NETWORK ORGANIZATION

G.Tabriz
 Relationship marketing
• "Relationship marketing is a strategy
designed to foster customer loyalty, interaction
and long-term engagement.
 Relationship marketing
• It is designed to develop strong connections with
customers by providing them with information
directly suited to their needs and interests and
by promoting open communication."
 Relationship marketing
• RM lives in 3 environments:
1. Market-market relationship
2. Society-mega relationship
3. Organization-nano relationship
 Virtual organizations
• A virtual organization is a temporary or
permanent collection of geographically
dispersed individuals, groups, organizational
units, or entire organizations that depend on
electronic linking in order to complete the
production process. Virtual organizations do not
represent a firm’s attribute but can be
considered as a different organizational form.
 Virtual organizations
• Unfortunately, it is quite hard to find a precise
and fixed definition of fundamental notions such
as virtual organization or virtual company. The
term virtual organization ensued from the phrase
"virtual reality", whose purpose is to look like
reality by using electronic sounds and images. The
term virtual organization implies the novel and
innovative relationships between organizations
and individuals. Technology and globalization
both support this particular type of organization.
 Virtual organizations
• Virtual can be defined as "not physically existing as such but
made by software  to appear to do so", in other words
"unreal but looking real". This definition precisely outlines
the leading principle of this unconventional organization,
which holds the form of a real (conventional) corporation
from the outside but does not actually exist physically and
implicates an entirely digital process relying on
independents web associates. Thus, virtual organizations are
centred on technology and position physical presence in the
background. Virtual organizations possess limited physical
resources as value is added through (mobile) knowledge
rather than (immovable) equipment.
 Structure
• An own base - leader company and an
“imaginator” (the leader, the entrepreneur) and
their strategic map;
• A customer base - tied to the leader company
through systems for production, delivery, market
communications and payment;
• Partnering companies - contribute resources.
 Virtual organizations
• The Internet supports the construction of
network organizations
• The core of the organization can be small but
still the company can operate globally
 Virtual organizations
• Amazon.com workforce is just 1% of Wal-Mart –
but has become the world ’s largest global
bookstore - network-based
 Corporation
• A corporation is an organization—usually a group
of people or a company—authorized by the state to
act as a single entity (a legal entity; a legal person in
legal context) and recognized as such in law for
certain purposes. Early incorporated entities were
established by charter (i.e. by an ad hoc act granted
by a monarch or passed by a parliament or
legislature). Most jurisdictions now allow the
creation of new corporations through registration.
 Company boundaries
• The company boundaries are fuzzy
• Network theory which sees organizations as
scale-free and boundaryless.
 Neoclassical economics
• Neoclassical economics is an approach
to economics focusing on the determination of
goods, outputs, and income distributions in
markets through supply and demand.
 Transaction costs
• Transaction cost analysis guides the
establishment of boundaries between a company
and its market
• Does not pay attention to the service-based
economy; • franchising and alliances;
• Companies strive to minimize transaction costs -
in practice marketing and purchasing costs.