Organisational Structure and design for a virtual world - Dell case - Essay Example

? Organisational Structure and design for a virtual world - Dell case Contents Contents 2 Introduction 3 Company background 4 Literature review 5 Comparison of virtual organisations with other organisational structure 7 References 13 Introduction Twentieth century witnessed a huge technological advancement in term of internet and World Wide Web. With the invention of advanced computers and internet the virtual world was formed. Virtual signifies something which is made through the use of computer that is electronically. Philosophy defines virtual as something which is not real but in today’s times the virtual world exists through the use of computer and internet. With the increase in the use of virtual world, organisations which were earlier considered as tangible using resources such as building, machines, furniture etc are now becoming intangible in nature. But like every coin has two sides the virtual world also has limitations too (Camarinha-Matos and Afsarmanesh, n.d., p.4-6). This project deal is about the case of Dell who uses the virtual organisation’s model for its operations. The case outlines the opportunities that the virtual organisation’s model has provided to the Dell in improving its operations as well as the limitations the company faces because of using virtual organisation structure. The report includes a detailed study on the virtual organisation including the merits and the demerits of these types of organisational structure. The organisational structure has been analysed in detail to assess compare the different organisational structures with the virtual organisational structure. The case have been critically analysed to assess the strength and weakness of the company on using this type of organisational structure so that solutions can be identified for improving the limitations. Company background Dell Computer Incorporation which began its operations during 1984 as a hardware manufacturing firm under the leadership of Michael Dell is found to diversify its operations to enter the electronic commerce paradigm. The company initially depended greatly on revenues emanating from direct sales operations which were conducted based on orders received out of telephonic contacts. Dell being able to serve orders in an optimal manner became successful to gain huge amount of business profits in a quick span of time. Diversification from the current business and sales strategy was assumed by the company by drifting from direct sales to conducting sales through the help of internet. For the above purpose the company went in to create its own website where different types of products along with relevant information were published which helped the clients of the concern to effectively book them. Operating based on the orders placed in by the clients as during the direct selling period it helped in to maximise the utilisation of is electronic commerce interface. The electronic commerce interface not only helped the company to enhance its sales revenue on a daily basis but also helped the concern to enhance its relation with its clients and customers. Clients of Dell obtained the pleasure of getting their queries addressed online which thereby enhanced the goodwill factor of the company. Enhancement of the electronic commerce paradigm was conducted by the company by engaging its supplier network which helped the company management gain control over its production parameters and deliver ordered products on a timely basis. In this context the company also designed a separate organisational team which mainly started focusing on the electronic commerce process in order to enhance its feasibility (Kraemer and Dedrick, 2001, p.4-6). Literature review Virtual organisation The advance use of information technology helped to create a newer organisational structure which is referred to as virtual in nature. In this regard, Wiesenfeld, Raghuram and Garud (1998) state that the virtual nature of the organisation is enabled owing to the connection of different organisational activities based on an online network connected by satellite communication. Organisations operating based on virtual networks become able to expand its operations along wide geographical territories thus gaining a large number of consumers and thereby become able to make optimal gain in the business sphere. Moreover the use of information technology in an expanded manner helps the business organisations to decentralise its business operations which thereby helps to enhance the productivity of the concern. However the virtual organizations in stark contrast to the traditional organisations reflect lesser employee to employee and employer relations wherein people located in different parts of the world operate in a much independent fashion. This fact is often criticised in contributing to the loosening of employee relations and in disturbing the organisational discipline often maintained by traditional set of organisations. On the contrary the creation of virtual organisational network in contrast to traditional organisation is held to contribute to the creation of a flexible work force who can deliver their service with the help of information technology gadgets in a much comfortable manner. This characteristic helps in enhancing the motivational factor of the employees and thereby increases their loyalty to the concern (Wiesenfeld, Raghuram and Garud, 1998). Mowshowitz (2002) further states that the virtual organizational structure enabled in a concern helps in enhancing the functionality of the concern. Through the use of information technology on an expanded scale the organisational manpower becomes able to deliver specialised and high quality services to the client base. Decentralisation thus helps in enhancing the productivity of the different departments like production, manufacturing and sales and thus helps the concern cater to consumer needs in an efficient fashion (Mowshowitz, 2002, p.61-62, 91-92). Advantages of virtual organisations The emergence of virtual organisations has gained a large amount of publicity on a global scale owing to certain advantages. To this end, Tomic (n.d.) observes that virtual nature of organisations helps the concerns to gain advantages of flexibility and outsourcing