February 27, 2024

geographical organisational structure?

A geographical organisational structure suits businesses that have offices or units in different regions or geographical areas. This form of structure enables businesses to:

have a reporting and functional system across multiple locations

operate separate sites according to local demand but still be directed by business policy

Depending on the size of the business, each geographic unit may report to an executive who oversees several locations. Alternatively,

it may report directly to top management located at the business’ headquarters. The reporting structure can adapt to the size and industry of the business.

The advantages of a geographical structure

A geographical structure can offer several operational and strategic advantages, including:

close communication with local customers

strong collaborative teams at each location

the ability to better serve local needs and tailor their approach to the local market

the ability to encourage positive competition between different departments

It makes sense to divide an organisation by region if different cultures, rules, languages and customer preferences exist in the area where the business operates. Logistics relating to shipping, resources and staff also sometimes make the geographical structure a good choice.

The disadvantages of a geographical structure

The main downside of a geographical organisational structure is the potential conflict between local and central management, as individual divisions often take on a great deal of autonomy. Other disadvantages include:

 

The disadvantages of a geographical structure

The main downside of a geographical organisational structure is the potential conflict between local and central management, as individual divisions often take on a great deal of autonomy. Other disadvantages include:

potential duplication of jobs, resources and functions

some economies of scale may be lost

Geographic organisational structure suits mainly industries like retail and hospitality, transportation and other businesses that need to be near sources of supply and customers (eg for deliveries, production or on-site support).

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