Formalization is required in all kinds of organizations.

Most state organizations such as army, ministries, educational institutions, governmental agencies and hospitals have highly formalized systems.

Private firms in knowledge intensive sectors may adopt a less formal system to increase creativity.

According to organizational life cycle model, it is not required to have any kind of formal systems at the entrepreneurial stage of an organization because entrepreneur-managers can easily control work processes of few employees.

Too much red tape is an idiom, which has been frequently used to denote unnecessary paperwork in organizations.

The correct answer is E.