Table of Contents

Matrix Organization ........................................................................................................................ 1

Example .......................................................................................................................................... 3
Advantages ...................................................................................................................................... 3
Line organization ............................................................................................................................ 4
Organizational Structure ................................................................................................................. 5
E-business (electronic business) ..................................................................................................... 8
Social media .................................................................................................................................. 10
Refrences....................................................................................................................................... 12

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Matrix Organization
A matrix organization is defined as one in which there is dual or multiple managerial
accountability and responsibility. However, the term matrix means quite different things to
different people and in different industries. In a matrix there are usually two chains of command,
one along functional lines and the other along project, product, or client lines. Other chains of
command such as geographic location are also possible.

The matrix organizational form may vary from one in which the project manager holds a very
strong managerial position to one in which he plays only a coordinating role. To illustrate the
organizational principles, a matrix will be considered first in which there is a balance of power
between the project and functional managers. It must be recognized that such a balanced
situation, considered by some authorities to be ideal, probably seldom occurs in practice.

The term “matrix project organization” refers to a multidisciplinary team whose members are
drawn from various line or functional units of the hierarchical organization. The organization so
developed is temporary in nature, since it is built around the project or specific task to be done
rather than on organizational functions. The matrix is thus built up as a team of personnel drawn
from both the project and the functional or disciplinary organizations. In other words a project
organization is superimposed on the conventional functional hierarchical organization.

Figure 1 Simple matrix organization

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Matrix organizational structure is often used in project management because it speaks to both the
product of the project and the function of the management producing it. Let’s take a closer look
at this type of organizational structure to determine its pros and cons in project management.

Origins of the Matrix Organizational Structure

The matrix organizational structure came about as a business response to the rise of large-scale
projects. They needed fast-track technology applications and required the ability to process great
amounts of data in an efficient manner. Project organization was needed to respond quickly to
interdisciplinary needs, without upsetting the functional organizational structures already in
place.

Matrix organizational structures were first developed in the aerospace industry in the U.S. as
projects grew in complexity during the mid-century. Until that point, they had been using a
single hierarchical organization, which was fine when there was only one very large project.

However, with more and more projects having a variety of sizes and complexities, there was a
need for expanding beyond one discipline. So, as time went on, the use of one discipline to
structure a project become increasingly rare. But there remained a need for a single source of
information and responsibility for each project. Therefore, instead of creating many autonomous
projects, a matrix of projects was developed.

Example
In the 1970s, Philips, a Dutch multinational electronics company, set up matrix management
with its managers reporting to both a geographical manager and a product division manager.
Many other large corporations, including Caterpillar Tractor, Hughes Aircraft, and Texas
Instruments, also set up reporting along both functional and project lines around that time.

Advantages
In a matrix organization, instead of choosing between lining up staff along functional,
geographic or product lines, management has both. Staffers report to a functional manager who
can help with skills and help prioritize and review work, and to a product line manager who sets
direction on product offerings by the company. This structure has some advantages:

 Resources can be used efficiently, since experts and equipment can be shared across
projects.

 Products and projects are formally coordinated across functional departments.

 Information flows both across and up through the organization.

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Line organization
A has direct two-way lines of responsibility, authority, and communication running from the top
to the bottom of the organization, with all people reporting to only one supervisor. The military
and many small businesses are organized this way.

Line organizational structure is one of the simplest types of organizational structures. Its
authority flows from top to bottom. Unlike other structures, specialized and supportive services
do not take place in these organizations. The chain of command and each department head has
control over their departments. The self-contained department structure can be seen as its main
characteristic. Independent decisions can be taken by line officers because of its unified
structure.

The main advantage of a line organizational structure can be identified as the effective
communication that brings stability to the organization.

In large businesses, a line organization may have the disadvantages of being too inflexible, of
having few specialists or experts to advise people along the line, of having lines of
communication that are too long, and of being unable to handle the complex decisions involved
in an organization with thousands of sometimes unrelated products and literally tons of
paperwork. Such organizations usually turn to a line-and-staff form of organization.

Figure 2 Line organizational structure chart drawn with Creately

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Line and Staff Organization

To minimize the disadvantages of simple line organizations, many organizations today have both
line and staff personnel. A couple of definitions will help. Line personnel are part of the chain of
command that is responsible for achieving organizational goals. Included are production
workers, distribution people, and marketing personnel. Staff personnel advise and assist line
personnel in meeting their goals (e.g., marketing research, legal advising, information
technology, and human resource management). See Figure 8.6 for a diagram of a line-and-staff
organization. One important difference between line and staff personnel is authority. Line
personnel have formal authority to make policy decisions. Staff personnel have the authority to
advise the line personnel and make suggestions that might influence those decisions, but they
can't make policy changes themselves. The line manager may choose to seek or to ignore the
advice from staff personnel.

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Many organizations have benefited from the expert advice of staff assistants in areas such as
safety, legal issues, quality control, database management, motivation, and investing. Staff
positions strengthen the line positions and are not inferior or lower-paid. Having people in staff
positions is like having well-paid consultants on the organizations payroll.

