof. The benefits of B2B commerce must, therefore, be tangible for the purpose. In this context, the critical issues to be examined by the media personal are: How does B2B affect the clientele base? Does it facilitate economy-of-scale operation for business organisation? Or is it a proxy for intra-house deals among large businesses organisations? Does it lead to vertical integration of businesses by large transnationals? Is B2B offering the opportunity for enterprises of different sizes to lower cost and enjoy reasonable profit along with sustained growth? Does it save transportation, executive and other overhead costs for businesses? Does it really lead to an efficient purchasing process for its business clients with benefits thereof passed onto those end-users -- the consumers at the end of the final transactions of goods and services in the supply-chain? These are the critical issues for consideration because they ultimately affect people and their living.
The media will be better poised to catalyse the growth of B2B commerce and to play an effective role in bridging the gap for its sustained promotion, if its benefits do reach the people through efficiency gains on the part of the businesses. Fostering competition -- and not forestalling it -- in markets promotes wider opportunities. B2B commerce can take a great leap forward, if it helps create the conditions to facilitate smaller entrepreneurs and those who lack network connection to have a better chance at undertaking productive activities. Competition has an important role also in promoting institutional change as well as economic development and sustained growth. However, the degree of competition, may, sometimes, need to be limited in market in order to promote innovation. This is particularly so in those areas where technology developers are unable to gain sufficient profits to cover costs in the absence of such protection. Nonetheless, the prime focus of B2B commerce has to be on fostering competition as far as practicable, if it is to make a sustained headway for ensuring an efficient value-chain for the widest possible dispersal of its benefits. That will help involve the media pro-actively in bridging the gap for its growth and expansion.
For the B2B commerce to expand, it is important that it leads to market penetration, market development as well as product development. Market penetration tries to increase ultimately the sale of current products in current markets with more intensive market efforts. Market development seeks to open up ultimately new markets for current products. Product development creates new or improved products for current markets. In the process of all such efforts, the growth of B2B commerce is expected to have a favourable impact on the business growth of the media as well, through advertisements and publicity. That will lend strength to the functioning of a competitive, free media.
There is no denying that advertising, the financial partner of the media organisations in the developed or highly developing countries, still remains a missing link for many media organisations in a country like Bangladesh. This impacts the quality of manpower and, thus, the growth and development of skill on the part of the media personnel. In this backdrop, the media would look forward to a win-win situation for all the stakeholders (including itself) under expanded B2B commerce. That will reinforce its role as one its catalysts.
The presentation was made by the Editor of The Financial Express to a seminar held last week in Dhaka and sponsored by the Nielsen company in partnership
with Katalyst
As an abbreviation for Business-to-Business, B2B encompasses a wide array of business activities relating to exchange of products, services or information between businesses, as distinct from those between businesses and consumers. As a qualifying word or adjective, B2B commerce describes, thus, any activity, be it in marketing, sales or any other transaction made in an industry value-chain before the finished product is sold to the end-consumers. However, such transactions, in essence, are not entirely new phenomena. These have been taking place since a pretty long time. What has now given it a strong currency is "E-" or "electronic" commerce in a business-to-business context. It is primarily a large online platform (B2B portal) or website. This facilitates interactions and/or transactions between buyers and suppliers at organisational or institutional, rather than individual, levels. The adoption of e-commerce technologies by businesses in greater numbers than consumers, particularly in developed or fast developing economies, has facilitated this on-line commerce between business entities.
Admittedly, B2B commerce typically takes the form of automated processes between business partners/entities. But such activity exists -- or, has been in practice for long, long many years --, off-line as well. The readymade garments (RMG) sector in Bangladesh has been involving many B2B deals, both on-line and off-line. Such deals range from transactions for imported inputs via e-commerce to sub-contracting of work-orders and the like (through mainly off-line). The transactions that have been taking place involving the small engineering units in Dholaikhal area in the capital city of Dhaka for supply of their "innovative" auto parts or other machinery or spares thereof to the garage shops and other business enterprises may also be cited here as off-line B2B commerce, largely informal in nature. The farm produces that the small rural vendors or supplies sell to the other city-based 'middlemen' or 'fariahs' may also qualify for B2B-type off-line commerce, though mostly in informal, not organised, sector of the economy. But questions here arise about what real value the latter add to the supply-chain when such produces are retailed to the end-consumers in the urban markets at very high premiums. Supplies from vendors, sub-contractors, indentors etc., may, perhaps, also be considered as B2B commerce. It is not yet certain whether exclusive or distribution contracts fall within the domain of B2B-type transactions or deals.
So far so good. The technalities of the B2B commerce are matters that should better be left to management, marketing or sales' experts, to deal with. However, the potential of B2B commerce, in the given context of the Bangladesh situation, should be assessed in areas of both on-line and off-line activities. Computer literacy, internet access, infrastructural support facilities etc., are not yet favourable factors for Bangladesh to look forward to any marked expansion and growth of electronic B2B in the immediate future. However, the prospects for technology-aided or on-line B2B commerce in the forceable future are not to be overlooked or ignored in any way. And, as the future unfolds, a clear understanding of the pros and cons of this electronic B2B commerce will, sooner than later, become essential for managing the new business realities in to-day's globalised economy. Yet then, the acronym -- B2B -- must not become a hyped-up one, being divorced from the ground-level realities facing our domestic businesses in general.
