Relevance of Virtual organization in globalization

Virtual organization is a solution to globalized economy that can let businesses flourish, but globalization also affects traditional employment and management structure.

Globalization can be compared to a double edge sword; it can transform your business but also change your business ideologies.

Current blog post is for managers who wish to get a base idea on how to start this reformation and use globalization to their advantage. This article can get you started on understanding the value it could add to become virtual organization.

The marketplace is changing dramatically and is expected to continue changing rapidly. Regarding environmental change, Huber and Glick (1993, p. 4) wrote. The fast-changing nature of today’s organizational environments is largely a consequence of two factors: (1) the increasing effectiveness of information technology (both communications technology and computing technology) and (2) the increasing effectiveness of transportation technology.

Classification of Virtual organization

  • Partly virtualized
  • Fully virtualized

We have numerous articles in this blog related to both, links to which can be found towards the end of this article.

Focus of virtual organization is IT.

  • The key to virtual organization lies in seamless communication where managers and team members be able to interact closely as they can do with a physical organization. There are numerous tools to achieve this seamless communication. Please check reference section.
  • The other key is agility and to be able to adapt to rapid changes in both requirement as well as scalability of operations. An organization which is virtual and agile can be called agile virtual organization.

Concept of virtual organization

A virtual organization can be “a collection of business units in which virtual team members from geographically dispersed location work together in order to perform tasks that have a common goal or vision”. Virtual organization has to adhere to process deliverable guidelines just as it would do with a stationary near proximity team.  Virtual organizations enable core competencies of a team member to be brought together in a short time and disbanded when no longer required.

Often core competencies in an organization are a shortage and the team member with the desired skill has to be physically relocated for it to be utilized. Virtual organization can save you costs in terms of relocation expenses and time efficiency for relocation; it could avoid variable resource cost from your project.

Virtual organization models

  • Partners: This methodology is useful to allow each partner to concentrate in its own core competencies and sharing its skills for mutual benefit.
  • Per project/value chain: Utilize by big giants like IBM. They have appointed global virtual team to take care of their value chain around the globe. It can be utilized per project basis as well.
  • Data/infrastructure virtualization: Data/infrastructure from an organization such as e-commerce or complete application data can be virtualized, thus avoiding overheads of data storage and maintenance. The entire enterprise can exist on electronic cloud with the same security as it would remain within an infrastructure. There are more classification such as “private cloud” and “public cloud” of this type of virtualization.

Legal and information support for virtual organization

There are government agencies around the globe to monitor virtual organization and global operations. Each country has its governing body for globalization. The laws of globalization are different and have its own legal advisors. However “Small scale enterprises” are free to operate in globalization model as long as they remain in the threshold.


Virtual organization has numerous advantages and disadvantages. The model has risks just as it would have on any management process and business. It is advised to understand this model in depth before its implementation or transition to virtual organization.

Please leave relevant comments on my post and also post any related questions. I will be glad to answer your questions and make this blog a discussion point from best of my experience.

Resource references

11 thoughts on “Relevance of Virtual organization in globalization

  1. Ramanuj K

    Where can I get some more details on how to run a virtual organization, I am searching and most sites including yours do not have basics structured. Overall information was enough to trigger thougts but not good enough to really use it.

  2. Antonio Markus

    I agree some points regarding virtual organization, but can you tell me why is that it is not widely accepted?

  3. Rincy joseph

    I am a fan, now I have your RSS bookmarked, but I do not see much posting in tweeter and posts here are kind of old. Have you been busy these days, I am sure a professional like you is preoccupied but please take time post new topics.

  4. Kate huston

    i like it Relevance of Virtual organization in globalization ; winged Virtual ; The new mantra for IT virtual organization. now im your rss reader

  5. Reena Capratchi

    Nice blog and good topic , especially usefull for people like me who are looking to get funding. By the by would you be intrested in partnering with me?

  6. Keri Gould

    In 1977, the OECD identified in its Appropriate Technology Directory 680 organizations involved in the development and promotion of appropriate technology. By 1980, this number had grown to more than 1,000. International agencies and government departments were also emerging as major innovators in appropriate technology, indicating its progression from a small movement fighting against the established norms to a legitimate technological choice supported by the establishment. For example, the Inter-American Development Bank created a Committee for the Application of Intermediate Technology in 1976 and the World Health Organization established the Appropriate Technology for Health Program in 1977.

  7. Angelo Spencer

    “Technonet Asia” is a typical example for another approach to technology transfer, and adaptation. National member organizations have a strong small and medium scale industry function and a national industrial policy role. They cooperate in the transfer of indigenous technology through:- Making available to one another industrial and technical information on products and processes developed and available in their respective countries.

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