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Management Information Systems
Notes
6 LOVELY PROFESSIONAL UNIVERSITY
transformation in the strategy of many enterprises has been observed with a tendency to
disintegration. This is accompanied by a need for increasing the quality of the products or
services offered, which requires more interdependency among the different corporate units. As
a consequence of it, several transformations both inside the enterprises and in the relationships
between them are taking place, which establishes new structures through which the relationships
among competitors, customers and suppliers are changing substantially. One of these changes is
the cooperation established among different enterprises, which allows them to develop their
competitive capability. Companies are forming strategic alliances because there is an increasing
acknowledgement that organizations operate in a relational context of environmental
connectedness and that organizational survival and performance depend upon connections
with other organizations.
Notes The co-operation among enterprises allows their flexibility and their innovative
capacity to be increased. Current products are based on so many critical technologies that
most of the enterprises cannot keep constantly updated in all of them.
The Network Structure
The concept of the network’s form of organization has been particularly popular with
management writers for its potential to build the flexible organization with the ability to meet
the challenges of a changing and global environment. Despite both the abundant available
literature and the existence of a certain consensus on some aspects, there is still too much
ambiguity in the concepts used in this area. Taking into account the formation of networks,
which is an interesting field of recent development with strong repercussions on the inter-
organizational relationships, it is necessary to clear the existing terminological confusions in
order to formulate its theory and to improve its implementation.
Starting from the definition, a network is a specific kind of relationship joining a particular
group of people, objects, or events. Two factors needed for constituting a network can be obtained
from this definition; first, a network is formed by a group of elements; second, these elements
establish specific relationships among them. We must show that the establishment of a co-
operative network is not a purpose itself but “it must be a dynamic structure that allows
consolidating the competitive position of its members”.
By means of a network structure, the competitive position of the enterprises can be reinforced as
these concentrate on what they do best, and on what maintains their success in the market. In this
way, other enterprises make the activities left, in which they have distinctive competencies too.
The enterprises outsource those activities that are ballast and bureaucratize them.
The enterprises that belong to a network have not all the elements needed for manufacturing a
product or providing a service under their absolute control. Within the networks, the involved
elements belong to independent enterprises and are placed along the value system of a product
or service.
All this drives to an organizational structure in which the enterprises generate more value in
those areas where they have specific competencies. The success of these emergent organizational
forms seems to be based, on a great extent, on an effective co-ordination by means of the use of
advanced information systems, which are based on the Information Technologies (IT). There is
an increasing interest in the relationship between the emerging organizational ways and the
function of the IT/IS insofar as the progresses in each field have influenced the others.