Virtual management of global marketing relationships.

INTRODUCTION

In today's hypercompetitive, global marketplace, many organizations are forming marketing relationships in order to compete effectively. These relationships are conceived as a means to increase both the efficiency and effectiveness of those involved in these marketing relationship (Williamson, 1991; Gundlach, Achool, & Mentzer, 1995). Inter-organizational relationships have become one of the most frequently used means of entering or expanding into the global marketplace. There are a number of reasons given for forming these global marketing arrangements, such as:

1. gaining access to new markets;

2. enhancing market position in existing markets;

3. augmenting existing product lines with relationship partner's products;

4. entering new market segments/domains by allowing partners to selectively incorporate existing products into their lines;

5. accelerating the rate of international expansion;

6. reducing cost/risk of participating in international markets; and

7. lowering costs to gain/maintain competitive advantage (Varadarajan & Cunningham, 1995).

One type of interorganizational relationship, the strategic alliance, has enabled many global organizations to obtain significant advantages. Therefore, it is anticipated that managing these and other types of interorganizational relationships effectively will become increasingly integral to managing global marketing operations.

The first section of the paper briefly describe virtual organizations that can be used in a marketing context. The second section illustrates five models of virtual organizations and the third section develops a virtual management perspective that is beneficial when attempting to manage global marketing relationships. The final section of the paper describes implications of virtual management in global organizations

THE VIRTUAL ORGANIZATION CONCEPT

A virtual organization is "a collection of business units in which people and work processes from the business units interact intensively in order to perform work which benefits all" (Goldman, Nagel, & Preiss, 1997, p. 158). Although virtual organizations have become a relatively widespread business approach to structuring business, the underlying concepts of linking competencies across business units or organizations have existed for some time. These business linkages enable organizations to more tightly coordinate the transactions and activities across a value chain.

Virtual organizations enable organizational and/or individual core competencies to be brought together when needed and disbanded when no longer required. These new firms mirror the fluidity of the global markets, creating and disbanding resources as dictated by the marketplace. Global locational, technical, workforce and market expertise advantages can be heightened through the use of the virtual organizational structure (Davidow & Malone, 1992).

The rationale for forming a virtual organization varies for the different entities involved in each relationship. One primary rationale for creating virtual organizations has been the ability to bring key players from a variety of organizations together in order to pursue a specific global market opportunity. Virtual organizations are able to generate new products more quickly, decrease the risk of pursuing a new opportunity, increase "apparent" organizational size, and decrease cycle times by relying on the core competencies of the membership. Characteristics of virtual organizations are continuing to evolve. However, some characteristics that have been identified include (Goldman et al., 1997):

* a web of companies each contributing resources

* virtually vertically integrated

* linked through inter-enterprise business and production systems

* aimed at reduced business cycle time

* aimed at one-stop shopping.

These characteristics are closely aligned with assessing all marketing activities across the entire global value chain in order to "virtually vertically integrate" across a "web of companies." It would appear that creating a virtual organization to generate a product or service more effectively can take one of two forms: (1) removing inefficient transaction costs from the value chain, such as reducing time to market; and (2) adding value to existing activities in the value chain enhancing the overall value of the product or service.

Many of the physical activities that exist in a traditional marketing value chain (e.g., distribution) will also need to exist in a virtual global value chain. However, the focus on virtual global marketing value chain activities is much different than in a traditional physical value chain [ILLUSTRATION FOR FIGURE 1 OMITTED]. When performing global value chain analysis across virtual organizations that are bringing different core competencies together, the focus should be on the necessary sharing and integrating of information and learning capability. As illustrated in Figure 1, these virtual global …