by chiefstaff

November 14, 2013

The story started in the 19th century with the beginning of free markets. The world of free markets is the world where business exchanges started to expand to global organizations and relationships. Many exchanges were now possible thanks to the free markets.

The allocation of resources is determined by supply and demand, as well as the prices. In fact, free markets involve free exchanges and free balance between supply and demand. In free markets, participants have a high level of freedom in their actions.

However, the degree of thinking is very low and there is no planning that could give some guidance to all these exchanges between many parties from the markets. After that, organizations have tried to implement some rules to regulate the markets. Indeed, although free markets were efficient in the 19th century, regulation became necessary with the multiplication of the exchanges. Therefore, societies started to go towards a new approach with regulated markets. These markets are similar to free markets: there are many exchanges between many different people and parties but rules were implemented to regulate them. Some markets can be even more advanced than regulated ones: managed markets. In fact, management involves better regulation and efficient methods that enable a good functioning of global markets.

Organisations can go directly from regulated markets to managed markets, or they can also experience communistic markets or socialistic markets, which are very controlled but with a higher level of thinking and planning than regulated markets.

Managed markets, which follow these two models, are less controlled – but not totally free – and have a better level of thinking.

However, managed markets are still at the level of multiple exchanges between unrelated and random parties. The next stage is obviously about building your business network. After managed markets, then, it comes to free networks. This approach can look like free markets but it is much better organized. In fact, free networks involve partners available on the market and you have a choice between partners. Contracts and relationships are very free. Once this approach is granted, you can start thinking about the next steps, which go through regulated networks and then managed networks. However, the crucial point is to outstrip the network stage. In effect, at first we talked about markets, but the key step is to move to a network approach. To be able to do this, you and your team need to improve the degree of thinking and planning first. The level of control is less important and it will determine the kind of relationship you have with your partners, but first you have to build your network. With repeated interactions, you will make your outcomes far more superior than any other form of association. That is the reason why great business networks are the key to the success of your business.

Then, more regulation of the global business networks will be necessary to keep up the relationships with partners, and then the business will have to move towards a more managed network structure in the global economy.

Consequently, we have to admit that it is crucial to move from markets approach to networks approach. Then, we must think about regulation and management in order to gather all the conditions to build a great business network and sustainable relationships that will help us create more value. Vivek Sood’s book, The 5-STAR Business Network (http://bit.ly/5-STARBN), will give you important guidelines to make this path from free markets to free networks.


Copyright - These concepts, frameworks and ideas are copyright of GLOBAL SUPPLY CHAIN GROUP from the time of their creation. Do NOT copy these without permission and proper attribution. These ideas and concepts will be usually expressed by our thought leaders in multiple forums - conferences, speeches, books, reports, workshops, videos and training. The date shown above the article refers to the day when this website was last reformatted. This blog post or article may have been written anytime prior to that date. All anecdotes are based on true stories to highlight the key points of the article - some details are changed to protect identification of the parties involved. 

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  • A free market system is an economic system based solely on demand and supply and there is little or no government regulation. In a free market system, a buyer and a seller transact freely and only when they voluntarily agree on the price of a good or a service. For example, suppose a seller wants to sell a toy for $5 and a buyer wants to buy that toy for $3. A transaction will occur when the buyer and the seller agree on a price. Because a free market system is based solely on supply and demand it leads to free competition in the economy without any intervention from outside forces.

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