This is an organizational structure in which each employee reports to both functional manager and group manager. This is a "Multiple Command System." Workers will have two bosses. They work in two chains of command. In matrix organization, two types of structure operate simultaneously. One is vertical structure and the other is horizontal. In vertical structure, the command moves vertically and in horizontal, the command moves horizontally. As the business activity is becoming more and more global, matrix organizations, which are complex in nature, are emerging.

An Incident - Matrix Organisation

A leading IT Company of India is exporting its products to three countries say (i) Bangladesh (ii) Nepal and (iii) Sri Lanka. The basic product being same, there is slight change in product features exported to three countries. Product being X, it is XB for Bangladesh, XN for Nepal and XS for Sri Lanka. The workers working to produce these products report to two authorities (i) The Departmental Head in India where the product is produced and (ii) The Country Manager (Second Process) to which country the product is exported. This reduces several problems of production and product acceptance in the country to which it is exported. See the diagram.

Matrix Organisation Structure

Fig. 5.14 Matrix Organisation Structure

In this diagram, it may be observed that functional managers and their workers interact with each country manager regarding individual products are concerned. Workers look at functional managers for general policy solutions and country managers for individual product policy.

Advantages of Matrix Structures

1. It is an efficient means of bringing together the diversified specialized skills required to solve a complex problem.

2. There will be many problems in functional designs. In matrix organization, it is minimized as people work together on various diversified issues. Workers of both teams acquire realistic attitude about the work as they work together. For example, if hardware people and software people work together, they can produce better systems. Many problems will be solved in the process.

3. Matrix structure provides a great deal of cost-saving flexibility. Duplication of work is avoided.


1. Workers do not easily adapt to a matrix system as members may not possess interpersonal skills and may be conservative in their attitude.

2. If hierarchies are not firmly fixed, there will be the danger of conflicting directives and ill-defined responsibility

Selecting the Type of Organisation

In the foregoing pages, an analysis of the features, merits and demerits of the different types of organisation has been made. It may be stated here that there is no hard and fast rule for the type of organisation suited to a particular business unit. However, while selecting a suitable type of organisation for a business unit, the management should consider such factors as the nature of industry, size of the business unit, scope for expansion in future, etc.


In modern business houses, there is a widespread use of committees for performing certain administrative tasks. According to Hicks, "A committee is a group of people who meet by plan to discuss or make a decision for a particular subject." Thus, a committee consists of a group of persons specifically designed to perform some administrative acts. Committees are widely used in the modern concerns for the purpose of discharging advisory functions of management relating to personnel, finance, industrial relations, production, etc. A committee's duties, responsibilities and authority are well-defined and are accountable to the authority that appoints it.

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