Virtual Organization Management and Characteristics

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Table of Contents

Managing virtual organization
What is a virtual organization?
Characteristics of virtual organizations
Management challenges posed by virtual organizations
Conclusion
References

Managing virtual organization

Advancements in technology in the recent years more so towards the end of the 20^th century have led to the formation of new and sophisticated platforms for doing business which not so long ago seemed to be impossible in the normal world. For instance nowadays it is easy to do business even without actually meeting through electronic means though 20 years ago no one would have thought of such a thing.

These advancements in technology have also led to the rise of a new form of organizations known as virtual organizations which though separated by distance and joined by electronic means they work together by combining their skills as if they were a single unit and give a common output. It has often been said that virtual organizations are a combination of the very best of skills, talents and competencies (Lipnack & Jeffrey, 2009). This paper will attempt to critically examine the key characteristics of virtual organizations. It would also evaluate the opportunities, examples and management challenges posed by them.

What is a virtual organization?

A virtual organization is an identifiable temporary collection of groups, individuals, departments or independent organizations separated by both distance and time but integrated together via electronic means in order to produce a common output as if they were working from one central point (Duarte & Snyder, 2006). They share skills, markets, costs of doing business and the resulting profits among themselves. In a related definition (Serrat ,2009) agrees with Duarte and Snyder as she defines a virtual organization as a collection of individuals separated by distance and time but work interdependently towards a common objective via interactive technology.

Examples of renowned virtual organizations include Sigma, Virtuelle Fabrik and Rosenbulth international alliance (Jacobsen, 2004). Jacobsen also adds that Sigma for instance is a virtual organization in Germany which consists of training personnel and consultants working on freelance, full time or part-time in building teams that work on various projects. Another good example is Amazon, which is a virtual bookstore that sells books electronically to millions of clients worldwide. The organization though does not own any of the materials it sells but merely connects publishers to their clients once they place orders through their “website www.amazon.com”.

Characteristics of virtual organizations

It is worth noting that the two definitions of virtual organizations above give some common characteristics of virtual organizations like the separation of distance and time and also use of technology in order to achieve their objectives. However, the most common charactaristics of virtual organizations that are inherent in almost all of them are many and are discussed below.

First of all virtual organizations are dispersed geographically and are only connected to each other by use of information and communication technologies ( Jagers, Jansen & Steenbakkers, 1998). The aspect of distance though is not a problem because technology has bridged the distance gap in the world and people nowadays can work as if they were in the same room via technological platforms. For instance from the example of Amazon given earlier, the bookstore is able to sell books all over the world from different publishers dispersed geographically to their customers. The customers, publishers and the book store itself do not meet in any way but still manage to gratify each other. In order to buy a book you only need to place an order and it is delivered to you once you make an electronic payment.

Virtual organizations operate in a virtual environment. In this essence they employ use of electronic communication technologies in order to do business. According to Travica (1997), the main reason behind the concept of virtual organizations is to break the hurdles presented by distance, time and space through communication technology. In order for virtual organizations to operate effectively they must employ the use electronic communication technology effectively. Travica further adds that the platforms presented by technology nowadays are numerous and keep advancing with time. For instance nowadays people can chat, voice mail, e-mail and even have a video conference. All these work in such a way that you are able to communicate with a person however far he is without meeting as though you were in the same room (417-419).

Partner equality is also a key characteristic of all virtual organizations. This is because the main reason for their formation is the desire to combine and share talents, skills, efforts and information in order to give an end product (Naisbitt, 1994). This way all of the partners perform their individual roles though separated by distance in such a way that the end product is a combination of effort by all of the partners. Naisbitt also adds that all of the partners have a chance of becoming team leaders based on their individual skill, talents or expertise. This can also be termed as shared leadership as all of the partners offer leadership when need arises. In this way no one can be said to be above the other in hierarchy as it occurs in the traditional organizational models.

The participants of virtual organizations are not permanent and are bound to change from time to time. This is because of the nature of operation of virtual organizations as their functions keep on changing from time to time and coupled together with the aspect of geographical dispersion, there cannot exist permanent members. In a virtual organization, according to the objective at hand its composition can change each day such that if a member feels that the aspirations of the organization do not match his own he is free to leave. The objectives of the virtual organization are often temporary leaving no room for permanent membership but there is also a possibility of redeveloping objectives for new projects.

