Virtual Business Networks
Classification of Virtual Business Networks
Virtual Business Network is the most discussed topic among the Business Communities nowadays. The basic definition of a Virtual Business Network means a group of small Businesses joining together to collaborate and co-operate to accomplish common Business objectives and goal by creating networks that facilitate communication using technology based on the internet.
The main difference of a Virtual Business Network from a Social Network is that the members represent Businesses or Companies and not individuals as in Social Networks. The Virtual Business Networks have different names and are growing popular over 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. This article will help to classify the various types of Virtual Business Networks based on key factors.
Because of these varied names for Virtual Business Networks, the customers and government agencies face the problems of correctly deciphering the roles and functionality of each such Virtual Business Networks. The customers and potential Business alliances need to understand what the networks actually mean before buying services or for joining the network as a member.
The classification of Virtual Business Networks will also help Small Businesses to identify which type of network is best suited for them and help to attain their ambitions for growth through virtual collaboration.
Classification will also help the large enterprises to try working with smaller Business Network instead of the traditional supply chains. Also the policy makers of government will get help from the classification to decide strategies for enhancing economic competitiveness and improvements.
Therefore there is a need to device methods for comparing the key features of the various types of Virtual Business Networks. This will help small companies to join the correct network and government policy makers to develop strategies aimed at regional and economic growth.
Factors influencing Virtual Business Networks
There are mainly two important factors that influence the Virtual Business Networks. The first one is the vision and aim of the individual companies and Businesses that for part of the Virtual Business Network.
The small Businesses generally join the Virtual Business Networks with aim of increasing their sales, improving their knowledge, exposure to innovation and reducing costs of gaining such services. The Small Businesses benefit from the collective marketing, bidding and enhanced product lists in a Virtual Business Network.
The Small Businesses cannot obtain such services without investing substantially and taking the risk of staying alone. To what extent the Small Business give importance to maintaining a relationship within the Virtual Business Network depends on this factor. The next important factor is the Regional Business Policies.
The Regional Business Policies aim to develop Business networks based on the Business viability and facilities in a particular region. The policies help to support collaboration among small and medium sized Businesses and allowing them to link with the global market.
Structure of Virtual Business Networks
The structure of the Virtual Business Network depends on the same factors that effect the large organizations and their hierarchy. The first factor is the graphical hierarchy also known as the topology. The topology places the various small Businesses under a tree branch structure and three is a defined location for each member in the network.
The nodes have the associated responsibility and accountability. Generally, on the top of the structure large enterprises, flag ship companies or government agencies are placed.
They provide financial stability and management features governing the networks. The next factor is the objective of forming the Virtual Business Network. There are various known objectives with which Virtual Business Networks are formed. Some objectives are knowledge and skill development, sales, marketing, joint development and many more.
The next important factor is the level of cohesion and cooperation within the Virtual Business Network. The level of cooperation may range from sharing of outside information often through events and specialist speakers, or sharing of internal knowledge on Business best practice and joint problem solving, commitment to joint invention and risk like taking part in collective bids. The level of collaboration determines the effectiveness of the network.
The next factor is the age of the Virtual Business Network. If the Virtual Business Network has survived effectively over a long period, it signifies the stability and reliability of the network. Newly formed networks will have to prove themselves by demonstrating sustained performance in the long run over a considerable period of time before they can gain recognition and reputation.
Types of Virtual Business Networks
The first common type is the Collaborative Supply Chain. This type of network works as the supply chain for a major organisation or company. Such networks are prominent in the government sector and defense sectors. The second type is the Joint Supplier Network and it represents a group of Business suppliers operating under a common name jointly. Mostly, these networks can be seen in the education department, skill development, and other auxiliary Business services.
The next type is the Joint Product Development network wherein a group of Small Businesses and Companies invest money and resources jointly to innovate, and perform research and development.
The next common network is the Subcontracting and Partnership Exchange Virtual Business Networks. In Subcontracting and Partnership Exchanges networks the main objective is to develop the regional economy.
Hence, these networks are non-profit industrial Virtual Business Networks run by competent managers. The second objective of Subcontracting and Partnership Exchanges networks is to structure the Businesses in such a way so as to effectively utilize the skill, expertise and production capacities of the member Companies and Businesses.
The last type of Virtual Business Network is the Virtual Enterprise Network. This network is a group of Small Businesses or Companies who join together in 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.