Organization Structure

VIRTUAL ORGANIZATIONS

The virtual organization is a network of independent suppliers, customers, and even competitors, generally tied together by computer technology (Roger, 1991). They share skills, costs, and access to markets. It is tend to have flat structures in which information and decision making move horizontally (Judith R.G, 2002). Through the support of modern electronic system, it becomes possible to link people across formal organizational boundaries (Judith, 2002, quoted in S.G. Straus, S.P. Weisband, and J.M. Wilson, 1998).

Virtual corporations have some major characteristics (Judith, 2002, quoted in Byrne. n.d.) as following state: technology, excellence, opportunism, trust and no borders. Technology makes distance no longer a problem while entrepreneurs or companies far away from, due to the computer networks link people all over the world. Excellence was showed by each partner bringing its core competencies to the corporation, which can exert all advantages. Companies make alliances for specific market opportunity and this is a more efficiency work way than any others. Members in a virtual organization must trust their partners due to they meet the need by cooperating. The new communication ways were brought by computer networks, which blur the traditional hierarchies and boundaries.

Metersbonwe took the lead in adopting virtual organization among Chinese garment industry by brand chaining operation. The company stated to take full advantage of market resources by controlling, retailing, the core segment in the link in order to concentrate on its core business, Brand construction and Design, while non-core business was outsourced: Manufacturing and Sales network. At present, over 200 manufacturing factories have established long-term cooperative relations with Metersbonwe Group, saving 62.5m$ for the company. More than 900 franchising shops save an average of 62.5m$ every year as well. At the same time the company collects capital from the franchising fees. Metersbonwe achieved great success by using this model.

Figure 1: MetersbonweЎЇs network

MARKET-ORIENTED STRUCTURES

The market-oriented structure groups workers according to the market they serve, such as product, project, client, or geographical area. Large companies that implement a market-oriented structure may have market-based divisions or create a conglomerate of separate subsidiaries (Judith R. Gordon, 2002). I believe that this structure is more adoptable by those multinational corporations which have to respond to diverse cultures and meet the unique needs of various countries. The teams have the same goal meeting the market demands. However, this structure duplicates resource so as to increase the costs.

Before reformation, Philips had a market-oriented structure. Each region filiale had the same operation departments and each department had the similar function offices. Take Philips Shanghai Filiale for example, it led five operation departments: consume electronic product, family electrical equipment, lighting, medical treatment system and semiconductor. And under each of five departments, there also were several similar functional offices: marketing office, public relations office, HR office, etc. (Figure 2) As a result, there is a tree-like structure which highly duplicates resources and the managing costs. Due to the gloomy situation of the global economy and the competitors sharing the market, Philips faced the deficit for years.

Figure2: Philips Shanghai filiale structure

THE ORGANIC STRUCTURES

Organic structure looks most like the boundaryless organization. It is flat, uses cross-hierarchical and cross-functional teams, has low formalization, possesses a comprehensive information network (using lateral and upward communication as well as downward), and involves high participation in decision makingЈЁStephen P. Robbins, n.d.Ј©.Organic structure, in my opinion, is a highly adaptive and flexible structure. It is more suitable for the uncertain condition. The greater the uncertainty is, the greater this structure to be needed. Collaboration is both vertical and horizontal way, easy to control and change if the need arises. WhatЎЇs more, adaptable duties, low formalization and decentralized decision authority are also the characters of this kind of model. Thus the advantages of this open system are clearly pointed out: low in complexity, formalization and centralization, and keep activities furthest efficiency.

By establishing ÐŽoservice sharing centerÐŽ±, Philips has successfully control the costs, as other giant corporations did. ÐŽoShareÐŽ± means departments will not set up the same offices, instead, all background support will be offered by ÐŽoservice sharing centerÐŽ±. By changing the structure, Philips does not only reduce nearly 0.3 billion EURO costs than before, but also optimize the resources and predigest the working flow. According to this ideal, ÐŽoPhilips People ServiceÐŽ± was the first part to establish a sharing background to take the first step achieving ÐŽoTransforming into One PhilipsÐŽ± plan. At present, Philips has set up the ÐŽoHR sharing centerÐŽ± in Shanghai, which means in the short future, all HR problems of PhilipsЎЇ China filiales will be solved together in this center. (Figure 3) Now it establishes five core tasks: recruitment,