Virtual organizations operate in such a way that resources are often shared among all the partners. According to Lipnack & Jeffrey (2009), the main reason for the formation of virtual organizations is because single organizations or individuals are unable to perform the tasks on their own. The existence of virtual organizations ensure that the tasks at hand are performed by individual organizations by way of complementing each other in such a way that each partner performs what he is able to do best. This way it is possible to produce a finished product done collaboratively or complete a project that could not be completed by one person alone. This ensures that the projects completed or products produced are of better quality than if they were done by a single organization.

Virtual organizations also have a characteristic of being temporary although this has often been argued by many people. Jagers, Jansen & Steenbakkers support this by arguing that the functions of any virtual organization are dictated by the demands of the customers and are not pre-planned like in the case of traditional organizations (Lucas, 1998).

In order to expound on this they further argue that traditional organizations exist on laid down objectives and aims when they are being set up and pre-plan before producing any product or service but virtual organizations do what the customers want. This aspect of shifting due to a shift in customers demands is the main reason for the temporariness of the existence of virtual organizations. Virtual organizations also cease to exist when the customer demands cease to exist or when the partners find the collaboration not beneficial to them

Management challenges posed by virtual organizations

According to Serrat (2009), trust is the biggest challenge in managing virtual organizations. She further argues that this is coupled with the fact that trust is hard to build but very easy to destroy. In order to develop trust certain issues must be attained such as physical proximity, information exchange, common culture, shared values and time. In the virtual environment that a virtual organization exists trust is based by the ability of the partners to perform the task at hand but not on interpersonal relationships’. This way trust increases through the performances of the members and is bound to reduce if one member’s performance reduces.

It can also be very difficult to collaborate over long distances. Although the aspect of communication is addressed through communication technologies, working with people who are very far away can be a daunting task (ADB, 2009). This is because all the members of a virtual organization work according to their own will and do not have any people to supervise them. They usually work at their own pace and time and although they share a common objective, it is because they want to. There can occur instances when a partner pulls out at a critical stage and although a replacement can be found, it would be a drawback to the whole virtual team.

Electronic communication technologies can also offer a great challenge in the management of virtual organizations. Serrat argues that for virtual organizations to operate effectively, all the partners or organizations that form the virtual organization must have access to communication equipment that is standard across the spectrum. If for instance there is need for video conferencing all the partners should have access to all the necessary hardware and software. The challenge posed by ICT is that, it keeps on changing from time to time. Infact within one year there could be several versions and updates of a particular hardware or software being produced in the market in different regions and if one partner upgrades his own without the others doing so there will be a problem.

The different cultures of the partners of the virtual organization can also pose a great challenge (Tekplus, 2001). Since the partners are dispersed geographically there could be a great chance that they do not have the same beliefs and practices and this could pose a big challenge as making them work together as a unit is not an easy task in itself. This is because they have different work cultures and in order for the virtual organization to operate all its members should have the same work culture.

Conclusion

Managing a virtual organization may seem difficult as shown in the above challenges but it has also offered many opportunities. For instance customers are now able to order for personalized products from a one stop shop. The expectations of customers are also very high hence the need to have organizations producing very high quality productions. The world is also shifting manufacturing to providing solutions and the only way this can be done effectively is through virtual organizations (Tekplus 2001).. Finally, virtual organizations provide a good platform for the convergence of services, technologies and products

References

ADB. (2009) Working in teams. Web.

Duarte, D and Nancy, S. (2006) Mastering virtual teams: Strategies, tools, and techniques. U.S.A: John Willey & Sons.

Jagers, H. Jansen, W and Steenbakkers, W. (1998) Characteristics of virtual organizations: Primavera working paper 98-02, Amsterdam: University of Amsterdam.

Jacobsen, K. (2004) A study of virtual organizations in mobile computing environments, Norway: Norwegian university of science and technology.

Lipnack, J & Jeffrey, S. (2009) Virtual teams: People working across boundaries with technology. U.S.A: John Wiley & Sons.

Lucas, H. (1996) The T-form organization: using technology to design organizations for the 21^st century, San Francisco: Jossey-Bass publishers.

Naisbitt, J. (1994) The bigger the world economy, the more powerful its smallest players, New York: Bready publishing.

Serrat, O. (2009) Knowledge solutions. Managing virtual teams: Web.

Tekplus limited. (2001) The emergence of virtual organizations: A white paper. Web.

Travica, B. (1997) The Design of the virtual organization: A research model, in Proceedings of the Americas conference on information systems: Indianapolis, 417-419.

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