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Virtual Organizations

By Edited Jan 26, 2014 0 0

Competitive Advantage

The answer is simple: Competitive Advantage. “The power of the many” as it is dubbed highlights that there is advantage to be gained from collaboration and inter-company communication. The commitment to such collaboration can take many forms; mutual trust and a common goal are essential prerequisites for such collaboration to succeed.

 One such method of collaboration results in what’s known as a “virtual organisation”. It is a concept developed that describes the sum of companies that co-operate for mutual benefit. A definition of the term is that it is an organisation distributed geographically and whose work is co-ordinated through electronic communications. The concept of electronic communications implies that a virtual organisation is networked which will then afford it the allowance to be geographically distributed.

The benefits of pursuing such a strategic direction are several fold but are particularly evident for small to medium-sized companies who wish to gain and share information. This results in a sense of community especially for those companies in similar if not the same industries. Its interesting to consider however where companies would draw the line between disclosing information and withholding it. Would a company be so bold as to provide misinformation to competitors with a view to outperforming them? I am diverging from what the concept virtual organisation really is. It is not meant to be about misinvolvement, only collaboration for mutual benefit.

 Other benefits with such collaboration include: 

  • It gives a company access to a wide range of specialised resources.
  • It can present a unified face to large corporate buyers.
  • Individual members can retain their independence.

The concept of being included coupled with a freedom of independence is key to the concept of virtual organisations. Members are part of a community without the attachments, legal baggage or commitments of other strategic alliances.

 What role has technology to play in such collaboration? Technology is the key to all that can be successful in a virtual organisation because it allows for members to communicate globally in an instant and it allows for the amalgamation and analysis of terabytes of information relating to a company and industry which is accessible throughout the community.

 The early days of technology saw companies communicating through eMail, Internet Bulletin Boards and Electronic Data Interchange etc which all proved very effective however recent technological developments have afforded companies the opportunity to communicate more effectively. One such development is eXtensible Markup Language (XML) which provides a unified method of communication with older legacy systems for example and provides them with boundless opportunities with regards to information retrieval. NASA’s Information Power Grid was developed for use between its large number of sub branches as each had enormous requirements in terms of computer capacity requirements. They developed this grid to allow similar resources to be shared between all branches. In essence they created a Virtual Organisation. It is an excellent example of how technologies have been developed, embraced and shared with the common goal of communication and collaboration.

 There was a study completed in 1996 by Christopher Barnatt on Cavendish Management Resources (CMR) which developed a virtual organisation style business model which has been used to good effect. Albeit slightly outdated the case is excellent in terms of seeing how and why the virtual model was developed, its practical application and the benefits it provides to all members and end customers.

 CMR is a UK-based company which has for many years exhibited the characteristics of a virtual model of human, technological and capital resource integration. Referring briefly to the company history, CMR are a consultancy which provides management support services as well as investment funding for SMEs who are seeking to expand.

 Over the years CMR became affiliated with one hundred and fifty external “members” who all had backgrounds in a wide range of industries. These members were carefully selected and had to be senior managers who choose to offer their services to CMRs customers. CMR had amalgamated 150 experts to their side. Interestingly none of them were CRM employees instead each work independently and provide services to customers which are referred to by CMR. What CMR gains is a wealth of expertise which improves their services to their customers. What each member gets is the assurance of referrals from CMR as well as professional aid from other members and the company.

 According to the case study the business model proved a great success with regard to the service they were providing to their customers. The CMC of computer- mediated communication tools being used were typically eMails and Bulletin Boards on the Internet. Upon subsequent research on their current website. I was unable to retrieve the information technologies used for such collaborating today however based on my analysis I would suspect that the Internet and eMail would still be the main technologies used as with many industries they have become the uniform standard. However I could foresee the introduction of Web Services to be of particular advantage which would provide members real time information on particular data accessible anytime, anywhere. Also the introduction of mobile technologies eg PDAs for those members who might be mostly working out of the office and this would afford them the prospect of collaborating with CMR out of the office.

 In summation the trend towards consolidation could force companies to seek out methods of collaboration with other companies which would strengthen their position in the marketplace. By creating or getting involved in a Virtual Organisation companies are not only collaborating but embracing a business model centered on trust and mutual benefit and importantly as evident with CMR improved customer service.



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