What is a Virtual Organisation?

Virtual and organisation are two different words put together. When defined separately, virtual means almost even if not exactly or in every way1 or that there is some sort of link with computers e. g. IBM’s Virtual Machine. Organisation is an establishment, a system of government (not necessarily The Government), or another definition an administration system. There are many definitions of organisation and I could fill this page with them.

But what does “Virtual Organisation” actually mean?Virtual is considered to be any interaction that is not face-to-face.

A virtual organisation uses technology to establish temporary alliances through a network of independent companies. It is the use of Information technology linking manufacturing, administrative services, customers and rivals to share skills, costs and access to one another’s markets. “It will have neither a central office nor organisation chart. It will have no hierarchy, no vertical integration.Lipnack & Stamps (1997) define a virtual team as “a group of people who interact through interdependent tasks guided by common purpose” that “works across space, time, and organisational boundaries with links strengthened by webs of communication technologies” (p.

7).

We define a virtual organisation as a geographically distributed organisation whose members are bound by a long-term common interest or goal, and who communicate and coordinate their work through information technology. Robert Bradt’s (1998) theory is that there are four types of virtual organisation. 1. The Alliance 2. The displaced3. The invisible 4. The truly virtual After reading many various articles and journals, I agree with his theory and will give a brief definition of each.

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I am very fortunate that for this module, the assignment is on virtual organisations as I work for Virginstudent. com, a branch from one of the many departments of Virgin owned by the famous entrepreneur Richard Branson. My job title is a Tele-marketing co-ordinator and my duties involve co-ordinating marketing projects and assigning briefs to the reps that will carry out the projects who are supervised under me over the website.

Virginstudent.com is a marketing organisation where student reps all over the UK are in contact with the firm through real-time video links and tele commuting. My work is assigned via the websites e-mail system. I then receive the marketing materials by post and contact those reps that work under my supervision via e-mail or phone calls. When the brief has been completed, the reps are required to complete a project feedback form, which is sent to me via e-mail and then forwarded onto my employer who confirms the pay. Pay is also received via the BACS system, which is another example of a virtual organisation.I occasionally have face-to-face contact with my peers or managers because most of the time I am using tele commuting to stay in touch.

The virtual organisation boundary Fig.

1- How I perceive Virginstudent.

com Above is an illustration of a web-based or otherwise known as a displaced organisation.

Members are geographically apart, working by computer e-mail and groupware whilst “appearing to others as a single, unified organisation with a real physical location”. 3 An alliance organisation such as Dell or IBM, do not seem to be virtual as production is taking place and people interact with each other face-to-face.Although partnering has changed this. “Just as the walls within organisations are falling, so walls among organisations are falling too. The result is what’s been called the virtual corporation. Rather than staff up, you partner. You understand your core competencies and unite with companies having other talents. You forge a series of ever-changing alliances to achieve competitive success”. 4 Tapscott (1996) gave a clear definition of an alliance organisation.

Dell took a step into virtuality by eliminating the distributor and partnering with the supplier.This became the first type of virtual organisation.

It has a physical presence in the form of a manufacturing plant but its organisation is spread over several plants which do not all belong to Dell. The invisible organisation has no physical structure at all. An example of such an organisation is DirectLine insurance, which sells its services through electronic commerce and has no high street branches but a building where staff are employed to answer calls and provide customer service. The company does not have a physical presence neither does it sell physical products.Lastly, there is the truly virtual organisation. This type of organisation combines the other three together. An example is Amazon. com is based in a small building above an art gallery in Seattle. The worlds biggest bookstore is based in a small room yet without the Internet, Amazon would not exist.

The business has minimal stocks of the best sellers.

Orders are placed on the Internet and the books sent by Amazon’s allies, publishers and wholesalers.

Amazon acts as a virtual warehouse and does not ship books but has claimed the title “virtual inventory”. 5Virtual organisational benefits & why managers encourage entrepreneurship The virtual organisation is expected to be one of the auspicious organisational forms in the 21st century. Managers prefer virtual networks and seek to encourage entrepreneurship and innovation as this kind of organisation is designed to cope with the furious market competition6. In a virtual organisation, the business operation processes and the product realisation processes are distributed in different partner companies. These different companies are distributed in different countries and co-operate closely as a commonwealth.In this special kind of organisation, each company possesses its own unique core competition capabilities, such as, core products, core processes and core competencies.

The whole virtual organisation is made up of these different self-directed companies and can take advantage of their different core competition capabilities to win the large market opportunities that cannot be handled by any single company alone7. This type of organization can be established and disassembled quickly to respond to some rapidly changing opportunity. This makes the virtual organization the most promising organisational form in the 21st century.Richard Branson developed Virgin and thus went onto develop many different departments of Virgin through encouraging entrepreneurship. Virginstudent. com was born through the innovation of a university student. Obviously when the idea was proposed, the student was encouraged to set it up as the directors of Virgin realised the advantages it would bring to the company.

Virgin expanded into the virtual network and is reaping its benefits.

In conclusion, it is the benefits that managers see in virtual organisations that encourage entrepreneurship and innovation. Virtual organisations bring about the automatic reductions of manual actions.Virtual networks are informative and enable the availability of huge quantities of detailed information, which is precisely targeted. They allow continuous process monitoring and provide an analytical complex analysis of existing information. Virtual networks bring together and integrate varied activities so businesses can expand easier. Expertise knowledge is developed in keeping up with the advancements in information technology but the most advantageous attribute that virtual organisations/networks brings is the geographical overcoming of space and simplifying and removing intermediaries attached to the organisation.