Virtual companies
Virtual companies are mergers of several companies for a limited period of time in order to pursue a common business purpose. This form of enterprise has emerged as a result of the ever-increasing competitive pressure on national and international markets and takes account of shortened product life cycles and intensified competition. Virtual companies are founded in order to be able to react quickly and optimally to short-term changes. They must act flexibly and dynamically, work efficiently and innovatively, but also be able to handle complex problems. A characteristic feature is the extensive use of information and communication technologies.
Characteristics of virtual companies
Virtual companies always consist of a network of several companies that remain legally and economically independent. Nevertheless, they appear to the outside world as a cohesive unit. They join forces for a limited period of time in order to carry out a joint project or work together on an order. The companies are often located far apart and operate at a distance with the help of modern communication technologies. Virtual companies offer individualized products and focus to a large extent on the customer. This type of company is usually not accompanied by large sets of contracts. Cooperation is characterized by trust and simple agreements. Bureaucracy should be avoided whenever possible.
Objectives of the formation of virtual companies
Virtual companies are formed to take advantage of the strengths of both companies. Often, large and small companies join forces because they complement each other perfectly in various areas. A partner thus achieves the possibility of offering its customers extended services, even if they exceed its own core competencies. In this way, they can offer customers better service and cover larger market shares. The quality of services can also be improved by combining know-how and expertise. Virtual companies exploit short-term market opportunities in this way and penetrate innovative markets.
Disadvantages of virtual companies
In practice, virtual companies certainly have to contend with problems. In particular, the physical distance leads to difficulties. Coordination among employees is difficult because they do not see each other regularly, but only communicate with each other via the Internet, e-mail and telephone as needed. On-site meetings are difficult to plan and implement due to the distance. In addition, corporate processes are not transparent because, basically, the cooperating companies never know exactly what is going on at the partner’s end. In addition, virtual companies can have difficulties with the technical infrastructure. Collaboration via incompatible software systems is difficult and prone to errors.
