Industrial network: Providing specifically adapted products for customers

Résumé du document

The economies of scale, defined as the reduction in cost per unit resulting from increased production realized through operational efficiencies, constitute one of the key goals for firms to improve their competitiveness. But this productive model seems to be in the same time contradictory to the individual and specific customer relationships that firms try to follow. Indeed, involved in an industrial network, they have to take up the challenge and find a balance between economies and standardization on one hand and adapted products and customized relationships on the other hand. How could they achieve this goal and what are the implications of this opposition on their activity links? The following development, based on Håkansson and Snehota´s model in “Developing Relationships in Business Networks” (1995) and on Richardson´s analyze in “The organization of industry” (1972), tries first to demonstrate how activity links have consequences on the division of labor and how firms have to deal with a large sense of activity.

Extraits

[...] This view is particularly developed in the Håkansson and Snehota´s model, which presents activity links as continuum. The long and short term consequences resulted from changes on activity links and the role of the pattern in the efficiency of links lead firms to accept that the challenge between differentiation and standardisation is an always renewed goal. The movement toward efficiency implies constant adaptation in the relationships and new types of activity links. Consequently, this view of activity links as “unstable” organization also raises the question of position in the network for the firms. [...]

[...] Indeed, firms, focused on their final products, are involved in various activity links with their suppliers and customers that they have to design in an efficient division of labor to protect their business and generate economies of scale. Thus, firms have to well analyze their division of labor and to build up adapted links to reach economies of scale and differentiation in the same time. Consequently, activity links imply an exchange of know how between the two partners and an implication of both sides to reach efficiency. This last point raises also the question of cooperation and highlights on the fact that activity links can not be simplified in business transactions. [...]

[...] Furthermore, other sources of efficiency can be analyzed for France” in the pattern with for example implementation of fidelity programs with competitors. This example shows how activity links evolve in time to match with the environment and the pattern changes. The challenge differentiation-standardisation demands high involvement of both sides, who are helped with the analysis of the activity pattern that highlights source of economies. To conclude, activity links have the capacity to deeply understand and modify how firms are involved in the network and consequently interact with the ability of firms in achieving economies of scale. [...]

[...] Bibliography Håkansson, H. and Snehota, I. (1995), Resource Ties, Developing Relationships in Business Networks, Routledge: London o Chapter 3.1 : The activity dimension in business relationships o Chapter 3.3 : Management implications Richardson, G. B. [...]

[...] One key challenge is to provide specifically adapted products for customers, while at the same time achieving economies of scale . The economies of scale, defined as the reduction in cost per unit resulting from increased production realized through operational efficiencies, constitute one of the key goals for firms to improve their competitiveness. But this productive model seems to be in the same time contradictory to the individual and specific customer relationships that firms try to follow. Indeed, involved in an industrial network, they have to take up the challenge and find a balance between economies and standardisation on one hand and adapted products and customized relationships on the other hand. [...]