The term "organizational structure" refers to how people and resources are organised along the lines of authority. For example, a vertical hierarchy has an executive at the top, managers in the middle and line workers at the bottom.
A hybrid structure, also called a matrix structure, is a mix of structures. At Toyota Corp., the matrix structure includes chief engineers (who design vehicles) on one side of the organizational matrix and general managers on the other side. Hybrid structures develop for different reasons in each organisation, but there are some common advantages.
One rule of thumb is to match the structure of an organisation with its strategy (or how it does business). If an organisation has competing strategies in its business model, it might develop a hybrid structure to respond to those needs. One example is a non-profit organisation that develops a for-profit subsidiary because it wants to conduct activities not allowed by a tax-exempt entity. A for-profit subsidiary can make money using the resources of the non-profit while keeping the accounting systems separate and paying taxes on all activities.
Just like organisations might adopt hybrid structures to be able to adapt to economic conditions, they might also use these structures for cultural benefits. For example, a multinational corporation might use one type of structure in the United States and a different structure in a foreign country. If the foreign country's culture, for example, thrives on a vertical hierarchy, a U.S. multinational might choose to stick with that structure in the foreign country while using a business process management model at home.
Hybrid structures might develop from adding new diversified product lines in the organisation. For example, a major division of the business might be structured as order-based (in which a product is made only after a consumer places an order) and another division based on a traditional manufacturing firm. If a business makes luxury cars and frozen goods in different divisions, the luxury cars might be made to order while the frozen goods are manufactured in bulk and shipped to stores.
Diversification dictates choosing the right organizational structure for a product division based on the market conditions for its products. Looking at this organisation as a whole, it is a hybrid, organised according to the needs of its product divisions.