Virtual Organization is a flexible network of separate entities which forms a collaboration by connecting companies, institutions or individuals delivering a product or service on the basis of a common business perception. In virtual organization, there is no need of the people to come together at same place at a time in order to deliver the product or service. Branding is the most important factor in the virtual organization in strongly positioning the site on the internet.
The term Virtual organization is used to describe a network of independent firms that join together, often temporarily, to produce a service or product. Virtual organization is often associated with terms as virtual office, virtual terms and virtual leadership. The ultimate goal of virtual organization is to provide innovative, high-quality products and services instantaneously in response to customer demands.
Virtual organizations are distributed “business processes”. The processes may be owned by one or more organizations acting in partnership, for a specific project, resources are assembled to perform a business process on behalf of the project owner, and then disassembled on the completion of the contract.
Virtual organization is a geographically distributed organization whose members are bonded by a long-term common interest or goal.
A virtual organization is an organization existing as a corporate, not for profit, educational or otherwise productive entity that otherwise does not have a central geographical location and exist through telecommunication tools.
Example:
A small software company wants to bid for a new contract, which is beyond its scope. This company forms a VO with other similar small companies and by doing that it is suddenly able to compare with larger Corporations to gain the contract.
Characteristics of Virtual Organization
Virtual organizations can be large or small, long or short lived. Other characteristics of virtual organizations are:
- VO exists for a specific purpose.
- VO does quickly deliver products/services that are innovative and customized.
- Membership and structure of a VO evolve over time.
- VO members can switch from one project to another.
- Dynamic VOs have a capability to unite quickly.
- Resources, services and people that comprises a VO can be single or multi-institutional homogeneous or heterogeneous.
- Principle of Synergy (many to one): VO exhibits unifying property because it is constituted from different organizational entities that create an effect of single organization.
- Principle of Divergence (one to many): A single organization can exhibit multiplication property by participating in many VOs at the same time.
Advantages/Benefits of Virtual Organization
- VOs can make it possible to satisfy constantly changing customer and market requirements in a competitive manner.
- An ability to participate in Bos can increase the service range a company can offer its customers.
- Participation in VOs increases the total number of end-customers a company can reach indirectly via its partners.
- It became possible to provide services precisely tailored to a specific customer need.
Disadvantages/ Drawbacks of Virtual Organization
- High Cost: The main costs are related to investments and subsequently high operational costs, including training and maintenance.
- Legal Problems: VOs are established fast and efficiently to respond to market opportunities or tackle specific projects. This can result in complex legal problems as the boundaries between the organizations becomes vague or fluid.
- Trust and respect issues: Trust and respect are one of the most important factors for a successful VO. This applies both for knowledge sharing and the group dynamics for collaboration.
- Cultural Issues: Co-operation in Vos may involve working across culture. This is a big challenge to many managers and requires them to transfer their business policies and culture to work with dispersed business teams spanning organization geography, and cultures.
Types of Virtual Organization
There are various types of approaches in implementing virtual organization which are as follows:
- Mobile Working: This type of virtual organization specifies to the mobile employees working in an environment in which mobile devices such as cell phones, laptops, e-mail wireless devices, pagers and laptops are required.
- Virtual Teams: Virtual teams are usually developed by the employees of the same organization and may have the employees from external organization. Employees cooperates through e-mails, groupware, the intranet and video conferencing from geographically dispersed locations. They perform parallel responsibilities along with their fundamental responsibilities in the organization.
- Telecommuting: Employees in this type of organization works from a place other than the normal workplace, which could either be their home or some other place. For managing and contacting the head office, telecommuters used the tools such as computers and telecommunications equipment.
- Hot Desking: In these type of virtual organizations, fixed desks assigned to all or few employees is removed. When they arrives, they are accredited a computer workstation through which they can access their documents, files, applications and e-mails. This type of arrangement is suitable for the companies in which members spend a huge amount of time on the customer workplaces.
- Hoteling: This type of organization is similar to the hot desking. Hot desk in this system is provided by the client or customers to the virtual organization employees.
- Telecentres: These type of virtual organizations are placed for the employees generally not available in the telecommuter’s home. It is mostly placed in the associations outside of the major cities and provide space and equipment there.