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7.2 Contemporary Forms of Organizational Structures
LEARNING OBJECTIVES
1. Explain what a matrix structure is and the challenges of working in a
structure such as this.

2. Define boundaryless organizations.
3. Define learning organizations, and list the steps organizations can
take to become learning organizations.
For centuries, technological advancements that affected business came in slow
waves. Over 100 years passed between the invention of the first reliable steam engine
and the first practical internal combustion engine. During these early days of
advancement, communication would often go hand in hand with transportation.
Instead of delivering mail hundreds of miles by horse, messages could be transported
more quickly by train and then later by plane. Beginning in the 1900s, the tides of
change began to rise much more quickly. From the telegraph to the telephone to the
computer to the Internet, each advancement brought about a need for an
organization’s structure to adapt and change.
Business has become global, moving into new economies and cultures.
Previously nonexistent industries, such as those related to high technology, have
demanded flexibility by organizations in ways never before seen. The diverse and
complex nature of the current business environment has led to the emergence of
several types of organizational structures. Beginning in the 1970s, management
experts began to propose organizational designs that they believed were better
adapted to the needs of the emerging business environment. Each structure has
unique qualities to help businesses handle their particular environment.
Matrix Organizations
Matrix organizations have a design that combines a traditional functional
structure with a product structure. Instead of completely switching from a product-
based structure, a company may use a matrix structure to balance the benefits of
product-based and traditional functional structures. Specifically, employees reporting
to department managers are also pooled together to form project or product teams. As
a result, each person reports to a department manager as well as a project or product
manager. In a matrix structure, product managers have control and say over product-
related matters, while department managers have authority over matters related to
company policy. Matrix structures are created in response to uncertainty and
dynamism of the environment and the need to give particular attention to specific
products or projects. Using the matrix structure as opposed to product departments
may increase communication and cooperation among departments because project
managers will need to coordinate their actions with those of department managers. In
fact, research shows that matrix structure increases the frequency of informal and
[1]
formal communication within the organization. Matrix structures also have the
benefit of providing quick responses to technical problems and customer demands.
The existence of a project manager keeps the focus on the product or service
provided.

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