Globalisation and the virtual

organization:
What are the communication
implications?

Samantha Bezuidenhout
205016945
NDIP: International Communications
Communication Science III
18 June 2007
Table of Contents:

1. Introduction / 3

2. Definitions
2.1. Knowledge Management /4
2.2. Outsourcing / 4
2.3. Agribase / 4
2.4. Hedging / 4

3. Globalisation and the virtual organisation / 5

4. Analysis of the case study “Game On” / 6

5. The feasibility of a virtual organization at the company Bushveld Grain

5.1. A brief description of Bushveld Grain / 8
5.2. A possible type of virtual organization to be used in this company / 8
5.3. Core competencies, outsourcing and partners of Bushveld Grain / 8
5.4. Communication structure currently in place / 9
5.5. Internal Communication aspects / 10
5.6. External communication aspects / 11

6. Comparison of the virtual organization Second Life to Bushveld Grain / 13

7. Recommendations / 14

8. Conclusion / 15

Bibliography / 16

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1. Introduction

A few decades ago, the world did not have television, cell phones did not exist,
landlines were a luxury and the internet was something out of a sci-fi movie. So
much the world has changed and it seems to be moving faster and faster. In
today's fast paced world, technology is all about creating a 'convenient'
environment where everything is done for you, the strain of making all your own
decisions and carrying tasks our manually is minimised. The irony is though,
amidst all the effort that goes into making life convenient and easy, the pace of
life has sped up so much and we are so busy making everything convenient that
we no longer have time for things that actually require real physical effort. These
are things like commuting between work and home everyday, making time to see
friends and going on family holidays.

The answer or rather the result of our fast paced lifestyles and abundance of
technology is the creation of a virtual world. A world where we keep in contact
with friends, family and even meet new people all by the click of a button. A world
where the term 'earning the bread and butter' now means waking up in the
morning, fetching the bread and butter from the kitchen and once again pressing
a button on your computer to check what work needs to be done for the day.
If you are privileged to be one of these people you can then consider yourself to
be an employee of a virtual organisation.
In this assignment I will attempt to investigate the effect that the virtual
organisation has on communication as well as on the organisation itself including
both internal and external aspects.

As I am not currently employed at a suitable company to analyse, I have used my

previous employment where I worked for 2 months and in this time became very
familiar with the structure and communication patterns of the company.
I have used the internet to do my research as the topic is of this assignment is
the virtual organisation, which is based on and exists through the internet.

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2. Definitions

2.1. Knowledge Management

Knowledge management is the name of a concept in which an enterprise

consciously and comprehensively gathers, organizes, shares, and analyzes its
knowledge in terms of resources, documents, and people skills. Knowledge
management involves data mining and some method of operation to push
information to users. [www.searchdomino.com]

2.2. Outsourcing

Outsourcing is an arrangement in which one company provides services for

another company that could also be or usually have been provided in-house.
Outsourcing is a trend that is becoming more common in information technology
and other industries for services that have usually been regarded as intrinsic to
managing a business. In some cases, the entire information management of a
company is outsourced, including planning and business analysis as well as the
installation, management, and servicing of the network and workstations.
[www.searchdomino.com]

2.3. Agribase

An in-house system developed to manage operational risks in trading of grain.

Agribase monitors ‘real time’ transactions and cash movements on positions of
grain market. [www.bushveldgrain.co.za]

2.4. Hedging

An investment made in order to reduce the risk of adverse price movements in a

security, by taking an offsetting position in a related security, such as an option or
a short sale. [www.investorwords.com]

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3. Globalisation and the virtual organisation
In terms of an Information Society, globalisation can be seen as a revolution in
the way we access information, the type of information we access and also what
we do with the information we access.

According to Robbins et al (2003:4) an organisation is a ‘deliberate arrangement

of people to accomplish some specific purpose.’ Davison (2003) then goes on to
say that if the people working in the organisation are separated by space or time,
then the organisation can be described as virtual.

Davison (2003) also reports that when evaluating the technical, interpersonal and
conceptual skills needed for a successful virtual team, interpersonal skills are
most important. This is because a great deal of ‘noise’ is often created by the
reduced number of communication channels due to the distance between team
members.

Information networks will be decisive to relative future competitiveness, states

Peters (2003). Globalisation opens the competition ‘flood gates’ as there are no
longer boundaries of territory.

