Author: BORAN SUEKINCI
Publication date: 20.08.2024
The emergence of network enterprises is something that has changed the landscape of business forever. Many of the biggest businesses in the world right now are not singular companies but network enterprises made of multiple smaller companies. Some examples of this can be Disney, Alphabet Inc. (which Google is a part of) and Meta Platforms (which Facebook and Instagram is a part of). The changes coming from the rise of this model aren’t limited to just the rise of specific businesses either. The shift towards network enterprises in the history of organizations is one that, for better or worse, restructured production methods, company bureaucracies, employer-employee relationships and many other things relating to business. Therefore, being aware of the existence of network enterprises as a concept is something that might even redefine how a person looks at companies and business as a whole. In this article we will try to briefly explain network enterprises as well as some of the countries behind it.
What is a Network Enterprise
A network enterprise at its core is an enterprise that isn’t just made of a single company. Instead, it is made of multiple companies beneath its umbrella all having their own specializations with each of these companies having their face turned to a different side of the market. These smaller companies are connected to each other and work in tandem, but they do not work as one.
There are various advantages to a model like this. For starters, it allows for a lot more adaptability than a single much larger company. Implementing decisions and changes becomes faster and cheaper because tearing the organization into partly independent but interconnected bits makes it possible to manage and adapt things on a micro level. This decentralized micro level adaptation means that the management becomes a lot less bulky than it would be with one large company.
Furthermore, having specialized smaller companies means a lot more variability and more chance to expand into different markets. This way, the enterprises get to appeal to different audiences it might not have been compatible with otherwise through the various companies under its umbrella. Therefore, the enterprise can turn into a much more extensive center.
Just in Time Manufacturing and Flexibility
Two of the ideas that had an impact on the shift towards network enterprises were just in time Manufacturing (JIT) and flexible accumulation. Both of these helped the business landscape move towards smaller and more flexible organizations instead of larger but less customizable organizations. The larger, singular companies at the time were facing issues caused by their production model such as failing to adapt products according to changing circumstances because of their serialized nature or the hardness of keeping up with the expensiveness of maintaining and further expanding bigger organizations. Utilizing methods such as just in time manufacturing and flexible accumulation offered the solution to such issues.
Just in time manufacturing basically refers to trying to get the raw materials and produce the end product at the same time. In this strategy, the product gets produced as soon as the raw material comes in instead of the raw material being kept in stock. Just in time manufacturing lessens the storage expenses and allows the company to produce according to demand instead of risking loss by making more than demanded. Needless to say this strategy requires a lot more connectivity and communication between organizations as running the process smoothly requires synchronization.
Flexible accumulation is basically customizing each product specifically according to demand with a group of multitalented people who can adapt on the fly instead of mass producing. As the name suggests this model offers a lot more flexibility and helps adapt the company to changing demands quickly. This model would also require smaller teams so that the changes could be adapted to the product on the fly and therefore would be less compatible with a much larger organization where communication would take time.
Precarity
Romanticizing the changes brought by network enterprises in the business landscape would be a mistake. There are also dark sides to network enterprises, one of which being rising precarity in employment. Due to their emphasis on flexibility network enterprises rely more on temporary work and keeps less permanent employers. This leads to problems such as worser working conditions and lack of employee benefits.
Connectivity
Network enterprises have made the world and the business landscape a lot fickler and more intertwined in many ways through creating a focus on creating and interconnected web of companies instead of making singular bigger companies. Due to these influences, understanding what network enterprises are can also help see business and work from a different perspective.
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