Virtual Organizations (graphics not included)
The virtual organization is a network of independent suppliers, customers, and even competitors, generally tied together by computer technology (Roger, 1991). They share skills, costs, and access to markets. It is tend to have flat structures in which information and decision making move horizontally (Judith R.G, 2002). Through the support of modern electronic system, it becomes possible to link people across formal organizational boundaries (Judith, 2002, quoted in S.G. Straus, S.P. Weisband, and J.M. Wilson, 1998).
Virtual corporations have some major characteristics (Judith, 2002, quoted in Byrne. n.d.) as following state: technology, excellence, opportunism, trust and no borders. Technology makes distance no longer a problem while entrepreneurs or companies far away from, due to the computer networks link people all over the world. Excellence was showed by each partner bringing its core competencies to the corporation, which can exert all advantages. Companies make alliances for specific market opportunity and this is a more efficiency work way than any others. Members in a virtual organization must trust their partners due to they meet the need by cooperating. The new communication ways were brought by computer networks, which blur the traditional hierarchies and boundaries.
Metersbonwe took the lead in adopting virtual organization among Chinese garment industry by brand chaining operation. The company stated to take full advantage of market resources by controlling, retailing, the core segment in the link in order to concentrate on its core business, Brand construction and Design, while non-core business was outsourced: Manufacturing and Sales network. At present, over 200 manufacturing factories have established long-term cooperative relations with Metersbonwe Group, saving 62.5m$ for the company. More than 900 franchising shops save an average of 62.5m$ every year as well. At the same time the company collects capital from the franchising fees. Metersbonwe achieved great success by using this model.
Figure 1: Metersbonwe¡¯s network
MARKET-ORIENTED STRUCTURES
The market-oriented structure groups workers according to the market they serve, such as product, project, client, or geographical area. Large companies that implement a market-oriented structure may have market-based divisions or create a conglomerate of separate subsidiaries (Judith R. Gordon, 2002). I believe that this structure is more adoptable by those multinational corporations which have to respond to diverse cultures and meet the unique needs of various countries. The teams have the same goal meeting the market demands.
In the past, college graduates would embark on careers in the business world with book learned business theory. Now the college curriculum can include practical use of real world situations in a web-paged virtual organization. This virtual organization allows students experience to review, analyze, troubleshoot and resolve real business problems. This paper will review the virtual company, Riordan Manufacturing, allowing students to review existing business systems, identify improvements or introduce new business systems to allow the company to thrive in the growing technology of the business world.
Yet, in a unique paradoxical way, the convenience of being able to avoid face to face interaction, or any means of transport, becomes inconvenient and sometimes ineffective due a phenomenon known as virtual distance (Lojeski & Reilly, 2007). While the dynamics of conducting business virtually present appealing opportunities in terms of staff flexibility, cost effectiveness and the elimination of geographical barriers (Pacuraru, 2012), virtual distance presents obstacles that leaders must strive, continuously, to overcome (Lojeski & Reilly,
Therefore organizations have to find the perfect balance between these two structures and in this age of hyper-competition more of them are adopting a more decentralized structure in order to respond faster to the ever changing market and threats from competitors both new and existing.
The adjective "virtual," practically unheard-of a few years ago, has without a doubt become the number one buzzword of the nineteen-nineties. Virtual reality has become a catch phrase for the interactive multimedia technologies that have supplanted desktop publishing at the cutting edge of personal-computer graphics technology. The virtual communities which for years have flourished in comfortable obscurity on the Internet, have recently been thrust into the glare of publicity as commercial gateways have opened up the net to the public, while virtual corporations have transformed the world of business.
Companies continuously seek for the best organizational structure that will allow employees to be as effective and efficient as possible. The question many managers must ask themselves is whether to organize their departments by product or by function. Managers must decide between having specialist grouped together by function regardless of the product they work on or having them grouped by specific products and which option will be best suited for their organization (Walker & Lorsch, 1968, p. 1). Walker and Lorsch in their article “Organizational Choice: Product vs. Function” (1968) take an in-depth look at two companies, Plant F and Plant P, in order to examine these two structures in action and determine some of the advantages and downfalls of each.
Value webs are concerned with what goes outside of the firm, and how well the firm coordinates direct, and direct suppliers, and delivery firms, and customers. By working with other firms, and using information systems, an advantage can be gained, by developing industry-wide standards for exchanging information, which eventually forces all market participants to subscribe to similar standards. Information exchange becomes more fluid, which positively influences efficiency, this in turn, makes product substitution unlikely. Such efforts also increase barriers to entry, which discourages new entrants. The internet has made possible to create highly synchronized value webs that integrate different business processes among the whole industry. These value webs are highly responsive and adaptable to environmental changes in supply and demand, as relationships can be bundled or unbundled, depending on the market conditions. Quick decisions can be made in order to optimize the value web relationship in order to deliver the required product or service in the right place and
In considering one or more of the above options, the company was also faced with the task of determining the level of centralization for its activities. Depending on the specific construction of the network, there would be potential to bundle tasks which were being performed individually in each of the existing markets. The key would be to find the balance between utilizing synergies for efficiency and keeping sufficient flexibility in each country in order to tailor to market specifics.
In addition to urgency, Gustavsson could not create a powerful guiding coalition. He established a cross-functional team to develop a new moisture-resistant product. But the team did not include a sales manager who knows customers' needs and eventually sells the product. Although the team developed a commercially-viable product, their efforts, at least in the short term, were unsatisfactory, because with sales people's own doubts about the new product, they were afraid of jeopardizing the reputation of current product. Moreover, these cross functional teams operated within the established organization maintained the company's dominate culture and past norms. We know that structurally independent teams that are tightly integrated into the existing hierarchy with different cultures and processes are often more successful.
The company has self organizing team and use groupware, emails and blogs to communicate with the customers.
This kind of structure permits an organisations workplaces to work separately while abiding to company’s policies and procedures. For example: International companies like Marks and Spencers have their stores based in different countries all around the world.
Regardless of the decentralization, they are capable to manage the activity because of a shared determination to make decisions. Consequently, as as Manuel argues, these digital networks form the foundation of the new network enterprise and the new network economy, where performance is dispersed through flexible and adaptable workforce that is both independent and synchronized.
I –Form organization is an organization that makes use of the market exploration model in the enable such companies to pursue opportunities. These organizations make wide use of technologies to manage the capture the business and efficiency of the knowledge intensive environment. In order to conduct effective market explorations, such organizations have to does not only develop community based organizational design, but also use the facilitative management approach that helps that enable the companies in a given industry to collaborate with one another and their customers. I – form organizations have been found to be very crucial for the companies and organizations that operate in the industries that the knowledge base that determine the business opportunities is constantly changing or increasing.
Igbaria, Magid. “The Virtual Driving Forces in the Virtual Society.” Communications of the ACM, December 1999, Vol. 42, No. 12.
A network between businesses all over the world is established in order to make use of the strengths of different technologies and cultures.
−The Company is moving from total decentralisation to a hybrid model, with a bog cooperate and support of other companies