NETWORK STRUCTURE

 Network Structure

• A radical organizational design, the network structure is an example of what could be termed a “non-structure” by its virtual elimination of in house business functions. Many activities are outsourced. A corporation organized in this manner is often called a virtual organization because it is composed of a series of project groups or collaborations linked by constantly changing non-hierarchical, cobweb-like networks. 
• The network structure becomes most useful when the environment of a firm is unstable and is expected to remain so. Under such conditions, there is usually a strong 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 sophisticated information systems reduce the transaction costs of the marketplace, thus justifying a “buy” over a “make” decision. Rather than being located in a single building or area, an organization’s business functions are scattered at different geographical locations.
•  The organization is, in effect, only a shell, with a small headquarters acting as a “broker”, electronically connected to some completely owned divisions, partially owned subsidiaries, and other independent organisation. In its ultimate form, the network organization is a series of independent firms or business units linked together by a common system that designs, produces, and markets a product or service. 
• Companies like Airtel use the network structure in their operations function by subcontracting manufacturing to other companies in low-cost. 
• The network organization structure provides an organization with increased flexibility and adaptability to cope with rapid technological change and shifting patterns of international trade and competition. It allows a company to concentrate on its distinctive competencies, while gathering efficiencies from other firms who are concentrating their efforts in their areas of expertise. The network does, however, have disadvantages.
•  The availability of numerous potential partners can be a source of trouble. Contracting out functions to separate suppliers/distributors may keep the firm from discovering any synergies by combining activities. If a particular firm overspecialises on only a few functions, it runs the risk of choosing the wrong functions and thus becoming non- competitive. 
• The new structural arrangements that are evolving typically are in response to social and technological advances. While they may enable the effective management of dispersed organizations, there are some serious implications, The learning organization that is a part of new organizational forms requires that each worker become a self motivated, continuous learner. 
• Employees may lack the level of confidence necessary to participate actively in organization-sponsored learning experiences. The flatter organizational structures that accompany contemporary structures can seem intrusive as a result of their demand for more intense and personal interactions with internal and external stakeholders. Combined, the conditions above may create stress for many employees.