The Virtual Enterprise

1
The Virtual Enterprise

• Two Solutions for a Fast Moving Business
  Environment

ITEC810 Project by Markus Spillner
2
Agenda

• Problem Statement
• Research Plan
• Drivers for the Virtual Enterprise (VE)
• Two Models of Virtual Enterprises
• Major Outsourcing VE
• Collaborative Network VE
• Comparison of the Two Models
• Case Studies
• Conclusion
• Future Work

3
Problem Statement

• Definition of the Virtual Enterprise (VE)
• Disparate definitions developed by different
  authors
• No universally accepted definition has yet
  prevailed
• VE is a fairly new organisational concept
• What are the drivers for the concept?
• What are the benefits/risks of the concept?
• Where is this concept especially valuable?

4
Research Approach

• Categorisation of the VE
• Identify different categories of VEs
• What is unique across the categories?
• What circumscribes the categories?
• How can an enterprise become virtual?
• Transition from a traditional enterprise to a
  virtual enterprise
• Benefits/Risks
• Case Studies of VEs
• Benefits they have achieved
• Obstacles they have come across

5
Drivers

• Fast changing business technology environment
• Business response
• Scrutinise and realign competitive competencies
• Cost reduction, efficiency, quality and delivery
  speed
• SMEs need to act big to benefit from economies
  of scale and/or scope
• Large enterprises need to act small for
  agility, flexibility and a high level of customer
  service

6
Drivers

• Internet Globalisation
• Access to new markets
• Exposure to global competition
• Sophisticated Information and Communication
  Technology (ICT) as an enabler
• E.g. Web Services, Portals, Groupware Solutions,
  etc.

7
Collaborative Network VE

• Multiple independent organisations and/or
  individuals form a collaborative network
• Synergistic relationship
• Each entity provides their core competencies
• The participants are geographically dispersed
• Network is supported/enabled by ICT
• Built for one business intention and dissolved
  afterwards
• Appears as a uniform enterprise towards third
  parties

8
Collaborative Network VE
Small and Medium Enterprises
CC
SC
SC
SC
CC
SC
SC
SC
Business Opportunity
CC
SC
SC
SC
CC Core CompetencySC Supportive Competency
CC
SC
SC
SC
9
Major Outsourcing VE

• Majority of the enterprises functions are
  outsourced
• Functions that are outsourced
• Not provide a competitive advantage
• Costs can not be further reduced internally
• A central entity contracts outs and then
  coordinates the designing, making and selling of
  products or services

10
Major Outsourcing VE
Service Providers
Large Enterprise
Virtual Enterprise
CC
SC
SC
SC
CC
CC
SC
SC
SC
SC
SC
SC
CC Core CompetencySC Supportive Competency
CC
SC
SC
SC
11
Comparison of Classifications

• Two major classes of VEs
• VE as Major Outsourcing
• VE as a Collaborative Network
• Unifying Factors
• Network Structure
• Cooperation and Coordination
• Distributed Supply Chain
• Differentiating Factors
• Virtuality
• Centralised control
• Longevity
• Collaboration

12
VE Classification
13
Dell Computer

• Major Outsourcing VE
• Concentration on assembly and sales
• All other functions outsourced
• Benefits
• Direct-sales model
• Built-to-order model
• Suppliers are virtually integrated
• Customer perceives a one-stop product
• Risks
• Supplier dependency
• Reconfiguration of outsourcing mix disrupts
  virtual integration

14
Virtual Factory

• Collaborative Network VE
• 20 SMEs form stable and interdisciplinary source
  network
• A combination of competencies and resources forms
  a VE in respond to a business opportunity
• Benefits
• Access to partner resources and competencies
  while remaining autonomous
• Handling of high-class complex orders
• Risks
• No executive power to enforce the goals of the VE
• Diversity of interest is base for conflicts

15
Conclusion

• Two major concepts
• Valid by all means
• Perfect response to todays fast moving business
  environment
• Major Outsourcing VE
• Allows large companies to act-small for
  flexibility and agility
• Collaborative Network VE
• Allows SMEs to act-big for economies of scale
  and/or scope
• ICT enables the VE, but does not define it

16
Future Work

• Guidebook for VEs
• Detailed direction on how to become virtual
• Controlling instruments for VEs
• Management instruments
• Network roles
• Trust formation
• ICT support

17
? Questions ?