Last week we learned and read about social networks, the connections between individuals. Everyone has relationships with people we know or, sometimes, may not even know. These connections are important to understand, because they describe the flow and exchange of information. Especially with the rise of social media and other new communication channels, the process of information sharing becomes easier, cheaper and faster. Thus, the network of connections grows and becomes more complicated.
However, networks are not always social. There are countless other networks, e.g. for businesses. For a business, it is important to know where you stand in the network, what your role is, what content you share and receive as well as how you can use this information to create a competitive advantage. Because I am interested in the business networks, I read several articles on business articles and stumbled upon Larry Hawes ‘Types of Business Networks’ on Forbes.com.
Hawes (2010) named several industries for business networks, namely voice, financial, supply, transportation, retail, service, content, social. Two interesting sectors are retail and transportation. Due to the fast development of technology, transportation is also becoming cheaper and faster. A French customer can order a jacket from Australia and let it ship to England, for example. The network of transportation thus is responsible for the movement of goods around the world and is very complex. Well-known examples of package distribution examples are FedEx, DHL, etc. According to Hawes (2010) there are two types of retail networks: networks affiliated with one brand or and others that sell goods from other brands. HP, for example, sells their products through multiple partners, whereas McDonalds only sells its own products.
Kauffman et al (2010) pointed out that each company in a network contributes to its network differently and therefore there might not be fair value sharing. Based on this idea, would you argue that it is smarter for a company to minimize their network or maximize their network? By operating in a small network, a business is less dependent on other companies but increases competition. By operating in a large network, you might be the company that contributes more value (and thus, money), you are more dependent, but you also have more cooperations which decreases competition and assures safety…
