 literature. Networks in Telecommunications Buyer 1 Seller 1 Buyer 2 Intermediary Seller 2 Buyer 3 Seller 3 Buyer 1 Seller 1 Buyer 2 Seller 2 Buyer 3 Seller 3 Figure 1.1. Intermediaries reduce the transaction costs of direct buyer-seller contacts with hub-and-spoke networks of business relationships. Companies that are supply-chain managers perform complex network man- agement functions. For example, Flextronics, one of the largest electronics man- ufacturing services companies, provides outsourcing solutions to leading original equipment manufacturers (OEMs) in such electronics industries as computers, computer peripherals, networking, telecommunications, semiconductor equip- ment, industrial controls, medical electronics, avionics, and consumer electronics. Flextronics maintains a vast global network of customers (OEMs) and suppli- ers (component manufacturers) and reduces communication costs by applying electronic data interchange, centralizing data collection and analysis, and jointly monitoring manufacturing and business transactions.4 The centrally managed net- work allows outsourcing transactions to be managed at far lower costs than if the OEMs and component suppliers were to transact directly with each other. B. The Structure of Networks The concept of a network is a powerful metaphor used to describe many types of systems. The network is also an even more powerful conceptual tool for analyzing 4 Flextronics, http://www.flextronics.com. The Structure and Functions of Networks complex interactions. Scientists apply network concepts to model chemical reac- tions, nuclear reactions, and biological processes (Temkin et al. 1996; Shore 2002; Jeong et al. 2000). The mathematical theory of networks is used to analyze these types of interactions and to model how physical systems change over time. The mathematics of networks is itself a vast area that includes the representation of network structures using graph theory and other types of analysis (see the classic text by Berge 1976, as well Carré 1979; Anderson 1