Examiners’ commentaries 2016

Examiners’ commentaries 2016

IS3167 Management and innovation of e-business

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 2015–16. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2011). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refer to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements – if none are available, please use the
contents list and index of the new edition to find the relevant section.

General remarks
Learning outcomes
At the end of this course, and having completed the Essential reading and
activities, you should be able to:
• explain the history of e-business from the dot-com boom to the present
day
• critically discuss successful and failed e-business ventures
• assess the role of innovation in e-business
• explain the key elements of e-business technology including websites,
inter-organisational networks and social networks
• describe the social and legal context within which e-business has
prospered
• explain the growth of social networks and their impact on e-business
• analyse and criticise the business models underlying e-business
proposals and existing e-business systems
• discuss the changing structure of business-to-business e-business and
the shifting role of intermediation
• apply economic theories, such as transaction cost analysis, to explain
the economics of e-business
• explain the interaction between the needs of business and the
potential of e-business technology to produce new organisational
structures and different ways of working (e.g. outsourcing, mobile
working and teleworking)
• discuss the key innovations, business models, products and processes
and how e-business contributes to innovation through, for example,
open source development and open innovation.
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IS3167 Management and innovation of e-business

Planning your time in the examination

Without proper time management you will not perform well even if you
have properly revised the course and reached a good level of preparation.
You must answer three questions out of six – no more and no fewer.
To answer three questions in three hours means that you should spend
roughly 60 minutes on each question. It is surprisingly easy to spend more
than an hour on a question that either you find interesting or one for which
you have spent many hours in preparation. A common scenario is that
instead of ‘answering the question’ (see below), you perform a ‘memory
dump’ of everything you know about a topic area. This not only dilutes
your answer but it also eats up the time and, before you know where you
are, you have spent an hour and twenty minutes on one question.
If you do not properly distribute your time it will be difficult not only to
do well but often to pass. If you answer only two questions or, as often
happens, the third answer is presented in a bullet point form, it will be
difficult to score well and even to pass the examination. Hence you must
divide your time equally between the three questions you answer.

What are the examiners looking for?

Examiners are mainly looking for a critical analysis and critical
consideration of the specific aspect, strategy or theory, which is framed in
the examination question. Candidates are expected to critically elaborate
upon the material. The high marks, the distinctions, are granted to
candidates who have clearly digested the material they have studied and
used it to properly address the questions asked in the examination paper.
If the answer is based on a perfect summary of the theory or subject, the
examiners will not award a distinction grade and such an answer can
also be a fail if the question is not specifically about the theory or the
subject summarised. What makes a very good answer is critical, personal
reflection, analysis and discussion of the subject and not the replication of
definitions or abstract descriptions of related theories.

Do not live in the past

One of the attractions of e-business is that it is an exciting and dynamic
area that is constantly changing. The downside of this is that many of the
examples from the subject guide, textbook and articles quickly become out
of date as new services are introduced and old ones terminated. Similarly,
some companies that were successful 10 years ago have since failed or
been taken over. Although all writers try to keep their material up to date,
this is not always possible and this provides you with an opportunity in the
examination to quote more recent examples and, provided that they are
relevant, the examiners will give you extra credit for your contributions.
However, although some of the examples given by writers may ‘date’ fairly
quickly, you should not assume that the theory or conceptual framework
contained in the article is similarly obsolete. The theories and frameworks
emphasised in the subject guide, many of which are more than 20 years
old, are remarkably good at standing the test of time and are still very
relevant today.
Hence, you should develop your reading skills so that, when you read
articles, you can easily distinguish between theoretical or conceptual issues
that are still valid from example cases which may be losing their relevance.
Similarly, you should also read widely in the management and practitioner
literature to keep abreast of recent practical developments, but you must
ensure that you can link them to older theories.

