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Firms using dynamic networks use a small amount of capital to fund growth allowing them to grow rapidly. They usually have a small staff. They subcontract work and outsource noncore functions. They hire superior talent, avoid idle capacity, and reduce inventory allowing them great flexibility. Dynamic networks have vertical disaggregation, brokers, market mechanisms, and full-disclosure information systems. Firms that function in a global environment have special challenges and environmental pressures. They must respond to local laws and customs, and conditions in their host country. Firms structure their division of labor through horizontal differentiation, vertical differentiation, personal differentiation, and special differentiation depending on the type of firm. Firms are decentralizing responsibility for decision making to more people in the firm allowing for increasing autonomy.
414). and distribution. and avoid becoming committed to a technology that becomes obsolete. pg. reduce inventory costs. These companies can grow rapidly since they use a small amount of capital to feed rapid growth. The modular structure meets the need for innovation and efficiency since subcontractors pursue different strategies. marketing. Dynamic networks have four characteristics. supply. They have brokers that assemble the business groups by subcontracting for required services. General contractors and subcontractors in the construction business form a stable and continuous network over time. For example. a core firm may sell computers. subcontracts work and outsources noncore functions. and distribution. 2002. This allows the company to hire superior talent to perform certain functions. manufacturing. and other functions. The firm can add or subtract subcontractors as needed. creating linkages among partners. This allows great flexibility for the firm. They have market mechanisms such as contracts or .Characteristics of Dynamic Networks Dynamic networks (modular organizations) combine a variety of subcontractors into a working organization. production. or locating such functions as design. High-tech firms strategically collaborate with each other to form network organizations. but contract out design. sales. It is used in product design. avoid idle capacity. yet complement each other as part of the network (Gordon. manufacturing. They have vertical disaggregation in which independent organizations within the network perform the business functions. The dynamic network takes different forms. Modular organizations have a small staff that develops strategy. and monitors the interface with various subcontractors allowing managers to decrease overall costs and speed the development of new products. Individual firms join in partnerships to work in international projects.
410-411). flattens the hierarchy by empowering workers and eliminating non-value-added work. 2002. there is full disclosure information systems link the various network components. It can eliminate assigned or assumed authority. A modular structure also can exist inside an organization. or supervision. It uses information technology to reach performance objectives and deliver value to customers. pg. Horizontal structures organizes work around key processes instead of tasks. Horizontal organization focuses on core processes. 2002. uses teams to manage everything.payments for results. rather than plans. This structure emphasizes strong interpersonal communication. 2002. Rather than acquiring and developing their own resources. such as distribution. It includes cross-functional teams that manage and run processes. and lets customers’ satisfaction drive performance. It rewards workers for their team-related performance and maximizes contact with suppliers and customers (Gordon. information technology. Some firms unite and form alliances to pursue a set of agreed-upon goals. Lattice Organizations emphasizes teamwork and employee empowerment that results in structures that reduce or eliminate organizational hierarchy. The company creates entrepreneurial and market components. pp. Process owners take responsibility for an entire core process. and encourages employees to focus on customer requirements and satisfaction. or research and development that operate as separate divisions or profit centers with bottom-line responsibility (Gordon. 414). emphasizes on empowering workers by reducing the management hierarchy. some organizations find . 411-412). Sponsors rather than bosses work with associates instead of employees. hold the functions together. Individuals responsible for accomplishing various objectives are tasked with setting the objectives (Gordon. pp. controls. In addition.
