NETWORK ORGANIZATIONS ORHAN BALIKÇI Introduction

Define of Network Organization Network organizations are defined by elements of structure, process, and purpose. Structurally, a network organization combines co-specialized, possibly intangible, assets under shared control.
We can characterize network structures as long-term agreements among companies, which enable them to obtain and maintain competitive advantages in relation to other companies not belonging to the network.
In network structures a managerial center is created for the purpose of a coordination of all cooperating companies on the basis of the contract. The responsibility is divided among all parts of the network.<br>

Functions of Network Forms Of Organizations Network forms of organization foster learning.
If an actor’s partner in a network form of organization possesses considerable legitimacy or status, then the actor may derive legitimacy or status through the affiliation.
The network form of organization is the adaptability of this form to unanticipated environmental changes.
These organizations can alleviate sources of external constraint or uncertainty by strengthening their relationship with the particular sources of dependence.<br>

Disadvantages of Network Organizations The coordination problems arising from having different companies perform different parts of the work process would be enormous.
There has to be trust between the different groups so that they can share their ideas, something necessary of successful new product development.
In general, the more complex the value creation activities necessary to produce, market goods and services, the more problems there are associated with using network structure.<br>

Kinds of Network Organizations The general network organization framework permits several gradations in type. Network organizations are distinguished between three kinds:
internal,
stable, and
dynamic.<br>

Internal networks<br>

Stable networks<br>

Dynamic networks<br>

Virtual Organizations versus Network Organizations Network Organizations All of virtual organizations are network organizations. But All network organizations are not virtual.
Network organizations can be long-term or short-term.
Separation from network and joining network are in the form of units. Virtual Organizations Virtual organization is a special form of the network organizations.
The structure of virtual organizations is temporary. When project is over, virtual network is gone.
There is no only one leader firm.
Separation from network and joining network can be at many levels.<br>

Examples of Network Organizations Sun Microsystems:
it has been considered highly decentralized organization comprised of independently operating companies. Sun positions information systems as a top priority, trying to achieve faster and better communication. With numerous "SunTeams," members operate across time, space, and organizations to address critical business issues. Sun managers identify key customer issues and then form teams with the critical skills and knowledge needed to address the issue. This team might include sales people, marketing personnel, finance, and operations from various places around the globe; customers and suppliers may become episodic members as necessary.<br>

Examples of Network Organizations Nike
It is a global brand with its Swoosh as the most recognizable logo. Nike utilizes the network structure to outsource manufacturing particularly because the company owns no manufacturing facilities and are keen in moving production when the needs arise. Nike, as a network organization, had dispersed members that is linked using advanced technology.
Nike is outsourcing everything except two activities: Marketing and Design. Nike keep them within the company, not only because they do it better than anyone could do, but also outsourced activities are easy target for copycat.<br>

Examples of Network Organizations Dell Computers (US)
Most of the components in a Dell computer are made by other companies while Dell focuses on its strengths--marketing, customer support and integration of these components into the final computer products.<br>

Examples of Network Organizations REUTER
This financial information services company created virtual teams with representatives from 12 companies around the world to work on user interfaces for the company. Facilitated by the signing of nondisclosure agreements, there has been savings in recruitment costs, staff benefits and overhead as a result of this virtual organization approach<br>

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