Write a short note on Matrix Structure.

In matrix structure, functional and product forms are combined simultaneously at the same level of the organization. Employees have two superiors, a product/project manager and a functional manager. The “home” department - that is, engineering, manufacturing, or marketing - is usually functional and is reasonably permanent. People from these functional units are often assigned temporarily to one or more product units or projects. The product units / projects are usually temporary and act like divisions in that they are differentiated on a product-market basis. The matrix structure may be very appropriate when organizations conclude that neither functional nor divisional forms, even when combined with horizontal linking mechanisms like strategic business units, are right for the implementation of their strategies. Matrix structure was developed to combine the stability of the functional structure with flexibility of the product form. It is very useful when the external environment (especially its technological and market aspects) is very complex and changeable. A matrix structure is most complex of all designs because it depends upon both vertical and horizontal flows of authority and communication. It may result in higher overhead costs due to more management positions. The matrix structure is often found in an organization when the following three conditions exist: 1. Ideas need to be cross-fertilized across projects or products; 2. Resources are scarce; and 3. Abilities to process information and to make decisions need to be improved.