by A value network is a set of connections between organizations and/or individuals interacting with each other to benefit the entire group. A value network allows members to buy and sell products as well as share information. These networks can be visualized with a simple mapping tool showing nodes (members) and connectors (relationships).
A network which creates partnership and value in purchase, production and selling of products is referred to as value network. Value network looks at the whole supply chain system players as partners rather than customers. The purpose of value network is to increase productivity, save cost and increase revenue. Companies are willing to take the procurement process on online for accuracy and speed. Companies exactly know each partner’s role in influencing or disrupting normal operations.
Companies have developed distribution channel and network through which it supplies final product to customers. This distribution channel and network are referred to as the marketing channel. Companies invest time and money in a well functioning marketing channel. The marketing channels are an integral part of marketing and promotional activity of the company.
Value configuration
Fjeldstad and Stabell declare a value network as one of three ways by which an organisation generates value. The others are the value shop and value chain.
Their value networks consist of these components:
- Customers
- A service that enables interaction among them
- An organization to provide the service.
- Contracts that enable access to the service
Tangible value
All exchanges of goods, services or revenue, including all transactions involving contracts, invoices, return receipt of orders, request for proposals, confirmations and payment are considered to be tangible value. Products or services that generate revenue or are expected as part of a service are also included in the tangible value flow of goods, services, and revenue. In government agencies these would be mandated activities. In civil society organizations these would be formal commitments to provide resources or services.
Intangible value
Two primary subcategories are included in intangible value: knowledge and benefits. Intangible knowledge exchanges include strategic information, planning knowledge, process knowledge, technical know-how, collaborative design and policy development; which support the product and service tangible value network. Intangible benefits are also considered favors that can be offered from one person to another. Examples include offering political or emotional support to someone. Another example of intangible value is when a research organization asks someone to volunteer their time and expertise to a project in exchange for the intangible benefit of prestige by affiliation.
All biological organisms, including humans, function in a self-organizing mode internally and externally. That is, the elements in our bodies down to individual cells and DNA molecules work together in order to sustain us. However, there is no central “boss” to control this dynamic activity. Our relationships with other individuals also progress through the same circular free flowing process as we search for outcomes that are best for our well-being. Under the right conditions these social exchanges can be extraordinarily altruistic. Conversely, they can also be quite self-centered and even violent. It all depends on the context of the immediate environment and the people involved.
