Virtual structure

From CEOpedia | Management online
Jump to: navigation, search

Virtual structure is a type of modern form of grouping posts, cells, or organizational units of different organizations, and even entire companies, whose main task is to implement stated objectives. It has no legal personality, property or personnel employed by a single entity.

Virtual organization structure consists of two basic elements:

  • network
  • virtual enterprise

In a virtual organization relationships are very important, and the possibility of rapid communication between the partners, which is achieved by using communication technology and network computing. These networks are the basis of a virtual organizations. The dynamics of the environment constantly requires organizations to deal with new obstacles. They must keep up with the continuing changes and assimilate the innovative information technology. In this organization, it does not matter who and at what level in the hierarchy is, all interested parties are equal. Work breakdown and control of processes is done by a company that coordinate deal with particular customer. When it comes to the duration of a virtual organization, this can not be strictly defined. Organization will exist as much time as it will need to fulfill the order or project.


Virtual structure is often used by large corporations. Companies do not employ workers, but contract workers of outside service provider, for pursuing specified objectives. Contractors makes products in their own factories, because virtual organizations do not have own production centres. The production process is not controlled in any way by the virtual organizations. Virtual organization give only own brand to finished products. The aim is to substantially reduce the cost of production, which is possible because of cheap labour in poorer regions of the world.

See also: