Business Networks, Markets & Wealth
Business Networks
- Business networks thrive through their connections to customers, suppliers, financial institutions, and collaborative partners.
- These connections transcend geographical and regulatory limitations, enabling the creation of wealth through the exchange of goods and services.
Markets
- Markets play a central role in business networks, with types such as:
- Public: e.g., fruit markets, car auctions
- Private: e.g., supply chain financing, bonds
Ledger
- The ledger serves as the official record-keeping system for a business.
- It tracks the movement of assets between participants in various business networks.
- A business typically maintains multiple ledgers, each dedicated to different business networks.
Ledger Definition:
The principal book (or computer file) for recording and totaling financial transactions by account type, with debits and credits in separate columns, including a beginning and ending monetary balance for each account.
Participants of a Business Network
- Customers, Suppliers, Government, and Regulators are key participants.
- Each participant has specific identities and roles within the network.
Transaction
- A transaction refers to an asset transfer between participants.
- Example:
- Annie gives a house to Mary.
Contract
- A contract outlines the prerequisites for a transaction to occur.
- Example:
- If Mary provides money to Annie, ownership of the house transfers.
- In more complex cases, the transfer of funds might depend on a third-party arbitrator if conditions, such as the house’s quality, are not satisfactory.