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 Examiners’ commentaries 2016

Work steadily through the year

This course is a blend of a variety of disciplines, ranging from economics
to information technology and from marketing to logistics, all within an
overall context of information systems and management. This means that
you cover a large area, made up of rather diverse elements, each one of
which has its own, often rather different theories and paradigms. Some
of the theoretical concepts, such as transaction cost economics, are quite
difficult to grasp, either in terms of the theory itself or in terms of their
range of application.
Hence, you are strongly advised to ‘think through’ and work through the
material steadily through the year as you progress through the course. It’s
important to do the reading for a topic at the time you are studying that
topic. You need to reflect on and understand each topic and its theoretical
base before you move on to the next topic. Do not leave all the reading
and studying until just before the examination; then it will just appear to
be a complex tangle and you are guaranteed to do badly.

Follow your subject guide

The examiners strongly recommend that your preparation for the
examination focuses on reflecting upon the course material rather than
writing summaries of it. The knowledge of theories is a pre-requisite to be
able to answer the examination questions properly. To prepare effectively
for the examination, candidates have to be acquainted with the logical
and intellectual journey that is framed in the subject guide. This journey
provides the proper logical link between the different topics addressed
in the course. We strongly advise you to read the subject guide carefully
and, where possible, discuss the material with fellow candidates before
starting your wider reading. The subject guide provides the analytical
framework, you need to be critical rather than relying on superficial
factual knowledge.
The subject guide for this course is a guide, not a summary of the readings.
So the examiners expect and recommend that candidates read the subject
guide and then study the readings for the course. The subject guide is a
road map to address the complex subject matter of the course. Once you
have properly prepared for the examination we strongly suggest you try
to critically analyse real experiences or cases as exercises to learn how to
address the examination questions successfully.

Answer the question that you are asked

The most common mistake made by candidates is to fail to address
the question asked. This is a remarkably easy trap to fall into for two
particular reasons. Firstly, you may have spent the weeks before the
examination memorising huge chunks of the subject guide, textbook and
supporting articles. You arrive in the examination room with your brain
overflowing with this stuff and you can’t wait to dump it down on your
answer paper. The relief may be initially satisfying but the answer is very
unlikely to score many marks as most of the material, although perhaps
accurate and interesting in itself, will be irrelevant and will score very few
marks. Examiners are not impressed by the breadth of your
topic knowledge – they are looking for answers to the specific
question.
The second scenario is when you have based your revision on examination
questions from previous years. These are certainly important to study
as they give you a good picture concerning the style of question you can

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expect. However, we do not repeat questions from one year to the next
and, if you are locked into last year’s questions, there is the danger that,
like ‘old admirals’ you will ‘fight the last war and not the current one’.
In other words, you answer last year’s question and not this year’s one.
Again, you will probably get very few marks for this approach.
This means that you should go into the examination prepared to think
on the spot. In many ways, an examination is like a job interview. You
probably know the sort of questions to expect and you can prepare little
chunks of material beforehand; for example, the interviewer may ask
for examples of your past leadership experience and it’s a good idea to
have this prepared in advance. However, you cannot totally predict the
interview questions and you should treat the examination in the same
way. You certainly do need to prepare small chunks of material concerning
e-business but you must be prepared to answer the question, through
selecting relevant chunks and not just writing everything you know
about a topic. Examiners, like interviewers, know full well when you’re
beginning to ‘waffle’ and you are unlikely either to be offered the job or to
be awarded a high examination grade.
Many examination questions are multi-part questions, comprising a
number of sub-questions. Normally, it’s best to answer each sub-question
consecutively as you are less likely to miss a sub-question and hence lose
marks. Similarly, if the question asks you to provide examples and discuss
them, this must be done. If you fail to do so, the answer is only partially
answered.
Hence, you must directly address the question and you have to remember
that the answer is marked in relation to the question and not to extraneous
peripheral knowledge.

Key steps to improvement

From the above discussion, it follows that to do well in this unit you
should:
• Do not live in the past – keep up to date with recent developments in
e-business and integrate them into your studies. Read frequently and
widely.
• Work steadily through the year – a ‘big bang’ of revision of only half-
understood material just before the examination is doomed to fail.
• Follow your guide – use the subject guide as an essential road map to
the often complex and confusing multi-disciplinary field of e-business.
• Answer the question that you have been asked – you must answer the
question on the examination paper, not one that you wish is there.
Give yourself time to think in the examination – don’t just write pages
of irrelevant material for the whole three hours of the examination.