Organizational Structure
Hierarchical Structure

The hierarchical model is the most popular organizational chart type. There are a few models that
are derived from this model.

In a hierarchical organization structure, employees are grouped with every employee having one
clear supervisor. The grouping is done based on a few factors, hence many models derived from
this. Below are few of those factors

Function

Employees are grouped according to the function they provide. The below image shows a
functional org chart with finance, technical, HR and admin groups.

Geography

Employees are grouped based on their region. For example in USA employees might be grouped
according to the state. If it’s a global company the grouping could be done according to
countries.

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Product

If a company is producing multiple products or offering different services it can be grouped

according to the product or service.

Figure 3 A functional organizational structure chart, a variation of the hierarchical model

This is the dominant mode of organization among large organizations. For example
Corporations, Governments, and organized religions are hierarchical organizations with different
levels of management, power or authority.

Horizontal/Flat Structure

This is an organizational chart type mostly adopted by small companies and start-ups in their
early stage. It’s almost impossible to use this model for larger companies with many projects and
employees. The most important thing about this structure is that many levels of middle
management are eliminated. This enables employees to make decisions quickly and
independently. Thus a well-trained workforce can be more productive by directly getting
involved in the decision-making process.

This works well for small companies because work and effort in a small company are relatively
transparent. This does not mean that employees don’t have superiors and people to report. Just
that decision making power is shared and employees are held accountable for their decisions.

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 Figure 4 Flat organizational structure chart drawn with Creately

Network Structure

Network organizational structure helps visualize both internal and external relationships between
managers and top-level management. They are not only less hierarchical but are also more
decentralized and more flexible than other structures.

The idea behind the network structure is based on social networks. Its structure relies on open
communication and reliable partners; both internal and external. The network structure is viewed
as agiler than other structures because it has few tires, more control and bottom flow of decision
making.

Using a Network organizational structure is sometimes a disadvantage because of its complexity.

The below example of network org chart shows the rapid communication between entities.

Divisional Structure

Within a divisional structure, each organizational function has its own division which
corresponds to either products or geographies. Each division contains the necessary resources
and functions needed to support the product line and geography.

Another form of divisional org chart structure is the multi-divisional structure. It’s also known as
M-form. It’s a legit structure in which one parent company owns several subsidiary companies,
each of which uses the parent company’s brand and name.

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The main advantage of the divisional structure is the independent operational flow, that failure of
one company does not threaten the existence of the others.

It’s not perfect either. There can be operational inefficiencies from separating specialized
functions. Increase in accounting taxes can be seen as another disadvantage.

Team-based Organizational Structure

Team-based organizational structures are made of teams working towards a common goal while
working on their individual tasks. They are less hierarchical and they have flexible structures that
reinforce problem-solving, decision-making and teamwork.

Team organization structures have changed the way many industries work. Globalization has
allowed people in all industries around the world to produce goods and services cooperatively.
Especially, manufacturing companies must work together with the suppliers around the globe
while keeping the cost to a minimum while producing high-quality products.

E-business (electronic business)

E-business or Online business means business transactions that take place online with the help of
the internet. The term e-business came into existence in the year 1996. E-business is
an abbreviation for electronic business. So the buyer and the seller don’t meet personally.

E-business (electronic business) is the conduct of business processes on the internet. These e-
business processes include buying and selling goods and services, servicing customers,
processing payments, managing production control, collaborating with business partners, sharing
information, running automated employee services, recruiting; and more.

Now there are actually many types of e-Businesses. It all depends on who the final consumer is.
Some of the types of e-commerce are as follows:

Business-to-Business (B2B)

Transactions that take place between two organizations come under Business to business.
Producers and traditional commerce wholesalers typically operate with this type of electronic
commerce. Also it greatly improves the efficiency of companies.

Business-to-Consumer (B2C)

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When a consumer buys products from a seller then it is business to consumer transaction. People
shopping from Flipkart, Amazon, etc is an example of business to consumer transaction. In such
a transaction the final consumer himself is directly buying from the seller.

Consumer-to-Consumer (C2C)

A consumer selling product or service to another consumer is a consumer to consumer

transaction. For example, people put up ads on OLX of the products that they want to sell. C2C
type of transactions generally occurs for second-hand products. The website is only the facilitator
not the provider of the goods or the service.

Consumer-to-Business (C2B)

In C2B there is a complete reversal of the traditional sense of exchanging goods. This type of e-
commerce is very common in crowdsourcing based projects. A large number of individuals make
their services or products available for purchase for companies seeking precisely these types of
services or products.

Online marketplaces

Ecommerce transactions can also take place on online marketplaces sites that facilitate
transactions between merchants and customers. Many online marketplaces don’t own inventory;
rather, they just connect buyers and sellers and give them a platform on which to do business.

Some of the top online marketplaces on the web are

Amazon

A company that needs no introduction, Amazon is one of the world’s largest online
marketplaces, offering extensive selections of books, electronics, apparel, accessories, baby
products, and more.

