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     1 

  Processes transcend the boundaries of a single firm and are not controlled by a single 

organisational  hierarchy.  

    2 

  Production processes are flexible with different parties involved at different times.  

    3 

  Parties involved in the production of a single product are often geographically dispersed.  

    4 

  Coordination is heavily dependent on telecommunications and data networks.   

 Here, all companies tend to have some elements of the virtual organisation. As these charac‑

teristics increase this is known as 

virtualisation

. Malone  et al.  (1987) argued that the presence 

of electronic networks tends to lead to virtualisation since the governance and coordination 

of business transactions can be conducted effectively at lower costs. 

   Mini‑  case study   6.1    on the Pebble watch and the PwC (2013) research at the end of this 

chapter give further examples of virtualisation through outsourcing.       

  Options for restructuring the supply chain 

 As part of strategy definition for digital business, managers will consider how the structure of 

the supply chain can be modified. These are mainly choices that have existed for many years 

but Internet technology provides a more efficient enabler and  lower‑  cost communications.