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 Examiners’ commentaries 2016

Examination revision strategy

Many candidates are disappointed to find that their examination

performance is poorer than they expected. This may be due to a
number of reasons.  The Examiners’ commentaries suggest ways of
addressing common problems and improving your performance.
One particular failing is ‘question spotting’, that is, confining your
examination preparation to a few questions and/or topics which
have come up in past papers for the course. This can have serious
consequences.
We recognise that candidates may not cover all topics in the syllabus
in the same depth, but you need to be aware that examiners are free
to set questions on any aspect of the syllabus. This means that you
need to study enough of the syllabus to enable you to answer the
required number of examination questions.
The syllabus can be found in the Course information sheet in the
section of the VLE dedicated to each course. You should read the
syllabus carefully and ensure that you cover sufficient material in
preparation for the examination.  Examiners will vary the topics and
questions from year to year and may well set questions that have not
appeared in past papers. Examination papers may legitimately include
questions on any topic in the syllabus.  So, although past papers can
be helpful during your revision, you cannot assume that topics or
specific questions that have come up in past examinations will occur
again.
If you rely on a question-spotting strategy, it is likely
you will find yourself in difficulties when you sit the
examination. We strongly advise you not to adopt this
strategy.

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IS3167 Management and innovation of e-business

Examiners’ commentaries 2016

IS3167 Management and innovation of e-business – Zone A

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 2015–16. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2011). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refer to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements – if none are available, please use the
contents list and index of the new edition to find the relevant section.
Please note that this Examiners’ commentary refers to a newer edition
of the essential textbook than the edition listed in the subject guide. You
should always attempt to obtain the most recent edition of any textbook,
and where references are made to page numbers of previous editions,
use the index of the new edition to find the relevant section.
Edition listed in subject guide: Chaffey D., fourth edition (2009)
Edition referred to in this Examiners’ commentary: Chaffey D., fifth
edition (2011)

Comments on specific questions

Candidates should answer THREE of the following SIX questions. All
questions carry equal marks.

Question 1
Discuss whether the growth of business-to-consumer e-business is likely to lead
to the death of traditional shopping centres.
Reading for this question
Chapter 4 of the subject guide.
Approaching the question
This B2C question is evidently a ‘discussion’ type of question where there
are, at least, two sides to the argument, that is, whether or not e-business
will lead to the death of traditional shopping centres. Extreme enthusiasts
for e-business might foresee the demise of shopping centres while, at the
other end of the spectrum, others might argue for a ‘business as usual’
or ‘nothing will change’ conclusion. A mid-point in the discussion would
be that shopping centres would change but not die. Clearly, none of us
can accurately predict the future and so there is no ‘right’ answer; rather,

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 Examiners’ commentaries 2016

marks are awarded according to the quality of your argument and the
extent of your knowledge of B2C.
In answering this question, you need to cover both sides of the argument.
A good way of doing this would be to explain the value proposition
of online B2C, but also to point out the constraints on online B2C, for
example, problems of consumer uncertainty and lack of trust. You should
also discuss the increasingly familiar phenomenon of multi-channel
shopping (‘clicks and mortar’) as a mid-point of the argument. This type of
answer would be an acceptable answer.
An excellent answer would explore much more the social and
psychological aspects of shopping, as well as pointing out the inherent
advantages of traditional shops in terms of expert personal service,
cheaper customer acquisition and the opportunity to act as showrooms for
products. It would also look at the problems of operating multi-channel
retailing.
Providing practical examples is normally good examination practice and
this question, in particular, invites practical examples. These could be local
to where you live or international ones, such as Amazon.

