Page 215 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 11: Structural Implementation

Advantages and Disadvantages: Notes
Advantages
(a) It can draw on expertise worldwide.
(b) It is highly flexible and responsive.

(c) It reduces overhead costs.
Disadvantages
(a) Lack of control because the boundaries of a virtual organisation are weak and
ambiguous.
(b) Virtual teams place new demands on managers, who have to work with new people,
new ideas and new problems.
(c) Virtual organisation poses communication difficulties, and managers may lose
motivation.

Example: Computer organizations that have successfully implemented forms of
this new structure include Apple Computer and Sun Microsystems. When Apple Computer
linked its easy-to-use software with Sony's manufacturing skills in miniaturization, Apple
was able to get its product to market quickly and gain a market share in the notebook
segment of the PC industry.

Sun Microsystems has been considered another highly decentralized organization
comprised of independently operating companies. Sun positions information systems
as a top priority, trying to achieve faster and better communication. With numerous
"SunTeams," members operate across time, space, and organizations to address critical
business issues. Sun managers identify key customer issues and then form teams with
the critical skills and knowledge needed to address the issue. This team might include
sales people, marketing personnel, finance, and operations from various places around
the globe; customers and suppliers may become episodic members as necessary. Weekly
meetings may take place via conference calls. Critical to the team's success is the selection
of talent from the organization, defining a clear purpose for the team's efforts, and
establishing communication links among the team members.
Sun has been working on further development of technologies such as EDI (Electronic
Data Interchange) and RFID (Radio Frequency Identification technology). Both EDI and
RFID will impact information exchange globally and across numerous industries.
Source: Wikipedia and www.referenceforbusiness.com)

Task Can you name two virtual organisations? Why and how were they formed?

11.5 Modular Organisation

The organisational capabilities to interact with others have been greatly improved as a result of
modern information and communications technologies: Nowadays a company can maintain
more relationships with more companies at much lower costs than before. The increased business
networks require modularization of the products, the processes and the firm in order to be
effective. Modular products tend to favor a modular organisation form, as the various units

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