The main advantage of this model, is that it facilitates 'reorganization' of hierarchies very easily. We just have to change the rules. This stems from the fact that we have attached the 'Rules' to the 'Organization Structure Type'. Hence, if an organization feels that it has to change the hierarchic relationships between the constituent organizational units, it just needs to change the rules. This is actually the most-encountered situation in companies.
Companies reorganize more often than add new organizational units in the hierarchy.
Maybe the names might change, but that just means having a name attribute and changing it. The service team for the product X of ABC Inc., reports to the sales office at Chicago. This would be modeled as an organization structure whose parent is the Chicago sales office, subsidiary is the service team and organization structure type is line management. ABC Inc. This would be modeled as another organization structure whose parent is the HR office, subsidiary is the service team and organization structure type is HR management. So, each instance is associated with its own set of rules.