Question 2
Discuss why and how commercial organisations are using web 2.0 tools as part
of their everyday business. Make use of examples in your answer.
Reading for this question
Chapter 8 of the subject guide.
Approaching the question
This question refers to the external and internal uses by organisations
of web 2.0 tools, such as social networks, blogs and wikis. Most
organisations, especially commercial ones, make extensive use of
networks such as Facebook and Twitter, as is clear to all of us who use
these networks for leisure purposes or to link with friends. Less obviously,
organisations are also using them internally. This question asks ‘why’ and
‘how’.
An acceptable answer would argue that such networks improve both
external and internal communication with customers, trading partners
and staff. These tools facilitate the sharing of information and the
improvement in interaction in increasingly competitive markets. Marketing
and customer relationship management can gain tremendously through
using these tools by allowing commercial organisations to get much closer
to their customers. Web 2.0 tools encourage a more informal and friendlier
style of communication. The question specifically asks for examples and
you must provide some; either ones that you have personally experienced
or that you have read about.
While the external activity is much more prominent, an excellent answer
would give almost equal attention to why and how organisations use these
tools internally. Large multinationals can appear remote and unfriendly
to their far-flung staff and new young recruits are not attracted by the
bureaucratic practices traditionally associated with such companies.
Hence, an organisation’s quality of staff may be at risk. Innovation in
products and services is becoming more important and this typically
means collaborating with people and start-up companies outside the
organisation, as well as improving internal cooperation between different
parts of the company. The increase in outsourcing also provokes a need for
constant and effective collaboration with trading partners.

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IS3167 Management and innovation of e-business

Question 3
What is vendor-managed inventory? How are information and communication
technologies used to support vendor-managed inventory? What are the
advantages and disadvantages of vendor-managed inventory for suppliers and
retailers?
Reading for this question
Chapter 7 of the subject guide.
Approaching the question
This supply chain management (SCM) question is essentially
straightforward. Vendor-managed inventory (VMI) is fairly common,
especially in the supermarket industry, but is a radical departure from
traditional SCM practice. The question is in three parts. The first part calls
for a brief description of VMI. The second part invites you to link recent SCM
technologies with VMI – EDI and RFID are the obvious examples to use. The
third part emphasises the slightly different concerns of retailers and suppliers
by asking for the advantages and disadvantages for each party.
An acceptable answer would cover the three parts of the question,
although you might have to think carefully regarding the third part. You
need to answer each part equitably and hence you should be careful not
to write too much about the technologies and hence skimp on the first and
third parts.
An excellent answer would provide this balance between the different
parts of the question and give the examiner confidence that you
understand not just the technical detail of the technologies but also the
marketplace context in which they are used. The emphasis would not
be on the technologies but on how they facilitate accurate information
exchange between the two parties. This would also extend not just into
considering the different concerns of retailers and suppliers but also their
common aims.

Question 4
How does Facebook add value as an intermediary? How might Facebook be
disintermediated? Justify your answer theoretically.
Reading for this question
Chapter 3 of the subject guide.
From the texts in Essential reading:
Cordella, A. ‘Transaction costs and information systems: does it add up?’,
Journal of Information Technology 21(3) 2006, pp.195–202.
Picot, A., C. Bortenlanger and H. Rohrl ‘The organization of electronic markets:
contributions from the new institutional economics’, Information Society
13(1) 1997, pp.107–23.
Approaching the question
This is a straightforward question aimed at testing your understanding
of the transaction costs theory and its implications in the context of
intermediation and re-intermediation. The answer needs to discuss under
which conditions intermediaries can offer value by better managing the
complexity of electronic marketplaces. The answer should explain that
electronic markets can be more uncertain, diversified and complex than
traditional marketplaces and hence have higher transaction costs that can
be mitigated by consultant driven intermediaries. You should discuss how
Facebook could offer consultant driven services to other companies that
rely on the data Facebook collects and analyses.
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 Examiners’ commentaries 2016

Intermediaries, especially in the digital economy, can be very successful

in helping agents to overcome the frictions of the market. To succeed they
have to offer services that are difficult to be copied or limited.
A good answer would discuss how competitors could develop data
collection and analysis competences similar to those of Facebook and
hence disintermediate its services.
An excellent answer would articulate on the technical and organisational
competences that companies willing to disintermediate Facebook must have.

