The Important Things About Virtual Organization

Virtual Organization is a relatively new concept that has emerged at the beginning of the 1990s. Virtual Organization is defined as a “dynamic collection of individuals and institutions which are required to share resources to achieve certain goals”.

Virtual Organization is a relatively new concept that has emerged at the beginning of the 1990s. Virtual Organization is defined as a “dynamic collection of individuals and institutions which are required to share resources to achieve certain goals”. Virtual businesses conduct all or most of their business via the internet and do not have physical premises or locations to interact with customers face to face. A purely virtual organization may outsource nearly all of their business functions such as product development, marketing, sales, shipping, etc. However, most virtual businesses retain some of these activities in the house and may still require a physical presence in the form of headquarters, warehouses, shipping and delivery hubs, etc. virtual retailing is the most common form of virtual business. It began in the early 1980s (before the widespread adoption of the internet and world-wide-web) as companies such as AOL and CompuServe began offering subscription-based, dial-up services such as email, chat, electronic bulletin boards and forums, all delivered through primitive text-based interfaces on various computer platforms. Available services eventually expanded to include newswire, stock quotes, and online shopping. The development of security protocols such as SSL in 1994 enabled sensitive data such as credit card information to be safely transmitted over the World Wide Web (WWW) and e-commerce exploded as a result. As well as the move to internet retailing was a case of too much too fast and during the dot – com crash of 2000- 2002 few internet retailers survived. Those that did such as Amazon, eBay, Priceline, etc.

Characteristics of the Virtual Organizations 

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Many researchers have presented definitions about virtual organizations. Camarinha-Matos introduces all characteristics described for a virtual organizations. Dimitraks selects temporary, permanent, delocalization, individualization, and dematerialization as main properties of a virtual organizations while Fang deletes individualization and permanent and Graser serves dynamism property instead of permanent and non-institutionalization instead of individualization. Haller only considers temporary, delocalization, non-institutionalization, dematerialization as property for a virtual organization. 

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• Delocalization
•  Delocalization is one of the most important developments in the globalization process. It is potentially space dependence. Therefore, enterprises become independent off space and capacity. It eliminates the need for a particular space.

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• Dematerialization
• Dematerialization has the virtual forms in products, communities, services, and so on along the development of the virtualization. With increasing, virtualization products become potential immaterial. It means that all object areas are immaterial. Existing mutual confidence for members, absence of physical attributes and administrator can affect system performance and flexibility.

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• Individualization
• The main reason for this property is increasing consumer demands. One of the ways for capturing market is to attend to mass production along with personal needs. Mass customization is one approach for manufacturers to fulfill customer demands and capture new markets.

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• Non-Institutionalization
• Because operations are performed in a virtual environment without physical attributes, the institutionalization of inter-organizational relationships in such environments can be waived.

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• A synchronization
• This attribute causes members to asynchronously communicate and interact with each other via the ICT in the context of innovations with the release of time. Some companies globally schedule their works in three shifts between dispersed locations.

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• Integrative Atomization
• This property refers to integrate all atomized core competencies of the participants for satisfying customer.

Benefits of Virtual Organization

The primary benefit of a virtual organization is that it can unite highly qualified people without location restrictions. Virtual Organizations make it possible to satisfy constantly changing customer and market requirements in a competitive manner. Access to market increases.
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• It becomes possible to provide services precisely tailored to a specific customer need
• An ability to participate in Virtual Organizations increases the total service range a company can offer to its customers
• Participation in Virtual Organizations increases the total number of end-customers a company can reach indirectly via its partners
• A particular organization can both “multiply itself” virtually by participating in several Virtual Organizations and initiate a virtual organization that will be constituted from different parties. This creates the possibility for the coexistence of the opposites in one organization
• By participation in a Virtual Organization, the concept-to-cash time is reduced

Challenges of Virtual Organizations

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The virtual organizations had faced many challenges in the world. And problems are based on the three criteria.

• Authentication
• Policy-Based Management
• Business Rules

Following problems can be determined as issues of virtual organizations.

• Since Virtual Organizations rely on IT, exposure to fraud or misuse of technology is a major concern.  
• Security systems of Virtual Organization partners must be mutually trusted. This brings up the challenge to come up with an effective and flexible security system.
• Contract management needs to be effective in order to be able to quickly reconfigure in Virtual Organizations. Services for the management of electronic contracts must be trusted. 
• Parties have to provide access to their services and resources, as specified
• It may happen that dispersed project members are incapable of communicating in a professional domain. 
• The members should be self-motivated program and able to work independently. They need to be able to keep working effectively without much external control or structure.
• The next important quality is strong result-orientation. Unless the person shows clear results, there is nobody around to identify how intense their work activities are.
• The members of the organizations should be able to communicate clearly, constructively, and positively even though the more limited channels of technology, in spite of the loss of much nonverbal causes of face-to-face communications.