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RosettaNet Case
MIS 3537
Internet and Supply Chains
Spring 2014
Due Date: April 15, 2014
Refer to the case “RosettaNet and ebXML: Betting on the Right eBusiness Standard”
Answer the following questions briefly (6-7 lines each):
1. Why are standards necessary in eBusiness?
2. Which standard do you think Developcom should adopt? Explain your answer giving reasons from the case as well as the Exhibits at the end.
3. What do you understand by the term ‘network externalities’? Also explain the phenomenon of ‘winner takes all’ in markets with network externalities.
4. Why are network externalities important in eBusiness standard wars? Give examples from the RosettaNet case.
1. Why are standards necessary in eBusiness?
Standards are necessary in eBusiness because they help facilitate automation between companies. It is much faster, cheaper and efficient for companies to use automation as appose to processing transactions manually. However to utilize cross company automation there must be standards put in place so that information will effectively be translated between companies. For instance if two companies implemented an automation process but did not use standards, vital information could be lost or misrepresented during the data exchange process.
2. Which standard do you think Developcom should adopt? Explain your answer giving reasons from the case as well as the Exhibits at the end.
Developcom should adopt RosettaNet. RosettaNet is a forum that allows users to come together and solve supply-chain business problems as quickly and inexpensively as possible. RosettaNet could work on top of either ebXML infrastructure or RNIF. EbXML needed RosettaNet and other business-content industry-specific standards to provide a complete solution. RosettaNet has more PIPS, Users, and Install base. Rosetta Net’s vertical standards would allow Developcom to focus its marketing and sales efforts on specific high-tech industries, instead of spreading them across all industries. RosettaNet also has a better marketing strategy than exbml and is also supported by Intel and Cisco.
3. What do you understand by the term ‘network externalities’? Also explain the phenomenon of ‘winner takes all’ in markets with network externalities.
Network externalities are the effects that a user of a product has on the value of the product for other users. With network externalities the value of a product is determined by the number of users. In a market with positive externality the value of a product will increase with the number of users of the product. In a market with negative externality, or a ‘winner takes all’ situation, the value of a product will decrease for current users as more people adopt it. One example of negative externality is lock-in which occurs when users of a certain provider’s product are limited to only that provider’s products. Another example is congestion which is when the efficiency of a network decreases for current users as more users join.
4. Why are network externalities important in eBusiness standard wars? Give examples from the RosettaNet case.
Network externalities are important in eBusiness standard wars because the network is more valuable when more people are using the same network. In RosettaNet case, Developcom is involving both RosettaNet and ebXML. On one hand, it is because Developcom’s major customers are interested in RosettaNet. On the other hand, Developcom realized that ebXML is a rapid evolving market. Therefore, Developcom can find out its long term market for its product.