Paradigm shift to virtual organization

1. VIRTUAL
ORGANIZATION
ATIENZA, FRANCIS
FAJARDO, ROLAND

2. Virtual Organization
oAn organization involving detached and disseminated entities
(from employees to entire enterprises) and requiring IT to
support their work and communication.
oused to describe a network of independent firms that join
together, often temporarily, to produce a service or product.
o Also known as virtual office, virtual teams, and virtual leadership.
o Virtual organizations do not represent a firm’s attribute but can be considered as a
different organizational form.
o The ultimate goal of the virtual organization is to provide innovative, high-quality
products or services instantaneously in response to customer demands.

3. Virtual Organization
◦ Consists of individual's working out of physically dispersed work
places, working from mobile devices.
◦ ICT is the backbone of virtual organization.
◦ ICT coordinates the activities, combines the workers’ skills and
resources with an objective to achieve the common goal set by a
virtual organization.

4. Apparition and Evolution
1980
◦ The emergence of outsourcing in the 80s unquestionably played a
significant role as its aim is to eradicate unproductive internal services and
transfers the difficulty outside of the organization.
1990
◦ First utilized in the early 1990s as demonstrate the work of Jan Hopland,
Roger N. Nagel, William H. Davidow and Malone.
◦ Emerged in 1990, it is a social network in which all the horizontal and
vertical boundaries are removed becoming boundary less organization.

5. Companies engaged in Virtual Organization

6. Working of a Virtual Organization
Security
Agency
R & D
Agency
Transportation
Manufacturing
Firm
Material
Suppliers
Financial
Institution
Central
Organization

7. Technology required
◦ Internet
◦ World Wide Web
◦ EDI
◦ Telecommunications
◦ E-mails
◦ Groupware
◦ Video Conferencing

8. Characteristics of Virtual Organization
oFlat organization
oDynamic
oInformal communication
oPower flexibility
oMulti-disciplinary (virtual)
teams
oVague organizational
boundaries
o Goal orientation
o Customer orientation
o Home-work
o Absence of apparent
structure
o Sharing of Information
o Staffed by knowledge
workers.

9. Advantages of Virtual Organization
◦ Eliminates physical boundaries.
◦ Cross-functional teams and organizations operates via electronic
channels.
◦ Allow business to sell and deliver product across the word in most
efficient ways.
◦ Greater business opportunities.
◦ Better integration of suppliers and vendors.
◦ Better management information.
◦ Lower operational costs.
◦ Better market understanding.
◦ Expanded geographical coverage.

10. Disadvantages of Virtual Organization
◦ Less commitment of members on
account of not being involved
physically.
◦ Members are often not able to work
as a team creation and
management of team is often
difficult.
◦ Virtual organization often are not
economical to constitute
◦ Less commitment of members on
account of not being involved
physically.
◦ It may not be possible to develop
mutual trust between the member
firms in a virtual organizations.
◦ The staff of some member firms
may find it difficult to adjust to the
virtual arrangement.

11. Types of Virtual Organization
Tele-
commuters
Permanent
Virtual
Organizations
Outsourcing
Employees/
Competencies
Completely
Virtual
Organizations

12. Types of Virtual Organization
1. Telecommuters - These companies have employees who work
from their homes.
They interact with the workplace via personal computers
connected with a modem to the phone lines.
Examples : Dow Chemicals, Xerox, Coherent Technologies Inc.,
etc.

13. Types of Virtual Organization
2. Outsourcing employees/competencies - characterized by the outsourcing of
all/most core competencies
◦ Areas for outsourcing include marketing and sales, human resources, finance,
research and development, engineering, manufacturing, information system,
etc.
◦ In such case, virtual organization does its own on one or two core areas of
competence but with excellence.
◦ For example, Nike performs in product design and marketing very well and
relies on outsources for information technology as a means for maintaining
inter-organizational coordination.

14. Types of Virtual Organization
3. Completely Virtual - These companies metaphorically described as
companies without walls that are tightly linked to a large network of
suppliers, distributors, retailers and customers as well as to strategic and
joint venture partners.
Atlanta Committee for the Olympic Games (ACOG) in 1996 and the
development efforts of the PC by the IBM are the examples of completely
virtual organizations.

15. Types of Virtual Organization
4. Permanent Virtual Organizations - designed from its
inception, as a virtual organization to bring together
market players and respond to opportunities for
both improved revenue generating activities as well
as cost savings.

