Functional vs Matrix management structure:
A functional management structure focuses on grouping people into functional groups. So the legal team will all work together as part of one team, and the engineering team will work together as a different cohesive unit. A matrix structure focuses more on projects. Whilst people belong to a specific department they also have a project assignment. The work that each individual is given is primarily coming from the project manager, although some instructions will still come from the functional department manager.
Organisational design and structure is influenced by the nature of the business. If the business is dealing with pharmaceuticals, then mistakes cannot happen. This means that the business management will be driven towards a more authoritarian structure, with more centralised management. However, if the business offers warehouse storage as a service, then they will likely be able to operate efficiently on a very laissez-faire structure with lots of decentralisation. This is because it isn’t vital that everything is done in the exact same way, and it may improve customer relations. The size of the business is also a big factor, as the larger the business gets, the harder it becomes to maintain effective centralised management. As the burden on the head office grows with every employee that the business gains, if they have thousands of people working at hundreds of sites across the globe, then they are likely to struggle to require a more hands off approach in order to achieve optimum efficiency.