The Value Chain Support activities Primary activities Inbound

The Value Chain Support activities Primary activities Inbound logistics Operations Outbound logistics Marketing and Sales Service Corporate infrastructure Human resources management Technology Development Procurement Materials receiving, storing, and distribution to manufacturing premises Transforming inputs into finished products. Storing and distributing products Promotions and sales force Service to maintain or enhance product value Support of entire value chain, e. g. general management planning, financing, accounting, legal services, government affairs, and QM Recruiting, hiring, training, and development Improving product and manufacturing process Purchasing input

Crafting the Network Economy Business Model Concept describes the opportunity and strategy Value Measures the benefits to investors and other stakeholders Capabilities define resources needed to execute strategy

Crafting the Network Economy Business Model

Focused Distributor Business Models and Examples Own Inventory Sell Online Price set Online Physical product or service Likely Revenues Likely costs Retailer Toys. Rus. com Staples. com Yes No Yes Product/service sales Advertising and marketing; physical facilities; inventory and customer services; R&D; IT infrastructure Marketplace Eloan. com nsweb. com Possible Yes No No Transaction fees; Advertising and marketing; service fees; R&D; IT infrastructure commissions Aggregator Internet Securities No No No Possibly Referral fees; advertising and marketing fees Advertising and marketing; R&D; IT infrastructure Exchange ebay. com freemarket. com Possibly Yes Possibly Depends on model Advertising and marketing; staff support for auctions (especially B 2 B)R&D; IT infrastructure; inventory control; R&D; technical infrastructure.

Building the Networked Business o “ABB is an organization with three internal contradictions. We want to be global and local, big and small, radically decentralized with centralized reporting and control. If we resolve those contradictions, we create real competitive advantage” § Percy Barnevik, CEO Asea Brown Boveri (ABB)

Enhance Add functionality or features to current product/services offering or improve performance of existing business Exit a business or market or drop a product/service offering Extend Enter into a new line of business and/or add new business model Expand Add new product/service offering or enter new geographic market