Classroom Companion: Business

 
Chapter 8 · Value Creation Models and Competitive Strategy

---

109
8
value network. Note that in such cases, the mediation network and the physical 
network may be two different things. In the telephone network, the mediating net-
work consists of people calling one another and not the telecommunications net-
work itself. The physical telephone network just enables or supports the network of 
relationships between the users of the network. The same applies to e-mail and 
social media—the telecommunications network is an enabler for the value network 
associated with these services. Example of value network not operating a physical 
network is the newspaper mediating between readers and advertisers.
>
The value network is not a physical network but an abstract network of relation-
ships between stakeholders.
.
Figure 
8.4
shows four examples of value networks: (1) NY Times, which medi-
ates between the readers of the newspaper and the merchants advertising merchan-
dise and services; (2) eBay, which mediates between the sellers and buyers of goods; 
(3) Facebook, which mediates between the users of the social media and the adver-
tisers; and (4) Kickstarter, which mediates between the project owners and the 
funders. Note that these examples are simplified pictures of the actual business 
only emphasizing the mediation principles by suppressing all other business activi-
ties taking place in the company.
Next, let us discuss some particular characteristics of value networks. The market 
behavior of some mediation services is different from most other services. A simple 
bank facility has two types of customers: those depositing funds are paid by the bank 
for being a customer, while those loaning funds must pay the bank for being a customer. 
The price of advertisements depends on the number of readers of the newspaper—the 
more readers, the more the newspaper can charge for each advertisement.
Advertiser
Advertiser
Reader
User
Buyer
Seller
Project owner
Funder