Local area networks (LANs) connect computers within a building or group of buildings on one site. LANs cover a small geographical area, and the computers are linked together by coaxial cable or fiber-optic cable. There are three main advantages in using a LAN:

• sharing limited hardware resources, such as printers, hard disks and modems
• sharing application software, such as word processing, database, spreadsheet and graphics programs
• Improved communication among users by sending electronic messages.

Network topology is the physical arrangement of devices in a network. Some types of these topologies include: star, bus, ring, mesh and tree topologies.

A star topology has a central computer with each device connected to it with a point-to-point connection. The central computer serves as s switch. It receives messages and sends them to the destination device. All traffic that transverses the network passes through the central hub which acts as a signal booster or repeater. However, if the central computer fails, then the network fails. It is also limited by the processing power of the central computer. It uses a time-sharing system that allocates a certain amount of CPU time for each user. It is the most common topology for a mainframe. There are two types of star topologies: Extended star and Distributed Star topologies.

A bus topology is an arrangement where all the devices are attached to a direct line called the bus. A terminator is required at each end of the bus cable to prevent the signal from bouncing back and forth on the bus cable. Each device has a unique identity and can only recognize those signals intended for it. Devices check the bus and retrieve their messages as data travels along the bus. A signal from the source travels in both directions to all machines connected on the bus cable until it finds the MAC address or IP address on the network that is the intended recipient. If the machine address does not match the intended address for the data, the machine ignores the data. Alternatively, if the data does match the machine address, the data is accepted.

Each device is considered to be connected to every other device and can communicate directly along the network to any other device. Bus topology is one of the easiest to set up and can still operate if one node fails. Ethernet and PowerTalk use a bus topology. It is rather inexpensive to implement when compared to other topologies as it consists of only one wire. However the low cost of implementing this technology is offset by the high cost of managing the network. There are two types of bus topologies: Linear bus and Distributed bus topologies.

A ring topology is an arrangement where all devices are attached so that the path is in the shape of a continuous circle. Each machine or computer has a unique address in a ring topology that is used for identification purposes. The signal passes through each machine or computer connected to the ring in one direction. Ring topologies typically utilize a token passing scheme, used to control access to the network. Data flow is in one direction, moving from device to device until the data arrives at its destination. The token ring network is the most common form of access for ring topology. By utilizing this scheme, only one machine can transmit on the network at a time. The computers connected to the ring act as signal boosters or repeaters which strengthen the signals that transverse the network. The primary disadvantage of ring topology is the failure of one machine will cause the entire network to fail.