They share control over the performance of assigned tasks and make continuing contributions to the alliance. plan and budget jointly. Electronic communication supports multidisciplinary work arrangements that link people across formal organizational boundaries. 412-413). costs. these alliances have committed leadership. Each organization participating in the network contributes only its core competencies. attach importance to the results of the collaborative efforts. and provide necessary resources (Gordon. access to markets. and supports the development of this structure. Each partner brings its core competencies . computer networks link companies. Successful alliances view partnership as an opportunity. uses conflict productively. and believes in honest communication. entrepreneurs. Companies frequently regroup which into new virtual corporations which creates flexibility to seize new opportunities. Virtual organizations may be temporary. and firms may participate in multiple alliances simultaneously. customers. Once the network achieves its objectives. demonstrate a reasonable level of trust. tied together by computer technology. and demonstrate a willingness to learn from each other. and partnerships. Strategic alliances also create opportunities for learning from a partner. The Internet and information technology allows them to share skills. It creates shared goals and realistic expectations. pp. In virtual corporations. The virtual organization is a network of independent suppliers. it may dissolve.it faster and cheaper to form alliances with another organization. These organizations usually have flat structures in which information and decision making move horizontally. and even competitors. 2002. In addition. The linkages between organizations in alliances strengthen companies by bringing additional resources to solving organizational problems and competing in the marketplace. redesigns and creates integrated systems. have congruent measurement and reward systems.
Organizations that function in the global environment face special environmental pressures. and customers makes it difficult to determine company’s borders. there must be a level of trust. and less formal. There are many challenges in the global environment such as the rapidly changing environment. Since members rely on each other to achieve their goals. pp. the constant development. companies function in a global environment. Multinational companies typically choose the extent to which they create special local structures that respond to conditions in their host countries (Gordon.allowing the creation of a “best-of-everything” organization. Many of these firms are moving to a decentralized structure that allows managers to respond more quickly and effectively to customer requirements. 2002. The virtual corporation redefines the traditional boundaries of a company. They must respond to local laws and customers. They have of a pool of employees from whose expertise various business units can draw which allows all parts of the organization access to a broader pool of talent and enables information technology staff to work on a broader array of projects and problems (Gordon. as well as to those of their home country. and availability of new . Partnerships are more opportunistic. less permanent. Virtual organizations can exist within a single company. with special challenges. suppliers. Differences between Global Management and Multinational Management Increasingly. 2002. Increased cooperation among competitors. 432-449). 416). pg. Managers in high-performance companies structure their organizations to increase effectiveness of their interactions with the environment.
with the elimination of economic boarders between countries and comparable consumer demands. and a general environment. network structures. global structures have emerged thus eliminated the need to differentiate horizontally into regional divisions or product subsidiaries. However. 449). coordination across long distances is simple and effortless (Gordon.technology. Firms that start and develop as part of the dot-com companies face many challenges in structuring themselves so that they are responsive to the changing environment. Pharmaceutical firms use an international management style that falls between global and multinational management. such as horizontal organizations. These firms design marketing. and products to meet specific country or regional requirements. Companies in this environment tend to implement organic structures. These firms combine mechanistic structures and organic structures to create a hybrid firm as they become more established. and the increased number of knowledge workers in the labor force. With the Internet and communication technologies of today. Firms with similar products in different regional markets such as oil companies. and sales. 2002. use a multinational management style. increased competition. pg. These firms compete worldwide by creating few or no distinctions between markets and developing global economies of scale in manufacturing. and even virtual corporations. Frequent reinvention and restructuring occurs as these companies respond to new product launches. Firms in the electronic industry or consumer products industry such as the food industry. There may be variations in laws and regulations that require special support staff in various countries to ensure compliance. use a global management style. Managers of multinational organizations create structures and management strategies that respond to their needs. These firms sell similar products in all . sales. distribution.
