To be the better in its competitive market, every organisation should have the predefined shape of such an organisation that can contribute to achieving it’s business goals.
Organisation follows different structures on its own to perform its day to day activities. The main reason behind the organisational structure is to manage the business organisation and its components which determine the success of that business organisation.
Among a number of structures and methods used for the flow of information, the network structure is the most advanced and newer concept.
Let’s take a look at what network structure is.
The network structure is a new concept and radical redesign of business structure. It is also known as non- structure as it does not own any in-house business functions.
The organisations which follows this structure are also called as a virtual organisation. This is because it is a series of project groups or collaborations linked by constantly changing non-hierarchical, cobweb-like networks.
Where is the network structure suitable?
This type of organisation structure works effectively where the business environment is changing frequently and one can assume that it remains the same for long. Thus it demands the need for innovation and quick response.
Instead of having salaried employees, it may contract with people for a specific project or length of time. Long-term contracts with suppliers and distributors replace services that the company could provide for itself through vertical integration.
Electronic markets and refined information systems reduce the transaction costs of the. In this structure, an organisation shall not be located in a single building or area, rather organisation functions widely in the world.
The organization exists with a small headquarter acting as a broker which connects other owned divisions, partially owned subsidiaries and other independent companies.
Since this is a new organizational structural form, it may effect employees since they cannot perform well in a new structure that often demands constant innovation and adaptation.
For the effective implementation of network structure, it is very important that each worker become a self-motivated individual and a continuous learner.
The network structure of organisation demands the effective coordination and interaction with internal and external stakeholders that may create stress for many employees.
To conclude, the network organization is a series of independent firms or business units linked together by computers in an information system that designs, produces, and markets a product or service.
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