Thus a global matrix structure is followed. Power struggles between the functional and product managers or between the product and area managers can prevent successful implementation of matrix structural arrangements. The matrix structure provides a good environment to learn and grow. It enables us to serve global customers, manage supply chains that extend outside the organization and run integrated business regions, functions and processes. Delivering the advantages and avoiding the disadvantages cannot be achieved through a structural change, only by building the skills and mindset necessary mindset to engage people differently and the skills to cut through this complexity. Perspectives on global organizations30. Matrix structure is a combination of two or more different structures. Both the advantages and disadvantages of the matrix are about people and the way they work together. Upper management may favor a specific executive or group and as others in the organization see this occurring, they may perceive that the locus of power lies with a certain individual or group. Additionally, such a project may necessitate the skills and expertise of different employees in other departments to find dynamic solutions to complex problems. The global matrix structure is most closely associated with the transnational strategy. b. Learn how your comment data is processed. The second boss is the one who gets the authority due to flat hierarchy. Each group shares responsibility over foreign operations. It also helps us to develop broader people capabilities — a matrix helps us develop individuals with wider perspectives and skills who can deliver value across the business and manage more strategically in a more complex and interconnected environment. – Delays in decision-making (too many people getting involved) global aspirations The matrix structure is here to stay, but its complexity can be minimized, and companies can get more value from it. Not only do product groups compete; functional and geographic groups also must compete among themselves to obtain resources held by others in the matrix. As organizations grew they often became more international, integrated or developed multiple product groups. We are deep content experts in remote & virtual teams, matrix management and agile & digital leadership. The Global Matrix Structure contains simultaneous, intersecting differentiation bases, with employees reporting to functional and product managers simultaneously. Then, as organizations became more integrated the need for ‘horizontal’, cross functional and cross geographic working became more compelling: Organization structure should always follow strategy, and as companies aspired to become more integrated and ‘joined up’ across functions and geographies, they tended to reflect this in the reporting lines of the organization. The global matrix structure groups people by both of product division and geographic division. The matrix structure is here to stay, but its complexity can be minimized, and companies can get more value from it. Companies use a matrix structure to break the traditional vertical silos and increase cooperation and communication across the business. Most matrix organization structures began with virtual teams, then introduced solid and dotted line reporting, eventually moving to the most complex form of matrix organization structure – solid line reporting to more than one boss. A matrix organization structure involves horizontal, vertical and diagonal flows of responsibilities. Rather than duplicating functions as would be done in a simple product department structure, resources are shared as needed. combination of two or more types of organizational structures Required fields are marked *. For more about how we deliver our keynotes, workshops, live web seminars and online learning. The structure that is typically set up when firms initially expand abroad is a: a. Global matrix structure C. Worldwide area structure D. Knowledge network structure. Large multinational corporations that use a matrix structure most commonly combine product groups with geographic units. Additionally, such a project may necessitate the skills and expertise of different employees in other departments to find dynamic solutions to complex problems. This may incorporate solid lines (direct strong reporting) and dotted lines (a weaker reporting relationship, but still indicating some formal level of ‘right’ to the individual’s time) or it may mean multiple solid lines to more than one boss.However … global customers demanded a single point of contact to speak to around the world; supply chains cut across geography and traditional functions such as manufacturing, purchasing, distribution; global projects and products required more coordination around the world; common systems in areas such as IT became more cost effective and efficient and enabled higher levels of integration and coordination. The way a company organizes itself—how. D. product division and geographic area. One advantage of a global matrix structure is that it facilitates the use of highly specialized staff and equipment. It allows employees to communicate across the boundaries and creates a pleasant, cooperative, work environment that helps to integrate the organization. Most organizations evolve from functional structures within a country or other geographic region. These product-group managers also must compete to ensure that geographic-group managers emphasize their lines sufficiently. Following figure gives the Matrix structure of an Multinational Enterprise. The disadvantages of a global matrix structure organization arise from the dual/multiple reporting structure. While conceptualizing organizational structure, the internationalizing firm often has to resolve the … global aspirations. • The area structure facilitates local responsiveness but can inhibit worldwide economies of scale and sharing of knowledge and core competences among geographic areas. The functions were very successful in developing people and delivering work for a long time. A matrix organization structure is usually defined as one where there are multiple reporting lines – that is, people have more than one formal boss. Some disadvantages these organizations have experienced include, – Lack of accountability In a matrix structure, responsibility for the products goes up and down one depending on the product’s dimension such as pricing, distribution and the target market. Initially this was often informal but, as the need for coordination increased, it often lead to dual reporting – a group level matrix. The Matrix Organization Structure can deliver this, provided people have the skills to make the matrix work. Usually, MNCs prefer to adopt this structure. In some cases, highly specialized staff may divide their time among more than one project. c. Global product division structure. The functional heads started to have a reporting relationship to a group level HR or IT person as well as to their country or region head. 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