Indiv 4 - Information Aggregation Through Electronic Market

Suggest two other business cases in which this method can be used to collect information. What problems do you see besides the ones mentioned in the Background information section? What kind of information system do you need to design to support this method of collecting information? Provide a simple hardware/software configuration.

1. There are two other types of business that might use the information aggregation method. An international freight forwarding company needs to collect information to predict the currency exchange rate. International trades are highly influenced by currency exchange rates. For example, if the exchange rate between US dollars to Canadian dollars decreases, US import from Canada will also decrease, but US export to Canada will increase. Therefore, international freight forwarders need to predict the rate for their business planning. They can use this method to collect currency rate prediction from the currency trading brokers.
The airline industry can also benefit from this method by collecting information to predict the future fuel price. Airlines need to sell tickets for flights in the future. Since fuel price fluctuates, the ticket price should also be adjusted. Airlines should collect information from the electronic market, and predict the future fuel price.

2. There are problems in this method besides the ones mentioned in the background information section. First of all, this method does not prevent or consider sudden catastrophic events that might suddenly crash the market. Second of all, each participant has its own predication on the market, but sometimes, it is only their personal beliefs. Even though the majority of participants might prefer one result in the market, but it is not a systematic analysis. Therefore, it might not be reliable.

3. An online trading system is a good enough for this practice. The company can setup a web server. It should contain account information of each participant, and allows them to trade on this electronic market on the website. Participants can trade on currency, fuel, or stocks depending on the company’s objective.