network externality

Examples of network externality in the following topics:

• Economies of Scale and Network Externalities

  • Economies of scale and network externalities discourage potential competitors from entering a market.
  • Economies of scale and network externalities are two types of barrier to entry.
  • Network externalities (also called network effects) occur when the value of a good or service increases as a result of many people using it.
  • This is evident in online social networks.
  • Social networks with the largest memberships are more attractive to new users, because new users know that their friends or colleagues are more likely to be on these networks.

• Network Structure

  • A firm using a network structure may outsource certain tasks to external service providers and managers to coordinate external relations.
  • Companies that outsource their help desk functions to call centers in foreign countries are creating a network structure through its contract.
  • An example of a modern structure is network structure .
  • In essence, managers in network structures spend most of their time coordinating and controlling external relations, usually by electronic means.
  • For example, H&M is outsourcing its clothing to a network of 700 suppliers, more than two-thirds of which are based in low-cost Asian countries.

• Network Structure

  • In the network structure, managers coordinate and control relationships with the firm that are both internal and external.
  • In this structure, managers coordinate and control relations that are both internal and external to the firm.
  • The concept underlying the network structure is the social network—a social structure of interactions.
  • At the industry level, complex networks can include technological and innovation networks that may span several geographic areas and organizations.
  • For example, lines of accountability may be less clear, and reliance on external vendors can be quite high.

• Group-external and group-internal ties

  • That is, the network as a whole (all the groups) can be characterized in terms of the bounded-ness and closure of its sub-populations.
  • Here's a sample of the dialog with Network>Cohesion>E-I Index in which we examine the Knoke information network that has been partitioned according to the attribute of organizational type (group 1 = governmental generalists, group 2 = non-governmental generalists, group 3 = welfare specialists).
  • That is, a preponderance of external over internal ties for the graph as a whole.
  • E-I index output for the Knoke information network - groups and individuals
  • E-I index output for the Knoke information network - whole network

• Potential external relationship obstacles

  • Problems within the networked organization usually arise due to the failure in identifying all stakeholders and network partners.
  • All nodes and partners in the networked organization have to know and recognize all the stakeholders involved.
  • Therefore, when choosing a supplier or a partner in the networked organization, having similar goals, missions, and similar ways of performing the business processes are vital for the success of the relationship.

• Neural Networks

  • A neural network (or neural pathway) is the interface through which neurons communicate with one another.
  • The connections between neurons form a highly complex network.
  • However, we do know that we have neural networks to thank for much of our higher cognitive functioning.
  • However, experimental studies of electrophysiology, beginning in the early 20th century and reaching high productivity by the 1940s, showed that the nervous system contains many mechanisms for generating patterns of activity intrinsically—without requiring an external stimulus.
  • Explain the different theories of how neural networks operate in the body

• The Role of the Circulatory System

  • The circulatory systems is a network of blood vessels supplying the body with oxygen and nutrients, while removing carbon dioxide and waste.
  • The circulatory system has evolved over time from simple diffusion through cells, in the early evolution of animals, to a complex network of blood vessels that reach all parts of the human body.
  • This extensive network supplies the cells, tissues, and organs with oxygen and nutrients, while removing carbon dioxide and waste, the byproducts of respiration.
  • A circulatory system is not needed in organisms with no specialized respiratory organs, such as unicellular organisms, because oxygen and carbon dioxide diffuse directly between their body tissues and the external environment.
  • Just as highway systems transport people and goods through a complex network, the circulatory system transports nutrients, gases, and wastes throughout the animal body.

• External Stakeholders

  • Integrating businesses into society results in a wide variety of interactions with a number of different external stakeholder groups.
  • There are quite few external stakeholders for business to keep in mind when making decisions and carrying out operations.
  • As a result, suppliers are closely related to organizations as key external stakeholders.
  • Social networks are collecting vast amounts of data.
  • Identify the various external stakeholders which may be impacted by business operations

• A few hints on data handling with NetDraw

  • A second method is to build a dataset within NetDraw itself.Begin by creating a random network (File>Random).This creates an arbitrary network of 20 nodes.You can then use the node attributes editor (Transform>Node Attribute editor) and the link editor (Transform>Link Editor) to modify the nodes (and add or delete nodes) and their attributes; and to create connections among nodes.This is great for small, simple networks; for more complicated data, it's best to create the basic data set elsewhere and import it.
  • There are four sections of code here (not all are needed, but the *node data and *tie data are, to define the network structure).
  • File>Save Data As>Pajek lets you save the network, partitions of it (which record attributes), and clusterings in Pajek format.
  • File>Save Data As>UCINET lets you save the basic network information for binary or valued networks (UCINET needs to know which) and attributes (which are stored in a separate file in UCINET).
  • Screen capture programs (I used SnagIT) can take pictures of your graphics that can be then saved in any number of formats, and edited further by external graphics editors (perhaps to add titles, annotations, and other highlights).

• Summary, exercises, and references

  • These include the common types of external relationships, phases of relationship development, the building blocks of successful relationships, and the skills necessary for developing a variety of relationships.
  • Yet efficiency is not enough, as the needs for flexibility and quality assurance lead to ever more integrated networks of organizations, which require strategic perspectives for maximizing profitability.
  • It is expected that every organization be involved in a variety of external relationships, where each relationship is justified according to cost and quality.
  • "Reining in external relationships. " Info World Media Group 18 SEP 2000 20. 29 SEP 2007 http://infotrac.galegroup.com.ezproxy.lib.vt.edu:8080/itw/infomark/797/834/13524898w18/purl=rc1_BIM_0_A65286562&dyn=33!
  • "External relationships and the small business: a review of small business alliance and network research. " Journal of Small Business Management.