activities. Through the help of outsourcing activities the business organisations can reduce the work load and also thereby becomes able to reduce the cost of business operations. Moreover the function of outsourcing enabled in virtual organisations also helps the business concern in enhancing the parameters which would help in augmenting the profitability and operational expertise. Again the existence of flexibility in regards to virtual organisations also helps in motivating the employee to work in a more dedicated manner for the organisation. Further the business organisation with the help of a flexible and expert workforce can also proceed towards rendering innovation in the organisational work process and thereby produce newer type of products and services. Virtual organisations operating based on the power of information technology can work in a much independent manner than traditional concerns in regards to the appointment of supplier networks and other support teams. Another major advantage obtained through the use of virtual networks by business organisations is to gain access to large number of markets spread across international boundaries (Tomic, n.d., p.2). Disadvantages of virtual organisations Though in the above case potential advantages are reflected in regards to virtual organisation yet it is found that such organisations do suffer from huge number of disadvantages. In this regard, Cascio (2000) states that the mangers in virtual organisations find it difficult to manage the large number of organisational teams spread along international boundaries. Large number of disciplinary and managerial issues crop up owing to such effect. Further in each of the different areas the business organisation has set up its branches it requires to maintain the different setups for maintaining the community circles of employees. Thus in one way where through the help of outsourcing activities the cost of operations is targeted to get reduced on the other hand owing to the above reason the cost of business starts on augmenting heavily. Again several legal and political complications emerge from time to time in regards to the different areas which in turn affect the working of these virtual firms thus disrupting the work atmosphere and culture. The employees working in a virtual network spread along international boundaries if not properly looked after are found to suffer from the feelings of being isolated which in turn decreases their interest for the job and the company (Cascio, 2000, p.82-83). Comparison of virtual organisations with other organisational structure The virtual organisations have lent large amount of sophistication in transforming the organisations on a scientific scale from the traditional or conservative based concerns. In this regard, Hemingway and Breu (n.d.) observes that the virtual nature of organisations has helped in transforming the traditionally based concerns in mainly three ways through the enhanced use of electronic networks, corporate restructuring and creation of a knowledge based workforce. It is found that virtual organisations through the use of electronic interface aim to share huge amount of potential business information with several business partners and aids spread along large geographical territories. However though the internet based networking for sharing of business information is highly fast than in case of traditional concerns yet it raises the alarm of taking precaution as to the nature and potency of information that is shared and also requires inspecting the people with whom the information is to be shared. Through virtual organisational network the company aims at restructuring wherein a huge resource pool can be organised by gaining in knowledge based on experiences of different people working across different corners of the world. Again the creation of virtual organisations enabled the sharing of knowledge by different organisational people not based on the use of pen and paper but rather through the help of electronic documentation. The age of paper less transactions is enabled through the creation of virtual network based concerns. Further the organisational people are found to gain training based on international policies and are not only restricted to local borders. Thus virtualisation of organisations helps to render a scientific image to the business corporation which was previously quite conservative and traditional in nature (Hemingway and Breu, n.d.). The above discussion can be shown in a graphical manner as follows. Figure 1: The Impact of Virtualisation in Organisations Source: (Hemingway and Breu, n.d.). SWOT analysis of Dell The analysis of the Strength, Weakness, Opportunity and Threat parameters for Dell Computers reveals some crucial facts which can be underlined as follows. Speaking on the strength side it is found that Dell through the maximum utilisation of its direct sales force aimed to gain access to large number of consumers directly and thereby develop optimal relationship with them. Further the company also gained the strength of competing with other international vendors like IBM through the reduction of cost of vendor selection. However the computer company also suffered from a potential weakness owing to its failure in managing an effective relationship with the dealer population which would conduct the retail sales for the corporation. In regards to the opportunity parameter it is observed that the management body of the corporation rightly figured the need of the consumers to find a convenient shopping mode wherein they can get access to both information and options before purchasing. Thus the concept of electronic commerce was rightly envisaged by the business corporation to attract large number of consumers and thereby gain potential revenues from such. Finally analysing on the basis of threats it can be stated that the faltering on making positive relationship with the dealer base led other business corporations like IBM and Compaq to gain a potential stand in the market which threatened its presence by eating up its market share (Collett, 1999, p.58). Critical analysis Critical Analysis of the Virtual Organisational Structure of Dell can be conducted along certain heads which can be given as follows. In the first position the customers appreciated the online