Once in a chain, organisations vertically integrated to increase their control over the chain and increase profits. Strategic location of facilities was a critical aspect of controlling value adding through the chain. In the new economy, the value chain is being replaced by the value web. New technologies enable intermediaries to be bypassed and the customer to connect directly to the manufacturer or generator of the product or service. The potential for disassembly of the plethora of intermediaries using physical facilities is enormous.
Retailers are clearly worried because there are no shelf space limitations in cyberspace.
In the finance sector, banks continue to close down branches. While the potential for disassembly of the property portfolio is clearly there, the network economy may, in reality, create even more intermediaries. However, the new demands for space are quite different. At the macro level, networking technologies are increasing the size of the largest companies, while simultaneously changing their shape. Witness the recent merger of AOL and Time Warner.