What are the advantages and disadvantages of network structures?
The advantages of network structures include: network structures are lean and streamlined. They help organizations stay cost-competitive by reducing overhead and increasing operating efficiency. Network concepts allow organizations to employ outsourcing strategies and contract out specialized business functions. Within the operating core of a network structure, furthermore, interesting jobs are created for those who coordinate the entire system of relationships.
The potential disadvantages of network structures lie largely with the demands of new management responsibilities. The more complex the business or mission of the organization, the more complicated it is to control and coordinate the network of contracts and alliances. If one part of the network breaks down or fails to deliver, the entire system suffers. Also, there is the potential to lose control over activities contracted out and to experience a lack of loyalty among contractors who are used infrequently rather than on a long-term basis.
Source: Management, 11th Edition & 12th Edition- John R. Schermerhorn