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Business Environment And Networks Essay

1046 words - 5 pages

1 Introduction
1.1 The transformation of competition
The complexity of contemporary business environments are configured by intense competition and continuous technological evolution. In today´s world the virtual exclusion of geographical barriers for business exchanges, the emergence of information and communication technology, the rising consumer´s concern about companies practices towards social and environmental responsibility, the increasing specialization of firms and many other variables have transformed the way companies create value for their customers to compete in the market.
For over 30 years, the value chain model developed by Michael Porter was the main guide to analyse the value creation within business value chains and address its challenges. It is based mainly in activities within the firm itself, taking few or no account for the relation between firms (Peppard and Rylander, 2006). This theory has been of major importance for understanding the value creation process and the management of the tasks of a firm to achieve it. It also have provided insights and directions for the development of industries and academic thinking in this matter in the last century. Nevertheless, the scenario described above demands further developments in this theoretical corpus, as well as in the tools that enable the management of value chains. These developments are made in order to include aspects that have changed over time and that now delineate new configurations of business all over the world.
One of the main differences that can be observed in business environment is the changing nature of inter firm relationships. The value creation for customers within a value chain is moving towards being the result of the collaborative work of many firms instead of based on the work of only one main firm. Each of these firms adds value to the product or service that will be offered in the market. This reality produces a shift of focus from the value creation activities from one single firm, to the activity of networks of value creation. These networks are composed by interlinked firms which work together, every one of them adding value to the final product or service through its core competences. Each particular firm have an specific part in the value creation network and therefore, it is increasingly important for the relationships between the firms in these networks. It is considered that value chains are enduring a transformation from buyer-seller competitive relationships to collaborative value adding networks.
1.2 The shift of paradigm
In these scenarios of growing competition, where inter firm relationships grow in importance, it is fundamental to examine what the contributing factors are to generate and maintain long lasting, productive and collaborative relationships between firms. Also, it is vital to understand how they can benefit from the relationships and examine the different managerial approaches to these ongoing changes in the market....

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