The widely popular business networks have different names and are growing in numbers everyday though the internet. Names such as Virtual Enterprise Networks, Virtual Collaborative Networks, Virtual Cluster Networks, Virtual Collaborative Supply Chains and Virtual Networked Enterprises are a few examples among many such names.
The most common type is the Collaborative Supply Chain Network which acts as the supply chain for a major organization or company and is prominent in the government sector and defense sectors.
The second most common type of network is the Joint Supplier Network and it represents a group of business suppliers operating under a common name jointly providing auxiliary business services. The Joint Product Development network is a group of small businesses and companies invest money and resources jointly to innovate, and perform research and development. The Subcontracting and Partnership Exchange virtual business networks are non profit industrial networks with the main objective to develop the regional economy.
The Virtual Enterprise Networks are formed by groups of small businesses or companies with the primary aim of bidding and winning large business contracts. The individual businesses and companies may posses the skills and expertise but may not have the financial backing to participate in such large contracts single handedly.
Hence by forming a collaborative network, the companies or small businesses achieve the capability to participate in large business deals and ventures. This article will help to identify each of these business networks and define parameters and factors to assess them.
Considering the varied types of business networks, it is important therefore device method to assess the worth and value of these networks. Especially for the prospective customers and other small business planning to join one of these networks, this assessment method will be very valuable in deciding which network to choose from the many available.
The business networks can be assessed based on several factors. The most important factors that describe the value of business network are described below.
Business Network Status: This factor is the most important of all other factors. The Business Network Status indicates the state of the network. All networks have different states such a Formation, Valuation, Expansion, Formulation, and Operational state.
The formation state indicates that the network is new and has just begun the process of developing into a business network. Valuation state indicates that the goals of the members are being analyzed and reorganized towards a common collaborative goal.
In the expansion state further network alliances and expert service providers are being added to increase value to the network. Formulation state decides the responsibilities, accountability and also creates a hierarchy and control chain. The last state is the fully operational state where all key elements of the Business Network are in place and operational. The Operational state is the status which is highly preferred by the potential customers and other small business planning to join one of these networks
Network Management Resources: The next important factor is the network management resources. The policies and collaborative transaction rules dictate the extent of management resources committed for the business network. This factor also helps to assess the flexibility and control available in the network.
Network Roles in Collaboration: There are three distinct roles in a collaborative virtual business network. Each of these roles is equally important from the point of view of achieving success together. The first kind of role is that of the Architect. The architect can be considered as the administrator of the virtual business network. He has the overall view of the network companies and their capabilities. The next role is that of the Broker.
The broker finds opportunities and potential customer for the virtual business network and then based on the customer requirements helps Architect to make a work execution plan. The broker is also the link for the virtual business network to other networks and customers.
The third and most important role is that of the Coach. The coach is responsible for building relationship among the businesses in the virtual business network. He deals with the members of different companies in order to develop trust, define the responsibility and accountability hierarchy, solve problematic issues, and address issues which improve the cohesiveness of the team. These well defined roles must exist in an operational business network.
Joint Network Capability: In a collaborative environment, there is a need to formulate a joint network capability of the business network. This capability definition helps to highlight the expertise available in the business network and also brings out the gaps and positions still required to be filled up with new small businesses with those requisite business domain knowledge.
The small businesses planning to join business networks can look for this aspect in deciding availability of opportunities fro exposing their business expertise. The potential customers can asses the capability of the network easily before committing their projects to these business networks.
Innovation and Alliances: The operational business networks have a common strategy and plan for collaborative product development. This also involves investment in research groups and project funding for developing new products. The alliances determine the reach of the business network in the global market.
Common Rules and Guidelines: The best business networks have well defines and efficient processes that define execution, management and reporting of internal and external business activities.
Legal Agreements: Since the business networks have many members, it is very important for defining and agreeing to detail legal agreements in the areas of collaborative working, Intellectual Property management, non-performance rules and risk and rewards rules. The legal agreements provide the cohesion and stability which these networks possess.
Rating Business Networks
By performing careful analysis of the factors that are exhibited by the networks, a rating system can be developed easily. The factors bring out the key issues of stability, cohesion, future perspective and the probability of success of a business network. Based on this rating method the business networks can be grouped into three major categories.
Beginner Networks: A business network in its early stages of formation and it needs more time to develop.
Temporal Network: This business network is an ad hoc network formed on temporary basis and is not stable.
Stable Network: This is a fully operational business network with stability and capability to achieve projects successfully in a collaborative environment.