UNIT 3

VIRTUAL CORPORATIONS

3.1 CONCEPT AND IMPORTANCE OF VIRTUAL CORPORATIONS

A virtual corporation or a virtual company is the representation of the

organization built on Internet technology. That is to say, the sectors most
important areas in which the organization is divided rely on the Internet to expand the
business potential and allowing for greater connection between the staff and in the
interaction with companies.

This means that you will connect with your customers and suppliers via the Internet, your
processes are fundamentally on the Internet and the business can theoretically 'a temporary network
companies that come together to exploit a specific market opportunity supported by
the technological capabilities that make up the network.

Introduction The virtual company is a new form of functional organization, that

it describes the dynamic evolution of technology and globalization. Its
organizational structure relies on the use of the Internet to expand its transactions and
operations in the cyberspace market. In the contemporary world, it is proliferating
and has transformed into a new basic organization of associated work of individuals and
companies that are established using Internet technology.

It is a company made up of several in collaboration, accepting, in

principle, any instrumental formula, strategic alliances, outsourcing,
outsourcing, etc.

Each of them contributes what they do better than anyone else, to what Hamel and
Prahalad has referred to Core Business - fundamental or core activities - in his
Book Competing for the Future, in 1994.

The virtual company is an organization of associated work that uses the network of
Internet como una base de comunicación entre los socios que conforman esta empresa.
Understanding
IMPORTANCE

The main beneficiaries of this new trend are individuals and

organizations that focus on being outstanding in their areas of expertise or 'core'
competence. Organizations or individuals that cannot be distinguished or possess
Outstanding skills will be the biggest losers.

These new trends will drive companies to seek market niches where
they may excel, will concentrate their efforts on exploiting their best skills and will
will specialize in some of the activities of the production process. The companies that
The greatest economic benefits will be obtained by those who can create brands, those that
other activities such as manufacturing, quality control, and distribution will be delegated to
external agents. As an example of the above, we have the business unit of screens.
for the company's PC Nokia. Myyar Moragjhi managed to develop this new unit of
business against strong competition from companies in the USA. In 1992, Moragihi invested the
US$ 100,000 that I had in marketing and information brochures. In the
Currently, the company has 6% of the 17-inch screen market in the USA.
sales of US$ 160 million. All this with a staff of five people. Moraihi and a
assistants control the brand and marketing activities while Moraihi and two
financial specialists manage financial matters. Local partners with extensive
market knowledge is responsible for attending to customers in the USA, customer service
is carried out by independent technicians in Raleigh, North Carolina, the logistics
a subcontracted company in Charleston, South Carolina, the promotion and
advertising is carried out by another company in Montanview, California and the
manufacturing takes place in Salo, Finland (Fulk, J and DeSanctics, G, Electronic
groups at work, Organizational Science, 1995).

The process of becoming a multinational organization involved setting up offices

with company personnel in different countries. This usually required legal work,
financial supervision and mobilization of personnel. In order to manage these operations
It was necessary to coordinate and consolidate information, which required qualified personnel.
the headquarters and usually took time. This cost represented a barrier to
entry for new participants. The Internet and electronic communication allow for
access to low-cost communications. An Internet portal can receive visits from
people from all over the world and take orders directly from the consumer. They can be made
global contacts and being multinational in a few weeks. The emerging technologies of
E-commerce is democratizing business opportunities. Individuals and
Small organizations can operate internationally through a computer.
staff from their own home.

3.2 CHARACTERISTICS AND INFORMATION SYSTEMS OF THE

VIRTUAL CORPORATIONS

CHARACTERISTICS

Individuals have a shared vision or goal and aprotocolfor the

collaboration.

They group activities according to their core competencies.

They work together in teams in order to contribute their "core competencies" to the
value chain.

They process and distribute the information intimereal throughout the entire network. It
that allows them to make decisions and coordinateacciones quickly.

Members are added to the network as new 'core' ones are needed.
competences.

The interaction among members of organizations primarily occurs at

through remote communications (DeSanctis & Monge, 1999).