Question 5
What are the main characteristics of B2B buyer-oriented marketplaces and
supplier-oriented marketplaces? What are the main challenges for these
marketplaces? Justify your answer theoretically.
Reading for this question
Chapter 6 of the subject guide.
From the texts in Essential reading:
Chaffey, D. E-business & e-commerce management: strategy, implementation and
practice. (Harlow: Financial Times/Prentice Hall, 2011) fifth edition, [ISBN
9780273752011] especially Chapter 7.
Approaching the question
To answer this question you need to reflect on the main characteristics
of B2B marketplaces in general and to focus on the specific effects that
ICT investments have on the configuration of electronic marketplaces
where the investment in ICT is made to support the exchange among the
parties. It is important to highlight the differences that exist among the
B2B marketplace which are the consequence of the orientation of the
marketplace (see Chaffey, 2011, Chapter 2).This question asks you to
discuss the challenges faced by both buyers and sellers in B2B electronic
marketplaces and to explain the different challenges associated with the
different orientations of the marketplace.
A good answer would elaborate on how ICTs can create market distortions
in favour of the party that is in control of the technology. The exploitation
of these distortions can create situations that are not sustainable for
the party that is not in control of the technology. This is the main risk
associated with vendor and buyer oriented marketplaces. These risks
can be mitigated by forcing the adoption of open standards and non-
proprietary technologies.
An excellent answer would instead discuss how intermediary oriented
marketplaces can offer a more sustainable and effective environment to
enable B2B electronic exchanges.
You should discuss the arguments in the light of transaction cost and
principal agent theory.

Question 6
Discuss how e-business can support a retailer to gain access to a global
marketplace. Justify your answer theoretically.
Reading for this question
Chapters 3 and 11 of the subject guide.
Approaching the question
The question aims to explore your broad understanding of information
management and how companies use information systems to get better

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information on competitors and markets; also on how to meet demand

in places where they do not have a current presence. In the specific
example, we expect you to discuss the effect of ICTs on search costs and
on the reduction of control costs. We expect you to analyse and discuss
the power of having better information management to participate in a
global marketplace. You may explore many examples, from the use of
information services, such as Google analytics and Twitter, to more specific
use of 3D printing or other manufacturing technologies that reduce the
cost of product distribution.

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 Examiners’ commentaries 2016

Examiners’ commentaries 2016

IS3167 Management and innovation of e-business – Zone B

Important note

This commentary reflects the examination and assessment arrangements

for this course in the academic year 2015–16. The format and structure
of the examination may change in future years, and any such changes
will be publicised on the virtual learning environment (VLE).

Information about the subject guide and the Essential reading

references
Unless otherwise stated, all cross-references will be to the latest version
of the subject guide (2011). You should always attempt to use the most
recent edition of any Essential reading textbook, even if the commentary
and/or online reading list and/or subject guide refer to an earlier
edition. If different editions of Essential reading are listed, please check
the VLE for reading supplements – if none are available, please use the
contents list and index of the new edition to find the relevant section.
Please note that this Examiners’ commentary refers to a newer edition
of the essential textbook than the edition listed in the subject guide. You
should always attempt to obtain the most recent edition of any textbook,
and where references are made to page numbers of previous editions,
use the index of the new edition to find the relevant section.
Edition listed in subject guide: Chaffey D., fourth edition (2009)
Edition referred to in this Examiners’ commentary: Chaffey D., fifth
edition (2011)

Comments on specific questions

Candidates should answer THREE of the following SIX questions. All
questions carry equal marks.

