Economy Informatics, no. 1/2001 95

From transnational organization to the virtual organization

Prof. Bogdan GHILIC-MICU PhD., Assist.Lect. Marian STOICA Economic Informatics Department, Academy of Economic Studies Bucharest

Abstract: The transnational organization extends the locationless operations strategy around the world. So much so that it’s difficult to know which country is the organization’s country. One good example is the industry of who manufacturing now more personal computers and accessories outside then inside of home organization’s country. Operating extensively outside the country of origin is a hallmark of the transnational organization. But why should the organization to go international with its operations? Let’s find some answers. Key words: transnational/virtual organization, e-business, virtual workplace, , , organizational horsepower.

he organizational horsepower source of much research projects. Today, T strategy the business environment is shaped by Organizations create their competitive ad- eight important forces: competition, glob- vantages in different ways. We have seen a alization, information as a basic resource, great deal in the business materials about knowledge employee computing, e-com- different strategies to improve an organi- merce, teleworking, virtual workspace and zation. This has been will continue to be a virtual organizations (figure 1).

COMPETITION

GLOBALIZATION KNOWLEDGE

TODAY E-COMMERCE INFORMATION NEW BUSINESS e-business

VIRTUAL TELEWORKING WORK SPACE VIRTUAL ORGANIZATION Figure 1. Forces shape e-business

Taking advantage of these eight forces is organizational competitiveness generated how business competes today and that through organizational force and speed. takes organizational horsepower. Organizational horsepower is meeting as The organizational horsepower strategy is many customer expectations as possible. not only about force but also about force An organizational hopes too meet more delivered with speed. One without the expectations than its competitors and thus other is more less powerful then both com- gain a competitive advantage. Organiza- bined, then double synergy effect. So, or- tional speed is meeting customer expecta- ganizational horsepower is a measure of tions quickly. 96 Economy Informatics, no. 1/2001

Organizational force, organizational speed mands a powerful competitive position. and organizational horsepower provide a The organization can also generate OF framework for evaluating how various through the economics of scale that accrue strategies can enpower an organization. through masive global production. The information as a key resource, the The transnational organization globalization, knowledge employee com- A transnational organizational is one that puters and e-commerce synergizes a or- produces and sells products and services in ganization’s market competitiveness. To- countries all over the world in coordinated day, in the information society, the work cooperation. Operating internationally market is one of a teleworking activities. benefits an organization because it gains Teleworkers (telecommuters) and their access to more customer markets around employers must create their own work- the globe. Using information and commu- space – a virtual workplace. The virtual nication technology to link these geo- workplace has requirements over or above graphically dispersed operations, organ- those of the real workplace. In figure 2 we izational force is magnified more then can see six components of the virtual other organizational horsepower strategy. workplace: technology, in- This is the step to the virtual organization formation access, phisical meetings, con- who is a temporarly network of independ- stant communication, goal setting, man- ent organizations. Having a presence in aging and monitoring. every major market in the world com-

Communication technology

Information Constant access communication VIRTUAL

WORKPLACE

Goal Physical setting meetings

Managing and monitoring

Figure 2. Basic components of virtual workplace

Implementing an international strategy sources and directions. Therefore informa- based on teleworking and virtual work- tion directives travel one way from head- place begins with three different configu- quarters to operations. rations: global, multinational and transna- In a multinational configuration, interna- tional. tional opetations work independently re- In a global configuration all international porting only financial information to head- operations depend on headquarters for re- quarters. Economy Informatics, no. 1/2001 97

To become a transnational organization, management informationsystems and one firm may construct a transnational workgroup support systems (groupware). configuration. All operatios share informa- With resources spread across the world, the tion and resources and, in these conditions, transnational organization must ensure that the notion of a headquarters becomes ir- resource duplication does not occur among relevant. locations. Multinational organization (like virtual organization) maintain independent The success factors for transnational or- operations and often duplicate resources ganization because they lack interoperational commu- The success of transnational operations is nications. To benefit from transnational determinated by two critical factors: 1) integration, international operations must globalization and uniformity and 2) infor- communicate with each other to eliminate mation technology infrastructure. this redundancy. Communicating in this First, to adopt a transnational organization way reduces also the isolation of interna- strategy the organization must carefully tional operations. Those barriers can be balance local uniqueness with global uni- broken by the multitude of translation tools formity. available today. For example, we can pur- Customers arround the world want the or- chase communication ganization to cater to their unique cultural like Internet Explorer or Netscape Navi- and national needs. The organization’s in- gator that translates between 15 and 25 dif- ternational operations must reflect that ferent languages and dialects. uniqueness in managing, marketing, sales, human resources, goal settings and legal To the virtual organization conformance. At the same time, the or- If we think a transnational organization as ganization must operate with a global stan- located everywhere, we must think at the dard of excellence. virtual organization as located nothere. Second, adopting a transnational organiza- Like we already seen, the virtual organiza- tion strategy means that the organization tion is the distributed organization of the must create a global information technol- present and of the future. Is a network of ogy infrastruture that support the first criti- independent organizations liked by infor- cal success factor. In these sense, the mation and communication technology to hardware, the software and the telecom- exploit market opportunities by sharing munication networks must support both of skills, costs and market access. global brand and local independence. Many virtual organizations are created The customer expectations require to the solely to meet newly identified customer organization to establish international tran- needs faster than building an organization zaction processing systems and customer from seratch (who start from scratch). All integrated systems. That means the tranna- member organizations share in this type of tional organization must use extensively organizational speed. Project only virtual the information and communication tech- organizations permit member to reach new nology and networks facilities and syn- customers beyond their current capabilities ergy. and thus share an organizational force. Also, the transnational organizations need Tying the member organizations together then just tranzaction processing systems with information and communication tech- and customer integrated systems. They nology enables the organizations to operate must access their global knowledge re- as one and create organizational forces un- sources. Geographically dispersed experts attainable by any single member. need to work together in deciding the or- On the other hand, like transnational or- ganization’s direction. That means estab- ganizations, some virtual vs operate as lishing global decision support systems, permanent companies. Member organiza- 98 Economy Informatics, no. 1/2001 tions join in a flexible network, establish- The virtual organization has a much more ing permanent relationships to produce distributive network of partners. Most in- certain products and services. Even that, formation partnerships include only two member organizations remain independent partners and they often create a single uni- and free to do business outside of the vir- fying location from which to operate the tual organization. business Because the virtual organization Member organizations share the organiza- joins independent business, creating links tional force only if each of them actively with information and communication tech- contacts customers to extend the market nology can present special challeges in- reach. Also, in a permanent arrangement cluding: linking incompatible software and the simultaneus production at member or- hardware or fostering creativity without ganizations creates shared organizational human contact. speed. References Conclusions 1. Haag S., Cummings M., Dawkins J., Operating internationally can create some Management Information Systems for the surprising ethical challenges. Taking ad- Information Age, Irwin McGraw-Hill, vantage of a competitive opportunity in USA, 1998 one country may be viewed as exploitation 2. Boulton R., Libert B., Somek S., in another. for example, inexpensive labor Cracking the Value Code – Haw Success- costs in one country may be the rezult of ful Business are Creating Wealth in the what another country considers unethical New Economy, Arthur Andersen, USA, labor practices. Avoiding such dilemmas 2000 requires coordination on a global basis. It 3. Sieber P., Griese J., Organizational Vir- is important to understand cultural stan- tualness and Electronic Commerce, Pro- dards as well as communication practices ceedings of the 2nd International VoNet – across the transnational organization. Workshop Zurich, September 23-24, 1999