The Rise of Multinational Virtual Corporations

The virtual corporation is the emerging organisational form, which best combines, a fluid ability to adapt to rapidly changing markets and is able to leverage its skills with the complementary skills of other corporations.

In the concept's purest form, each company that links up with others to create a virtual corporation will be stripped to its essence. It will contribute only what it regards as its core competencies. It will mix and match what it does best with the best of other companies and entrepreneurs

Key attributes of the Virtual Corporations: Technology, Opportunism, Excellence, Trust, No Border

If these Virtual Corporations are to function globally then they need to be in a position to utilise global communication networks. These networks may be conventional; telephone or international travel, but added value will be yielded from the use of international computer networks. This is an argument for the use of open systems, even internally, in order that such global teams may come together rapidly and largely invisibly.

Underlying Reasons for the Rise of Virtual Corporations

The globalisation of business

People in remote nations will be able to participate in worldwide projects to add value locally without uprooting themselves and their families. Information technology also can make the organisation chart irrelevant. But the real goal of information technology for businesses is faster response times. To bring new products to market quickly and to satisfy changing customer needs, you have to work on many pieces of a complex project in parallel. Information technology makes that possible. It creates competitive advantage in a dynamic global marketplace.

Some critics claim that the national state ability to control its own destiny is being limited by shifting away the economic power from national governments and toward supranational organisation such as World Trade Organisation, the European Union, and the United Nations.

People

In the knowledge-based economy of the 1990s it is people and their knowledge/expertise, which are the scarcest resources in the information economy so you move work to where the people are. Virtual corporation practices are better suited to take advantage of this than more traditional, fixed corporations

Cost of offices in cities

In cities such as London, New York and Tokyo, the costs of large building are a significant portion of firms operating costs. The resulting pressure on a firm to cut costs often involves rethinking a company's location.

The lowering of trade barriers made globalisatuion of markets and production a theoretical posibility, and technological change has made it a tangible reality. Since the end of World War 2, the world has sseen major advances in communications, information processes, and tranportation technology including, most recently, the explosive emergence of the Internet and World Wide Web.

The Internet and the WWW promise to develop into the information backbone of tommorrow's global economy. From virtualy nothing in 1994, the value of the Web - based transactions hit $7.5 billion in 1997. According to a recent report isssued by the United States Department of Commerce, this figure could reach $300 billion in the United States alone by the year 2003.

Every day, more people connect online and grow comfortable with digital transactions. More companies are building relationships with new and existing customers through the Internet, as well as lowering transaction costs for corporate purchasing or their supply chain6.

Every company can use the Internet to build stronger, more eefective relationships with customers and business partners.

E - commerce and Globalisation

E-commerce has the potential to transcend national boundaries and time zones. It has the potential to create genuinely global market - one in which companies will be exposed to the full glare of competition. Given the general recognition of the roe of electronic commerce in overcoming national, geographical and temporal boundaries to trade, it is now clear that companies that wish to be at the forefront of global competition in their particular markets cannot afford to ignore electronic commerce any longer.

In a world which is increasingly competitive and where organisations are required to undertake greater levels of risk in order to compete, those companies that fail to act now may find they have left it too late as ellectronic commerce has become a dominant way of doing business in their sector. By contrast, companies that by embracing electronic commerce now, they will reinforce their market position.

Aurel Voiculescu MBA http://www.aurelvoiculescu.com
Electronic commerce research as part of my MBA dissertation: http://www.aurelvoiculescu.com/mba/transmanag.htm
Analysis includes consideration of theories of international trade, corporate globalisation strategies, the impact of electronic commerce (Internet, EDI) and the political factors, which have an impact on the ways in which companies conduct international business.