The M-form becoming extremely popular, from an outside point of view has little to no downsides. However many scholars would argue that there are more disadvantages to the M-form than there are advantages. Perhaps the largest downside to the M-form is the allocation of power. “Companies may want to centralize decision making in order to reduce costs and prevent division managers from taking actions that are contrary to the long-term goals of the entire company; however, too much centralization deprives division managers of the flexibility and independence they need to operate their specific businesses“[1] The allocation of power through the levels of management can take power from lower management positions. The lower management someone who must be qualified for their position and hard to replace may feel that they are being taken advantage of and demand more flexibility. In reality they the lowest of management runs the show of the day-to-day work and is a vital part for success.
Secondly the cost of the M-form should be considered when deciding whether it will help a company or not. Having multiple levels of management makes the cost of labor and management significantly greater. Each different level of management will require funds for the training/ operation of that level. With different levels of management each step up on the ladder will cost the company more than the last. Every person in management requires qualification for there position and in return will cost the company for pay raises throughout the levels. A company must take account of this and continuously analyze a cost- benefit analysis to make sure the M-form is even worth having. [2]
Lastly major problems exist in the cooperation on fair price between the levels of management on the products and supplies necessary. “The “seller” will want to maximize its return on investment by obtaining the highest price possible; however, this approach often unfairly penalizes a “buyer” that is part of the same larger company and may even place the affiliated buyer at a disadvantage in relation to external competitors who are free to purchase comparable inputs at more favorable prices on the open market” This makes gridlocks in setting a transfer price and raises competition between divisions. As a whole this can only harm the company, as it will slow things down until agreements are made.