MATRIX ORGANISATION
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.
MATRIX ORGANISATION
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.
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