According to Wiggins and Morello (2003:1) the U.S., Europe and Japan have led
globalisation, because they were the countries pushing products and services
into developing countries. As offshore sourcing grows and even ‘nearshore’
sourcing in terms of alliances and partnerships is more common, the global
equation is changing. Globalisation is becoming more widely accepted
everywhere. Davison (2003) also reports that globalisation is seen by many
authors as being a major force in the increasing number of virtual organisations.
But, what this means is that every virtual organisation, not only virtual but also
traditional, are now in competition with the entire world. Wiggins and Morello
(2003:1) that outsourcing creates equal opportunity globalisation because
enterprises in developing countries and emerging markets are now reaching into
developed economies and offering skill and talent at a fraction of the price.
Outsourcing equals competitiveness.

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It is clear that businesses are facing an array of new challenges. These in turn
have only emphasised the importance of implementing an effective knowledge
strategy. [www.ikmagazine.com]
On a purely functional level, knowledge management is key to coping with many
of the problems operating internationally can bring. Customers, employees and
partners around the world all work according to different cultural values, in
different languages and time zones. [www.ikmagazine.com]

4. An analysis of the case study: "Game On"

In order to analyse this case study, I will be using the spatial approach in terms of
an Information Society.

Virtual organisations are the beginning of the end of the ‘monopoly’. Companies
like e-Bay make it possible to eliminate space constraints and create a truly
global market. In most aspects a virtual organisation can be more financially
viable. It eliminates costs such as rent, transport costs, even costs such as
updating your wardrobe and employing a tea lady.

In this case study Jerri and Francoise are able to have a comfortable living from
the business transactions they do in the virtual world called “Second Life”.

Nothing of their business or life comprises of any of the traditional occupations

and industries we are faced with every day. The only people needed in their
business are the two of them.

What is unique about their business is that they probably don’t even know who
exactly they are doing business with because they are interacting in the game.

When I think about the nature of their business is almost as if they are living in a
loophole of life. The gaming sphere of life in which they live is completely virtual
and yet it is as real as any other industry. However, they do not pay tax on their
profits, they do not need to have a professional public image and obtain a
qualification in order to get a promotion. They do not need to create awareness

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about how much Corporate Social Investment they are involved in and they do
not need to ask their put in an application to take leave – it sounds like a truly
unreal world.

The 2 main factors in the spatial approach can be identified as the elimination of
geographic boundaries and the access to information networks.
Their business is an absolute ‘spatialisation’ of traditional business practice.
They can operate their business from any location in the world as long as they
are connected to an information network.
The communication implications of their business in terms of knowledge
management are that they do need to manage anyone else’s knowledge. Instead
of studying further to get a promotion they need to play the game more and get
better at it. They need to manage their own knowledge. They are a married
couple so they are already at the same place all the time, and they only have two
employees which is easy to manage at this stage.
Because their business is virtual it poses the question of how long can this
business run for?
The main focus of the business is playing the game and knowledge of the game,
therefore if the business is to continue, this knowledge needs to transferred or
recorded somehow.
As their business grows and they employ more people it will be even more
necessary to establish some type of structure and an alignment of goals between
all team members.
E-bay can be seen as a partner to their business, whether it’s deliberate or not,
but without e-bay, whose main function is completely different from theirs, their
business would not operate. Other partners would be the game manufacturers as
well as the large companies wanting to brand themselves in the game.

As Davison (2003) states, there is no universally accepted approach available

yet for the management of a virtual workplace, but it is clear that in this
unexplored territory, it is a very dynamic environment that needs to be adapted to
at every new step.

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5. The feasibility of a virtual organization at Bushveld Grain
5.1. Background information about Bushveld Grain:

Bushveld Grain (B.G.) is a grain marketing company who was formed on 3 June
1997. Bushveld comprises of 15 dealers and 3 admin personnel. They are a
diverse team of people and associates with a sound base of practical experience
in dealing, agriculture, banking service rendering and information technology
industries, backed by the appropriate academic qualifications.
They continuously develop their scope, skills and their capacity to identify
specific client needs and to match them.
The company’s main objective is to minimise the risks in the grain commodity
trading for both the buyer and seller. The company provides the broker with all
the necessary systems for the formulation of strategies of the clients.

5.2. A possible type of virtual organization to be used in this company

I believe that Bushveld Grain best adapt to becoming a permanent ‘alliance’

virtual organisation. Even though Bushveld Grain is not a virtual organisation, the
structure of their business as well as current negotiations and partnerships do
facilitate a transition into becoming a virtual organisation.

5.3. Core competencies, outsourcing and partners of Bushveld Grain

Bushveld Grain deals solely with brokering. Each broker then has their own
clients for whom they trade and advise. However, all the brokers are situated at
one locale where they are connected to the same network, namely Agribase. The
brokers consult with each other and are to a certain degree protected under the
name of Bushveld Grain, as the brokers pay a monthly fee to have access to the
Agribase system.

