Page 213 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 11: Structural Implementation

Notes
Figure 11.4: Matrix Structure
Matrix Structure
Top Management

Manufacturing Sales Finance Personnel

Manager Manufacturing Sales Finance Personnel
Project A Unit Unit Unit Unit
Manager Manufacturing Sales Finance Personnel
Project B Unit Unit Unit Unit

Manager Manufacturing Sales Finance Personnel
Project C Unit Unit Unit Unit

Manager Manufacturing Sales Finance Personnel
Project D Unit Unit Unit Unit

While functional heads have vertical control over the functional managers, the product or
project heads have horizontal control over them. Thus, matrix structure provides a dual
reporting. The dual lines of authority makes the matrix structure unique. The matrix
structure has been used successfully by companies such as IBM, Unilever, Ford Motor
Company etc.

Example: Starbucks is one of the numerous large organizations that successfully
developed the matrix structure supporting their focused strategy. Its design combines
functional and product based divisions, with employees reporting to two heads. Creating
a team spirit, the company empowers employees to make their own decisions and train
them to develop both hard and soft skills. That makes Starbucks one of the best at customer
service.

5. Network Structure: A network organisation outsources or subcontracts many of its major
functions to separate companies and coordinates their activities from a small headquarters.
Rather than being housed under one roof, activities like design, manufacturing, marketing,
distribution etc. are outsourced to separate organisations that are connected electronically
to the central office.
Figure 11.5: Network Structure

Accounts
Receivable
Company
(USA)

Design Distribution
Company Company
(Canada) (Europe)
Company
Core (hub)

Transportation Manufacturing
Company Company
(Korea) (Asia)

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