Advantages and disadvantages of virtual organization

From the past up to now, the organization has changed a lot in order to make the jobs and employees to become more effective and efficient. Among these changes, we have noticed many organizations nowadays try to restructure their organization’s structure to move toward “virtuality”. According to the Modern Management book, virtual organizations refer to as network organizations or modular corporation (Samuel & S. Trevis, 2012). There are both pros and cons for having a virtual organization.

To begin with the positive points, organizations can reduce the cost by having a virtual organization. In this way, they can reduce some cost for working spaces and as well as utility expenses such as rent, maintenance, insurances, water, electricity, and raw materials. Secondly, some employees may find themselves to work faster at home rather than in the company’s office. Working at the office can sometimes be very disturbed as there can be a lot of people in one office. Thus, virtual organization can increase productivity for those who like to work at home or in a silent place. Finally, virtual organization allows firms to redesign jobs to make employees more effective and efficient. For example, some jobs do not require employees to come to office every day as the jobs require employees to work directly with customers, so it is not important for them to be present at the office every day. As a consequence, they can get access to the customer more quickly and save time.

Moving onto the negative points, first, it is difficult to build a desired corporate culture in a virtual organization. In this respect, it is hard for employees and employers to work and understand about each other in a virtual organization which could create a complex corporate culture workplace as they are coming from different cultures or geographies. There is a high possibility that conflicts could exist in a virtual organization as well. For example, Cambodians find it is not appropriate or impolite to speak something bad directly with the managers, whereas, westerners like to complain about something directly.  Difficulty for managers to control workers is another disadvantage of virtual organization. Managers are hard to measure the performance and commitment of their employees as they work at their own places rather in the traditional office which managers could see their workers every day. Lastly, it makes communication more difficult for virtual offices because there are less physical interactions and we need to arrange the actual time and date for an online meeting.  Similarly, workers who are working in different time zones will even find it more difficult in order to communicate with other employers or employees. Due to all the above reasons, managers need to consider attentively before making the decision to implement virtual organization structure.

In conclusion, virtual organizations are getting attention from many contemporary managers as they find it is beneficial since it can cut some expenses for the organizations, increase workers’ productivity, and allow firms to redesign jobs to make employees more effective and efficient. However, employers also need to be aware for the drawbacks of virtual organization. As discussed above, virtual organization creates a complex corporate culture, difficulty for managers to control workers, and makes communication more difficult. Most mangers find that the advantages of virtual organization seems outweigh the disadvantages, and that is why many organizations around the world commence to adopt virtual organization structure.

Reference

-          C. Certo, S., & Certo, S. T. (2012). Modern management. (12th ed., p. 354). London: PEARSON.

Responses of Cambodian government to the global crisis (2008)

A lot of the countries around the world suffered from the impact of the global financial crisis which started to take place at the end of 2007 and in the early of 2008. Similarly, Cambodia is also among those countries which got severe impact from that crisis. For example, monthly exports from garment sector in Cambodia fell 50%, from US$250 million in 2008 on average to $100 million in January 2009 (Jalilian, Chan, Reyes, Saing , Phann & Pon, 2009). Additionally, the real GDP of this country also decline noticeably. In order to response to this phenomenon, Cambodian government has implemented three main effective policies to tackle the effect from the global financial crisis.

            The first policy that the Cambodian government did to counterattack with the global financial crisis is implementing the fiscal policy. The Cambodian government has increased its spending on infrastructure, agricultural, and social safety nets in order to increase the demand (Jalilian, Chan, Reyes, Saing , Phann & Pon, 2009). In this way, the increasing of government spending will leads to an increase in the amount of money in circulation which causes an increase in aggregate demand. Additionally, people have few assets left during the financial crisis and thus are income-constrained during such periods; government spending is a way to get income into their hands-income that they are likely to spend immediately (Miller, 2011). As the Cambodian government increased its spending, it will push the aggregate demand backs to its level and fulfilling the recessionary gap (Figure 1).. As a result, the fiscal policy has helped a lot to the Cambodia’s economy during the crisis times.

            As we have known, garment sector is one of the main distributors to the Cambodia’s economy. Cambodia’s garment industry represents 90 percent of the country’s exports and employs more than 300,000 workers by some estimates (Palatino, 2012). During the crisis time, the Cambodian government decided to suspend the 1 percent advance profit tax, and reduced 10 percent in export management fees and other fees. By doing that, the Cambodian government could foresee that that there will be more investments in Cambodia and evade the existing investments from bankruptcy or leave the country. In this respect, a lot of the company around the world was meeting trouble or bankrupt during the crisis time since the demand for most of the products declined markedly. Thus, the decreasing in taxation could induce firms to supply the products and services at the regular level as before. As represented in the figure 2, the decrease in garment’s taxation will help out to push the short-run aggregate supply curve backs to its equilibrium level.

Another policy that the Cambodian government established during the global crisis is strengthening the monetary policy and banking. There were some banks in other countries bankrupt because of the global financial crisis and as a result, those banks could not repay all of the liabilities that they owed to the depositors. There was a tendency that in the near future, some of the Cambodia’s bank would meet that problem too and a lot of depositors in Cambodia’s bank were likely to withdraw their money back in which the bank did not have all of those amounts of money. Hence, the Cambodian government has increased the reserve requirements from 8 percent to 16 percent for deposits and borrowings in order to insure the depositors and stay away from the huge amount of unexpected withdrawals from the depositors that the bank could not afford to repay immediately (Chea, 2009). In addition, the National Bank of Cambodia also limited bank exposure to high risk sectors, especially real estate, by introducing a 15% cap on real estate lending. In this aspect, the price of the real estate had bubbled before the crisis happened and a lot of people borrowed money from the bank to buy houses and lands. As the crisis happened, the price of the real estate had blown out and most of the bank’s loans for real estate could not repay.  Hence, the bank confiscated a lot of houses and lands and sold them at the low price which could not recover the loans that they gave away. As a consequence, many of Cambodia’s bank had lost a lot of their capital during the crisis, but thanks to the monetary policy and banking that helped them to reduced the serious impact. 

In conclusion, the global financial crisis had considerable impacts to many countries around the world and as well as Cambodia. I think that the Cambodian government had done very well to deal with the crisis by implementing some effective policies: fiscal policy, supporting garment sector policy, and strengthening the monetary policy and banking that could reduce the impact from the crisis and curb the GDP of this country from declining. In my opinion, many countries around the world also implemented the same kinds of policy like Cambodia too.  

References

-Chea , C. NATIONAL BANK OF CAMBODIA, (2009). On the occasion of opening the

seminar on cambodian's microfinance amid global financial crisis. Retrieved from

NATIONAL BANK OF CAMBODIA website:

 http://cma-network.org/forum/speeches/HE.Chea chanto-Speech-English.pdf

-Jalilian, H., Chan, S., Reyes, G., Saing , C. H., Phann, D., & Pon, D. (2009, May). Global

financial crisis discussion series. Retrieved from:

http://www.odi.org.uk/resources/docs/4323.pdf

-Miller, R. L. (2011). Economics today. (16 ed., p. 287). Boston: PEARSON.

-Palatino, M. (2012, Feb 21). Cambodia’s fainting workers. Retrieved from:

http://thediplomat.com/asean-beat/2012/02/21/cambodias-fainting-workers/