Virtual organization is a solution to globalized economy that can let businesses flourish, but globalization also affects traditional employment and management structure.
Globalization can be compared to a double edge sword; it can transform your business but also change your business ideologies.
Current blog post is for managers who wish to get a base idea on how to start this reformation and use globalization to their advantage. This article can get you started on understanding the value it could add to become virtual organization.
The marketplace is changing dramatically and is expected to continue changing rapidly. Regarding environmental change, Huber and Glick (1993, p. 4) wrote. The fast-changing nature of today’s organizational environments is largely a consequence of two factors: (1) the increasing effectiveness of information technology (both communications technology and computing technology) and (2) the increasing effectiveness of transportation technology.
Classification of Virtual organization
- Partly virtualized
- Fully virtualized
We have numerous articles in this blog related to both, links to which can be found towards the end of this article.
Focus of virtual organization is IT.
- The key to virtual organization lies in seamless communication where managers and team members be able to interact closely as they can do with a physical organization. There are numerous tools to achieve this seamless communication. Please check reference section.
- The other key is agility and to be able to adapt to rapid changes in both requirement as well as scalability of operations. An organization which is virtual and agile can be called agile virtual organization.
Concept of virtual organization
A virtual organization can be “a collection of business units in which virtual team members from geographically dispersed location work together in order to perform tasks that have a common goal or vision”. Virtual organization has to adhere to process deliverable guidelines just as it would do with a stationary near proximity team. Virtual organizations enable core competencies of a team member to be brought together in a short time and disbanded when no longer required.
Often core competencies in an organization are a shortage and the team member with the desired skill has to be physically relocated for it to be utilized. Virtual organization can save you costs in terms of relocation expenses and time efficiency for relocation; it could avoid variable resource cost from your project.
Virtual organization models
- Partners: This methodology is useful to allow each partner to concentrate in its own core competencies and sharing its skills for mutual benefit.
- Per project/value chain: Utilize by big giants like IBM. They have appointed global virtual team to take care of their value chain around the globe. It can be utilized per project basis as well.
- Data/infrastructure virtualization: Data/infrastructure from an organization such as e-commerce or complete application data can be virtualized, thus avoiding overheads of data storage and maintenance. The entire enterprise can exist on electronic cloud with the same security as it would remain within an infrastructure. There are more classification such as “private cloud” and “public cloud” of this type of virtualization.
Legal and information support for virtual organization
There are government agencies around the globe to monitor virtual organization and global operations. Each country has its governing body for globalization. The laws of globalization are different and have its own legal advisors. However “Small scale enterprises” are free to operate in globalization model as long as they remain in the threshold.
Virtual organization has numerous advantages and disadvantages. The model has risks just as it would have on any management process and business. It is advised to understand this model in depth before its implementation or transition to virtual organization.
Please leave relevant comments on my post and also post any related questions. I will be glad to answer your questions and make this blog a discussion point from best of my experience.