Network structures have relationships with outside sources such as contractors and suppliers. The new approach is to only own the most essential part of the business and operate the rest with outsourcing. Outsourcing is utilizing workers from outside the organization to conduct functions of the business. The development in information technology has added to the advantages of network structures. Network structures allow organization to be cost effective and increased efficiency. Outsourcing allows organizations to reduce the number of full-time staff members which reduces operating costs.
· More complex the business, the more complex the contracts and alliances
· Difficult to control and coordinate
· If one part of the network breaks, the entire network falls apart