2 Micro-environmental analysis
The micro-environmentconsists of five key elements: competitors, customers, suppliers,
intermediaries and other stakeholders. At this level, the organisation has much more
direct control. In highly dynamic markets, competitors are constantly monitored in order
to understand their next move. Relationship management with both the buy side and
supply side of the exchange process is carefully controlled and managed. In addition,
location of trading, virtual value chain, channel structures and trading relationships form
an important part of the online trading context but are considered separately in Trading
relationships in B2B markets later in this chapter (see also Chapter 2).
Arguably, competitionis at the heart of any discussion about the micro-environmental
trading environment. In 1980, Michael Porter published his classic model showing how
these forces potentially shape the five main competitive forces that affect a company. In
2001, he revised this model to accommodate how the Internet influences industry struc-
ture. However, he is mindful to point out that in the dot-com boom and bust era the
Internet was the cause of many distorted signals. New technologies trigger rampant
experimentation that is often economically unsustainable (Porter, 2001). The value
chain model has been revised to reflect experiences of how Internet and digital tech-
nologies can alter the model.
An important part of this level of analysis is to develop an understanding of cus-
tomers and their behaviour in order to develop insight into how to get inside the minds
of online customers and to understand the drivers and barriers which impact on how
customers move through the buying process online. An important decision for digital
marketing planners is which groups of customers are the most attractive targets and best
match the organisation’s capabilities. In business markets, purchasing decisions are
almost exclusively goal-orientated. The decision-making unit (individuals involved in
the purchasing decision) will vary according to the buy class, the product type and the
importance of the purchase. The decision-making unit uses a range of choice criteria,
mainly technical and economic, to evaluate purchasing options. Tzong-Ru and Jan-Mou
(2005) argue that although the Internet has facilitated the connecting of markets across
the globe it has not altered the general criteria for B2B trading. Therefore, it is perhaps
reasonable to assume that choice criteria remain fairly constant whether an organisation
is buying on- or offline. However, the online environment can enhance and potentially
improve the efficiency of online trading by facilitating flow of logistics (leading to
potential cost savings), business flow (developing and extending markets), enhanced
cash flow (through streamlining and cost efficiencies in management and administra-
tion) and information flow (supporting decision making). It is important to remember
that a fundamental part of the organisational buying process is customer relationship
development and management. Trading via the Internet makes it possible to interact
with large numbers of customers whilst still treating them as individuals due to the
application of sophisticated e-CRM applications. However, it is important that such
applications are supported by appropriate organisational structures (see Chapter 6 for
further discussion of e-CRM).
Suppliers, intermediaries and other stakeholders are also considered as part of the
macro-environmental analysis. Perhaps the most significant change to occur as a result
of trading online is the nature of trading partnerships. New types of partnerships are
being formed with new types of partners in electronic trading hubs (e.g. marketsites).
Trading relationships are discussed again later in this chapter.
B2B E-CONTEXT