Management Concepts & Organisational Behaviour - Organisation Structure And Design
Territorial Depart mentation - Organisation Structure And Design
The process of creating departments along the geographical areas that the enterprise serves is termed territorial depart mentation.
The process of creating departments along the geographical areas that the enterprise serves is termed territorial depart mentation. This method is adopted when an organization operates in different geographical areas, each with distinct needs and dynamics. Territorial Depart mentation makes it easier for the organization to cope with variations in laws, local customs and customer needs. Public utilities like transport companies, insurance companies, etc., adopt territorial depart mentation. Similarly, a large scale organization operating both in domestic and international markets may have separate departments for both the markets. Again, different departments or divisions may be created for different regions of the world. Many multinational companies organize their global activities with regional headquarters in different regions of the world.
Advantages:
-- Territorial departmentation makes it possible
to concentrate on markets and marketing channels in different geographical
areas;
-- Develops opportunities for more efficient
marketing activities because of better face-to-face communication with local
stakeholders; and
-- Makes possible effective utilization of
locally available resources besides being able to cater to the region specific
variations in terms of preferences and sentiments of the people.
Disadvantages:
-- In this type of depart mentation, there are
problems in training people to think in terms of markets rather than products;
-- Requires more persons with general managements abilities; and
-- Increases problem of top management control because of the distance between the corporate headquarters and the regional officers.
