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1. Read the text below about how businesses will be organized in the future and choose the answer
1. Which of these statements gives the best summary of the ideas in the article?
a. New communications technologies enable information to be shared instantly across the world.
b. In the future most people will be self-employed or will work as freelancers.
c. Companies are having to restructure due to developments in electronic communications.
2. What exactly do the authors mean by the term ´e-lance economy´?
a. Most work inside large companies will be done using e-mail and computers.
b. In the future tasks will be done by individuals and small companies linked to the Internet.
c. Business between companies will increasingly be done through the Internet.
THE E-LANCE ECONOMY
Despite the wave of big mergers and acquisitions over the past few years, the days of the big corporation – as we know it – are numbered. Because modern communications technology makes decentralized organizations possible, control is being passed down the line to workers at many different levels, or outsourced to external companies. In fact, we are moving towards what can be called an ´e-lance economy´, which will be characterized by shifting coalitions of freelancers and small firms using the Internet for much of their work.
Twenty-five years ago, one in five US workers was employed by one of the top 500 companies. Today, the ratio has dropped to fewer than own in ten. Large companies are far less vertically integrated than they were in the past and rely more and more on outside suppliers to produce components and provide services, with a consequent reduction in the size of their workforce.
At the same time, decisions within large corporations are increasingly being pushed to lower levels. Workers are rewarded not for carrying out orders efficiently, but for working out what needs to be done and doing it. Many large industrial companies – ABB and BP Amoco are among the most prominent – have broken themselves up into numerous independent units that transact business with one another almost as if they were separate companies.
What underlies this trend? The answer lies in the basic economics of organizations. Business organizations are, in essence, mechanisms for co-ordination, and the form they take is strongly affected by the co-ordination technologies available. When it is cheaper to conduct transactions internally, with other parts of the same company, organizations grow larger, but when it is cheaper to conduct them externally, with independent entities in the open market, organizations stay small or shrink.
The co-ordination technologies of the industrial era – the train and the telegraph, the car and the telephone, the mainframe computer and the fax machine – made transactions within the company not only possible but advantageous. Companies were able to manage large organizations centrally, which provided them with economies of scale in manufacturing, marketing, distribution and other activities. Big was good.
But with the introduction of powerful personal computers and electronic networks – the co-ordination technologies of the 21st century – the economic equation changes. Because information can be shared instantly and inexpensively among many people in many locations, the value of centralized decision-making and bureaucracy decreases. Individuals can manage themselves, co-coordinating their efforts through electronic links with other independent parties. Small becomes good.
In the future, as communications technologies advance and networks become more efficient, the shift to e-lancing promises to accelerate. Should this happen, the dominant business organization of the future may not be a stable, permanent corporation but rather a flexible network of individuals and small groups that mig