Custom Search

Popular Posts

Sunday, November 24, 2013


Matrix Organisation

The principles of organisation apply whether you are designing the entire organisation or a department within it. The three most basic functions necessary for any business organisation are finance, production and marketing. Each of these functions is organised separately. Thus, within the organisation structure of the firm you would have distinct organisations for each function.

Broadly speaking, marketing is concerned with all aspects of the product, pricing, promotion and distribution. All sub-functions or activities relating to these four basic dimensions are included in the marketing function. You have to account for these various activities when designing the marketing organisation.

The structure of a marketing organisation can be studied at different levels, such as overall firm level or divisional level or market level.

There are many ways of organising the marketing department. We shall discuss in detail the four basic methods:

D. Matrix Organisation 

Methods other than these four are either their derivatives or combinations.  


We have learned companies which market different products to the same market or the same product to different markets. In the first case, organising around the product management concept provides an effective solution. In-the second case, the marketing organisation can effectively be organised around each market. But what if a company has a number of products and a number of markets to which these products are sold? A company such as Godrej has a product range which includes steel office furniture, refrigerators, almirahs, soaps and detergents, and each of these products caters to a different market. Similarly, Food Specialities Limited has a wide range of products including infant milk powder, instant coffee, ketchup, noodles each of which fulfils a different market need. How should the marketing department be organised to effectively take care of the different characteristics of the product as well as the market? The manager has to formulate and implement strategies suitable for each individual market and also keep in mind the different characteristics of each product. For managing so many products and so many markets, the manager has to cope with an immense amount of information. The sheer quantity of information and the range of its diversity usually makes it impossible for a single person to manage. Further, each product may be so different from the others that each product needs a separate manager. Similarly, the unique buyer and the characteristics of a market merit the full attention of an individual. Thus, a multi-product and multi-market firm needs both product and market managers. But how should the product managers and market managers be integrated to form a workable organisation structure.  

The solution lies in a matrix organisation where tasks may be differentiated on the basis of functions and products; functions and markets; or functions, products and markets; and integrated by means of co-ordinating functions (such as finance, R & D, information system etc.). In the functional, product and market-centred organisation discussed earlier, each manager has only one point of focus; function, or product or market. However, in the matrix organisation the points of focus are more than one. These focal points may be either functions and products; or functions and markets; or functions, markets and products. As is Obvious from these figures, the matrix may have two or more bases for differentiating the functions.
The origin of the formal matrix organisation can be traced to the aerospace industry in USA, The different manufacturers in the aerospace industry were organised functionally; but the US Government wanted each project to have specialised attention and imposed a project management type of organisation on the industry. The horizontal project groups were superimposed over the vertical functional organisations and the result was a matrix organisation. But informally, the matrix organisation has been in existence much before its introduction in USA. In an advertising agency, each client is assigned to a specific accounts executive who is responsible for understanding the client's objectives and needs and getting them translated into advertising campaigns. For translating client objectives into specific advertisements or campaigns, the accounts executive draws on the agency's functional specialists: artists, copywriter, photographers, visualisers, etc. Thus on the one side you have the functional specialists while on the other you have the accounts executive who can be thought of as a market manager (each client represents a separate market) and only a few clients are assigned to each accounts executive.
The distinguishing characteristics of a matrix organisation are:
-      members are allotted to two, or three groups with each group having its own boss,
-      the groups are work-related, though each on a different base (e.g., functional, product or market related),
-      the groups are formally arranged rather than evolving informally or on an ad-hoc basis,
-      information management is central to the concept and management of matrix organisation.  

Thus the matrix organisation is a blend of grouping by functions and/or markets and/or products, with the objective of retaining the advantages of specialisation and gaining the advantage of a sharper focus on a task or project. The specific advantages and disadvantages associated with the matrix organisation are described in Tables 1 and 2.  

Table 1: Advantages of a Matrix Organisation

1. Permits task/project focus without losing benefits of specialisation.
2. Provides for increased information-processing capability, catering to information needs of each group.
3. Permits greater decentralisation of decision-making since there are specialists in each area equipped with the necessary knowledge.
4. Provides a flexible structure, capable of adapting to new situations while retaining the basic framework of the structure.
5. Provides a means of coping with increased information processing needs and co-ordinating when the tasks are highly uncertain, complex and inter dependent.  

Table 2: Disadvantages of a Matrix Organisation

1. Tendency to conflict exists because the different groups are organised on different bases and each group may try to superimpose its own group objectives rather than the organisational objectives.
2. There is ambiguity in roles because each person reports to two bosses and this undermine the effectiveness of organisation.
3. Proves costly because of larger volume of information processing and the additional need of coordinating and supporting roles.
4. May be prone to power struggles and politics as each group tries to dominate.
5. Problems of designing a suitable information system, which now needs to cater to different requirements.


Blog Widget by LinkWithin