By: Debasree Paul

By : Debasree Paul

What is Value Network? It i s a netw or k; of all th e p eopl e an d

com pa nies ; th at con tribute to th e increas e i n a p rod uct’ s val ue, a s th e firm pr oceed s th ro ugh vari ou s s ta ges of manufactu re a nd di stri buti on. Often va lue netw or ks a re con side red to con sist of gr ou ps o f com pa nies w or king togeth er to pro duce a nd tr anspor t a pr od uct to th e cu sto mer .

Relat ionshi ps am ong cu sto me rs of a

single comp an y ar e e xa mpl es o f h ow va lue netw or ks can b e fou nd in an y organ izati on. Com pan ies can link th ei r customers to geth er by di rect m eth ods like th e tel eph on e or indirect m eth ods l ike com bi ning custom er’ s re sou rces to geth er .

Chri stensen def ines va lue n et wo rk a s: "T he collecti on o f ups tre am suppl ier s,

dow nstr ea m ch an nel s to m ar ket , a nd ancillary pr ovi de rs th at suppor t a com mon bu sines s m od el w ith in a n indu stry .

Example Pal m, the lead ing m an ufactu rer of

handhel d devi ces , h as a w hol e com munity of - supp lier s & as sem bl er s of sem icon du cto r comp on en ts , p las tic cases , LCD displ ays & acc essor ies ; of on line & of f-line res el lers , a nd of 45,000 com pl em en tor s w ho h ave cred ited o ver 5,000 a ppl icati on s fo r th e Pal m Opera ti ng Sys te ms

Th is pers pecti ve yi el ds sever al insigh t : 4) Th e com pa ny can es ti mate w heth er more

mon ey is mad e ups trea m o r d own strea m , incase it m igh t wan t to inte grate ba ck ward o r for wa rd

6) Th e com pa ny is mo re aw are of th e

distu rba nces in th e suppl y chai n th at migh t cause cos ts , p ri ces or s uppl y to ch an ge s udd en ly

Val ue n etwo rks consists o f th es e com pon en ts : A set of custom ers . Some s ervi ce t he custom ers all use, an d en abl es inter acti on b etwe en th e cu sto mer s. Some o rgan izati on that pro vi des th e ser vi ce. A set of contra cts th at en ab les acces s to th e ser vi ce.

The pu rp os e of va lue netw or ks i s to crea te th e m os t be nef it for th e p eopl e i nvol ved in th e n etwork . Th e i ntan gibl e va lue of kn ow led ge wi th in

th ese n etwo rks is just as i mpo rta nt a s a mon etar y va lue.

In or de r to succ ee d , knowled ge m ust b e

shar ed to crea te th e bes t situati on s or op por tu niti es .

An ob vi ou s exa mpl e of a va lue

net wor k i s th e n etwo rk fo rm ed by ph one users .

 The ph on e com pa ny pr ovi des a

servi ce, u sers en ter a contr act w ith th e ph one compa ny and i mmed iatel y h as acces s to all th e val ue n etwo rk of ot her cu stom er s o f the p hon e com pa ny.

Marketing channels Mos t pr od ucers d o not s ell th ei r goo ds

direc tl y to th e final u sers ; be twee n th em sta nds a set of inter med iar ies per for mi ng a vari ety of functi ons.

Th es e inter med iar ies betwe en th e

pr od ucers & cu sto me rs , con sti tu te a marketi ng channel ( also cal led a t rad e ch an nel or d istr ibu ti on ch an nel ).

Fo rm ally, marketi ng channel s ar e sets

of i nterd epe nden t o rga nizati on s invol ved in th e pro ces s o f ma ki ng a pr od uct o r servi ce a vai lab le for use o r con sump ti on .

 They ar e th e set of path wa ys a

pr od uct o r servi ce f ol low s af ter pr od ucti on , culminati ng in p urch ase and u se b y th e f inal en d user .

Some i nterm ed iari es—w hol es al ers and re tai lers —bu y, ta ke t itl e to, an d res ell th e mer chandise; th ey a re cal led mer chan ts. Oth ers —b ro kers , ma nufa ctu re rs ’ re pres en ta ti ves , sal es agen ts—s ea rch for cust om ers an d may negoti ate on th e pr od ucer’ s beh al f but to n ot take ti tl e to th e goo ds ; th ey ar e ca lled agen ts. Sti ll o th er s—tra nspor tati on compa nies , inde pen den t ware hou ses , b an ks, adve rti sing a gen ci es —a ssist i n the distr ibu tion pro ces s bu t nei ther ta ke ti tl e