Some companies have moved from high-cost U. This style adds elements from the other styles to meet special market needs. (4) identify the desired degree of operational independence. companies identify and address cultural incompatibilities. Companies that form international alliances need to add a cultural dimension to their normal financial. A transnational management style combines elements of each of these approaches. and strategic planning. pp. legal. They have employees with different cultural backgrounds. (5) carefully choose the legal structure for the alliance. and education. The firm can create a shared vision and smooth its development and operation by involving managers and employees in the alliance. (2) compare profiles and identify incompatibilities. (6) agree to the management systems for the alliance. 2002. and (8) assess the alliance’s demands on its parent company cultures and change practices as needed.countries but tailor them to meet local requirements. or cost-reduction pressures (Gordon. A company’s employees within a given country may come from both the home country and the . experiences even greater environmental complexity. 2002. (3) develop a joint business purpose. values. experiences. Multinational firms are organizations that function in numerous countries. (7) staff the alliance. a changing environment. pp. Some firms represent a new breed of multinational companies. and European sites to locations in developing countries (Gordon. They outsource part of the manufacturing and distribution process to other countries and focus on their core competencies. 450-451). There are eight stages in developing a culturally responsive alliance: (1) create cultural profiles of each partner. 449-450). To increase the likelihood that the international alliance will succeed. They must deal with the unique characteristics of numerous cultures and countries.S.
Global organizations have the same basic structures as domestic ones. they face particular challenges in creating a cohesive structure across countries. pp. tend to perpetuate a more holistic viewpoint. in which people are used to working with diverse groups. Hewlett-Packard reorganized its global structure so that multinational clients can purchase from a single sales and marketing group in their local area. Division of Labor The division of labor at Orion College is personal differentiation in which labor is divided according to the worker’s expertise or training. in contrast. The transfer of skills and the translation of knowledge among locations occur more easily in product or project structures. Functional structures. Other companies have moved key operations to specific business locations. Many companies have shifted work outside the United States to locations with lower-cost labor. Establishing structures that allow for the fluid exchange of employees at various sites across the world is important. and laws while creating an integrated enterprise. language. departments within the organization can vary the degree in . 416-450). Network structures provide the greatest opportunity for taking advantage of synergy from diverse countries and using it to make the parent organization more competitive (Gordon. For example. Companies that tend to have longer-lasting international joint ventures are those with experience in forming domestic joint ventures and those that are international. wholly owned subsidiaries (Gordon. Reconciling differences in employees’ perspectives. With personal differentiation. 2002. 440-450). as well as taking advantage of their different views. 2002.host country. is challenging when designing organizations. Orion emphasizes the personal division of labor and organizes labor around workers’ specialties. pp. They must respond to differences in culture.
In this division of labor. product. It depends on factors as the manager’s preference and the employees’ abilities. pg. such as strategy. customer. or geographical area. and then administers it during the students’ four years in college. There are other types of division of labor. and product or service. For example. Orion College divides its labor according to expertise and specialty. as well as the organization’s size. As a firm grows and . There can be a high or low division of labor. The students feel that they must deal with too many departments and that Orion is not customer-oriented and sensitive to student issues (Gordon. CEO’s. or Executive Vice Presidents are usually at the top. The Financial Aid Department receives applications for financial aid. The specialties report to these executives is divided into the Director of Admissions. and social issues in management. and communicates with students until they arrive on campus. and Controller. makes admissions decisions. This type of division of labor is also valuable in business situations that require special expertise in firms such as high-technology manufacturing or specialty marketing. human resource management. organizational behavior. CRO’s. 399). Orion College has received an increasing amount of student complaints. process. The amount of horizontal differentiation varies. This department sends students information about financial aid but does not answer questions about the financial aid process. Registrar. makes decisions about financial aid. With horizontal differentiation. the Admissions Department answers questions about the admissions process. Orion may also organize groups within its management department around professors’ expertise. goals.their differentiation. Director of Housing. The registrar handles all course registration. age. With this division of labor. Director of Financial Aid. jobs are grouped at the same level in the hierarchy according to their function. 2002.
