Virtual organizations use networks to link people, assets, and ideas, allying with suppliers and customers(and sometimes even competitors)to create and distribute new product and service without being limited by traditional organizational boundaries or physical location. One company can take advantage of the capability of another company without actually physically linking to that company. Each company contribute its core competencies, the capabilities that it does the best. These networked organization last as long as the opportunity remains profitable. For example, one company might be responsible for product design, another for assembly and manufacturing, and another for administration and sales. A virtual organization networked information system enable different companies to join together to provide good and services.

A value chain is the way in which primary and support activities are combined and providing goods and services and in increasing profit margins. The primary activities in this chain include

(1)Inbound logistics such as receiving, storing, materials handling, and warehouse activities.

(2)Operation in which inputs are put into final product form by performing activities such as machining, assembling, testing, and packaging.

(3)Outbound logistics which involves distributing the finished product to the customer.

(4)Marketing and sales which are used to encourage buyers to purchase the product.

(5)Service for maintaining and enhancing the value of the product after the sale through activities such as repair, product adjustment, training and part supply.

(1)The firm infrastructure, which is made up of the company’s general management, planning, financial, accounting, legal, government affairs, and quality management areas.

(2)Human resource management, which is made up of the selection, placement, appraisal, promotion, training, and development of the firm’s personnel.

(3)Technology in the form of knowledge, research and development, and producers that can result in improved goods and services.

(4)Procurement which involves the purchasing of raw materials, supplies, and similar goods.