Nestlé Company is a decentralised organisation that organised according to matrix structure.
Nestlé Company as a decentralised organization allows its subordinate organizations to enjoy a relatively high-level of autonomy. Although it still makes major strategy decisions at the headquarter level, daily operations are left up to subordinate organizations to derive and implement. The responsibility for operating decisions is pushed down to local units.
There is a problem with the matrix structure. A manager located within a division has two lines of reporting, two bosses. A first line manager reports to the corporate product manager and to the corporate functional manager. For example, no manager would like to report both to the Vice President in charge of the product and to a Vice President in charge of corporate-wide human resources. Suppose each had different ideas about policies, which boss would the manager follow? In theory, the product and functional managers reach agreement on conflictive policies at headquarters, but this does not always happen. Most firms are not willing to invest this kind of time in training and hence, matrix stucture is not often adopted by businesses.
The exception is international businesses. For a global organisation, the ability to organise around geographical markets and also around products is an advantage. Thus, the matrix structure serves Nestlé Company well. It has a manager in charge of a product line, but each product line is also coordinated with a manager in charge of a specific geographical area.
To solve the problem of matrix structure, Nestlé Company designs its own leadership building programs. It has two policies specifically designed to solve the conflict faced by managers. First, it has an extensive internal training program. Nestlé’s premier management candidates receive a month long...