1. Virtual Organizations (Outsourcing) Dr. Dave Sullivan Oregon State University (ideas mostly from V. T. Raja)

2. Some Characteristics of a Virtual Organizations An organization composed of several business partners sharing costs and resources for the purpose of producing a product or service Each partner creates a portion of a product or service in an area in which they have special advantage such as expertise or low cost Example: Flower shop and its business partners

3. Example - Virtual Organization (VO) Customer VO - Flower Company Flower Supplier Amex/VISA Master Card FedEx 1. Places Order - Web Sends monthly bill 2. E - validates payment 3. Passes e- order 5. Accepts Order 4. E-acceptance Order 6. Sends pick up info electronically 7. Picks up order 8. Delivers flowers Makes e-payment Makes e-payment Makes e-payment

4. Some Characteristics of a Virtual Organization Excellence - All star winning team Resource Utilization - Competitive advantage Opportunism – Making use of market opportunities Lack of borders - Redefines traditional boundaries Adaptability – to change Trust - Essential between/among business partners Technology - Basic ingredient Resources of business partners remain in their original locations but are integrated via information systems.