Introduction

Tencent Holding Limited is the largest gaming company in the world which specializes in technology, artificial intelligence, internet services, and entertainment. The company was founded in 1998 and has its headquarters in Nanshan District in China. In 2018, Tencent was ranked as the fifth company with the highest brand value. Currently, the company has approximately 700 million users and 100 million subscribers from all over the world making it among the most valuable companies in Asia. For a company to be as successful as Tencent Holding Limited, it has to have an organizational structure that suits the organization. This paper will, therefore, discuss why the matrix organization structure suits Tencent Holding Limited the best while giving the critical components met by this alternative.

Alternative structures

The alternative considered was the horizontal structure which organizes staff members around a core process in the organization. The benefit of this arrangement is the fact that it permits employees the freedom to think creatively especially in the field of technology and the internet. However, it was ruled out because it results in conflicts between departments because they are not depended on each other (Daft, 54). Thus, working is not harmonious. Therefore, the structure that best fists Tencent Holding Limited is the matrix structure. Such type of arrangement is used when innovation and technical knowledge and change are vital in achieving the organizational goals of an organization. Matrix implements both horizontal and vertical structures simultaneously. In Tencent, all these factors affect the organizational goals because it deals with products and services that require innovation and creativity and change relatively fast because of the advancing technology. One of the advantages of matrix structure is that it helps an organization meet the demands of customers such that resources are fairly allocated between different product lines and the organization can quickly adapt to the changing needs of their customers and the external environment.

Key Components met by Matrix Organizational Structure

One of the conditions that Tencent Holding Limited meets for the matrix structure is that there is a lot of interaction between product lines because they share resources. In the ideal matrix structure, product share resources because they are scarce, but at Tencent, the product lines share resources because most of them only differ slightly. Therefore, there is a lot of interaction even between employees in different departments or working in various product lines. Thus, the structure is informal.

Secondly, the chain of command from vertical and horizontal structures are implemented simultaneously. A vertical chain of command is where the system relies on the managers or supervisors to control the employees. The bosses are at the top of the string while the other staff members are below them. The horizontal structure’s chain of demand has very few levels of command because of the absence of the middle managers. Tencent Holdings Limited attempts to implement both of these structures to maximize the benefits offered by both of them. The resulting structure from using both of these systems is a relatively short command chain with very few middle-level managers.

Finally, the matrix structure is used in organizations where the environmental domain is complicated and uncertain. Tencent is one such organization because its environment is expected to change drastically depending on the changes happening in the technology world which it specializes. Also, due to the significant interaction between different departments, a change in one product line or department is expected to cause changes in other departments too. Thus, there is a lot of uncertainty in the organization. In case of drastic changes, the organization can adjust the system either by learning more on the horizontal structure or the vertical structure.

Organization Chart

Figure 1: Chart

In the matrix organizational structure, the relationships between employees and managers are not as rigid as the traditional hierarchy. As such, there is much interaction between people in the different departments because of the dual reporting relationships as shown above whereby an employee reports to two managers. The advantages of this structure as seen in Tencent Holding Limited is that there is a free flow of information since experts can share ideas across projects and product lines (Daft, 116). Also, due to the coordination between projects and departs, there is an efficient sharing of resources which not only reduces wastage but also reduces the cost of production.

Conclusion

In short, Tencent, which is one of the largest companies in Asia, has over forty thousand employees and different product lines. For such a company which pays a lot of attention to innovation and technical knowledge and the changes I the external environment, the best type of structure would be the matrix structures which incorporates both the vertical and horizontal structures. However, there is a risk of conflicts between different departments because of the resources being shared. Also, conflicts may arise because of a clash of interests between the horizontal and vertical structures. However, it is best for Tencent because of the advantages it offers to internet companies.

Works Cited

Daft, Richard L. Organization Theory and Design. 12th ed., Cengage Learning, 2010.

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