Firms decrease inefficiency by centralizing functions.differentiation increases. Vertical differentiation exists in tall organizations that have many levels in the hierarchy. In tall structures. Medium-size firms may have seven or eight levels. workers low in the hierarchy have be less motivated. pg. there are many levels of positions. flatter structures have the potential for faster communication and greater adaptability. which provide more avenues for advancement within the organization. Problems can occur when employees lack training in their roles and can contribute to failure. Vertical differentiation increases the checks and balances in a company and can help the firm minimize or avoid mistakes by employees. 2002. tall structures can slow decision making if people at many levels in the hierarchy participate. Higher-level employees more often check the decisions made by lowerlevel employees. This gives workers more responsibility and autonomy. barriers to communication also increase. however even tall . In the vertical division of labor. which a closer fitting of employees’ personal needs. Decentralization refers to extending the responsibility for decision making to workers at all levels in the organization. 399). Flat organizations usually have few vertical levels. Since higher-level managers make the important decisions. and abilities to jobs. the responsibility for decision-making is usually limited to those at the top of the firm’s hierarchy. With a vertical division of labor. Electronic communication can reduce these barriers since communication as it makes communication across units as easy as communication within the unit (Gordon. This division of labor describes the number of hierarchical levels in a company. Decentralization assumes that people closest to the problem have the most knowledge and can make the best decisions on how to fix it. However.
Mechanistic structures have relative stability and inflexibility in the way they organize activities and workers. Large. Coordination methods include mutual adjustment. With this type of coordination. They usually have centralized decision-making accompanied by a unitary chain of command. pg. Coordination refers to the extent and means by which an organization integrates or holds together its various parts and helps them work together to accomplish a common goal or activity. Spatial differentiation describes the grouping of jobs according to geographical location. standardization of work processes. Complex firms use it to reduce uncertainty in communication and task performance (Gordon. 399-401). a firm utilizes informal but direct communication between individuals. suppliers. 399-403). and standardization of skills (Gordon. 2002. pp. 401). They rely on extensive horizontal and vertical division of labor . bureaucratic firms rely on it in small departments or among top management. 2002. This type of division of labor responds best to differences in customers. telephone communication. or even regulation in different locations (Gordon. pg. Orion College is categorized as a mechanistic structure. pp. 2002. The firm must finds ways to coordinate the various groups. standardization of outputs. or videoconferencing. It also occurs with electronic media in which employees can have immediate access to co-workers around the world through e-mail. 2002. Simple organizations rely heavily on mutual adjustment to coordinate the work. Orion College uses mutual adjustment. Coordination Mechanisms Firms such as Orion College create positions and departments or other groupings of workers. direct supervision.structures can allow the decentralization of decision-making (Gordon. 401).
makes decisions about financial aid. and feedback to employees about their performance. 2002. makes admissions decisions. Horizontal. such as mutual adjustment or standardization of work processes. Although the Admissions Department sends incoming students information about financial aid. The Financial Aid Department receives applications for financial aid. Many organizations have substituted mutual adjustment for direct supervision of employees. it does not answer questions about it or process aid applications. The director of Human Resources may coordinate the work of her employees through direct supervision by providing guidance. 403). For example. The registrar handles all course registration (Gordo. Orion has a horizontal division of labor in which there is job specialization. pg. Standardization of work . In some cases. 2002. it is used with other coordinating mechanisms. and then administers it during the students’ four years in college. With the increased emphasis on empowering workers and using teams in the workplace there has been a trend of reducing the amount of direct supervision (Gordon. Firms use direct supervision when more formalized control is needed. 401). A manager directly supervises or has responsibility for the work of one or more other employees. Standardization of work processes occurs when managers specify the actual steps employees should follow in performing the work. lattice. Direct supervision uses the chain of command to ensure that workers do their jobs correctly. and virtual organizations emphasize mutual adjustment rather than direct supervision for coordinating work-related activities. pg.to encourage specialization of activities throughout the organization. the Admissions Department answers any questions about the admissions process. timetables. and communicates with the students until they arrive on campus. modular.
