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Topic 4 Reading Child Et Al. Virtual Corporations Notes

Accounting Notes > Strategic Finance, Digitization and Extended Enterprises Notes

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AC310: Topic 4: Reading: Child, Faulkner and Tallman 2005 - Cooperative Strategy Chapter 9 - The Virtual Corporation

Topic 4: Child, Faulkner and Tallman 2005 - Cooperative Strategy Chapter 9 Summary: Discusses the topic of virtual organizations and their benefits and limitations, emphasizing the economic, technological and organizational factors involved as well as the need for teamwork. They highlight the dehumanizing factor of virtual corporations as a key limitation.

The Virtual Corporation

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"...how one firm can be created with flexible boundaries and ownership aided by the facilities provided by electronic data exchange and communication" Takes organizational resources from difference companies and synthesizes them together - (Nagel and Dove 1991) Not the same as strategic alliances o Strategic alliances are created for organizational learning Each company provides a different function and are linked electronically o Creating a flexible organization of companies Some believe virtual organizations are the logical next step based on 'nonincremental changes in society in history' - (Mowshowitz 1994) o Similar effects to steam engines etc. o Further separating production from social interaction o Mowshowitz focuses on infinite switching capacity in his 'virtualcorporation concept' o 'meta-management'

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Meta-management: a.i) Analysis of inputs needed from outside sources, independent of examining particular suppliers a.ii) Tracking and analysis of potential suppliers a.iii) Revising and improving allocation procedure a.iv) Updating the requirement-supplier table

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Mowshowitz 3 pillars of virtual organizations:

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1) Standardization of interaction o Suppliers can be coupled and decoupled easily

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2) Commoditization of information o Facilitates switching and flexibility o Reduces dependence on humans as bearers of knowledge and skill

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3) Abstractification of property o simplifies movement and flexibility to operate anywhere in the world

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