discussion (Risks and opportunities of Virtual Organization)

Virtual Organization

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Virtual organizations refer to organizations whose employees are geographically spread and connect through phone, internet or email (Hebert, 2017). The concept of a virtual organization utilizes technology from a management perspective in which employees engage in different tasks to achieve the organization’s objectives. There are various benefits associated with virtual organizations. First, the owner of the business incurs lower overhead costs because a virtual organization needs no office space, furniture or paying for utilities (Shamsuzzoha & Helo, 2017). For example, an online education business only needs tutors and students. Secondly, employees are more satisfied due to the comfort of working from their own houses, for instance, tutors in a virtual institution can lecture students at the comfort of their homes. Lastly, the owner of the business can expand the business without having to worry about moving the many employees to a larger office.

However, a virtual organization is prone to many risks that hinder its effectiveness in terms of achieving its objectives. One of the risks is lack of cohesiveness in the organization. This is brought by the fact that the employees are spread and thus difficult to call for an emergency meeting in case an urgent need arises (Wohlers & Hertel, 2017). Secondly, there is a risk to reputation for customers may not perceive a virtual organization as a real company. Lastly, lack of social interaction discourages teamwork. Despite all these, there are various opportunities associated with virtual organizations such as the opportunity to reach the vast majority of the customers as well as an opportunity to change the strategy used by the business easily and for less cost.

References

Hebert, J. L. (2017). The Identification of Leadership Competencies within a Global Virtual Organization (Doctoral dissertation, The Chicago School of Professional Psychology).

Shamsuzzoha, A., & Helo, P. (2017). Virtual supply chain–event handling and risks management in collaborative networks. International Journal of Advanced Logistics, 6(1), 1-13.

Wohlers, C., & Hertel, G. (2017). Choosing where to work at work–towards a theoretical model of benefits and risks of activity-based flexible offices. Ergonomics, 60(4), 467-486.

Friend discussion 1 ( noura)

When independent firms join together and create a network, it is called a virtual organization. Firms with different characters joined temporarily to construct services or products. Virtual organization represent a different organizational form but cannot be considered as a firm's attribute (Cunha & Putnik, 2006). Firms in this type of organization share costs, risks, and rewards. The main objective of the virtual enterprise is to offer inventive and top quality products or services continuously as per the demands of consumers. In a virtual organization, teams may include consumers, suppliers, management, government, and employees working together to reach common goals. For a virtual organization, working teams are working together until the product or services designed and implemented successfully (Putnik, 2005). There are many benefits of the virtual organization, we mentioned the most effective of them. Low operating cost is one of the benefits of a virtual organization. We know in this type of organization different types of firms joined together for better outcomes so, cost of every firm decreases due to increasing of investment. overhead cost is lower than an individual organization if they want to implement the same project. In a virtual organization, there is a lack of bonding between employees, employees are working together until the project successfully designed and implemented. Different types of firms work together, for this reason, the communication between them cannot be established properly and it also effective in the outcomes of the project. By working with unknown groups, an organization should face reputational risk when one of them working inaccurately. An inaccurate work effect badly in the ultimate outcomes and all of the firms of a virtual organization are responsible for that imperfection. Hire the best available talent is one of the most effective opportunities for the virtual organization. By working with multi-culture teams, an organization can get an opportunity to easily familiarize and understand the trends and demands.

As an example, an online shopping site wants to launch various types of products a virtual organization created for this. There is a different type of company to sell their products on this site. The main advantage will be the number of footfall increase and increase the number of the buyer. Risk occurs when any of the company use to sell the bad quality of the product and a bad impact created in consumers. After that consumers provide negative feedback which badly effects in the business of the organization. They have the opportunity to grow their business by creating a virtual organization with established companies.

Friend discussion 2 ( Baraa )

Benefits:

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. The access to market increases.

1: It becomes possible to provide services precisely tailored to a specific customer need.

2: An ability to participate in Virtual Organizations increases the total service range a company can offer to its customers.

3: Participation in Virtual Organizations increases the total number of end-customers a company can reach indirectly via its partners.

4: A particular organization can both “multiply itself” virtually by participating in several Virtual Organizations and initiate a VO that will be constituted from different parties. This creates the possibility for coexistence of the opposites in one organization.

5: By participation in a Virtual Organization the concept-to-cash time is reduced.

It is of course possible for only a part of an organization to become virtual. In that case organizations can gradually evolve from real to virtual.

Risks:

The most challenging part of Virtual Organizations is the establishment and maintenance of trust. Trust needs to be established at several levels:

· Authentication

· Policy Based Management

· Business Rules.

Trust is based on rational calculations. Trust is established by the means of digital identities, certification, access control mechanisms, authentication, secure connection, reputation and inspection of the parties.

The main challenges related to the trust establishment are:

· Each party has its own policies on access control and conditions of use.

· The allocation of resources is often dynamic since the structure of Virtual Organizations may change dynamically.

· Parties may be located in different countries under different jurisdictions and, as a consequence, adhere to different legal and business requirements.

· 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 management of electronic contracts must be trusted.

· Service level agreement (SLA) monitoring is important to ensure that parties perform according to contracts.

· Parties have to provide access to their services and resources, as specified in agreements.

· It is a challenging task to choose between different potential vendors/parties. Sometimes options are closed and only few players are available on the market. In these cases a Virtual Organization initiator is to choose whoever is available.

· It may happen that dispersed project members are incapable of communicating

Opportunities:

The virtual teams offer the organizations an opportunity to hire the best available talent from every corner of the world. Multi-cultural teams are also supposed to cater to global clients in a better way as they can understand their demands easily. Since, the employees can work in their comfort zone, this acts as a mutual benefit for both the organization as well as employees. The work timings are rarely defined under virtual set-ups and all these factors enhance the availability of female workforce that is often found missing in the traditional teams. Researches show females can prove to be better leaders and create a more harmonious work environment (Zenger Folkman Inc, 2011 cited in HBR, 2012). Also, it is proved that companies do better corporate social responsibility when there are a higher proportion of females in the workforce (India CSR, 2011). So, virtual organizations avail these benefits apart from an opportunity for global knowledge transfer and learning for its members. The organizations can save a lot on office infrastructure as there is absolutely no need for a huge office space. Apart from infrastructure, the companies also save on reimbursing any commuting expenses to their employees.

Example:

1: A small software company wants to bid for a new contract, which is beyond its scope of the resources. This company forms a Virtual Organization with other similar small companies and by doing that it is suddenly able to compete with larger corporations to gain the contract.

2: A business traveller comes to a foreign country and wants to do something in the evening. He/she goes to a WLAN-equipped café and requests a multi-media city guide to be shown using his personal computer and the café’s facilities. This service can only be provided if the café, content providers, the user’s home service provider, and other network operators have previously formed a VO.

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