Question

10. Discuss the advantages and disadvantages of the network organization design.

Answer 1

10.

Boundary-less organization refers to the organization that breaks the chains of organizational structure. These type of organization work best in the field of innovation. Technological industry implements the boundary-less organization. There are four types of boundary-less organization. They are: -

• Modular organization
• Strategic alliance.
• Network organization
• Virtual organization.

Network organizational structure is a type of organization formed by creating alliance of several organization for developing product or service for the customers. This type of organization structure eliminate departments that are not necessary and outsource specialized works like logistic, technical support, etc. This type of structure include joint vebture, franchises, strategic alliances, etc.

The advantages of network stracture are: -

• It eliminates over departmentation by outsourcing non critical tasks of the organization.
• This helps in reducing the administrative cost because it needs very few staff to perform administrative work.
• It helps in increasing efficiency by focusing on core areas which result in gaining specialization.
• It helps in improving the speed and efficiencies of the business process that is outsourced. The third party perform that particular task that has been outsourced by the organization as they have the skills that is required to fulfill that specific business activity. Since they are expert in this field, it will help in improving the speed and efficiency of the process.
• This type of organization is flexible as it can hire new employees when required for specialized jobs.
• It promotes learning by integrating information and knowledge among employees.

The disadvantages of network organization structure are: -

• Outsourcing may result in the loss of privacy and confidentiality of sensitive data. It is very important to keep a control and monitoring system in place to prevent data loss.
• The control in the operational activities that has been outsourced will be lost and the management will not be able to control those activities.
• The quality of work or service may get affected if the service provider is inexperienced or ineffective. This may impact the customer service quality as well as the reputation of the organization.
• It becomes difficult to coordinate and maintain the performance both inside and outside the organization.
• the management of the organization will become dependent on other orgainzation.