L. A. Times column, October 12, 1998

[Bill D'Arcy]

Tony Barry wrote:
>I suspect in simpler times when economies were locally based symbiotic
>cooperation was much more prevalent than the competive model which
>globalisation favours. With the net providing better communication and
>making vertical integration more attractive I guess we will see further
>cooperation  vertically in markets.
>
>Are there other industries, other than software, where we can see a central
>component kept out of the market system?

I'm not sure what vertically integrated model Tony has in mind. If it's one
where a company produces, distributes and sells its products, then they're
in from some stiff competition from 'virtual" organisations that are able
to coordinate, but not own, each aspect of the process from production
through to sales and delivery.
Take the following from Ray Lane, Chief Operating Officer and President of
Oracle Corporation,19 November 1996:
http://www.acs.org.au/president/1996/atm/npc/im961119.htm
SNIP
"So as we look at the new order, and this new order becoming what I call
networking,
we find more and more companies and institutions focusing on their core
competency.
What do you do well? Do you market things, do you design things, do you
build things,
do you serve things - what do you do well? And everything else is
supportive to that
core competency and if it's supportive you have to call it into question as
to whether
you should own it."
And:
"A better example is a company called L.L. Bean. Now I don't know if L.L.
Bean sells in
Australia - have you heard of the company? Wonderful company - provides casual
clothing, outdoor clothing, camping equipment, things like that - yet L.L.
Bean doesn't
manufacture anything, they don't ship anything, they're purely a marketeer,
and they
provide catalogue marketing, and of course when they have enough customers
online
they'll be doing that electronically and they can provide an entire value
added system
virtually. So someone else manufactures the products but you think it's
L.L. Bean.
Someone else ships you the products but you think it's L.L. Bean. It is the
highest
quality customer experience you've ever had and you credit it all to L.L.
Bean. Yet they
have a very low cost high service delivery system that depends on others
and they tie
it all together."

----------------------------------------------------
Bill D'Arcy
Yarralumla ACT + South Durras NSW
mailto:billd@effect.net.au
"Simplicity is the key to truth."
Bloke in the pub