The process of creating departments along the geographical areas that the enterprise serves is termed territorial depart mentation.
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.
-- Territorial departmentation makes it possible
to concentrate on markets and marketing channels in different geographical
-- Develops opportunities for more efficient
marketing activities because of better face-to-face communication with local
-- 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.
-- In this type of depart mentation, there are
problems in training people to think in terms of markets rather than products;
more persons with general managements abilities; and
-- Increases problem of top management control
because of the distance between the corporate headquarters and the regional
The three patterns of depart mentation discussed above
– product, customer and territorial depart mentation broadly characterize the
divisional structure. All the three patterns have advantages and disadvantages.
The choice of any of these structures, therefore, would be based on which of
the factors management judges to be more important and critical in the light of
the strategies and objectives
Tags : Management Concepts & Organisational Behaviour - Organisation Structure And Design
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