Last edited 17 Nov 2019

Business to business

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[edit] Introduction

Business to business (sometimes abbreviated B2B or BtoB) is a term that encompasses the range of transactions and services which can take place between a business and other businesses. These transactions can take place at one end of the scale when small businesses sell and buy products from each other, or at the other end, when large quantities of goods and services flow between big companies.

Typical examples include the activities taking place between manufacturers and wholesalers or wholesalers and retailers.

A retailer selling to a customer or end user is not included in B2B; it is in fact business to consumer (B2C). Furthermore, when a business enters into transactions with government, it is called business to government (B2G).

[edit] The supply chain

A typical supply chain comprises a series of B2B transactions. A company buys products and/or services from other companies to help produce its final product, or to facilitate its business activities. As an example, a specialist machinery manufacturer sells glass-making equipment to a glass-making factory which in turn buys sand from a quarry and sells the finished glass to a DIY store. All of that chain is part of B2B. However, when the DIY store sells the glass to a consumer (or end user) it is part of a B2C transaction.

B2B methods encompass a wide range of activities, usually to make a profit for each of the businesses involved. These activities include sales and marketing, publishing, use of social media and the provision of other services.

Products used by businesses can be complex, or specially designed and typically involve significant development costs. Suppliers of these products tend to be highly skilled and become intricately involved with their customers’ businesses, in many cases catering for their specific requirements.

The players in a B2B chain may be concentrated in a specific geographical area for logistical and developmental reasons. For example, businesses may agglomerate around natural resource concentrations, e.g brickmakers located close to clay quarries. Another reason may be to be close to a pool of highly skilled workers, such as is the case at Cambridge Science Park in the UK, or Silicon Valley in the US. The latter features a cluster of software and hardware manufacturing industries, related mostly to computing, all realising the benefits associated with being in close proximity with each other. In this way, clusters of industries form in specific areas.

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