Under what conditions should a company consider adopting a g

Under what conditions should a company consider adopting a global geographic structure as opposed to a global product structure?

Please respond at least 400 words

Solution

Companies need to adopt an organizational structure according to their functional needs. A product structure is more affordable to companies that has a small variety of products but multiple locations of distribution (stores, customer service stands, among others) is the case of retail firms. As well, geographical structure is recommended to adjust the product properties to the local market.

A company can be realize that its product is not being profitable enough because a few of its characteristics of it does not fit with customers needs or tastes. For example, for an insurance company may need to open receiving offices in different locations to make easier to the affiliated to canalize their demands or to obtain information, better than If only exists an office to health insurance, life policies, car attention and so on.

Continuing with this example, if the receiving office is in a residential area, the attention schedule must be different than it is al a comercial zone. A geographic structure deals better with situations which the product or service are delivered in different contexts and require specific treatment.

The Geographical structure has some advantages that deserve to be referred as:

The attention in geographical variable. To concentrate all functions on one geographical zone permits each department to operate more effective, customers can perceive that the quality has improved, because product is adapted to them. In the case of services, the closeness of the provision is the key or the client loyalty and preference, customers value to have easy access to information and basic benefits.

The other aspect is the communication, which is much more personal in a geographical organizational structure, faster and more direct. Can make easier the formation of work teams improving the process of decision-making. Communication represents one of the most important organizational limitations, and It would be an strategic advantage of geographical structure is precisely this, the more fluid communication.

An additional angle is the ability to include local managers, promoting leaders who understand local business environment, culture, and legal framework. Newly, decision-making process is more effective, it is an excellent way to recruit promising talent to accomplish organizational goals.

Finally, a geographical structure shows also strategic advantages. The performance measurement of individual and team work is more direct. To decentralize control mechanisms to make easier this process. Having control points closer of the core process we can implement correctives faster and facilitating decision making process.