Question

(a) What is meant by virtual corporation?

(b) What are its advantages over traditional corporations?

(c) What are its disadvantages over traditional corporations?

Answer 1

(A) Virtual Corporation

  The online collaboration activities of today's business world have led to an environment where multiple firms can come together to meet customer demands, forming temporary partnerships known as virtual corporations (often called “virtual organizations” or “virtual enterprises”). These hyper-agile entities move through the business world, dissolving and reforming as necessary to complete supply or production chains and to market products to consumers. Instead of operating by the formal contracts and carefully constructed procedures traditional companies use in partnerships, virtual corporations are brought together by specialization and efficiency, working on a customer by customer basis without using long-term contracts.

(B) Advantage

1. It saves time, travel expenses and eliminates lack of access to experts.

2. Virtual teams can be organised whether or not members are in reasonable proximity to each other.

3. Use of outside experts without incurring expenses for travel, logging and downtime.

4. Dynamic team membership allows people to move from one project to another.

5. Employee can be assigned to multiple, concurrent teams.

(C) Disadvantage

1. The lack of physical interactions with its associated verbal and non-verbal cues and also the synergies that often accompany face-to-face interaction

2. Non-availability of paraverbal and non-verbal cues such as voice, eye movement, facial expression, and body language which help in better communication.

3. Ability to work even if the virtual teams are miles apart and the members have never or rarely met each other face-to-face.