Value networks, both internal and external, are important assets for companies to improve their operations and gain a competitive advantage. External networks include customers, other businesses, and government agencies, while internal networks are the departments within a company. Information technology provides tangible and intangible benefits, but can also create compatibility issues with external networks.
Value networks represent social or technical assets that companies can use to improve their operations. Today’s business environment abounds in value networks as technology continues to increase a company’s knowledge or intangibles. Networks are external or internal, although both networks can exist in an enterprise. Companies often exploit these tools to gain a competitive advantage in order to increase market share or improve the goods and services offered to consumers.
External value networks are those that include customers, other businesses, shareholders, or other agencies that can impact the business. The information gathered by these groups allows the company to receive performance feedback and adjust operations accordingly. Some groups, such as other businesses and government agencies, can help provide insight into changes in the business environment. For example, competitors who switch products or enter new markets will signal that other markets or market segments have profit potential. Government agencies will tend to send signals about a change in monetary or fiscal policy that can significantly affect the way the company does business.
Internal value networks are the divisions or departments that make up the entire company. Customer service, order fulfillment, accounting, manufacturing, or human resources are among the networks often found within a business. The knowledge and intangible benefits gleaned from internal networks and communications ensure that all employees add value to the company. Owners and managers will often seek to break down existing barriers in value networks to increase the flow of communication throughout the business. Divisions or departments that don’t pass information through the company can hinder another part of the company and ultimately create a decrease in the overall value of the company.
Information technology creates tangible and intangible benefits in value networks. The tangible benefits come from the equipment or software a business uses with the network. Many companies will create a unique hardware system for their operating environment that gives them a core competency not easily created and used by another company. This internal value doubles when the company uses a software program or system created by company employees. While this can build strong expertise, it can have the downside of connecting to external value networks. Outside companies may use networks with an operating system that is incompatible with other systems. This results in a disadvantage of using specialized networking hardware or software.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
