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Role of Intermediaries Analysis

Discuss the role of intermediaries in Business-to-Business (B2B)

In order to provide an answer to this question, it is first of all, necessary to understand what an ‘intermediary’ in a B2B transaction actually does. In real terms he/she could be said to bridge the gap between the buyer and seller, or in other words, establish essential communication lines between the parties intending to do EC business.

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In a traditional business, there are a plethora of intermediaries called middlemen, wholesalers, distributors, agents, etc. However, in an EC environment, many of these roles are dispensed with, and fundamentally, the objective of EC is to narrow down the gap between providers and consumers to the minimum. Moreover, with a view to curtail costs and ensure smooth and streamlined supply chain system, many computer manufacturers are obviating the services of intermediaries and seeking other means like private exchanges to sell their wares online. Again, in catering industry, it is seen that many hoteliers are not using wholesalers at all, for merchandising their products, with the result that fears of “disintermediation” also surface, due to apparent needs to create value chain systems that may favour a more centralised vendor management system with not many players in the chain, who may essentially prove only to hike costs. (Electronic Commerce A Managerial perspective. 2008, p.291).

Cultural roles in e-networking with Transcultural implications

It is seen that guanxis play an important role in development of e-intermediary business. Guanxis, as middlemen, successfully bridge the gap between buyers and sellers, being known to both parties, and thus help reinforce the concept of reintermediation, especially in Chinese cultures. It is observed that many western companies have successfully built their own guanxis in China. However group dynamics and knowledge of local language, especially Mandarin could pose a major barrier, since knowledge of local languages and cultures are a pre-requisite in building up strong guanxi networks in China. “As guanxi works through channels of familiarity, introduction by an intermediary are often more effective than self-initiated acquaintances.” (Luo 2000, P. 248).

Coming to the question and answer for reintermediation, it is seen that by using guanxi influence, the value chain management gets a good fillip, in that even unfamiliar cultures and work ethos could be successfully integrated to one’s own, in global business. However, it is necessary to build up the right contact channels to be able to integrate with a remarkable amount of success.

Yes, the writer does see, in his own environment and as well an ongoing cultural business change with the increasing use of e-intermediaries.

There are certain areas in business in which use of e-intermediaries are justified, given the kind of global networking necessary in business. It may be necessary to strike deals with unknown or unfamiliar terrains, and this is when e-intermediation becomes not only necessary, but also intrinsic to clinch the deal in our favour.

Through reintermeidiation networking, it is possible to succeed in business in a remarkable way, given the kind of complex and competitive business environment in which we operate today.

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In the final analysis, it translates to costs and revenues and no management system would like to incur costs which it could very well do without. However, at this stage one should be cautioned that intermediaries do play major roles when the situation demands performance. They could bring about a stronger and effective relationship between buyers and sellers in real time and could even make possible the management of numerous distinct trading partners, through making various independent exchanges more meaningful and productive. Besides, it is also possible that where there are innumerable players, like stock or commodity exchanges, the dissemination of intricate data could be realised more quickly and efficiently through intermediaries. It could also fill up the role of data processing agent with relative ease. It is also seen that when the choice of relying on privacy and confidentiality of data is concerned, computers serve better than humans in limiting information to the degree actually required.

Distinguish between buy-side and sell-side intermediaries

Buy-side refers to a situation when one buyer is to be selected from many sellers and sell-side refers to a scenario when one seller is to be selected from many buyers. Thus, it could be said that the intermediaries who deal with such kind of buy-side and sell-side are called buy-side intermediaries and sell-side intermediaries respectively. In cases of one-to-many, as in the case of restaurant or soft drink markets, or many-to-one, computer makers, it is seen that a single firm either does the entire selling (sell-side) or the entire buying (buy-side). (Electronic Commerce A Managerial perspective: The Basic Types of B2B E-Market & Services. 2008).

Thus, these kind of companies are termed ’company-centric’ since the concentration is just on one single company. In the case of such company focussed markets, the final choice, as to whom to include in buying and selling processes and the support system necessary, vests completely on such a company. Therefore, intermediaries who indulge in such buying and selling are essentially private e-market facilitators. (Electronic Commerce A Managerial perspective: The Basic Types of B2B E-Market & Services: Chapter 5 : B2B E-Commerce Selling and Buying in Private E-Marketing. 2008).

Further, it is seen that such one-to-many and many-to-one transactions could be carried out without the aid of facilitators, or intermediaries. However, in the case of bids, which need specialised market knowledge, it would be judicious to employ the services of intermediaries. It may be said that although buy-side and sell-side intermediaries may be used, the overall control and supervision would still be of a private nature since it is controlled by a single company.

Bibliography

Electronic Commerce A Managerial perspective: The Basic Types of B2B E-Market & Services: Chapter 6 : Exchanges, Directories and other support services. 2008. P.291.

Electronic Commerce A Managerial perspective: The Basic Types of B2B E-Market & Services: Chapter 5 : B2B E-Commerce Selling and Buying in Private E-Marketing. (2008).

Electronic Commerce A Managerial perspective: The Basic Types of B2B E-Market & Services: Chapter 5 : B2B E-Commerce Selling and Buying in Private E-Marketing. (2008).

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LUO, Yadong. (2000). Guanxi and Business. World Scientific. Web.

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