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Virtual Enterprise

Definition. Ad hoc alliance of independent experts (consultants, designers, developers, producers, suppliers, etc.) who join to pursue a particular business opportunity is called virtual enterprise. Virtual enterprises have little or no physical presence or infrastructure, rely heavily on telecommunications and networks such as internet, and usually disband when their purpose is fulfilled or the opportunity passes.

Agile, flexible, and fluid, they are extremely focused and goal driven, and succeed on the basis of little investment requirements, low startup and overhead costs, and fast response time.

Geographically dispersed members of a virtual enterprise collaborate on the basis of their core strength from wherever they are and whenever they are able to do so, and may become competitors in pursuit of another opportunity. Also called virtual company or virtual corporation.

The purpose of the virtual enterprise, as defined here, is to provide a new solution for an unpredicted opportunity. Therefore, the enterprise is more of an action, rather than an institution. The virtual enterprise is nimble: quick to grasp the new opportunity and create the solution. This feature leads to there characteristics of virtual enterprises.

In the virtual enterprise, value is created, not added. The virtual enterprise is a temporary co-operation to achieve. The virtual enterprise facilitates permanent restructuring.

Three Elements of the Virtual Enterprise

The virtual organization is restructured from within, with the goal of capturing value from short-term opportunity. Three basic elements define this system: (1) the value that is the opportunity or reason restructuring takes place, (2) the virtual operation or results of restructuring and, (3) the network, or source of restructuring. In the introductory case, Mr. Jack identified the drawings as a valuable business opportunity for this own factory as well as the network of external partners. Within one week, he and his team created the virtual operation to deliver the machine within seven months.

The Essence of the Virtual Enterprise

The following section discusses how the three elements-value, virtual operation, and network contribute tot eh success of the virtual enterprise. These elements can be implemented in numerous forms and methods. We examine several of these to indicate the nature of the virtual enterprise. After a discussion of the three elements, the chapter provides a review of the processes of restructuring and the management competencies for the virtual enterprise.

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