A compilation is made about the concept of virtual company, which has been evolving from 1989 to the present; as well as an approach to the effects of a technical and theoretical nature. Also a presentation of some economic aspects from the theoretical is made; an outline of the implications regarding the technological, administrative and marketing aspects of this type of company. Finally, a reflection is made on the minimum requirements to start a virtual company.
Some theoretical aspects
The concept of virtual company has evolved, some definitions can be summarized as follows:
The concept of Virtual Company begins with the shamrock organization proposed by Charles Handy in his 1989 book The age of unreason; In it, he states: “ Organizations used to be considered as giant pieces of engineering, with largely interchangeable human parts. We are talking about structures, their systems, the inputs and outputs, the control resources and their administration, as if the total were a large factory. Today, the language is not engineering, but politics, it speaks of cultures and networks, of teams and coalitions, of influence or power rather than control. ”
A proposal of common reference is that of Charles Handy (1989) who defines this organization as a clover, which emphasizes the human talent that makes it up as follows: “1- The central workers of the organization, made up of qualified professionals, technicians and administrators, who are essential. These are essential because they represent the organizational knowledge that is specific to that particular company, today we call it the Talent Inventory. It turns out to be an expensive resource, since it results in better payments, development and privileged conditions. 2- Increase in outsourcing operations, so that all non-essential work is performed by a workforce that is not part of the central organization and, 3- the flexible workforce, that is, employees on a temporary or hourly basis,as fluctuations or maximum levels in demand occur ”.
De otra parte, Gary Hamel y C.K. Prahalad quienes plantean las actividades fundamentales o nucleares, ya que a través de éstas se identifican plenamente las corporaciones virtuales, mediante las cuales se asocian, sin corresponder estrictamente a la figura de alianzas estratégicas mencionadas por Michael Porter.
Later, in 1992, Davidow and Malone, in The Virtual Corporation, presented their vision in this regard, and framed the concept in the eighties, trying to distort the birth of the virtual organization, “since they expose it as a network of companies around to a central core ”. When they state that: "Unlike its contemporary predecessors, the virtual corporation is going to look less like a discrete company and more like a continually varying block of common activities amidst a network of relationships"; and in "the process of becoming a virtual corporation is, first and foremost, a learning process."
In 1993, The Economist magazine published the article: «The global company: is dead», considering the Virtual Company as «a temporary network of companies that come together to exploit a specific market opportunity supported by the technological capabilities that make up the network ». On February 8, Fortune magazine called this idea as Modular Corporation, while Business Week magazine called it Virtual Corporation; With this background, new possibilities open up to study the topic of virtual business.
According to the definition of The Economist magazine, the basic concepts that determine a virtual company are:
- It is a company, made up of several in collaboration, accepting, in principle, any instrumental formula, strategic alliances, subcontracting, outsourcing, etc.
- Each of them contributes what they know how to do better than any other, to what Hamel and Prahalad have called Core Business - fundamental or nuclear activities - in their book Competing for the future, in 1994.
- In Félix Cuesta's book, The Virtual Company. The Cosmos Structure, published in 1998, presents a variant on the proposed definition, accepting the concept of network, but around a central nucleus, which allows solving one of the main problems of the so-called virtual company of the time, the reduction coordination costs, outside of any contemporary technological vision.
Inostroza and Sostres, 2005, review the previous concepts and propose a new one, considering that they do not take into account the technological developments in which the virtual company has developed: “… it is an associated work organization that uses the Internet network as a communication base between the partners that make up this company. Understanding that the organizational structure is defined in functions and processes, they rely on the Internet to expand their transactions and operations in the cyberspace market….. ”.
In addition, the virtual company is a software system that operates on the Internet, where it is possible to make decisions using algorithms previously designed for the purpose, and that with this technological association, the concept of a company is intrinsic, which modifies the paradigms of organization, work, production, commercialization and legal framework. (Salvador G. Sotres Arévalo, 2002)
However, the differences between the virtual company and the traditional company, is more of form than of essence. It requires a plan, a vision, a mission, an organization chart, a manual of functions and procedures. Of course, it also requires developing a production, planning, financial, marketing, administration function, paying taxes, submitting to rules or regulations.
By way of conclusion, it can be added that there should be no such distinction, after all they are companies, what happens is that some use the so-called information and communication technologies with greater intensity.
Some economic implications
In the first place, it is worth saying that some dare to affirm that with the birth of the “virtual company” a new branch of the economy appears “webonomics”, due to the new structures, rules that are appearing.
The virtual company strengthens and accelerates the globalization of the economy, since it benefits the development of the globalization process by creating conditions for transnational companies to perform better than others in developing countries (S. Sotress, 2010).
The great revolution in electronic commerce is based on reducing costs –at least those related to production, administration, operation-, by eliminating intermediaries that do not add value to the production chain. In this last aspect, it has not yet been possible to determine, that is to say to quantify, the impact and speed as the added value increases exponentially with the use of information technologies. It is as we call in economics "the factorial added value".
At the same time, the discussion arises about whether this type of technology should be a different "production factor" from those traditionally referenced in economic theory. And some authors such as Harrod and Domar, 1970, had raised it, but they did not imagine the overwhelming nature of the developments in this field, and only limited themselves to the possible applications of what today we would call "hardware", without taking into account that today for today it is the most important thing, the "software".
