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The Importance of Virtual Networks 



Probably the biggest problem with the definition of business by size is the fact that each category is extremely broad. How does one distinguish between a company with 4 employees and sales under $1 million and a company with 15 employees and sales of $15 million? Both are small companies. Therefore, the SME designation, small and medium sized enterprises, is somewhat confusing. Nowhere is this more evident than on the Internet. 

Some proponents of the Internet have stated that its real benefit in the current situation is that it will allow small and medium sized companies to be competitive with large multinational enterprises. We do not completely agree with this position. We argue that the market power of large multinational corporations is so great that it dwarfs SME's in comparison. However, we would also point out that SME's using a strategic alliance methodology can achieve greater success in market penetration in global markets thereby affording them new business opportunities. So, while we do not view the Internet as giving SME's greater power in head to head business competition, we do see the potential of the Internet as an evolving global marketplace. The importance of the virtual network can not be over emphasized in this context. The ability of companies to form global networks on the Internet will transform the way that we do business in the future. 

Problems With the Global Networking Concept 



Currently, the biggest problem for virtual networks is that the companies which need them the most are not becoming members. If one monitors the activities of companies involved in international trade on the Internet, one would notice rather quickly that many of the most active companies are very small. We would never speak badly of very small companies, being one ourselves. However, it is probably these companies more than any other who have the most to gain by joining virtual networks. Unfortunately, many of these companies either can not afford or are unwilling to pay for a WWW presence, which is usually a prerequisite for joining an active virtual network. There is also usually a membership fee and in some cases the fees are slightly expensive when one considers that the organizations are very new and have no proven record of success. 

Future of Global Networking 



Our view is that the future of global networking is very promising. The recent corporate downsizing which is happening in many countries means that new industries will have to provide employment opportunities in order for consumer demand worldwide to grow. We believe that the Internet will provide the means for companies to associate themselves with one another in virtual networks and begin to develop new business opportunities for each other in global markets. Furthermore, we believe that many companies who are now considered small will exert tremendous market power with the help of global networks. The ability to share information and resources gives even very small companies an opportunity to pursue larger projects, knowing that other members of a network will provide support and also participate as partners. 

Finally, local or provincial government agencies will be able to assist their local business community by joining virtual networks. The ramifications for local economic development are quite significant. By accessing a virtual network, your agency can now reach more companies and enhance your business attraction promotional activities. 



 

*Reprinted from ZDNet Inc. October 2000, with permission. Copyright (c) 2000 ZDNet Inc. Content originally appearing in Ziff Davis Smart Business is the copyrighted property of Ziff Davis Publishing Holdings Inc. Copyright (c) 2000. All Rights Reserved.

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Copyright 1999 JPG Consulting
Last modified: April 1, 2001
 

 

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Last modified: January 28, 2004