Opening the Gate on Gatetrade.net - The Making of the First Nordic B2B Marketplace (A) (B1) (B2) (B3)

B2B e-marketplaces retained their promise after the Internet bubble burst, but launching them proved harder than industry analysts predicted. Nordic players believed only alliances of IT, telecom, logistics and banking partners could make e-marketplaces work. In this four-part case by Mark Hunter and Professor Yves Doz explore the alliance behind the first e-marketplace in the region. The partners have, at times, conflicting goals, and need to build common ground. They confront opportunities unanticipated in their business plan, including the world’s first business to government (B2G) portal. They also meet serious problems: build marketing networks with internal and external partners, expand abroad, and create content. They write their success manual as they go, trying to keep multiple interests in line as they discover together an e-marketplace strategy.

by Yves Doz, Mark Hunter
Last Updated: 23 Jul 2013

It may seem like an unlikely cast of characters: Four of the largest and most traditionally oriented companies in Denmark are joining together to enter the New Economy. But what do Post Danmark, Danske Bank, Tele Danmark (TDC), and Maersk Data really have in common? Are their complementary competencies – in logistics, telecommunications, finance, and IT – the right ones for a venture as risky as an e-marketplace? Are they equally committed to overcoming the challenges of helping to invent a new industry?

In this four-part case, Mark Hunter, Senior Research Fellow, and Yves Doz, The Timken Chaired Professor of Global Technology and Innovation and Professor of Business Policy, begin by analysing the founding partners of gatetrade.net. All four emerge from a society in which an executive’s word is his bond – a constraint that impacts on the formal structure of their alliance. In this first phase, the issue of partner selection seems – on the surface – to have been decided by default. Another crucial issue, alliance goals, likewise contains hidden complexities. The initial goal is simply to collaborate – what they will collaborate on, and how, remains to be decided.

Through Oracle Denmark, the partners identify B2B e-marketplaces as their most promising opportunity. Within a few months, driven by the necessity to be the first mover in their home market, they create a business plan and shareholder agreement. But resistance remains, both within the partners’ organizations and between them. How is an e-marketplace coherent with Post Danmark’s core letter-and-parcel business? (This is the “trigger issue” for the case, enabling the reader to enter into the broader issues.) Can Oracle deliver a viable platform? Is it wiser for TDC to collaborate with their potential rival, Maersk Data, or to compete with them?

Following the A case, a suite of shorter cases explores issues confronted by gatetrade.net and its founders as they enter the real-world arena. Case B1 treats the challenge of “critical mass” – creating a self-sustaining core of buyers and sellers. Gatetrade.net’s partners will have to put a significant share of their own procurement online, sooner rather than later. But the partners have different amounts of purchasing power to commit. Their IT systems and procurement personnel may not be ready either, and one partner, Post Danmark, is bound by European Union procurement regulations that are incompatible with the marketplace. Their initial marketing plan, which calls for collaboration with the founders’ sales forces and outside IT consulting agencies, has to be sold to sceptical executives.

In Case B2, a startling new twist arises, as the Danish government makes a highly public commitment to launching the world’s first “B2G” (business to government) procurement portal. Can gatetrade.net take it on without subverting its original B2B plan? The government’s conditions scare more than one bidder for the contract. Can gatetrade.net afford not to win it – and with it, privileged access to the largest buyer in Denmark?

Case B3 follows gatetrade.net as it expands abroad. The founders understand that if they do not grow rapidly beyond Denmark, they risk being surrounded and smothered by similar Nordic alliances. But on what terms can they attract new allies? Can they maintain control of the business, or must they surrender hopes of dominance in order to survive?

Appendixes offer capsule portraits of the founders, analysis of the hype and reality of the global B2B e-marketplace industry through 2001, explanation of pricing for marketplace membership and services, and an introduction to the cost and control issues of creating online catalogue content.

This series can be used for MBA and Executive courses focused on alliances, corporate entrepreneurship, e-business initiatives, and globalisation (in particular, European enterprises).

INSEAD 2002

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