Organisational structure refers to the way that tasks and responsibilities are allocated to individuals and the ways that individuals are grouped together into offices, departments, and divisions. Mangers often describe their organisation by drawing an organisation chart which shows the structure of an organisation and the relationships and relative ranks of its profits and positions. When small businesses are started, they consist of an owner, manager and a few employees so an organisational structure is unnecessary at this stage. As an organisation grows to become an established business, it will adopt one of a number of organisational structures to implement its strategy.
There are a number of different structures (the allocation of tasks and responsibilities to individuals) an organisation can choose. They include a functional structure, multidivisional structure or a matrix structure. The matrix structure is more complex than the other forms of structure. It combines different structural dimensions simultaneously, for example, product divisions and geographical territories or product divisions and functional specialism.
The matrix structure has certain advantages and disadvantages:
1.They are effective at knowledge management because they allow separate areas of knowledge to be integrated across organisation boundaries. Particularly in professional services organisations. Can be helpful in applying particular knowledge specialism to different market or geographic segments. E.g. for a particular client – people with particular knowledge specialism (strategy/organisational design) tied with people grouped with particular markets (industry sectors or geographic regions. Example: education specialists – various age groups
2.Matrix organisations are very flexible because they allow different dimensions of the organisation to be mixed together. It is particularly attractive to organisations operating globally, because they of possible mix between local and global dimensions. For example, local marketing in geographical divisions and global product divisions.
3.The matrix structure replaces formal lines of authority with (cross matrix) structures or dual dimensions. This can lead to problems and disadvantages of the matrix structure.
1.It will typically take longer to make decisions because of bargaining between the managers of different dimensions.
2.There may also be conflict because staff may find themselves responsible to managers from two structural dimensions. In short, matrix organisations are hard to control.
3.Jobs and responsibilities of staff across the matrix may not be clear, i.e. one ‘arm’ of the matrix may work for another ‘arm’ of the matrix (economic production volumes over local variations).
4.Cost and profit responsibilities can be unclear. Senior managers must be good at sustaining collaborative relationships across the matrix and strategically leading and guiding employees.
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