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Virtual Organizations

This document provides information about virtual organizations. It begins with an introduction that defines a virtual organization as a temporary or permanent collection of geographically dispersed individuals or groups that depend on electronic linking to complete production. It then discusses the evolution of virtual organizations from the 1980s emergence of outsourcing to today where they focus on quickly creating first-class products. Key features are identified like no separate entity, interdependence, use of ICT, geographic dispersion, and temporary nature. The document concludes by looking at technologies that support virtual organizations, their advantages like cost savings and new opportunities, and challenges they face like communication issues, cultural differences, and technological dependencies. It also provides examples of successful virtual organizations like Amazon and a

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136 views22 pages

Virtual Organizations

This document provides information about virtual organizations. It begins with an introduction that defines a virtual organization as a temporary or permanent collection of geographically dispersed individuals or groups that depend on electronic linking to complete production. It then discusses the evolution of virtual organizations from the 1980s emergence of outsourcing to today where they focus on quickly creating first-class products. Key features are identified like no separate entity, interdependence, use of ICT, geographic dispersion, and temporary nature. The document concludes by looking at technologies that support virtual organizations, their advantages like cost savings and new opportunities, and challenges they face like communication issues, cultural differences, and technological dependencies. It also provides examples of successful virtual organizations like Amazon and a

Uploaded by

Anushka pashte
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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VIRTUAL

ORGANIZATIONS
INTRODUCTION
● A Virtual Organization is a temporary or permanent collection of
geographically dispersed individuals, groups, organizational units, or entire
organizations that depend on electronic linking in order to complete the
production process. Virtual organizations do not represent a firm’s attribute
but can be considered as a different organizational form and carries out the
objectives of cyber diplomacy.
● The ICT is the backbone of virtual organisation.It is the ICT that coordinates
the activities, combines the workers’ skills and resources with an objective to
achieve the common goal set by a virtual organisation. Nike, Reebok, Puma,
Dell Computers, HLL, etc., are the prominent companies working virtually.
APPARITION AND EVOLUTION
● Virtual organization (VO) was not “invented” by a single researcher, rather
it is a concept that has matured through long evolution process.
● 1980’s – Emergence of outsourcing
● Highlighted the necessity of alliances and networking in a business
● Provoked a great interest for new disciplines.
● 1990’s – First utilized
● As demonstrated work of Jan Hopland, Roger N. Nagel, William H.
Davidow and Malone
● Virtual organization view of Roger Nagel :
● “Takee advantage of market openings thanks to technology which allow
enterprises to form temporary partnerships”.
TODAY
● Not yet a universal definition of the term virtual organization
● Though started to evolve a long time ago it is still progressing
nowadays.
● We can observe the innovative virtual organization’s model focusing
on quickly and efficiently creating first-class products.
● Working group of MIT faculty developed coherent scenarios for
desirable organizations of the future.
● This hypothetical view proposes that virtual organizations will be part
of our organizational future.
FEATURES OF VIRTUAL
ORGANISATION
1. NO SEPARATE ENTITY – Does not create any separate entity . There is not
hierarchy in virtual organisation. 

2. INTERDEPENDENCE – The alliance members are entirely dependent on each


other . 

3. INFORMATION AND COMMUNICATION TECHNOLOGY – The use of ICT is


greater and thereby reducing the necessity of physical presence.

4. GEOGRAPHIC DEPRESSION OF PARTICIPANTS – The geographic location of


alliance members does not matter.
5. TEMPORARY IN NATURE – It gets disbanded once the goal is
achieved .

6. EXCELLENCE- Can provide excellence in particular product or


project.

7. MUTUAL TRUST AND RESPECT- The alliance members need


to have complete faith and trust each other.