As of 2015, there were more than 2 million third-party sellers on the site, and according to
Amazon, these sellers sold 2 billion items in 2014.

EBay

EBay is another popular online marketplace that connects merchants and buyers, facilitating
B2B, B2C, and C2C ecommerce. EBay offers products in several categories, including
electronics, cars, fashion, collectibles, and more.

eBay merchants can also hold auctions that let buyers bid on products. This allows the possibility
of selling items above market value.

Etsy

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 Etsy is an online marketplace that specializes in handmade, vintage, and one-of-a-kind goods.
Millions of independent sellers use Etsy to showcase and sell their creations, and people (buyers
and sellers alike) love the site because of its community-centric feel.

Social media
Social media can pave the way for ecommerce in two ways: social sites can facilitate a sale by
directing shoppers to a merchant’s ecommerce site, or they can allow users to buy something
directly on the platform.

How social media facilitates ecommerce

In many cases, social networks such as Facebook, Instagram, Twitter, and Pinterest aren’t used
as ecommerce platforms. Rather, merchants use these sites to showcase their merchandise. And
when shoppers come across an item that they like on social, they are directed to the merchant’s
ecommerce site.

For instance, many retailers who show off their products on Instagram use solutions such
as Like2Buy to enable customers to purchase the items. Here’s how it works: when a user sees a
product that they like on their Instagram feed, they can click the merchant’s Like2Buy link so
they can view the item’s product page.

Conducting ecommerce transactions on social sites

Social networks are also exploring ways to let consumer’s complete purchases without having to
leave the site.

Pinterest, for instance, has Buyable Pins that enable merchants to sell products featured on their
Pinterest page. According to the site, “Buyable Pins have a blue price tag, which tells people
your product is in stock and available for purchase. People can easily spot these Pins all over
Pinterest—in search results, in related Pins and on your business profile.”

Ecommerce success stories

This section lists some of the top ecommerce sites on the web, and it sheds light on what makes
them successful.

Amazon

We’ve mentioned Amazon quite a bit in this piece and for a good reason: it’s one of the most
successful ecommerce businesses in the world. Aside from a thriving marketplace featuring
third-party sellers, Amazon also has massive revenue coming in from its Prime membership, as
well as subsidiaries such as Amazon Web Services and Zappos.com.

These pillars are:

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  Be Customer Centric – “Amazon is not trying to force customers to fit the way they want
to sell them,” he says. “Amazon would rather fit themselves into how customers buy
today and will change their buying behavior in the future.”
 Be Creative – Amazon is always conducting experiments and coming up with ways to
improve the shopping experience.
 Be Focused on Customer Experience – According to Bryan, “Amazon will do everything
possible to have people talking about what an amazing experience it was to shop or return
items through their store. Every tiny detail in the store is designed to have customers
engaged and excited to be there.”
 Continuously Improve & Optimize – Amazon makes good use of its data. The company
is always crunching the numbers, and it uses data in just about every aspect of the
business, including customer experience, warehousing, operations, finance, and
marketing.

Birch box

Birch box has a two-pronged business: it offers a subscription in which the company charges
members $10 a month to receive “personalized mix of 5 hair, makeup, skincare, and fragrance
samples.” Birch box also has an online shop that allows customers to purchase full-sized
products. As of 2015, Birch box had more than 800 brand partners and more than a million
subscribers.

What makes Birch box successful?

Several factors contribute to Birch box’s success, but one of the most important ones is data. The
company’s co-founder, Katia Beauchamp, told Forbes that data became their best friend.

Here’s one example of how the company uses data. Birch box asks subscribers to review each
item and uses that information to match customers with the best products. Birch box also sends
the data to their partners so they can determine what works and what doesn’t.

Another key to their success?

Unlike most of their competitors, Birch box isn’t just a box subscription service. The company
allows members to buy full-size products rather than just with samples. This enables Birch box
to differentiate itself.

Wayfair

Wayfair is a home furnishings e-tailer that offers a wide selection of more than 7 million items.
Forbes reports that “Wayfair netted an estimated $18 million on $915 million in 2013, up 55%
from the year before.” And as of May 2017, the site had over 36 million total visits.

Ecommerce flops

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You’ve seen the success stories; now let’s look at some of the biggest flops in the industry. Pay
attention, and learn from these companies’ mistakes.

Boo.com

Boo.com was a UK-based clothing and cosmetics e-tailer that failed just two years after its
launch. It was just one of the many Internet companies that shut down during the dot-com bubble
in the year 2000.

Refrences
 Handy, Charles (2005). Understanding Organizations (4th Ed.). London: Penguin Books.
 Katz, Daniel; Kahn, Robert Louis (1966). The social psychology of organizations.
 Mintzberg, Henry (1981). "Organization Design: Fashion or Fit" Harvard Business
Review
 Beynon-Davies P. (2004). E-Business. Palgrave, Basingstoke

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