or written directions to define each step in the process. 401-402). Other professions such as teachers. pp. This results in worker empowerment by allowing more workers to respond creatively to changing conditions or customer demands (Gordon. This standardization uses equipment. Organizations can Solve or Create Problems . or hamburgers at a fast-food restaurant. these professionals may also use mutual adjustment supplement the standardization of skills (Gordon. lawyers know their responsibilities in the courtroom. certification programs. For example. Standardization of outputs coordinates the work of top management by allowing managers’ discretion to devise the best processes to get the job done. nurses. nurses know how to interact with physicians and other medical personnel. certified public accountants and board-certified surgeons participate in new programs directed at creating and maintaining skill standards. such as manufacturing tires. and training offer ways of standardizing skills. For example. Coordination also occurs by specifying the nature of outputs. Through training. pp. known as standardization of outputs. school.processes is used in production that uses assembly-line technology. 2002. This reduces the need for other forms of coordination. 401-402). and pharmacists rely on their training and expertise to coordinate their work through the standardization of skills. computer programs. Empowered teams of the modern firm have the autonomy to adjust work processes to meet the needs of the firm. and on the job. managers who are judged based on their groups’ productivity or profitability have their work coordinated by standardization of outputs and motivate workers to accomplish goals based on outcomes. Through legal training. 2002. parts. In addition. Licenses.
making face-toface communication feasible (Gordon. the company has a relatively benign environment. In functional structures. 2002. Largescale firms such as automobile. such as a stable and predictable market. grow in size. Orion is considered a professional bureaucracy. machine bureaucracy. The functional structure works best when the roles or jobs in the organization are grouped into functional areas. 405). Firms that have a simple structure are small and young use mutual dependence and direct supervision as coordinating mechanisms. This structure has the formalized characteristics of the machine bureaucracy. The top manager has significant control. employees are grouped according to major categories of work activity. information systems. As the organization grows. As organizations. At Orion College. and professional bureaucracy. companies may group employees into marketing. and the organization is small-to medium-sized. At the corporate level. pg. the simple structure either departmentalizes by function or develops a more complex form that relies on other means of coordination. but emphasizes . There are three types of functional structures: simple structure. there is horizontal differentiation that characterizes the structure. They key coordinating mechanisms are direct supervision and standardization of work processes. among others. and then into further groupings within each major function. leading to the standardized and formalized behavior characteristic of machine bureaucracy. In addition. and consumer goods manufacturers organize this way (Gordon. equipment. 2002. steel. and few exceptions occur.Orion College has a functional organizational structure. the organization has a well-developed product or service. horizontal and vertical differentiation increase. and human resources functions. employees need relatively little communication outside the groupings. pg 405-406).
Effective Types of Organizations Mechanistic structures rely on standardization of work processes and direct supervision. or accounting group services the entire company. There may be a call for communication up the hierarchy when dealing with problems. 403-406). The relatively high vertical division of labor that often accompanies this structure provides employees with many opportunities for advancement within a functional discipline.standardization of skills rather than standardization of work processes for coordination. Students feel that they must deal with too many departments and the college is not customer-oriented (Gordon. 406). operations division. pp. Firms train workers to ensure that they have the required skills for organizational functioning (Gordon. These approaches limit the discretion of most workers in the . but extensive personal differentiation. pg. The disadvantage is that the high horizontal and vertical differentiation can cause problems. This type of interaction builds a strong loyalty to the functional group and offers extensive expertise in specified areas. A professional bureaucracy typically has little vertical or horizontal differentiation. which slows the response time and hinders the response time to customer demands. 200. it tends to slow decision-making and impede effective communication as seen with the increasing number of complaints from students. This structure avoids duplication of effort in different parts of the organization since typically only a single human resources department. The advantage of a functional structure is that it encourages people with jobs in the same area of specialization to work together. Dysfunctional performance and competition results when communication is limited between functional areas. Although this specialization can work well in predictable situations. 2002.
