Technical Writing

Over the past decade, global competition, changing customer demands, environmental uncertainty, and rapidly evolving technologies have forced organizations to reassess their basic function and structure. The state of technology development has increased exponentially as computers and robots have entered the workplace. One of the effects of these is managers should manage effectively in changing and ill-defined organization structures. The structure of an organization consists of relatively fixed and stable relationships among jobs. The main purpose of organization structure is to influence the behavior of individuals and groups to achieve effective performance.

There are two theories that study management and organization design depending upon the degree of environmental uncertainty. The idea of these designs is an organization structure that enables customers to access its services can be applied at the subunit level as well as the overall organizational level. First is mechanistic design. In this theory, the characteristics of organization structure are highly specialized jobs, homogeneous departments, narrow spans of control, and relatively centralized authority. These characteristic assumptions are found in the historical circumstances within which this theory developed. Examples for such organization are banks, insurance firms, and airlines. Mechanistic designs provide appropriate mechanisms for integrating activities of relatively undifferentiated functions. Another alternative theory is organic design. This theory proposes that a more effective organization has relatively despecialized jobs, heterogeneous departments, wide spans of control, and decentralized authority. These organization structures achieve not only high levels of production and efficiency but also satisfaction, adaptiveness, and development. Examples for such organization are medical care, legal advice, and higher education. These organizations are better to integrate the activities of highly differentiated activities because organic structures provide the flexibility required to deal with the highly uncertain environment that is characteristic of customer demanding quite different services and desiring to play an active part in their delivery. We cannot choose one of these theories as a “best-way” theory. Rather, the manager must adopt the point of view that either the mechanistic or the organic design is more effective for total organization or for subunits within its organization.

One of the fastest developing practices in business throughout involves firms in cooperative relationships with their supplies, distributors, and even competitors. This kind of relationship is called “virtual organization”. Virtual organizations achieve both efficiency and flexibility by establishing networks of relationships with a variety of groups including suppliers, distributors, customers, strategic alliance partners, and even competitors. This relationship enables organization to rely upon smaller, closer to the market partner to sense impending changes in the environment and to respond at the local level.

There are three generic types of accounts available on virtual organizations in the literature. The first one is on organizations that out-source some of their business activities, forming virtual alliances to achieve organizational objectives. Such virtual organizations may be formed by integrating several companies’ core competencies and resources. A virtual company, then, is a collection of several companies organized to behave as if it were a larger, multifaceted organization. Chesbrough and Teece analyzed the practice of businesses in the market place and discussed the problems and concerns with firms going virtual. According to Harrington’s book entitled ‘Organizational Structure and Information Technology’, the second description of virtual organization is related to perceptual organization that is “abstract, unseeing, and existing within the minds of those who form a particular organization”. The third type description is organizations that are built up by virtual links with information technology.

The uncertainty situation nowadays, due to changes in business environment, forces the organization to be more flexible and adaptable. Currently, independent organization are often no longer in a state of being able to provide the desired products or qualities. This need for flexibility can only be guaranteed by several interdependent organizations which react promptly to the customer’s demands. Cooperation between those independent organizations shall be maintained in the form of a network type of virtual organization. This collaboration can be held through the collaboration of core competencies and working methods that the participating parties have. In another word, the participants in a virtual organization complement each others’ competencies and resources in order to complete the customer’s demand. An example of a successful virtual organization is the famous internet store known as “Earth Biggest Bookstore”, Amazon (www.amazon.com). This book firm offers an enormous selection of books that can be searched through several kinds of queries: title, author, description, and ordered via internet with supports from many credit card vendors such as VISA, MasterCard, etc. Actually, this firm is virtual and owns no single book itself. It manages a direct connection with several large publishers to supply customer’s order on desired book. This means that the firm manages no stock, no store, minimal personnel, and minimized logistics.

