Geographic Departmentalization – Why It Is Important?

Sometimes, few business enterprises formulate their actions based on varied geographical regions & locales. And this particularly happens in the outbreak of businesses with several chains or branches at different places.

Now the question arises, Is the technique of geographic departmentalization effective for an organization? And what role does it play in an organization? Take the example of a minor retail chain business or a yummy fast-food chain business with many branches everywhere.

In this article, we shall discuss what exactly geographic departmentalization is? and how is it beneficial for an organization?

Geographic Departmentalization –

Geographic Departmentalization is nothing but an organizational structure, which organizes people based on geographical location.

The network establishes definite divisions for each locale. And, each of these divisions themselves acts as a company & combines varied kinds of personnel to perform myriad business functions.

For instance, each of these divisions is supposed to possess its marketing, distribution, production department & sales department.

So, with the method of geographic departmentalization in a company, the local divisions get the autonomy of operating any function as they like & in whatever manner they want. Also, the regional divisions under this structure possess the ability to both comprehend & react to different local preferences. Again, they seek but also pursue the across-the-board business policy.

Those who maintained such departmentalization have proven efficiency and accomplished many productive regional, national & international projects in their organization.

Geographic departmentalization is done in an organization for appealing to large corporations because large corporations may think that a geographical, organizational arrangement will enable them to fulfill diverse groups’ particular desires or requirements. The geographic decisions may establish based on different cultures, rules, customer preferences & languages.

Also, many corporations get logistical benefits from this method of departmentalization. These logistical benefits include added financial benefits, reduction of cost, etc.

Geographic Departmentalization – Pros

  • Improves efficiency for doing geographical division among the organization.
  • The coordination of meetings between employees of a particular geographical location becomes easy. The employees can even now meet the challenges of their respective geographical areas.
  • Better focus on their specific location’s objectives, which leads to the company’s profit.
  • Geographic departmentalization brings leadership opportunities. It provides managers & gives them the chance to finish their on-the-job training & thereby to gain valuable experience.
  • It helps in better tracking a company’s profits based on location. The profit margins, revenues & sales practices of different sites differ based on customer demands.
  • It also facilitates by improving customer communication & establishing a better customer relationship with the employees.
  • Flexibility in market response
  • With this departmentalization, each geographic division gets the autonomy respecting logistics & with the help of it, they could maximize their working efficiency. Based on markets, local preferences & requirements, the regional divisions can make their own decisions on resources, staffing, customer data, employee hours, shipping, salaries, supplies & finances.
  • It encourages strong collaboration between the organization’s employees.
  • It prompts some healthy competition between various departments of the organization. These competitions generate positive enthusiasm towards work among the employees.

Geographic Departmentalization – Cons

  • Duplication of activities may happen.
  • The structure of Geographic departmentalization is more costly than other types of departmentalization.
  • Scarcity of resources in some companies may result in unhealthy competition among various divisions.
  • The discrepancy in the expertise of employees within the organization.
  • Possibility of conflicts between the employees of an organization because of their autonomy.
  • Lack of cohesive company culture within the organization.

Wrapping Up –

Different businesses adopt different types of departmentalization techniques to expand their business and penetrate remote areas. Geographic departmentalization plays a vital role in reaching out targeted audiences residing in different areas.

Recommended Articles –

Functional Departmentalization

Matrix Departmentalization

Product Departmentalization

Customer Departmentalization

Process Departmentalization

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