Page 263 - Electronic Commerce

Chapter 5

stakeholders. The most common services offered by states and similar regional
governments are the following: access to the text of state laws and regulations, renewal of
licenses, promotion of the state to businesses considering new locations, job listings,
promotion of tourism in the state, tax forms and filing information, and information for
companies that want to do business with the state.
Most local U.S. governments now have Web sites that offer residents a variety of
information. The Web sites of larger cities (such as Minneapolis or New Orleans) include
238
transcripts of city council meetings, local laws and regulations, business license and tax
administration functions, and promotional information about the city for new residents or
businesses seeking new locations. Smaller cities, towns, and villages are also using the
Web to communicate with residents (see the Cheviot, Ohio, Web site for one example).
These local government Web sites have proven to be useful general communication tools
in the aftermath of natural disasters.

Network Model of Economic Organization in Purchasing: Supply Webs
In Chapter 1, you learned about the three different forms of economic organization:
markets, hierarchies, and networks. One trend that is becoming clear in purchasing,
logistics, and support activities is the shift away from hierarchical structures toward
network structures. The traditional purchasing model had one hierarchically structured
firm negotiating purchase terms with several similarly structured supplier firms, playing
each supplier against the others. As is typical in a network organization, more businesses
are now giving their Procurement Departments new tools to negotiate with suppliers,
including the possibility of forming strategic alliances. For example, a buying firm might
enter into an alliance with a supplier to develop new technology that will reduce overall
product costs. The technology development might be done by a third firm using research
conducted by a fourth firm.
While reading the previous sections in this chapter, you might have noticed that
companies can have other firms perform various support activities for them. These
outsourcing arrangements are also examples of firms moving toward a network model of
economic organization. Consider a business that uses one supplier to manage its payroll,
another to administer its employee benefits plans, and a third to handle its document
storage needs. The document storage service supplier might store the documents of the
payroll service supplier and the benefits administration firm. The payroll service supplier
might handle the payroll for the benefits administration firm. A fourth firm might provide
online backup storage for the files of the other three companies. Of course, the payroll
firm and the employee benefits firm might form a marketing partnership to sell both of
their services to particular market segments.
Some researchers who study the interaction of firms within an industry value chain
use the term supply web instead of “supply chain” because many industry value chains
no longer consist of a single sequence of companies linked in a single line, but include
many parallel lines that are interconnected in a web or network configuration made up of
strategic alliances or complex configurations of outsourcing contracts.
Highly specialized firms can now exist and trade services very efficiently on the Web.
The Web is enabling this shift from hierarchical to network forms of economic

Copyright 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.