16. NEW BUSINESS FORM

17. NEW BUSINESS FORM
◦ The virtual corporation is more permeable than traditional organizational
forms.
◦ Interfaces in a virtual organization between company, supplier, and customers
continuously change, resulting in a blurring of traditional functions.
◦ Inside the office, work groups and job responsibilities may shift regularly.
◦ The virtual organization may not have a central office or an organizational
chart.
◦ Suppliers, customers, and even competitors may spend time alongside one
another in the virtual organization.

18. Virtual Teams
◦ "a group of people who interact through
interdependent tasks guided by a common purpose.”
◦ a virtual team performs work across space, time, and organizational boundaries
connected by interactive communication technologies.
◦ Virtual teams may include employees, management, customers, suppliers, and
government working together to achieve common goals.
◦ These teams often stay together only to perform its episodic task.
◦ They may work jointly on a new project, but when the product is designed and
goes into production, the project is finished and the virtual team dissolves.

19. Characteristics of a Virtual Team
◦ Learn a new set of skills. One skill is the ability to interact with one another
effectively despite infrequent or total lack of face-to-face contact.
◦ Ability to assimilate quickly and effectively into new teams.
◦ Virtual team members should be technically adept to deal with the variety of
required computer-based technologies.
◦ virtual team members may need intercultural skills to work effectively in multi-
national organizations.

20. Virtual Leaders
◦ Ability to manage a network of interdependent firms.
◦ To design virtual operations
◦ To create and sustain virtual relationships with internal as well as external
constituents
◦ To support virtual teams, and to keep virtual teams focused.
◦ The leader of a virtual organization demands a new set of skills unlike the
skills required in a traditional hierarchy.

21. Virtual Learning
◦ Ability of the organization to create world-class learning systems.
◦ These learning systems help leaders sustain or create world-class competencies.
◦ Effective learning systems can create pathways throughout the organization, in
network fashion, enhancing the innovative capabilities of the organizational
members.
◦ An organization's ability to sustain a leadership position in the world economy
demands that organizations be on the cutting edge to develop rapid and elegant
solutions to emerging consumer demands.

22. Challenges
◦ Strategic planning dilemmas, boundary blurring, a loss of control, and a
need for new managerial skills.
◦ Strategic planning poses new challenges as virtual firms determine
effective combinations of core competencies. Common vision among
partners is quintessential to cooperating firms. Focused on a common goal,
firms develop close interdependencies that may make it difficult to
determine where one company ends and another begins.
◦ The boundary-blurring demands that these boundaries be managed
effectively.
◦ Coordinating mechanisms are critical elements for supporting these loose
collections of firms.

23. Challenges
◦ Virtual structures create a loss of control over some operations.
◦ This loss of control requires communication, coordination, and trust among
the various partners, as well as a new set of managerial skills.
◦ Employees are exposed to increased ambiguity about organizational
membership, job roles and responsibilities, career paths, and superior-
subordinate relationships.
◦ This ambiguity requires management to rethink rewards, benefits,
employee development, staffing and other employee-related issues.
◦ Developing leaders who are able to create and sustain these organizational
forms is critical.

24. Researches
◦ According to the study, in order to
succeed in a V.O., workers need to trust
one another.
◦ The higher the degree of trust, the more
communication will occur between
virtual workers.
◦ Active communication and a high level of
trust can lead to collaborative learning.

25. Researches
◦ Adoption of virtual organization, provide means to implement innovative
organization structures.
◦ The adoption and diffusion of virtual organization might transform firms to
meet the demands of e-commerce

26. Researches
◦ An assessment of the data resulted in
important commentary about the behavior,
skills, and attributes of flourishing leaders in
virtual organizations.
◦ The study found persuasive confirmation that
various bundles of characteristics comprise
leadership attributes exhibited by successful
project management leaders in virtual
organizations. Interconnecting themes
included technology, communication, and
people skills.

27. REFERENCES:
◦ Colky, Deborah Lavin (2002). A critical examination of the virtual organization and
the mutual dependencies of Trust, Communication, and Collaborative Learning.
ProQuest Dissertations Publishing.
◦ Lin and Lu (2005). Adoption of virtual organization by Taiwanese electronics firms:
An empirical study of organization structure innovation. Journal of Organizational
Change Management, Emerald Group Publishing Ltd. pp. 184-200 Vol. 18 No. 2.
2005
◦ Musil, Elisabeth (2014). Leadership Attributes for the Virtual Environment: A
Qualitative Study. ProQuest Dissertations Publishing.
◦ https://www.referenceforbusiness.com/management/Tr-Z/Virtual-
Organizations.html
◦ https://en.wikipedia.org/wiki/Virtual_organization
◦ http://www.yourarticlelibrary.com/organization/what-is-virtual-organisation-
definition-characteristics-and-types/35533