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Alliances with other companies of different talents already exist within Bushveld
Grain. They outsource their Human Resources (HR) to “Bright Ideas” owned by
Riana Richards. Bright Ideas manages all HR issues as well as the
implementation and monitoring of effective internal communication.

Presently, Bushveld Grain is also currently in negations to partner with two major
companies, namely Land Bank and Legae Industries Ltd.

Land Bank is an agricultural bank with its own clients, being farmers, and the
partnership will be beneficial to both companies.
A brief description of the negotiations is as follows:
- Land Bank will provide financing to current Bushveld Grain clients seeking
financing
-Bushveld Grain will do hedging for Land Bank’s farmers and commercial clients.
-Bushveld Grain does hedging for Land Bank’s upcoming farmers – minimizing
market risks on production loans given
-Land Bank provides financing to Bushveld Grain of physical grain transactions –
thus generating interest income.

Legae Industries is a BEE stock-broking firm. B.G. is in negotiations for a joint

venture with Legae as well as WIPHOLD (Women Investment Portfolio
Holdings.) B.G. proposes that it will train BEE dealers on Land Banks behalf.

5.4. Communication structure currently in place at Bushveld Grain

B.G. does not have any formal communication structure. The office is open plan
and with different responsibilities lying with a few of the employees.
The following factors in the company and current communication structure will
allow Bushveld Grain to transition into becoming a permanent alliance virtual
organisation:

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It is a small business of 17 people, who already do not all even live in the city,
much of the business is done remotely. There are 2 Administrative staff
members and an assistant to the CEO. The rest of the staff consists of brokers
with varying amounts of clients.
The setting and layout of the company and office is very informal. There is not a
strong hierarchical structure, authority is visible in the sense that the CEO has
more responsibility due to ownership and needs to protect his assets (his
brokers.)
The business hours are only from 9:00am to 12:00pm, as this is when the live
market is open on JSE. After this time, all brokers leave the office and any other
tasks such as sending out daily financial reports need to be monitored but a
system is in place to formulate and send the information out automatically.
The only reason the brokers need to be in the same place is to have access to
the same network and to consult with each other. Bushveld Grain is at present
the only company using the Agribase system which was developed in-house. All
brokers and owners of Bushveld have an in depth understanding of the system
and would be able to function independently.

5.5. Internal Communication aspects of B.G. going virtual

As B.G. deals with very large amounts of money and sensitive information from
their clients’ everyday, one of the most important factors is the security of
information. Only the administrative staff and the CEO have access to all the
information which is stored and kept on the Agribase system. Each broker only
has access to the information relevant to his specific clients.
As B.G. out sources its HR to Bright Ideas currently, if they were to become
virtual, the nature of HR would change. It would no longer be internal
communications but rather a vital role in ensuring all team members are fully
informed and aware of changes that take place in the market.
Knowledge management is also vital at B.G.

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As stated by Collison and Purcell (2003), knowledge management is an
oxymoron, because nobody can really manage somebody else’s knowledge.
However, they also state that what can be done is manage the environment in
which knowledge is created, discovered, captured, shared, distilled, validated,
transferred, adopted, adapted and applied.

For this to happen, B.G needs to ensure that there are clear goals for the
organisation and that all team members are aligned at all times.

5.6. External communication aspects

B.G. is currently the only firm using the Agribase system which puts them in a
very good position. The reason for this is that it is so expensive to trade on the
JSE as well as high risk. B.G has longstanding relationships with the agricultural
industry as many of the brokers themselves were at one stage or are still
farmers. This is where globalisation plays a fairly large role in their business.
Globalisation and the virtual organisation allow them to function as they do with
the use of the newest technology, but at the same time, they cannot
communicate with their clients by using advanced communication tools. Most
farmers are out in the lands or commuting to and from the city. They are not in
front of the computer constantly checking emails. Usually the only way to reach
them is by telephone. Any documents or information needed from them also
takes longer than in a normal business setting as they do not have offices and
are often in remote locations.
B.G. has a website where new farmers are able to register to become a client or
receive general information about the company and the markets. As a virtual
organisation, B.G will need to make their website the first place people will look
and find all the information they need. However, as mentioned before,
conventional marketing methods will not work due to the nature of the client.
Most awareness creating will either have to be done face-to-face at conventions
or Agricultural societies or over the phone.

