HUMA 1745 Lecture 22: HUMA 1745 Lecture 22 Notes
1 May 2018
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HUMA 1745 Lecture 22 Notes – Minimizing Overhead
Introduction
• It minimizes bureaucratic overhead because there is no lasting organization to maintain.
• As well, it lessens long-term risks and their costs because there is no long term—a team
is assembled for a finite period and then disbanded.
• About one in nine Canadian companies engages in some sort of alliance.
• These alliances take many forms, ranging from precompetitive consortia to
coproduction, cross-equity arrangements, and equity joint ventures with separate legal
entities.
• Amazon.ca partners with Canada Post in such an arrangement.
• Orders plaed o Aazo.a’s wesite are fulfilled ad shipped y Assured Logistics,
which is part of Canada Post.
• Assured Logistics operates a Toronto-area warehouse that stores books, music, and
movies so that they can be shipped when ordered
• Thus eliminating the need for Amazon to set up its own warehouse facility in Canada.
• Newa’s Ow, the food produts opay fouded y Paul Newa, sells hudreds
of millions of dollars in food every year yet employs only 28 people.
• This is possible because it outsources almost everything
• Manufacturing, procurement, shipping, and quality control.
• What is going on here?
• A quest for maximum flexibility.
• These virtual organizations have created networks of relationships that allow them to
contract out manufacturing, distribution, marketing, or any other business function
management feels others can do better or more cheaply.
• The virtual organization stands in sharp contrast to the typical bureaucracy and
concentrates on what it does best, which is typically design or marketing.
• Exhibit 13-4 shows a virtual organization in which management outsources all the
primary functions of the business.
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