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I have conducted research on the following 2 organizations that operate in a virtual manner:
I selected the above-stated organizations as they are mainly in the business of selling products and services. As Furniture works operations will entail selling of furniture, these organizations can be sound role models for Furniture works to develop its best practice.
Amazon.com started operations as a virtual organization in 1995. They offer the largest variety of products worldwide. The company caters to 3 groups of customers: consumer customers, seller customers and developer customers. They also earn revenue through online advertising.
As per their website their vision is:
“To be the earth's biggest customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
As state above amazon.com has 3 major groups of customers:
They provide goods to consumer customers through their retail websites. They provide wide range of variety, competitive prices and utmost convenience to their customers.
Amazon.com provides a platform to seller customers enabling them to sell their products on amzon.com.
The developer customers of Amazon.com use their website services to access technology infrastructure that they can use.
PerkettPR is a virtual organization that serves its diversified clients as a Public Relations Agency. The company works comprehensively for its clients assisting them to write effective press material.
As per their website their mission is:
“You're not our only client, but you'll feel like you are.”
PerkettPR provides exceptional public relations services by bringing superior talent to companies at a reasonable price. The company also provides planning services and next generation communication solutions to keep their clients on the top.
According to the company's website 99% of their work is done over the phone. Therefore it saves considerably which is passed on to its clients through their reasonable pricing policy.
Features and characteristics of virtual organization
Based on my research of the above-stated organizations, I have summarized their characteristics as follows:
- These organizations are web-based networks of various independent entities such as buyers, sellers, manufacturers, service providers, etc.
- They operate across geographical boundaries and time
- These entities are connected through internet or other forms of information technology.
- They share revenue, costs, clientele, market base, etc.
- They operate with minimal infrastructure costs such as occupying costs, etc.
Recommendations to Furniture works on management of virtual organization:
Setting up of a virtual organization
"In order to have a rapid response to the market (customers), companies
have to reorganize themselves around response to customer demand,
forging tight relational and technological bonds with core suppliers and longtermcustomers. That is the shape of the corporation of the future, a virtualcorporation."Pastore, R. (1993). A Virtual Visionary, CIO, p. 46, July 1993.
As per the above-stated excerpt, Furniture works needs to reorganize itself by setting up a virtual organization in order to competently respond to the global market.
In order to survive and thrive in a global market which is ever evolving, it is very important for an organization like Furniture works to be flexible and expand its operations globally.
Furniture works should reorganize itself into a virtual organizational model where it collaborates with various independent entities bringing together their expertise, skills, know-how and selling the furniture to the clients across the country under the tag of Furniture works. It should outsource the production and delivery components of the business. In this model, Furniture works will have to set-up its website through which it will undertake marketing and promotion activities of furniture across the country. When a client visits the website and intends to buy furniture from Furniture works, it will outsource the production and delivery of the furniture to the client's closest available business entity. This will ensure timely delivery of products to clients.
The setting up of a virtual organization can be accomplished in 3 stages:
Stage 1 - Research for identifying business entities
This is the 1st stage where Furniture works being the originator of a virtual organization would have to identify entities to enter into business collaboration. In order to get the right people and the right combination Furniture works would have to conduct extensive research in the following areas:
- Market expansion
- Customer demands and needs
- Specialized skills of various business entities
- Degree of reliability of various business entities
- Efficient means of inter-organizational communication
Based on the results of the research undertaken Furniture works will identify business entities which will be a part of the virtual organization and will work in co-ordination.
Stage 2 - Dissemination of information and arrangement of infrastructure
After identifying the business entities, the second stage would enter into business collaboration with those business entities. This will entail dissemination of information about business plans and its implementation, business strategies, role of each business entity, right, privileges and restrictions of the business entities, etc. At this stage Furniture works will also reach an agreement with all the business entities involved on the means of communication.
Cost and revenue allocation:
At this stage it will be necessary for Furniture works to reach an agreement between all the entities involved for distributing the costs and revenue. The verbal agreements will have to be translated into legal agreements between the parties. Cost price and the selling prices will be pre-determined. Furniture works will receive the gross revenue which will then be allocated based on a pre-determined proportion to the business entities by Furniture works.
Means of communication:
Effective communication is a key to the successful implementation and long term sustenance of a virtual organization. An important step in this stage will be that Furniture works in consortium with all the business entities will have to decide on the means of communication in order to interact with each other effectively. This may include internet, intranet, worldwide web, electronic email, video-conferencing, etc. Extensive use of information technology is the backbone of any virtual organization and has overcome the barriers of distance and time.
Stage 3 - Execution
In this stage Furniture works will execute the virtual business operations. Furniture works will have to assign specific tasks to the business entities. The business tasks will have to be carried out by the various entities in the most efficient and economical manner by delivering quality products to the clients. Furniture works will have to continually oversee the performance of these business entities.
By converting into a virtual organization, Furniture works will be able to emerge as a competitive company operating efficiently with minimal overhead costs. As a virtual organization Furniture works will reap the following benefits:
- It will enable Furniture works to respond to constantly changing customer demands and market environment in a competitive manner.
- It will be able to provide customised products addressing to the specific needs of the customers.
- It will be able to provide a wide variety of quality products based on the expertise, skills and know-how of its business partners across the country.