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136 Part One Organizations, Management, and the Networked Enterprise

FIGURE 3.10 THE VALUE WEB

The value web is a networked system that can synchronize the value chains of business partners
within an industry to respond rapidly to changes in supply and demand.

Figure 3.10 shows that this value web synchronizes the business processes
of customers, suppliers, and trading partners among different companies in an
industry or in related industries. These value webs are flexible and adaptive to
changes in supply and demand. Relationships can be bundled or unbundled in
response to changing market conditions. Firms will accelerate time to market
and to customers by optimizing their value web relationships to make quick
decisions on who can deliver the required products or services at the right price
and location.

SYNERGIES, CORE COMPETENCIES, AND NETWORK-
BASED STRATEGIES

A large corporation is typically a collection of businesses. Often, the firm is
organized financially as a collection of strategic business units and the returns
to the firm are directly tied to the performance of all the strategic business
units. Information systems can improve the overall performance of these busi-
ness units by promoting synergies and core competencies.

Synergies
The idea of synergies is that when the output of some units can be used as
inputs to other units, or two organizations pool markets and expertise, these
relationships lower costs and generate profits. Recent bank and financial firm
mergers, such as the merger of JPMorgan Chase and Bank of New York as well
as Bank of America and Countrywide Financial Corporation occurred precisely
for this purpose.

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