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The Strategic Business Unit (SB
U) Structure
• As the number, size, and diversity of divisions in an orga
nization increase, controlling and evaluating divisional op
erations become increasingly difficult for strategists. Incr
eases in sales often are not accompanied by similar incr
eases in profitability. The span of control becomes too la
rge at top levels of the firm
 The Matrix Structure

• A matrix structure is the most complex of all designs because it depends on

both vertical and horizontal flows of authority and communication (hence the
term matrix). In contrast, functional and divisional structures depend primaril
y on vertical flows of authority and communication. A matrix structure can re
sult in higher overhead because it creates more management positions. Oth
er disadvantages of a matrix structure that contribute to overall complexity i
nclude dual lines of budget authority (a violation of the unity-of-command pri
nciple), dual sources of reward and punishment, shared authority, dual repo
rting channels, and a need for an extensive and effective communication sy
stem.