Discussion Question:Let's explore the virtual organizational form. Why would a firm decide to implement this approach to organizing? What are the benefits? What is the downside? Provide examples of organizations that have used a virtual organizational structure. Again, be specific and give examples - do not regurgitate the textbook - tell me in your own words.
Peer Initial post (MC): Dess, Lumpkin, Eisner and McNamara (2014) describe a virtual organization as a "continually evolving network of independent companies that are linked together to share skills, costs, and access to one another's markets." For years, organizations have felt that they must have all the necessary knowledge, skills and abilities in-house in order to have full control and to be successful.
However, the idea of virtual organizations is growing fast. Availability of the internet, information technology and other communication technologies assist in making virtual organizations a viable option for many firms. Firms choose to implement virtual organizations as this structure allows them to increase their value and share their costs, benefits and risks while better meeting demands and better competing in the market (Vieira, Junior, Rabelo, and Fiorese, n.d.)
One of the most important things when choosing to be a part of a virtual organization is to choose appropriate members. Due dilligence should occur before members of the network are selected. The three (3) most important things to look for when choosing members are: trust, commitment and ability for information sharing (Vieira, Junior, Rabelo, and Fiorese, n.d).
While it's important to find the correct members to be a part of the network, it's also critical that the virtual network have a shared vision, be comprised of all the attributes typically found in a traditional company and that the customer experience with the virtual organization is seamless. The customer should not notice that some functions (e.g., order entry, billing, customer service) are handled by different companies (Ahmed and Sharma, n.d.).
If there is a lack of a shared vision and a lack of a commitment to work for the network, there will be a resulting lack of trust among the firms in the network and customers will see and feel this. To be successful, firms in the network must be technologically integrated so that the companies can interact as one business and there must be the ability for people in the firms to easily interact with each so that there is a quick and efficient response time to any management issues (Ahmed and Sharma, n.d.).
There are a number of advantages and disadvantages related to virtual organizations. The advantages to the firms in the network include: adaptability, agility, flexibility, responsiveness, and improved resource utilization (Ahmed and Sharma, n.d.). In addition, there are reduced operational costs, a more global presence, and projects can be staffed with the most skilled staff regardless of their location and/or firm they are employed by. The disadvantages to the firm in the network include: lack of influence and autonomy, impact of cultural differences, and keeping up with evolving information and communication technologies (Ahmed and Sharma, n.d.).
Aside from the firms in the network, we must also consider the people that work for each of these firms. Alqithami and Hexmoor (2014) describe the people working for the firms as "small or large groups stretched across space, time and organizational boundaries with links strengthened by webs of communication technologies and relationships that bind them together."
In this arrangement, the people working for the different firms will rarely see each other, will interact primarily by electronic means and may rarely experience working together as one large team. Since the employees for the firms can either make or break the success of the virtual organization, good leadership and good communication technologies are keys to success. Good leadership will help the firms function as an empowered partnership and also share the accountability for quality products and services (Ferrell and Herb, 2012).
Garud and Lucas (1997) tell us that a great example of a virtual company is Verifone. Verifone is a global company that started out providing check verifying equipment. Today, they provide the bulk of the credit card verifying/swiping machines that we all interact with on a daily basis. In order to operate efficiently, Verifone uses a number of different communication mechanisms for their staff - email, Verifone intranet, video conferencing and face-to-face/group meetings on at least an annual basis. As of the writing of this source, Garud and Lucas (1997) tell us that the firms in the Verifone network included NetScape, banks, Discover, Microsoft and Digital Express.
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