There are several advantages that virtual organization can offer. The greatest one lies in the fact that it eliminates the physical boundaries of organizations, and that cross-functional teams and organizations are able to operate and collaborate across space and time by communicating with each other via electronic channels. The Internet becomes the most important interface between participating organizations, teams and individuals. Virtual organization also allows businesses to sell and deliver products and services across the world in the most efficient way. For example, www.gramedia.com, an online bookstore from Indonesia, helps people from different city in Indonesia to buy a book from them without going to the store directly and they will send the books directly to the customer’s house. Virtual organization may perceive greater business opportunities since it has an expanded geographical coverage that enables them to get a broader market. This phenomenon lies in the fact that customers of Gramedia bookstore don’t only come from big cities anymore but also from small cities, since www.gramedia.com provides services for customers from small cities. Better market understanding is another benefit of virtual organization, since the customer will get the product exactly as he wants it and almost immediately. Customer will have the joy to acquire almost perfect quality and good service. This will give a virtual organization the edge over its competitors. In virtual organizations, team members do not necessarily need to be in the same location and might not meet physically. A good example is engineering companies who have different sites around the world to do work 24 hours a day. They are taking advantage of the time zones. For example, when the shift in Europe finishes, the work is passed to the team members in the United States. It will reduce cost and time. Another advantage of virtual organization is better management information and better integration of suppliers and vendors. When the virtual organization can reduce its product cost, it will have more chances on the market thus the supplier will be able to sell more products to his client. Therefore, the supplier will be happy to continue working with the company. Vendors are something valuable. They promote and explain the products. This helps to grow with the customer and fulfilling his demands even better. Feedback is a very important thing to increase quality and customer satisfaction. With virtual organization, the vendor and the supplier are integrated together. The information transformation and flow between them are collected and arranged well in virtual organization. Therefore, the company will work more efficiently.

Although virtual organization has many advantages such as reducing the cost, being able not to pay the infrastructure, or becoming an umbrella organization, the virtual organization has some weaknesses, not from the concepts but they come from the theories itself. Virtual organization is lack of appropriate theories. It usually runs itself without the needs of formal theories. Another weakness is inconsistent paradigm, and lack of formal modeling tools [L. M. Camarinha-Matos, 2004]. Other considered disadvantage is hard to determine how the relationships between components in virtual organization should be organized. Organizing the customers, suppliers, employers, etc need great efforts and a lot of evaluations. This process can consume more time. Virtual organization itself should be aware of dynamic changes of global economy, this also need proper system to design.

Those disadvantages above can be reduced within time and experiences. The theories of virtual organization develop within time. P. Sieber and J. Griese mention in their paper abstract2 that virtual organization is a goal-oriented enterprise (i.e. unit or function within a company) operating under metamanagement. Metamanagement characterizes the management of a virtually organized task. A virtually organized task is a goal oriented activity that is implemented by an appropriate assignment or reassignment of concrete satisfiers to the abstract requirements of a task. (switching is the process of assignment and reassignment.). That statement supports that virtual organization focus on the goal not the process. The other theories we should start a virtual community than build the virtual organization to reach the virtual enterprise. In order to understand a virtual organization some expert use the theories in other discipline such as multi agent system, complexity theories, self-organizing systems, graph theory, network analysis, game theory, formal engineering methods, etc.

In order to create a well-organized and well-managed virtual organization we need to model it first. Creating a realistic model of virtual organization is a very hard work. Modeling is a very suitable means to aid designing, communicating, and implementing virtual organizations3. There are some model approaches such as management model (framework model, concepts model), management oriented process model, system requirement model, and enacted model. Management models depict the core concepts and elements of the (virtual) organization. They usually set the frame of reference or high-level architecture of the VO, and thus support understanding and discussing the main principles. Nowadays, some tools are supporting the modeling process in virtual organization although they cannot always satisfy the developers. Those are the VSD (Value System Designer), CIMOSA (CIM Open System Architecture), GERAM, etc. Creating model in virtual organization need some steps, that are: developing business architecture for VO or adopting it from reference models, detailing processes and roles to a level sufficient for employees or researchers to understand (and operate in) new organization, and detailing processes, data requirements and views for system development or system enactment2. By creating a good model we can create a well organized virtual organization. This model will also help us on following the world changes well.

To sum up, virtual organization as one of the fastest developing practices in business offers us flexibility and adaptability. This virtual organization, which isn’t able to be seen, forms virtual alliances to achieve organizational objectives, exists within the minds of those who form the organization, and it is built up by virtual links with information technology. Virtual organization offers us a lot of benefits such as eliminating physical boundaries of organizations through electronic channels, efficient in delivering products and services, expanding business coverage, better market understanding, 24-hour business a day, and reducing products cost. It has also some disadvantages, such as lack of appropriate theories and formal modeling tools, inconsistent paradigm, and hard to organize the components’ relationships in a virtual organization. Despite of its disadvantages, virtual organization is still considered a great prospect in business, especially in the future. By creating a good realistic model of virtual organization, a well organized virtual organization can be developed and the disadvantages can be reduced within time and experiences.