What Is a Value Web?

The Value Web is a framework, a structure, whose primary benefits include the channeling of thought during the process of strategy formulation. However, the concept represents more than just another variation of existing strategy tools that are commonly used in business today. The Value Web takes a completely different view of a company’s business environment.

Traditionally, companies perceived themselves as a link in what is commonly known as a value chain. In the 1970s, the prevailing model was that of “one company does it all.” Big organizations, such as IBM, DEC, or
Wang, were vertically integrated, controlling the value chain all the way from sourcing and production to distribution and end-user support. Realizing the inefficiencies inherent in such a structure, industries gradually adopted horizontally integrated structures. During the 1980s and 1990s, companies moved from the “one company does it all” mindset to that of niche players, aligned along a horizontal dimension. To stay with the example of high-technology companies, Intel, Motorola, and Texas Instruments focused on designing the chips, Microsoft and Novell provided operating systems, IBM, HP, and Sun built computer systems, whereas Microsoft, Lotus, Oracle, SAP, and others developed the applications.

The Value Web framework is a fundamental departure from the traditional value chain concept, be it vertical or horizontal. Characterizing companies in the 2000s and beyond, the Value Web framework considers an
industry or a market and its constituents to be represented best by the analogy of a network, or a web, rather than a linear sequence. In its essence, the Value Web framework describes a customer-focused and companycoordinated network that brings together strategic relationships that are required to provide the customer with a total solution. Companies that effectively coordinate their market’s Value Web are the ones that will create a sustainable competitive advantage. Companies that are unable to design and coordinate an effective Value Web will be relegated to the status of low-margin commodity providers.

Taken From : Enterprise Guide to Gaining Business Value from Mobile Technologies

Similar Posts:

None Found

Filed under: Earn Profits

Like this post? Subscribe to my RSS feed and get loads more!