sales and ordering service of Dell as it helped them in tracking the status of the orders placed in an instant manner. This fact in turn helped Dell to incur huge amount of monetary gains on a daily basis. Reflecting on the position of the corporate consumers of Dell it is observed that these set of consumers also obtained large amount of privileges both in terms of sales and technical services which were posted as value addition of services on the online sphere. Again reflecting on the internal side of the organisation it is observed that the enhanced use of internet and intranet helped in developing the communication systems within the concern. The people belonging to different organisational hierarchies through the use of intranet effectively started coordinating with each other which helped in enhancing the company’s productivity. Critical analysis of Dell’s virtual organisational philosophy thus shows that the concern through the use of internet grew up to become a knowledge concern. Again the consumers and suppliers belonging to the external stakeholder groups greatly benefited through the getting of large amount of information regarding the services and products of the company published along the online sphere. Thus the enhanced dependence on the virtual organisation concept helped the company management in making both the internal and external stakeholder groups like consumers, employees, shareholders and the government at large about the different information regarding alteration of any business process or in relation to production of newer products and services. This fact also helped in enhancing the goodwill of the company and thereby augmenting the value of the asset base (Eid, Truman and Ahmed, 2002, p.114, 118). Conclusion With the development of internet the organisation structure of different organisations has undergone a radical change. The extended use of internet has sophisticated the organisational structure to help the concerns gain access to different markets spread along international boundaries. This fact has helped the companies gain both in terms of profit and market share. Some terms like outsourcing, flexibility have rightly coined with the virtual organisation structure thereby on the one hand enhancing the loyalty of the employees. However the managers find it hard to effectively manage the employees spread along international boundaries and thus suffers from the threat of disruption in the work atmosphere. In the light of the above discussion the case of Dell can be analysed which drifted from the traditional sales philosophy based on direct sales to conducting sales via the internet. This fact helped the company in effectively meeting the orders gained from the different consumers and in providing them with potential information. Again the use of internet helped in effectively coordinating the different employees based along different hierarchies and thus helped in enhancing the productivity of the concern as a whole. Recommendation In the light of the recommendation that can be placed it can be stated that Dell Computers in order to better compete with other international giants like IBM and Compaq requires to enhance its relationship with the dealer population. The creation of virtual organisation also needs to be rightly inspected to enhance and monitor the working of the employees based along international boundaries. This would help in both enhancing the parameters of trust and in gaining productivity along the international markets. Thus proper management of the dealer network along with controlling of the employee’s functions based along international boundaries would rightly help in strengthening the market position of the company. The virtual sales dimension must be further developed to enhance its sales and services functions along the corporate and government sphere. Maintenance of the dealership network along with the betterment of the relationships both with the corporate and government consumer profile would evidently help in letting its business grow and in earning large amount of goodwill. Again the traditional practices like contacting consumers through telephone must not be rendered lower importance for it definitely helps in developing the personal relationship with them and in understanding their demands, feedbacks and in solving their queries. The above set of recommendations would definitely help in developing the business sphere of the company and thus would earn more potential to compete in the international sphere. References Camarinha-Matos, L.M. and Afsarmanesh, H. (No date). The Virtual Enterprise Concept. Retrieved on October 02, 2011 from: http://www.uninova.pt/~cam/ev/PROVEveconcept.pdf Eid, R., Trueman, M., and Ahmed, A. (2002). A cross-industry review of B2B critical success factors. Internet Research :Electronic Networking Applications and Policy. 12 (2), pp. 110-123. Retrieved on October 02, 2011 from: http://web.njit.edu/~jerry/MIS-625/Articles/Eid-EC-Internet-2002.pdf. Collett, S. (1999). SWOT Analysis. Computerworld. Cascio, W. F. (2000). Managing A Virtual Workplace. Academy of Management Executive. 14(3). Retrieved on October 02, 2011 from: http://www.slis.indiana.edu/faculty/hrosenba/www/l574/pdf/cascio_virtual-workplace.pdf. Tomic, I. (No date). Virtual Organizations. Retrieved on October 02, 2011 from: http://www.city.academic.gr/s3ctit03/Abstracts/Tomic.pdf. Wiesenfeld, B.M., Raghuram, S., and Garud, R. (1998). Communication Patterns as Determinants of Organizational Identification in a Virtual Organization. Journal of Computer Mediated Education. 3(4). Retrieved on October 02, 2011 from: http://jcmc.indiana.edu/vol3/issue4/wiesenfeld.html Hemingway, C., and Breu, K. (No date). From Traditional to Virtual Organisation: Implications for Work Unit Boundaries. Retrieved on October 02, 2011 from: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.117.2852&rep=rep1&type=pdf. Kraemer, K., and Dedrick, J. (2001). Dell Computer: Using E-Commerce to Support the Virtual Company. Centre for Research on Information Technology and Organizations. Retrieved on October 02, 2011 from: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.25.1518&rep=rep1&type=pdf Mowshowitz, A. (2002). Organizational Learning and Organizational Design. 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