Question 1
Discuss whether the growth of business-to-consumer e-business is likely to lead
to the death of traditional shopping centres.
Reading for this question
Chapter 4 of the subject guide.
Approaching the question
This B2C question is evidently a ‘discussion’ type of question where there
are, at least, two sides to the argument, that is, whether or not e-business
will lead to the death of traditional shopping centres. Extreme enthusiasts
for e-business might foresee the demise of shopping centres while, at the
other end of the spectrum, others might argue for a ‘business as usual’
or ‘nothing will change’ conclusion. A mid-point in the discussion would
be that shopping centres would change but not die. Clearly, none of us
can accurately predict the future and so there is no ‘right’ answer; rather,

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IS3167 Management and innovation of e-business

marks are awarded according to the quality of your argument and the
extent of your knowledge of B2C.
In answering this question, you need to cover both sides of the argument.
A good way of doing this would be to explain the value proposition
of online B2C, but also to point out the constraints on online B2C, for
example, problems of consumer uncertainty and lack of trust. You should
also discuss the increasingly familiar phenomenon of multi-channel
shopping (‘clicks and mortar’) as a mid-point of the argument. This type of
answer would be an acceptable answer.
An excellent answer would explore much more the social and
psychological aspects of shopping, as well as pointing out the inherent
advantages of traditional shops in terms of expert personal service,
cheaper customer acquisition and the opportunity to act as showrooms for
products. It would also look at the problems of operating multi-channel
retailing.
Providing practical examples is normally good examination practice and
this question, in particular, invites practical examples. These could be local
to where you live or international ones, such as Amazon.

Question 2
‘Users are not the enemy.’ Discuss this statement in the context of information
systems security.
(Hint: discuss why users (employees) can be seen as problematic by information
systems security managers and discuss ways of addressing the problem.)
Reading for this question
Chapter 10 of the subject guide.
Approaching the question
This question on e-business (or information systems) security concerns
how security managers deal with the security concerns arising from the
behaviour of employees. However, before dealing with the question itself,
it makes sense for an answer to discuss briefly the importance of security
in the e-business context and the risks and consequences of security
failures, especially in the light of an increasing variety of threats. Then
you should distinguish between intentional (malicious) and unintentional
behaviour before turning to describe how security managers deal with
each type of behaviour.
An acceptable answer would cover all of the above, including mentioning
the need for education and training, as well as passwords, for employees
and the need for software protection, such as firewalls.
An excellent answer would delve more deeply into the psychology of
employees who often focus on their own jobs with little concern for
organisational security. In fact, they may resent what they might consider
to be unjustified interference and a waste of (their) time. Furthermore,
an excellent answer would examine security policies, their cost and their
delivery in large organisations with many thousands of employees. This
would include the issue of how to strike a balance between ‘carrots’ and
‘sticks’ in order to change behaviour and attitudes, especially where this
involves a change in the underlying organisational culture.

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 Examiners’ commentaries 2016

Question 3
Why are some industries moving away from lean supply chains (i.e. optimised for
cost-efficiency) to more flexible configurations?
(Hint: start with a justification for lean supply chains and then examine their
disadvantages in practice).
Reading for this question
Chapter 7 of the subject guide.
Approaching the question
This question concerns the different types of supply chains and their
characteristics that can be observed in different industries. A good place to
start your answer would be a brief description of traditional fragmented
supply chains and the shift towards lean supply chains and what exactly
this means. Lean supply chains have their advantages but they also have
disadvantages, including their lack of flexibility and adaptability. This
includes their lack of resilience in the face of supply chain disruptions,
such as earthquakes and tsunamis. This issue includes the important
trade-off between efficiency and service – an ‘efficient’ supply chain does
not always provide the best ‘service’ to every organisation that is involved.
Powerful organisations can (and do) insist on better service, even when
this reduces the efficiency of the overall supply chain. Configurations that
are more flexible, such as responsive and agile chains, which take more
into account of the industry and product context (including uncertainty),
have evolved in some industries. However, flexibility normally has a cost,
in terms of the provision of spare resources, and tends to decrease the
efficiency of the overall supply chain.
An acceptable answer would distinguish between the different types
of supply chain, noting the different levels of uncertainty in different
industries. It would also show an awareness of how technology can be
employed in supply chain design.
An excellent answer would go more deeply into the political and
economic relationships between supply chain partners and the conflicting
pressures of competitive product markets, global sourcing and increased
complexity. The dangers of supply chains becoming too lean and too long
would be noted, together with examples of good practice (e.g. Zara)
and bad judgement (e.g. Ericsson). Finally, you should also mention the
complications of consumers that are more discerning, the often-crumbling
public infrastructure and the extension of the supply chain to consumers’
doors (through B2C e-business).

