Network Organization

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What is a Network Organization?

A network organization is a type of organizational structure in which a company's activities are coordinated through networks of relationships with other organizations, rather than through a traditional hierarchy. This can include partnerships, joint ventures, and subcontracting arrangements with suppliers, distributors, and other stakeholders.

The purpose of a network organization is to take advantage of the expertise and resources of other organizations in order to increase efficiency and competitiveness. It is often used in industries that are characterized by rapidly changing technology or market conditions, or in situations where a company lacks the internal capabilities to pursue a particular opportunity.

The components of a network organization include the internal units of the company, such as marketing, finance, and human resources, as well as the external organizations that the company partners with.

The importance of a network organization lies in its ability to access a wide range of resources and expertise, and to respond quickly to changes in the external environment.

The benefits of a network organization include increased flexibility and adaptability, as well as the ability to tap into the expertise and resources of other organizations. However, there are also potential challenges to network organizations, such as difficulties in coordinating and controlling activities across multiple stakeholders, and the potential for conflicts of interest.

Examples of companies that use a network organization structure include Airbus, Google, and Nike.

See Also