By providing training to increase the knowledge and empower employees with responsibility. employee morale can improve as well as customer service. pg. a consulting firm may organize its workers into projects for a particular industry. In addition. project.organization for processing information because they use the hierarchy for communication and problem solving. Employees can focus on their main role. Orion focuses on standardization of skills and personal differentiation. 403). the Admissions Department and Student Accounts Department may be trained to answer certain questions regarding financial aid (Gordon. many organizational members have more than one subordinate as seen with Orion College. For example. For example. however through training employees can answer a wider range of student questions. a more typical functional structure may exist within each geographical division. Larger firms may create market-based divisions or separate subsidiaries. In Orion College. through cross training and reduce the number of departments students must involve. Firms can respond to a mixed environment and diverse cultures by setting up mini-organizations that meet unique needs of various . Market-Oriented structures groups employees according to functional areas according to the market they serve. Orion can increase the skills of workers. 2002. Although each individual reports to a single person. A manager’s span of control is the number of people who report to him. or geographical grouping exists at one level. This results in clear lines of authority. but other forms may exist elsewhere such as a product structure. In market-oriented structures. a product. Each person knows whom to communicate problems or questions. A product manager may supervise various functional groups where the top level of a geographical structure emphasizes location. each individual reports to one supervisor. This structure seems to work best for universities however. client.
It responds to the needs of a changing and complex environment (adhocracy). Flexible structures respond to a complex. It incorporates sophisticated information technologies that support teamwork and information. Teams develop the common goal of meeting market demands. or geographical areas. The integrated structure has flexible groupings of individual and change as the organizations needs change. 408). This structure speeds problem solving and adaptation when combined with decentralization. With decentralized decision-making. 2002. there is increased autonomy. The disadvantage is that it increases costs since it can duplicate knowledge throughout the organization. customer. and matrix structures. The advantage of market-oriented structures is that it focuses on the needs of particular products. The focus on market requirements also prevents workers from developing a wider. 2002. responsibility. the organization has abundant resources for meeting customer needs (Gordon. pp. changing environment. It uses a variety of “ad hoc” or temporary liaison devices such as task forces. success requires rapid communication for rapidly changing conditions.countries and cultures. to encourage mutual adjustment among members. pg. functional expertise that lets workers moved from market group to market group as necessary (Gordon. 407-408). It also groups employees that combine functional specialties. projects teams. The integrated structure is a combination that incorporates both functional and market-oriented structures. which . In addition. which is advantageous when market needs require a fast response. and accountability of all employees allowing them to respond faster to unpredictable conditions. Some firms have an integrated structure (matrix). It groups individuals that emphasize a market focus. projects. The market-oriented structure responds effectively when the company faces a dynamic and unpredictable market situation.
The matrix form of an integrated structure has special costs such as overhead costs from more managers and personal costs for workers from reporting to more than one boss. The advantage of integrated structures is that they respond well to a changing environment. The matrix structure slows time-to-market in new product development. emphasizes empowering workers by reducing the management hierarchy. pp. Horizontal structures organizes work around key processes instead of tasks. uses teams to manage everything. flattens the hierarchy by empowering workers and eliminating non-value-added work. and lets customers’ satisfaction drive performance. firms look for other ways to combine functional and market-oriented structures. Firms can add or delete product of project groups as necessary. 409-410). some cost economies can occur. lattice organizations. modular organizations.combines the best aspects of functional and product structures (Gordon. 2002. pp. There may be power struggles from competition among managers. and virtual organizations (Gordon. It uses information technology to reach . 408-409). Workers retain a strong functional identity that helps bring special expertise to the needs of various products or projects. expectations. Although these situations can improve from clarifying responsibilities and quickly identifying problems. There may be conflict and stress among workers from working for people with different standards. More adaptive structures include horizontal organizations. Since project teams share functional sources. and work priorities. Firms adopt this structure when they have high information processing needs. and encourages employees to focus on customer requirements and satisfaction. 2002. Horizontal organization focuses on core processes. It includes cross-functional teams that manage and run processes. alliances.
