Teamwork is highly valued at Spectrum, and a matrix structure would exploit this advantage in a flexible and effective manner. A matrix structure also reduces costs, because it allows top talent to be shared between divisions: "because key people can be shared, the project cost is minimized" (Matrix organization, 2010, VisitAsk). The disadvantage to a matrix structure is the diffusion of responsibility. Shared authority and responsibility can reduce accountability -- although it can inspire a corresponding increase in innovation. The greater bureaucracy of a multidivisional firm, in contrast, seems less well-suited for the current market environment and the company's desire for greater flexibility in its approach. Three examples of potential communication problems: Correctives

Matrix structures are hardly problem-free, of course. There can be confusion regarding who is in charge -- the project manager or functional manager -- regarding specific decisions. While matrix teams may make use of shared synergies, there must be a clear demarcation of responsibility. Communication difficulties can also result because different parts of the organization are blended. And merging different personalities from different functional aspects of the firm, such as advertising and IT, can create conflict. To minimize these communication difficulties, a matrix firm should have standard operating procedures for orientating all new team structures in the different interpersonal 'styles' of team members, such as having them take a Myers-Brigg personality trait inventory beforehand, and discuss the result collectively.

The impermeable divisions in a multidivisional firm can also create problems -- barriers to shared knowledge, for example. The battery division...

A marketing campaign might stress sustainability, but the technical department of R&D might not be concerned with environmentalism at all. A lack of innovation may be the result of the enclosed nature of different divisions. Finally, there also may be divided loyalties -- given the authority bestowed upon the head of one's division, subordinates may feel a greater sense of loyalty to him or her than to the organization. A cohesive philosophy must be infused throughout the organization -- and this will also facilitate sharing of knowledge. There must be a distinctive firm character between as well as within divisions.
Degree of centralization that would be most effective

For a large organization such as Spectrum, even a matrix model must have some degree of cohesion and centralization, to ensure the company functions efficiently. Teams may work independently, but there must always be a final authority figure who will oversee and approve decision-making. With a multidivisional firm, a general orientation for new hires and routine 'team-building' exercises for all divisions are required to ensure that the enclosed divisions serve the holistic purpose of the firm.

References

Hoskisson, Robert E., Charles W. Hill, & H. Kim. (1993). The multidivisional structure:

organizational fossil or source of value? Journal of Management. Retrieved August 3,

2010 from FindArticles.co at http://findarticles.com/p/articles/mi_m4256/is_n2_v19/ai_14561089/

Matrix organization and project management. (2010). VisitAsk. Retrieved August 3, 2010 at http://www.visitask.com/matrix-organization.asp