8. SUPPORT FROM TOP MANAGEMENT - The top management


of participating organisations provide active support to the
individuals. 
Technology Required For Virtual
● organizations​
Virtual organizations are supported by primary technologies such as the
Internet and the World Wide Web, EDI, telecommunications, e-mails,
groupware, and video conferencing.​
● Knowledge management technologies​
● Collaborative technologies​
● Extensible markup language​
● Intranets and extranets​
● Personal devices​
● Wireless technologies​
● Virtual reality​
● Portals
Advantages of Virtual
1. Cost savings.
organisation
2. Leverage global talent.
3. Increased productivity and higher profits.
4. Reduced time to market.
5. New opportunities.
6. Improved scalability and growth potential.
Disadvantages of a Virtual
●
Organization
Lack of Camaraderie - Remote workers rarely speak face-to-face. Even
companies that make full use of video chat solutions often find that it isn’t
enough to fully simulate the camaraderie that you build when you work
together in an office environment. There is less opportunity for impromptu
conversations. You learn less about the people that you work with.
Companies with remote teams need to take steps to bring their teams
together and facilitate that togetherness.

● A Need for Increased Focus on Communication - Because your teams will


not be able to pass information between themselves like they would in an
office environment, you need to give them the tools and policies that ensure
that they actively communicate. Whether that means setting up a slack
channel, getting on daily calls, or simply encouraging them to email each
other new information often — communication plays a key role in the success
of virtual organizations.
• Reputational Risks - A poorly run virtual team can lead to knocks
to your reputation. Some potential customers may be wary of
working with a company that has a virtual office with remote
employees and may not take your startup as seriously.

• Security and Compliance Issues - Working remotely means


passing a lot of data back and forth. In some industries (health,
financial, etc.) it may be too risky for startups to opt for a virtual
organizational design.
Issues and Challenges
● Communication -
Encountered
Communication is a crucial factor in a virtual organization as it
is responsible of its efficiency and even to its survival. Virtual organizations imply
various autonomous and international workers, which also involve challenges such as
different time zones and language barriers. Thus, a lack of
multiple communication approaches can be observed in virtual organizations.
● Cultural - Culture constitutes an essential element in any organization of any type.
Yet, virtual organizations have to be even more vigilant about this notion as they imply
a shared  leadership between the team, which is composed of self-reliant workers from
all around the world. Thus, virtual organization must exegete respect for differences
among the team.
● Interpersonal - Managing virtually successfully requires a valuable communication
and cooperation among the team. Perceptions between partners might be quite
dissimilar and could lead to conflicts concerning the management of the virtual
organization.

● Technological - Virtual organizations are completely dependent to technology as


they are entirely internet based. Institute, uphold and spread a definite common
knowledge between partners is one of the ultimate issue to virtual organizations’
management. Security and data protection also constitute a significant challenge as all
the information regarding virtual organizations are transmitted and gathered digitally.
● Economical - Virtual organization involves considerable costs. Between the setup
and equipment costs and the maintenance costs, the bill can become quite steep quickly.
It also constitutes a challenge to measure, evaluate and track the work done within the
different departments of the virtual infrastructure.
Future of virtual organization
• Virtual teams will be a major part of how work is
organized and implemented in the workplace
• Trend in Hot Desking.
• Loyalty of organization as skin deep.
• Marketing program testing.
• Brand building.
Case Study I
( Successful Virtual Organisation )
Amazon Story
✓ Started in July 4, 1994
✓ 1995: Amazon launches with online book sales
✓ 1999 - Amazon becomes the biggest online sales platform in the world.
✓ In the late 1990s, Amazon decided to start selling other goods, starting with music
and DVDs
✓ 2005 - Amazon launches Prime membership
✓ 2007- Amazon launches its first consumer product: The Kindle
✓ 2009 Amazon had become the biggest online seller in the US and around the
world.
✓ 2015, Amazon surpassed Walmart as the most valuable retailer in the United
States
✓ 2020 US$185.6 billion (September 30)
7 REASONS WHY AMAZON IS SO
➢ INNOVATION
➢ SUCCESSFUL
CUSTOMER SERVICE
➢ EXECUTION
➢ DIVERSIFICATION
➢ OUTSTANDING USER EXPERIENCES
➢ MERGING DESIGN WITH CONTENT
➢ AN “IN IT TO WIN IT” MINDSET
CASE STUDY - II
( Failed virtual organization )
The story…
✔ Started in 2010
✔ Going strong
✔ Huge losses
✔ Flipkart-Snapdeal merger deal
✔ Fallout from the deal
✔ Turnaround struggle
What went wrong…
• Imitator in business
• Poor customer relations
• Late entry into mobile payments
• Acquisitions and investments
• Excessive spending and struggle for funding
• Confusion with snapchat
• Aamir Khan controversy

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