Question 4
How does Facebook add value as an intermediary? How might Facebook be
disintermediated? Justify your answer theoretically.
Reading for this question
Chapter 3 of the subject guide.
From the texts in Essential reading:
Cordella, A. ‘Transaction costs and information systems: does it add up?’,
Journal of Information Technology 21(3) 2006, pp.195–202.
Picot, A., C. Bortenlanger and H. Rohrl ‘The organization of electronic markets:
contributions from the new institutional economics’, Information Society
13(1) 1997, pp.107–23.

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IS3167 Management and innovation of e-business

Approaching the question

This is a straightforward question aimed at testing your understanding
of the transaction costs theory and its implications in the context of
intermediation and re-intermediation. The answer needs to discuss under
which conditions intermediaries can offer value by better managing the
complexity of electronic marketplaces. The answer should explain that
electronic markets can be more uncertain, diversified and complex than
traditional marketplaces and hence have higher transaction costs that can
be mitigated by consultant driven intermediaries. You should discuss how
Facebook can offer consultant driven services to other companies that rely
on the data Facebook collects and analyses.
Intermediaries, especially in the digital economy, can be very successful
in helping agents to overcome the frictions of the market. To succeed they
have to offer services that are difficult to be copied or limited.
A good answer will discuss how competitors can develop data collection
and analysis competences similar to those of Facebook and hence
disintermediate its services.
An excellent answer will articulate on the technical and organisational
competences that companies willing to disintermediate Facebook must
have.

Question 5
What are the main characteristics of B2B buyer-oriented marketplaces and
supplier-oriented marketplaces? What are the main challenges for these
marketplaces? Justify your answer theoretically.
Reading for this question
Chapter 6 of the subject guide.
From the texts in Essential reading:
Chaffey, D. E-Business & E-commerce Management: strategy, implementation and
practice. (Harlow: Financial Times/Prentice Hall, 2011) fifth edition [ISBN
9780273752011] especially Chapter 7.
Approaching the question
To answer this question you need to reflect on the main characteristics
of B2B marketplaces in general and to focus on the specific effects that
ICT investments have on the configuration of electronic marketplaces
where the investment in ICT is made to support the exchange among the
parties. It is important to highlight the differences which exist among
the B2B marketplaces which are the consequence of the orientation of
the marketplace (see Chaffey, 2009, Chapter 2).This question asks you to
discuss the challenges faced by both buyers and sellers in B2B electronic
marketplaces and to explain the different challenges associated with the
different orientations of the marketplace.
A good answer will elaborate on how ICTs can create market distortions in
favour of the party that is in control of the technology. The exploitation of
these distortions can create situations that are not sustainable for the party
that is not in control of the technology. This is the main risk associated
with vendors and buyers oriented marketplaces. These risks can be
mitigated by forcing the adoption of open standards and non-proprietary
technologies.
An excellent answer will instead discuss how intermediary oriented
marketplaces can offer a more sustainable and effective environment to
enable B2B electronic exchanges.

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 Examiners’ commentaries 2016

You should discuss the arguments in the light of transaction costs and
principal agent theory.

Question 6
Discuss how e-business can support a retailer to gain access to a global
marketplace. Justify your answer theoretically.
Reading for this question
Chapter 3 and Chapter 11 of the subject guide.
Approaching the question
The question aims to explore your broad understanding of information
management and how companies use information systems to get better
information on competitors and markets; also on how to meet demand
in places where they do not have a current presence. In the specific
example, we expect you to discuss the effect of ICTs on search costs and
on the reduction of control costs. We expect you to analyse and discuss
the power of having better information management to participate in a
global marketplace. You may explore many examples, from the use of
information services, such as Google analytics and Twitter, to more specific
use of 3D printing or other manufacturing technologies that reduce the
cost of product distribution.

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