Managing Your Portfolio of Connections

Traditionally, a company's links to its customers, suppliers and other external parties have been based upon either arm's-length transactions or socially embedded ties. Electronic technologies have enabled a third and more flexible option, dubbed "virtually embedded ties."

Companies succeed or fail based on their dealings with others. They purchase raw materials, equipment and parts from suppliers. They sell their own goods and services to distributors, resellers and customers. And they might rely on partners, alliances and industry consortia to provide them with crucial technology or expertise. Indeed, the ability to manage connections to external parties has long been a critical competency for any organization doing business. See sidebar

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Recently, that capability has become increasingly difficult to maintain. Globalization, international networks of companies and various competitive pressures have made out-sourcing, supply chains and customer relationships ever more complex and demanding to manage. At the same time, electronic communications and computer technologies have greatly broadened the possibilities for how organizations might establish and manage such an array of external connections.

In addition to traditional types of connections, such as those facilitated by social relationships, companies now have a new option: “virtually embedded ties,” which are initiated and maintained through electronic technologies like the Internet. Today, organizations should know how best to deploy such connections, and just as importantly, they need to recognize situations in which more traditional ties are the better option for conducting their business transactions.

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