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In this article we can understand, that companies to be at the peak of their productivities, must be both competitive but also collaborative. This situation requires an effort on the part of companies to develop this aspect.This paper is really useful for the companies because it’s explain the concept of strategic network and how to understand the cooperative relationships and their role in the strategy of a firm. It’s really hard for companies to understand this notion because, the concept of network is outside of the strategy field applicated by companies.
The key message of this article is therefore that companies must also learn to collaborate to be as competitive as possible. And that this concept of network must be taken into account within the strategies of companiesThe paper provided, explicates a framework to integrate the undisputable realisms of networking to the foremost model of “business competitive strategy”. If there is a possibility for an organization to arrange its necessities by an effectual provider, that will advantageous for it amongst the other competitors. This will automatically lead to the new mode of the firm named as the strategic network, which will definitely-drop the transactions expenses of the firm. This method of firms, benefits a portion of the properties of business sectors and a portion of the properties of hierarchies.
The above-mentioned scheme is financially beneficial as the total cost of the final product or the service gets surprisingly lower down, reason being the specialization of every supplier on in its part. This can consequently endure longer terms with them, the bond gets stronger and develops the trust among the team and the network, which subsequently lower the transaction cost. With the factor of trust and through esteeming the relationship, makes it easier to tackle issues.The focus of the framework is to comprehend that organizations are not monolithic objects. It is not easy for a unified organization or the network of organization to do all the processes or work required to develop a product or service. Although the model is explained very thoroughly and benefits of the same can be verified with number of examples in today’s era. However, the model still needs to explain competitive aspect, or its adaptations, but it is much closed to the murkier realisms of business comportment, with its affiliated aspects of competition and cooperation.
What are the key contributions / implications / conclusions of the article?Strategic networks as one of the four modes of organizing economic activity is something that entrepreneurs or managers use purposefully to position their firms in competitive circumstance and obtain a competitive advantage for them. Meanwhile, a foundation of strategic networks also be mentioned that transactions costs can be affected by conscious actions of the entrepreneur.We also know how can a network be economically efficient. An given activity will be integrated when EP ( external price ) + TC ( transaction cost) < IC ( internal cost).However, When TC is lowered up to a point, the manager will perform internally instead of integrating that activity, will be more efficient than its competitors.A network has to meet two characteristics to be created and then sustained: be effective and be efficient. Actual entrepreneurs ensure efficiency and effectiveness are be applied in their firms.Strategic networks implies that lower transaction costs to lead firm to integrate together with the advantages of specialization, both themselves and their suppliers.
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