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ACCA Strategic Professional · Strategic Business Leader · E-business: value chain

Harbor Textiles, a fabric manufacturer, has built a portal that lets its mill's own buyers order dyes and yarn electronically from a panel of approved suppliers. The portal also feeds approved purchase orders directly into the mill's stock system. Which e-business category does this activity best represent, and what does it mainly aim to achieve?

This is e-procurement, a buy-side e-business activity. Electronic ordering from approved suppliers, linked to stock systems, reduces purchasing process costs, improves control and integrates the supply chain. It is not consumer selling, marketing or channel disintermediation, because it concerns the inputs the mill buys rather than its sales.

  1. AE-procurement, which aims to reduce purchasing process costs and improve supply chain integrationCorrect
  2. BE-marketing, which aims to attract new retail customers through search engine optimisation
  3. CE-commerce selling to consumers, which aims to increase online sales revenue
  4. DDisintermediation, which aims to remove the mill's retailers from the distribution channel

Explanation

The portal supports purchasing of inputs from suppliers and links orders to internal systems. That is e-procurement (a buy-side activity), whose main benefits are lower transaction cost, tighter control and supply chain integration. It does not involve selling to consumers or marketing, nor does it change the sales channel.

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