Introduction:

i. Virtual Organization can be defined as “an organisational form that enables companies to reduce their physical assets (large headquarters, centralised plants etc.), relying instead on small decentralized units linked by strong communications network.”

ii. In other words, the old physical constraints of plants and office buildings are broken down, and activities of co-ordination and control, which used to take place face-to-face, are now handled remotely over wire.

iii. Thus, it uses information and communication technology to allow it to operate without clearly defined physical boundaries between different functions.

iv. It provides customized services by outsourcing production and other functions to third parties.

v. Thus, employees may work in anytime zone and customers are able to purchase tailored products from any location.

vi. This leads to more responsive and flexible company with greater market orientation.

Characteristics

Various characteristics of virtual organisation include:

i. Lack of Physical structure: Virtual organizations have little or no physical existence.

ii. Reliance on knowledge: Knowledge is the key driving factor of virtual organisation since physical facilities and contacts are least available.

iii. Use of communications technologies: Virtual organisations rely more on information technology.

iv. Mobile work: The reliance on communication technologies means that the traditional office or plant is no longer the only site where work is carried out. Increasingly, the office is wherever the worker is.

v. Boundary less and inclusive: Virtual organisations tend to have fuzzy boundaries.

vi. Flexible and responsive: Virtual organizations can be pulled together quickly from disparate elements, used to achieve a certain business goal and then dismantled again.

An alternative viewpoint on features of a virtual organization includes:

• Processes transcend the boundaries of a single firm and are not controlled by a single organizational hierarchy.
• Production processes are flexible with different parties involved at different times.
• Parties involved in the production of a single product are often geographically dispersed.
• Coordination is heavily dependent on telecommunications and data networks.

Example:

i. An example of virtual organisation includes the World Wide Universities network, which provides collaboration for research and e-learning facilities.

ii. This service provides distance learning education to a worldwide market including centres in various countries. Thus, the learners would benefit from a wider choice of specialized courses and lower costs than from travelling for education or going to a single provider.