Lattice Organizations emphasizes teamwork and employee empowerment that results in structures that reduce or eliminate organizational hierarchy.performance objectives and deliver value to customers. pp. and provide necessary resources (Gordon. demonstrate a reasonable level of trust. 2002. 2002. The linkages between organizations in alliances strengthen companies by bringing additional resources to solving organizational problems and competing in the marketplace. plan and budget jointly. 411-412). This structure emphasizes strong interpersonal communication. Rather than acquiring and developing their own resources. pp. It creates shared goals and realistic expectations. Some firms unite and form alliances to pursue a set of agreed-upon goals. these alliances have committed leadership. Strategic alliances also create opportunities for learning from a partner. It rewards workers for their team-related performance and maximizes contact with suppliers and customers (Gordon. It can eliminate assigned or assumed authority. Successful alliances view partnership as an opportunity. redesigns and creates integrated systems. pp. Individuals responsible for accomplishing various objectives are tasked with setting the objectives (Gordon. In addition. 2002. Sponsors rather than bosses work with associates instead of employees. They share control over the performance of assigned tasks and make continuing contributions to the alliance. and believes in honest communication. 410-411). some organizations find it faster and cheaper to form alliances with another organization. Process owners take responsibility for an entire core process. . uses conflict productively. and demonstrate a willingness to learn from each other. have congruent measurement and reward systems. 412-413). attach importance to the results of the collaborative efforts.
avoid idle capacity. These companies can grow rapidly since they use a small amount of capital to feed rapid growth. or supervision. A modular structure has vertical disaggregation in which independent organizations within the network perform the business functions. 2002. and monitors the interface with various subcontractors allowing managers to decrease overall costs and speed the development of new products. manufacturing. It is used in product design. and even competitors. production. it may dissolve. 414).Modular organizations (dynamic networks). reduce inventory costs. costs. This allows the company to hire superior talent to perform certain functions. and distribution. pg. creating linkages among partners. Brokers assemble the business groups by subcontracting for required services. controls. and supports the development of this structure. subcontracts work and outsources noncore functions. information technology. customers. The company creates entrepreneurial and market components. tied together by computer technology. Once the network achieves its objectives. The virtual organization is a network of independent suppliers. combines a variety of subcontractors into a working organization. or locating such functions as design. A modular structure also can exist inside an organization. rather than plans. and avoid becoming committed to a technology that becomes obsolete. There is full disclosure information systems link the various network components. Each organization participating in the network . Market mechanisms such as contracts or payments for results. or research and development that operate as separate divisions or profit centers with bottom-line responsibility (Gordon. such as distribution. supply. access to markets. and other functions. hold the functions together. marketing. The Internet and information technology allows them to share skills. Modular organizations have a small staff that develops strategy.
Virtual organizations can exist within a single company. Company’s band together to meet a specific market opportunity. Each partner brings its core competencies allowing the creation of a “best-of-everything” organization. They disband after meeting the need. Since members rely on each other to achieve their goals. Virtual organizations may be temporary. In virtual corporations. Increased cooperation among competitors. They have of a pool of employees from whose expertise various business units can draw which allows all parts of the organization access to a broader pool of talent and enables information technology staff to work on a broader array of projects and problems (Gordon. suppliers. 416). Partnerships are more opportunistic. less permanent. References . These organizations usually have flat structures in which information and decision making move horizontally. Companies frequently regroup which into new virtual corporations which creates flexibility to seize new opportunities. pg. entrepreneurs. and firms may participate in multiple alliances simultaneously. Electronic communication supports multidisciplinary work arrangements that link people across formal organizational boundaries. and partnerships. and less formal. computer networks link companies. 2002. The virtual corporation redefines the traditional boundaries of a company.contributes only its core competencies. and customers makes it difficult to determine company’s borders. there must be a level of trust.
J.).Gordon. (2002). R. Organizational Behavior: A Diagnostic Approach (7th ed. New Jersey: Prentice Hall. .
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