For all sectors of the economy, for example as stated in the document How to Set Up a Business in Virtual, 2010, it has different uses, for example, the purchase of agricultural products or the sale of crops; carry out the traceability of all products or services, through robust databases that allow monitoring of the entire production and distribution chain, enhancing the value chain
One of the great advantages of the virtual company is that it significantly improves the efficiency and with it the productivity and effectiveness of companies in any of its traditional functions or areas. For many of us it is clear that electronic purchases can mean interesting discounts, which translates to companies in economies.
Higher productivity, basically understood as the volume of total production per unit of input, allows the relative prices of goods and services to decrease and with it the volume and profitability of sales to improve significantly; it can be understood, then, as a new dimension of economies of scale.
Time is something relevant in the process; speed of responses and customer service; speed in decisions becomes a differentiating aspect of companies.
Of course there are downsides; some authors commonly point out the “lack of personalization in customer service”, which must be mitigated with activities that generate individual added value for the consumer; people still do not like to be served by an insensitive machine, that is why within the marketing process you should take advantage of the technology provided to track consumer data and convert it into valuable information, to the point of being able to personalize the value chain towards the customer, as stated by Álvaro Mendoza, Director of MercadeoGlobal.com.
This concept totally changes the economy, because it simplifies the process and makes the product cheaper. This process will be more agile, faster, more flexible and will allow to eliminate the stocks; never before has the concept of just of time been so palpable.
In the Virtual Company Study, 2006, it was found that 83% of respondents believe that the adoption of virtual company solutions will increase to increase savings and improve efficiency. 91% already provide their employees with secure remote access to their internal network when necessary. According to the majority of respondents, flexible work functionalities and interactive desktop facilities are provided to teleworkers. Employees estimated that the perceived benefits of these measures were greater efficiency and productivity, and also a more flexible work environment for them. A draft decree to regulate teleworking in the public sector is already being discussed in Colombia, which is available at www.dafp.gov.co.
Technical aspects
It is clear that this technology supports the entire administrative process: Planning, Direction, Organization, Integration, Execution, Control and Evaluation. There is no area of the company that is not affected by technology.
To be successful, these companies must take advantage of the benefits of technological developments. Information speed, availability, versatility. All this improves productivity levels, because they comprehensively impact each of the company's resources, this is capital, human talent, knowledge, transformation of natural and / or environmental resources.
One of the aspects where the benefits of internet technology have been exploited most intensively is marketing, and especially so-called direct online marketing, allows globalization based on supreme efficiency, without neglecting “personalization”, which asks each individual. In their Marketing book, Kotler and Armstrong, 2001, they make the good sense that websites should sell easily. In this framework, it can be confirmed that they allow easy integration, they facilitate the empowerment of the classic elements of marketing - price, place, promotion, advertising.
It is important to highlight that internet technology allows it to be used in the support functions of organizations, that is, administrative, human resources, planning, financial, transportation logistics; even with different levels of complexity. For example, platforms called ERP –Enterprise Resource Planning- have been developed, which are information management systems that integrate and automate many of the business practices associated with the operational or productive aspects of a company.
Creating a website is one thing, having them visit it is another. It is necessary that the site answers questions, that generates good will towards the good or service. Experts on this topic recommend investing in driving traffic.
Entrepreneurship options
As a virtual company has been proposed, it is a company in every theoretical, technical and practical sense, therefore it is the object of applying entrepreneurship initiatives, as it can be seen that it can be applied in any economic sector. Likewise, it requires a firm decision by the entrepreneur, who, unlike the entrepreneur in the traditional company, requires a little more knowledge and contact with information technology. The entrepreneur of the virtual company must take into account the advantages and disadvantages and fit his "business plan" into this new sphere. As in all economic and business activities, you must find the right techniques, tools and methods to develop your business idea.
In the network you can find different guides so that once you have the business idea, it can be implemented. Javier Gámez, in his book "Infallible Guide for Internet Business Entrepreneurs", proposes minimum conditions, such as the "passion" for developing an internet company and a clear business plan. Taking advantage of the fact that the investment in the company on the internet, in its beginnings is low-cost - many things can be obtained free of charge on the net-, for example, it does not require significant investments in physical elements for its operation in basic form, it requires: A good business plan, an internet connection and a computer.
Bibliographic references:
- Gamez Javier, Infallible Guide for internet business entrepreneurs; at www.publicidadyestrategias.com, retrieved on 10/20/11.
- Heath Joseph, Dirty Profit, Economics for those who hate capitalism. Little competitive in everything, 113 pp ss. Ed. Taurus, 2009.
- Kotler Philip and Armstrong Gary, Marketing, Online Marketing and E-Commerce, 567/576. Global Market 624/649. Eighth Edition, Pearson Education, 2001.
- Koontz Harold and Heinz Weihrich, Administration, a global perspective; 11a. edition; Mc Graw Hill.
Infographic:
- The path to electronic commerce (II), The webonomics: a strange form of business 02/01/11, By Oribe Irigoyen, recovered on 10/10/11
- The virtual company as a new business scheme on the network, Posted by Manuel Gross on 10/21/2010 at 6:06 PM. By Salvador G. Sotres Arévalo.
- The virtual company is the future http://www.sitiosargentina.com.ar/notas/2006/abril/empresa-virtual.htm, recovered on 09/29/11
- How to set up a virtual business, at http://www.alipso.com/monografias/comervir/, retrieved on 09/29/11
- How a company can have its own online store, retrieved on 09/25/11.
