 Dear students, we are discussing the topic of divisional structures in multinational corporations and within that we are talking about the matrix organizational structure. In this topic, we are going to discuss the disadvantages and challenges that are present and inherent in a matrix organizational structure, particularly with respect to international scenario. Matrix organizational structure, you know that it is divided on two dimensions and accordingly if there is a head of a product line and then there is a head of an area division then people who are working under both those managers working under the head ship of the product line manager and working under the head ship of the area manager, both of those people are responsible for the working of that same particular unit and therefore that creates a problem of dual reporting. It's always easier when people have to report to one person. That is the basic principle of line of command but it is not the most effective one. It may be the most efficient one but you know that in management we have to make a balance between efficiency and effectiveness. So it is not the most effective one. A matrix organizational structure is a lot more effective than a straight hierarchical structure therefore because it is more effective than the efficiency which is lost in dual reporting is considered to be a acceptable cost. All right so but that is one of the disadvantages that dual reporting can cause conflict and confusion. Obviously, if your one boss is telling you to go to Chumal and the other boss is telling you to go to Jhanoop then you will be totally confused what we have to do. So that means that a manager working under a matrix organizational structure would be facing dual reporting as you can see in this diagram that this manager over here with the blue dot is somebody who is reporting to area manager number two and product division B manager as well. So this person is responsible for dual reporting to both these people. Another issue of a matrix organizational structure is that there could be many communication channels which can create information log jams when you are reporting to multiple people and then there are multiple dimensions, multiple heads on one dimension, multiple heads on two dimension. So headquarters will be receiving information that is coming from a number of different channels and that could actually create a little bit of inefficiency in how you are communicating. Then there could be overlapping responsibilities and that can produce tough wars. Obviously, you know that in organizations because there are human systems and politics so politics may have your tough, your domain, when they are not clear, if you are reporting to two places, that means that because your managers are human beings, tough wars can create why this person is giving more attention to the other manager, why he is not listening to me, he didn't listen to me, he didn't listen to me, he didn't listen to me. So all these things can create tough wars. And it can also create loss of accountability because when you are reporting to two people then you will say that I had reported to him, so I didn't do it, although it can be possible that you should have reported to the other person. So because there is a situation in which two people are responsible, that is why your accountability is reduced. Then another issue is that distance, language, time and culture barriers that make it difficult for managers to resolve conflicts and clarify confusion because you are working in an international context. If your division is, let's say, Middle East, so if the division manager sits in Saudi Arabia and you are somewhere working in Iran or other Middle Eastern country, in that situation, to communicate on those distances is difficult in an international context. So managing a metric structure is easier in the domestic context, but it's difficult in the international context. So how do you overcome these challenges and issues? For that your managers working in a metric structure in the international context, they must be more skilled than your domestic managers. They must have more exposure. They must know the business very well, the general business. It's not just important that they should know their area. Like if a person is a finance manager or a marketing manager, it's not only necessary that they should be competent in their own areas, but they should know the business very well. They should also have very good interpersonal skills. Well, interpersonal skills are important in all contexts, but it is much more important in the international context, particularly if you're working in the metric structure. And then this person who is working in an international context must be able to deal with ambiguities of responsibility and authority. As we just talked about metric structure, creating a situation of dual reporting, loss of accountability, and turf wars. So that person must be... So because of this, ambiguity creates. Then they should have training for presenting ideas in groups because that in a metric context, in a metric structure, you are reporting to a multiple number of people and you are working in a more integrated way. You're not just limited to your own domain that, okay, this is the domain of finance or marketing or the domain of one product line or domain of one geographical area. No, it's a more integrated system. So you should be able to present your ideas to people who are different from your line of work. So you should be able to present your ideas in a group. Therefore, because of all these challenges, HR planning in a metrics multinational is more critical than in a traditional organization. So you have to be very much involved in the HR planning process and you have to know where you have to place which person because responsibilities are mixed, they are ambiguous. So a person who is fit for that particular position must be hired over that position. So HR planning is very much critical in this context.