Q.01In the context of Porter's Five Forces, when a company faces high bargaining power of suppliers and low rivalry among competitors, which eBusiness model is most appropriate to reduce supplier dominance?+
Correct Answer: B — Revenue Sharing Model
When suppliers hold high bargaining power, the business strategy is to reduce supplier monopoly or strengthen buyer-side leverage. The Revenue Sharing (eHub/ePortal) model achieves this by enabling multiple companies to:
Pool together and place collective bulk orders, gaining economies of scale
Market/promote products collectively to reach a larger segment
Deal with customers on larger projects they couldn't handle alone
Share resources and profits proportionally among participants
The Digital Value Hub (eRegion) and Supply Chain Model are also relevant strategies for this force. Option A (FSP) addresses customer-side complexity, not supplier power. Option C is incorrect — the D2C model doesn't eliminate suppliers; it eliminates intermediaries between company and customer.
Q.02A company that sells products or services directly to end consumers via its own website, bypassing distributors and retailers entirely, is using which eBusiness model? What is a key competitive advantage of this approach?+
Correct Answer: C — Direct-to-Customer (D2C) Model
DELL Computer is the classic textbook example of this model. Key advantages include:
Pricing control — no intermediary margins means more competitive pricing
Build-to-order — produce only what customers request, reducing overstock
Receive payment earlier — customers pay upfront before manufacturing
Speed up new product release cycles — direct feedback loops accelerate innovation
Data-driven CRM — rich first-party customer data enables personalisation
This model is specifically suited to dealing with high bargaining power of buyers and rivalry among competitors, as it differentiates the brand and builds loyalty.
Q.03A travel booking website aggregates airline tickets, hotel bookings, and car rentals from multiple third-party service providers into a single customer-facing platform. It earns commission on third-party sales and also sells its own products. Which eBusiness model best describes this, and which Porter's force does it primarily address?+
Correct Answer: B — Full-Service Provider (FSP) Model
The FSP model is characterised by:
Offering a wide range of own and third-party products through a single interface
Multiple channels — internet, face-to-face, phone
Earning commission on third-party products plus direct revenue on own offerings
Acting as a single point of contact, reducing complexity for the customer
It primarily counters high bargaining power of buyers — when customers can easily compare prices, bundling everything into one provider with seamless UX and added-value services locks in loyalty and reduces switching incentive.
Q.04The Digital Value Hub (eRegion) model connects Tier-1 suppliers, Tier-2 suppliers, manufacturers, distributors, and customers through a shared digital ecosystem. Which of the following statements best describes its primary strategic purpose?+
Correct Answer: C — Industry-wide collaboration & competitive force
The Digital Value Hub is distinct from other models because its value comes from collective ecosystem strength, not from a single company's advantage. Its defining characteristics are:
Strong B2B partnerships between every node in the supply chain
Industry competitors willingly working together (co-opetition)
Trust relationships among rivals within the same industry
Functioning as a strong collective force against foreign competition
Accelerated innovation and co-creation of new products/services
The Boeing 7E7 (Dreamliner) case is a textbook example — components were manufactured across Japan, Australia, Canada, Italy, and the US in a deeply integrated extended enterprise network. The DVH is the eBusiness model mapped to addressing the Threat of New Entrants and Bargaining Power of Suppliers.
Q.05Consider the "Chocos" chocolate company case (Annex C of the syllabus). It currently has a basic B2C website with no online ordering, supplier management, or global marketing. Applying the eBusiness Models framework, which combination of models would most holistically address its declining global market share and strong local suppliers?+
Correct Answer: B — Supply Chain + Revenue Sharing + Digital Value Hub
Chocos faces multiple simultaneous Porter's forces that require a layered eBusiness strategy:
Supply Chain Model → Chocos' raw materials depend entirely on a strong united supplier association (high bargaining power of suppliers). Implementing SCM with EDI, real-time inventory, and electronic supplier collaboration weakens this dependency through transparency and efficiency.
Revenue Sharing / eHub → Cocoa farmers and local distributors can join a portal to collectively negotiate, market, and order, reducing the suppliers' monopoly and leveraging economies of scale.
Digital Value Hub (eRegion) → To counter foreign chocolate brands (rivalry + threat of substitutes), local manufacturers can form a digital ecosystem that co-promotes Sri Lankan chocolate identity, co-creates new products, and acts as a unified force in both local and global markets.
A Global Trade Platform layer can also be added to address Chocos' shrinking global market.
This multi-model approach maps to the 7Es eTransformation methodology — starting from environmental analysis through to eSystems implementation.