All employees have real-time access to the entirety of the

company information (Kraut, Syteinfield & Hoaq, 1999). Next
the impact of both characteristics on the design of a
organization.
 INFORMATION SYSTEMS OF VIRTUAL CORPORATIONS

3.3 STRUCTURES OF VIRTUAL CORPORATIONS AND THEIR

DIFFERENCES WITH TRADITIONAL CORPORATIONS

The COSMOS Structure To approximate the theoretical model to practice, the author

define the COSMOS structure as "a structure based on three groups of functions,"

with different groups of people, with different levels of involvement in the project, with

different expectations and a management model based on cooperation, trust

and excellence"11. In this model, they are defined with the necessary precision for their

practical configuration the different functions that must compose a virtual company and

their respective activities, as well as the instrumental processes with which it must

concretize the collaboration between the member companies. The model illustrated in the

Figure 4 presents three levels of functions: or the nuclear functions, where the

fundamental knowledge of the identified business opportunity and that we can

concrete in the following: o R&D (to remain in continuous innovation processes); o

strategic marketing (which defines the policies to be developed to take advantage of the opportunity

of the market); direct marketing (responsible for the continuous maintenance of the

direct relationships with the client); or global management (responsible for the coordination of the

different components that integrate the company created 'ad hoc'); or the critical functions,

where does the responsibility for execution fundamentally reside and where can we

find the following functions: production; sales; logistics; or the functions

necessary, those that add less value, in principle, but must be carried out, in some cases

cases by legal imperative.

The virtual company is the associated work organization that uses the network of
internet as a communication base among the partners that make up this company
 The organizational structure is defined in functions and processes, it is supported by
internet to expand its transactions and operations in the cyberspace market.
It also represents better coordination and relationships with the human resource that
integrates, facilitates the control of assets and liabilities of the company, develops a greater
interaction with other companies that are in the network and ventures into international markets
at lower costs, greater quality and efficiency

Charles Handy (1989) defines this organization as an Irish shamrock of three.

leaves: the first are the core workers of the organization, composed of
qualified professionals, technicians, and administrators, who are essential. These
Profiles are essential because they represent the organizational knowledge that is specific.
for that particular company, today we call it Talent Inventory. It turns out to be a
expensive resource, as it results in better payments, development, and privileged conditions; they are

resources that organizations have just discovered to manage with fewer people, such as
result of the restructuring.

The second represents the increase in outsourcing operations, for

that all non-essential work be carried out by a workforce that is not part of the
central organization. The third sheet represents the flexible workforce, that is,
employees on a temporary or hourly basis, as fluctuations or levels occur
peaks in demand (see figure 1).

DIFFERENCE BETWEEN VIRTUAL AND TRADITIONAL COMPANIES

VIRTUAL COMPANIES TRADITIONAL COMPANIES

flexible schedules the needs of rigid schedules
I charge to the expected results (08:00 – 17:00)
work from anywhere I only work at the headquarters of
the organization
personal devices (BYOD) use of computers only
in the office
evaluation by results monitoring and control systems
physical
 virtual meetings with participants meetings limited to encounters
unlimited physicists

3.4 SOFTWARE OF VIRTUAL CORPORATIONS

The virtual company is a software system that operates over the internet.
It is possible to make decisions using previously designed algorithms for that purpose, and that
with this technological association, the concept of a company is intrinsically seen, which
modify the paradigms of organization, work, production, marketing, and framework
legal. (Salvador G. Sotres Arévalo. 2002)

they use the one world xe software, because it allows them to create companies
virtual beings capable of collaborating in business management with their partners, suppliers and
customers through the internet, as well as providing the company with the necessary set
of fully trained tools to operate.

BIBLIOGRAPHIC REFERENCES:

Gus Manochehri, Theresa Pinkerton. (Jan 2003). Managing telecommuters:

Opportunities and challenges American Business Review 21 (1), p. 9-16 (8 pp.). West
Haven Retrieved October 14, 2003, from ProQuest database. (Accession no.:276912801).

Kotler Philip and Armstrong Gary, Marketing, Online Marketing and Commerce
electronic, 567/576. Global Market 624/649. Eighth Edition, Pearson Education, 2001.

- Koontz Harold and Heinz Weihrich, Management, a global perspective; 11th.

edition; Mc Graw Hill.

Cuesta, F. - The processes of transformation of business structures: from the

traditional company to virtual company, Doctoral thesis, Alcalá de Henares, 2002