Two Popular Business Net Types: Value Chain & Distributive Network

Two Popular Business Net Types_ Value Chain & Distributive Network - NetizenMe

Two Popular Business Net Types: Value Chain & Distributive Network

“E-commerce is the exchange of goods and services between independent organizations and or persons supported by a comprehensive usage of powerful ICT systems and a globally standardized network infrastructure” (Kutz, 2016). There are various business models and classifications of e-commerce. Business net types present a more abstract way of categorizing e-commerce activity on the web.

Organizations can succeed in e-commerce by adopting business models that exploit the power of business webs (b-webs). “A b-web is a distinct network of producers, suppliers, distributors, services providers, and customers. It links all actors via the Internet and other electronic media to produce value for end-customers and one another” (Ubiquity: The rise of business webs, 2021).

What are the five basic types of B-webs?

There are five basic types of B-webs:

  • Agora: An electronic marketplace that facilitates buyers and sellers to meet and transact. Prices are negotiable through one-on-one haggling or multi-party auctions and exchanges, e.g., eBay.
  • Aggregation: An aggregator b-web is a digital supermarket where products category is standardized and prices fixed for the target market, e.g., Amazon. In an aggregation b-web, one company usually takes the lead role and the responsibility for value selection and fulfilment, pricing, and market segmentation.
  • Value Chain: “A value-creating chain that includes all value chain of the components—from specification, production, and delivery to support for products and services—desired by the customer”  (Classification of Business Webs According to Tapscott, 2011). Examples of value chain b-webs include Cisco and Dell, where “the focus is on producing a highly integrated value proposition through a managed process” (Ubiquity: The rise of business webs, 2021).
  • Alliance: Partners unite to establish a self-organizing value creation space e,.g. Linux. In these b-webs, there is no single entity with control over the group. Instead, the partners, including many companies or individuals, embrace a joint mission.
  • Distributive networks: Distributor b-webs focus on exchanging information, goods, and services from producers to consumers, e.g., UPS, AT&T, and Telecom. In addition, these networks provide infrastructure services, such as roads, postal services, telecom, digital network operators, and banks.  

Value Chain Vs. Distributive Networks

Example of value chain b-web

Cisco is an example of a value chain network that connects and supervises semiconductor producers, dealers of parts, logistics companies, and system integrators. It develops custom-made networks for customer-specific problems. The networks supplied by Cisco, including hardware and software, are configured and produced when ordered. Cisco takes up the role of an integrator, responsible for marketing and managing customer relationships. Other members of the value chain perform all other functions.

Example of a distributive network

AT&T is an example of a distributive network. It is one of the largest telecommunication companies globally, providing communication, media, and technical services. AT&T’s high-speed fibre and wireless broadband networks connect people and businesses as a broadband connectivity provider. In addition, it delivers entertainment experiences through HBO Max and AT&T TV as a software-based entertainment provider. AT&T’s unique blend of companies works together to provide customers worldwide and market with connectivity, technology, entertainment, news, advertising, and more.

Comparison between Cisco and AT&T

 CiscoAT&T
Differences
ObjectiveTo establish an optimized value chainExchange of information, goods, and services
AttributeSystematic and targeted supplier selection process optimization for the total value chain product integration along the value chainNetwork optimization limited USA logistics processes  
Role of the CustomerValue driverRecipient
BenefitsCreation and delivery of customer-specific productsIn time delivery
Commonalities
Customer ExperienceBoth of them are focused on delivering superior customer experiences.
Range of Products and ServicesBoth keep acquiring new companies and new technologies to widen the range of product and service offerings they provide.

Organizational gains from value chain b-webs

This b-web integrates the value contributions of various content providers such as external developers, parts suppliers, dealers, solution integrators, operators, and other partners. The motivation to implement such a value chain comes from customers striving for an individual and usually complex solution, possibly with a high investment volume. Organizational gains from this b-web include

  • Increased profitability: Organizations can use value chain b-webs to mobilize people and resources to achieve unprecedented performance. Increased productivity will automatically lead to an increase in profitability.
  • Increased market share: Cisco is constantly acquiring new companies with different technologies, which helps it achieve a prominent market position in the cloud and software market. Value chain b-webs can use the same strategy to increase their market share.
  • Improving service: Value chain b-webs help businesses improve service by offering a one-stop-shop where customers can access needed expertise, best practices, and insights.
  • Fast delivery of products: Cisco sells its products and services through its channel partners or direct salesforce. No matter the location, customers are assured of prompt delivery of products and services through the value chain partners.

Organizational gains from Distributive Network

“A distributor b-web is a distribution network that transfers material products, intangible products, and services from the producer to the user,” (Nico, 2014). Organizations gain a lot from distributive networks through:

  • Increased profitability: Companies can obtain scale effects by bundling service and product offerings. For example, AT&T offers a bundle that includes high-capacity broadband networks and data protection and security services. Also, through innovations and continuous improvements.
  • Increased market share: Distributors can increase market share by inventing new value propositions, including aspects of internationalization.
  • Improving services: Many distributors, mainly digital communications suppliers, offer around-the-clock service, ensuring customer issues are handled in real-time and improving service delivery.
  • Fast delivery of the product: Since everything is done online, prompt delivery of products and services is assured. For example, customers can order or subscribe to a service online and install it within short timelines.

Networked business communities transform competition, invent new value propositions, and mobilize resources to unprecedented performance levels. Thus, business leaders must master new B-web strategies to succeed in this dynamic business environment.

Check the following reference articles to learn more about the Two Popular Business Net Types: Value Chain & Distributive Network:

  1. Classification of Business Webs According to Tapscott. (2011, January 24). Lo Que Te Mueres Por Saber; Lo que te mueres por saber. (URL)
  2. Kutz, M. (2016). Introduction to Electronic Commerce: Combining Business and Information
  3. Technology. Bookboon.com. Retrieved from (URL)
  4. Nico. (2014, July 12). E-Commerce. SlideServe. (URL)
  5. Ubiquity: The rise of business webs. (2021). Acm.org. (URL)
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