what are they?
Network structures work with a central platform that is linked through "networks" of relationships with outside contractors and suppliers of important services. The traditional way of implementing network structures was by owning every part of the company. Now, however, the model is to own just the most significant components of the company and obtain the rest by participating in strategic alliances and outsourcing. A strategic alliance is an agreement between two or more parties who do things of the same value for each other to pursue a set of objectives that are agreed upon. Outsourcing is the contracting of parts of a business' value-chain (such as marketing and sales) to other companies that are skilled in those business functions. For example, Wal-Mart wants to start a whole new advertising and marketing campaign. They have a marketing department but they want to take it to a whole new level that is beyond their capability, so they hire an advertising agency to help meet their needs. To the left is a diagram of a network structure.
There are many advantages of network structures. First of all, they help businesses compete with other companies in terms of cost by giving them more operating efficiency. In addition, businesses can hire other agencies to do assignments for them instead of taking the time to employ and train new employees to do tasks for them, which helps in saving money. Another pro that network structures have is getting employees to work on-site with outsourcing, which is when they work with the agency the business is hiring to do work and acquire skills that they can take back with them to their work.
Just as there are pros of team structures, there are potential disadvantages of employing a team structure as an organizational structure in a company. First, the complexity of a business' objectives may require complex strategic alliances to be made. Furthermore, outsourcing to another company means being tied to the financial health of that company. If an agency to which a company is outsourcing goes bankrupt, for example, it is possible that this agency could take the company down with them.
There are many advantages of network structures. First of all, they help businesses compete with other companies in terms of cost by giving them more operating efficiency. In addition, businesses can hire other agencies to do assignments for them instead of taking the time to employ and train new employees to do tasks for them, which helps in saving money. Another pro that network structures have is getting employees to work on-site with outsourcing, which is when they work with the agency the business is hiring to do work and acquire skills that they can take back with them to their work.
Just as there are pros of team structures, there are potential disadvantages of employing a team structure as an organizational structure in a company. First, the complexity of a business' objectives may require complex strategic alliances to be made. Furthermore, outsourcing to another company means being tied to the financial health of that company. If an agency to which a company is outsourcing goes bankrupt, for example, it is possible that this agency could take the company down with them.