DEFINITION of 'Value Network Analysis'

Value network analysis is the assessment of an organization's members and the interactions of these members within a value network. Value network analysis is usually done by visualizing relationships using a chart or web. The participants are evaluated both individually and on the benefit they bring to the network. Value network analysis looks at the business as a whole, including financial and non-financial aspects of operations.

BREAKING DOWN 'Value Network Analysis'

Value networks are made up of members and their interactions while producing a product or providing a service. These connections are extremely important in identifying strong companies as well as finding a company's potential risks. For example, if a network member has a large influence, the loss of that member could devastate the entire group. This is an example of intrinsic value analysis because there is value, but it is hard to put a price tag on.

Applying Value Network Analysis

The methodology applied through value network analysis can help an organization optimize its external and internal value networks, making the most of its outside relations along with the synergies of the teams within the operation. This includes the exchange of knowledge, information, and expertise across the relationships woven into the organization. The goal of the analysis is to improve the communication and collaboration with all involved parties in order to operate at peak and improve overall productivity.

The application of the value network analysis can help organizations for such needs as internal restructuring, improvement of workflow across interrelated departments, as well as for project planning. The analysis can also assist an organization undergoing a merger or acquisition, as it looks to better connect with and make the most use of the new divisions and operations that must be integrated.

If a company is undergoing a process redesign wherein an extensive overhaul and new framework must be established, a value network analysis could be applied to provide a clearer picture for changes that must be made. If the organization needs to formulate a new business model, the value network analysis approach can be applied to identify resources that may be drawn upon to provide new insights into developing such a model as well as toward how the new model can operate going forward. The research and development aspects of an organization can also benefit from a value network analysis by identifying what information and expertise are available to collaborate in the creation of new services or products.

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