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As the public does not make use of the services offered by B.G. there is less
importance of public image and Corporate Social Investment, even though B.G.
is actively involved in the community.

The biggest barrier in Bushveld Grain becoming a virtual organisation is the level
of infrastructure needed by each broker to work effectively. I.e. each broker
needs access to the open market on JSE. Without an office, this is very
challenging.

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6. Comparison of the virtual organization Second Life to Bushveld
Grain

Firstly I will say that these two organisations are very similar. The major
difference between the two is obviously that the case study’s organisation is
completely virtual whereas, Bushveld Grain is in some ways virtual but is still
described as a traditional organisation.
The biggest similarity between the two is that both of these companies are
trading in a commodity and selling on an open market.

Both companies have small staffs that do not require formal communication
channels and constant monitoring as each team member is in actual fact working
for himself. As a virtual organisation Bushveld Grain would be a Permanent
organisation, but I think that until the Mperdempes’ create a knowledge
management plan structure to transfer their knowledge and learn from gamers,
their business will only be there as long as they are. On the other hand, they do
have very good partnerships with very large companies which could be taken
over and managed by other people.

I believe that Bushveld Grain will be able to transition very well into becoming an
alliance virtual organisation. It has a very informal structure, with all team
members using lateral, open communication. All staff members are only in the
office for the duration of the open markets and the nature of the business entirely
relies on information networks and channels. If the software and systems could
be installed with each individual team member and Bright Ideas further
developed their communication plan, then Bushveld Grain will definitely be able
to fully function as a virtual organisation.

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 7. Recommendations

Very few companies in South Africa are able to become virtual due to the lack in
technological infrastructure. The internet is still a luxury in most homes as it is
very costly. Our society has not developed around instant information and the
people are not yet skilled in knowledge management.

Once the internet becomes more affordable and a norm in households, we will be
better able to adapt to becoming a virtual society.

I think that the most important factor in that businesses should concentrate on is
their website and ‘virtual image’. Companies should make that the only place to
search for information in order to force people to use that option and get used to
it.
In addition to the above statement however, I also think that we shouldn’t forget
about keeping our specialised skills up to date and maintaining the traditional
industries in society.
The world has come to rely so much on technology and information that it is
inevitable that there will eventually be a shift of need to the industrial sector made
up of not only knowledge but specialised skills. Everyone is concentrating so
much on being able to access information and use it that a specialised skill or
craft will become rare and in demand once more.

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 8. Conclusion

It is undeniable that globalisation plays a role in every facet of our lives. We

created it and now it is moving so fast that we need to develop ourselves in order
to adapt and keep up.

Globalisation is a contradiction in many ways. We can fit more into our day and
do more simply by making everything less physical and more convenient which is
the definition of ‘doing less’. In the virtual organisation there are many new
factors to consider such as knowledge management. How will we record,
manage and use all the new knowledge we are acquiring?
Partnerships and outsourcing are becoming a part of normal business practice
due to globalisation and the broadening of the world’s markets in every industry.

It will not be possible for all industries and companies to become completely
virtual but it is possible for all of them to somehow be linked to the virtual world,
either through partnerships with virtual organisations or simply outsourcing to a
global company. Everybody needs to adapt to globalisation and step up to the
plate of sitting back and clicking a button.

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Bibliography

• http://www.bushveldgrain.co.za

• Collins, C & Parcell, G. 2007. Knowledge Management Method. Website

at:
http://www.12manage.com/methods_collison_knowledge_management.ht
ml

• Davison, R. 2003. Virtual team working. Website at:

http://russelldavison.blog-city.com/virtual.htm
• Author unknown. 2007. It's a small world: The effects of globalisation on
KM Website at:
http://www.ikmagazine.com/xq/asp/sid.0/volume.5/issue.9/qx/displayissue.
htm

• http://www.investorwords.com/2293/hedge.html

• Peters, T. 2003, Liberation Management. Macmillan, London

• Robbins, S.P. & Bergman, R. & Stagg, I. & Coulter, M. 2003.

Management. Prentice Hall, Australia

• http://searchcio.techtarget.com/sDefinition/0,290660,sid19_gci212731,00.
html

• http://searchdomino.techtarget.com/sDefinition/0,,sid4_gci212449,00.sear
chdomino.techtarget.com

• Wiggins,D & Morello,D. 2003. Outsourcing Backlash: Globalization in the

Knowledge Economy. Website at:
http://www.gartner.com/displayDocument?doc_cd=116614

Information about Bushveld Grain obtained from:

Ms. Chrizanne Fouche’
+27828023716
chrizanne@bosveldgraan.co.uk

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