The concept is closely related to the contract issue is a business network. For business network means a group of companies working together than to do be done through the market or group of companies or organizations that coordinate their production activities, supports many variations ranging from an intense network of relationships that determine the strong integration of the company to a situation where a weaker relationship.
The concept of network business primarily related to commercial relationships, but can also include other relationships such other activities (production, transportation of goods, collective mark, the R & D, technical information exchange, etc..)
One of the most typical network constituted by a large company is usually the issuance of orders and number of contractor companies, the event usually receives the name of the company network. The most typical cases is the production car with a principal business corporation or holding company and supplier of components, but also occurs in other sectors of the economy.
As a special type of corporate network can bring a franchise system whereby companies that lead has a trademark, production systems or certain types of products, can be used by some distributors. This is a system that has grown dramatically in recent years in various sectors such as agriculture A food company may decide to become part of the corporate network whose principal business is the giver of the agricultural industry and the command that defines a commitment to provide product specifications.
Farmer was part of a group of companies where the marketing activities undertaken by the main company or its order, but farmers are more or less involved and collaborate in action. This is an example the case of milk producers who have a network of farmers who supply them with milk on a regular basis or in the case of the meat industry or the company’s products in the production of feed compound sugar, preserved vegetables, etc., although this may also have their own farms through which a proportion of raw materials, as in the case of wine in several companies in Andalusia and other Spanish regions.
Network clearest and most comprehensive in the company’s poultry sector, where the command structure that is characteristic of vertical coordination based on contract, but not a simple purchase contract and a long-term sales from a single product but includes a lot of activity coordination. These structures include the production of chickens, slaughter and marketing, but also the production of feed, genetic materials, etc. This integration or quasi-integration can include all the activity above, but in some cases may cover only some of them and more, these structures can coexist with a system of coordination based on the buying and selling in the market.
Chicken production is generally in the hands of small and medium enterprises, but a high percentage of them, close to one hundred percent, is part of a larger integration organizations, sometimes called the polar integration, a company controlled by big capital in the U.S., sometimes combined the Spanish capital.
Large companies control the genetic material (the generation of mothers and grandmothers) to give the farmers to fatten chickens. Also provides a feed that is produced in factories owned and contract and buy them for chicken pieces finished in a slaughterhouse, also provides them with technical information and they oversee the production process and can even offer loans to farmers for construction of facilities. Sale and purchase of chicken feed is done by way of long-term, which sets a fixed price or terms of reviewing them.
Apart from contracts with producers of chicken, there are also contracts with large retail chains. You could say that the alternative market has almost disappeared, although there are still some recruitment centers, but they tend to contribute less and less significant.
Currently, the distribution chain of food products tend to act as the main company network companies formed by their suppliers, namely for the food industry and also by the farmers. Is the case with some channels that control the entire process or production process, which requires certain conditions to the parties, even forming a kind of quality certification. Farmers (and industrial) of participants involved in the marketing activities of major companies.
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