The media can play a useful role to bridge the gap in harnessing the potential of B2B commerce in Bangladesh. The media, both print and electronic, as we all know, deal primarily with news. And news is, in essence, information. Views are also expressed, as an adjunct function, through the media.
Information is extremely important for to-day's businesses. It was so even four and a half centuries back. International commerce became the main impetus for newspapers in Europe, after the invention of a printing press using movable type in the mid-15th century. Newspapers with international commercial news and advertising appeared in Germany in 1609 and then spread throughout Europe. Because of tight government regulation of information domestic political news became a feature in newspapers only in the middle of the 19th century. Ever since its inception, the press became a catalyst for commerce. Newspapers gave, in their beginning, accounts of commercial voyages and the risks and opportunities of news trading routes. Advertising stimulated the demand for products. Frequent features of financial reports, insolvency proceedings, trials of merchants and manufacturers helped merchants to choose their business partners.
That was how the B2B, the modern acronym for business-to-business commerce, sprouted. And indeed, all this information expanded links beyond tightly knit trading associations and communities, stimulating competition among traders, and manufacturers from different nations.
Given this backdrop, it is only logical that the media has become one of the key points for business activities in this era of information-intensive mass customisation. Now creation of knowledge is taking precedence over creation of wealth. More and more new business organisations are realising that creation of wealth is directly determined by the degree of efficiency of organisation to create, process and transfer knowledge and information within their system of operation.
Business information on products, services, market trends and statistics in general in our country is still sketchy or not adequately available. There is no denying that the coverage of business news in the media, both print and electronic, has expanded over the recent years. This coverage is also faster than before. But accurate and objective coverage remains yet a problem. Inaccurate and confusing reports/news items do harm -- and harm greatly -- at times.
For harnessing the potential of B2B commerce, media can be an important input in the process thereof. This role, can be played effectively by the media only when the concerned personnel are well-positioned to conceptualise the issue or related matters as well as to contextualise the same properly. This conceptualisation and contextualisation will help ensure clarity in writing or presentation, leading to dissemination of factual or objective information or news. The best way to write or present clearly is to make sure that we understand the term we hear or report. This will, in the process, ensure fairness and balance in news coverage.
Comprehending B2B commerce from the media perspective, both as parts of news coverage and newspapers' own business growth, involves a clear understanding of its importance as a value-chain in the broad perspective of marketing. Here the perspective of information -- and knowledge-based competition for businesses -- is critical.
B2B commerce forms a useful part in the supply-line or logistics of business operations or the value chain thereof. The benefits of B2B commerce must, therefore, be tangible for the purpose. In this context, the critical issues to be examined by the media personal are: How does B2B affect the clientele base? Does it facilitate economy-of-scale operation for business organisation? Or is it a proxy for intra-house deals among large businesses organisations? Does it lead to vertical integration of businesses by large transnationals? Is B2B offering the opportunity for enterprises of different sizes to lower cost and enjoy reasonable profit along with sustained growth? Does it save transportation, executive and other overhead costs for businesses? Does it really lead to an efficient purchasing process for its business clients with benefits thereof passed onto those end-users -- the consumers at the end of the final transactions of goods and services in the supply-chain? These are the critical issues for consideration because they ultimately affect people and their living.
The media will be better poised to catalyse the growth of B2B commerce and to play an effective role in bridging the gap for its sustained promotion, if its benefits do reach the people through efficiency gains on the part of the businesses. Fostering competition -- and not forestalling it -- in markets promotes wider opportunities. B2B commerce can take a great leap forward, if it helps create the conditions to facilitate smaller entrepreneurs and those who lack network connection to have a better chance at undertaking productive activities. Competition has an important role also in promoting institutional change as well as economic development and sustained growth. However, the degree of competition, may, sometimes, need to be limited in market in order to promote innovation. This is particularly so in those areas where technology developers are unable to gain sufficient profits to cover costs in the absence of such protection. Nonetheless, the prime focus of B2B commerce has to be on fostering competition as far as practicable, if it is to make a sustained headway for ensuring an efficient value-chain for the widest possible dispersal of its benefits. That will help involve the media pro-actively in bridging the gap for its growth and expansion.
For the B2B commerce to expand, it is important that it leads to market penetration, market development as well as product development. Market penetration tries to increase ultimately the sale of current products in current markets with more intensive market efforts. Market development seeks to open up ultimately new markets for current products. Product development creates new or improved products for current markets. In the process of all such efforts, the growth of B2B commerce is expected to have a favourable impact on the business growth of the media as well, through advertisements and publicity. That will lend strength to the functioning of a competitive, free media.
There is no denying that advertising, the financial partner of the media organisations in the developed or highly developing countries, still remains a missing link for many media organisations in a country like Bangladesh. This impacts the quality of manpower and, thus, the growth and development of skill on the part of the media personnel. In this backdrop, the media would look forward to a win-win situation for all the stakeholders (including itself) under expanded B2B commerce. That will reinforce its role as one its catalysts.
The presentation was made by the Editor of The Financial Express to a seminar held last week in Dhaka and sponsored by the Nielsen company in partnership
with Katalyst