Advantages and Disadvantages of Centralization
- Advantage: Clear Line of Authority
- Clear communication lines result in clear authority.
- Centralization of power is a disadvantage.
- Isolation and siloed thinking are issues.
- Endless red tape is another disadvantage.
Matrix Structure Utilization
Which companies use matrix structures?
- General Electric
- Citibank
- Dow Chemical
Matrix organizations respond to multiple sectors like regions and services. The utility industry, including companies like Entergy, has adopted, abandoned, and readopted the matrix approach. Entergy’s matrix model is structured with functional responsibility but places earnings accountability with state presidents. Functional and geographic missions need not perfectly align for a workable model.
Downsides of a Flat Structure
What are the disadvantages of a flat structure?
- Confusion arises if reporting lines are unclear, leading to a lower sense of accountability.
- Multiple bosses increase the risk of power struggles due to the absence of a formal system.
- The structure lacks specialism, hindering long-term growth and promotion opportunities.
- Scaling the company becomes difficult.