Departmentalization By Location

Here jobs that are in one location or nearby locations are grouped together into one department and allocated a manager.As an organization grows bigger geographical departmentation becomes necessary with geographical departments. Ultimate authority for performing the basic organizational functions is still retained by headquarters, but some authority for their performance is delegated to the departments on a geographical basis.

In departmentalizing by location considerations for the following must be made, economic factors, climatic factors, legal and political factors and convenience to customers.

Advantages:

•    Decentralization allows the branches to react to local conditions more appropriately.
•    Faster decisions because consultation with headquarters is minimised.
•    Provides a good training ground for general managers.

Problems:

•    Control—remote branches feel too independent and thus hinder control.
•    Branches are expensive to run.
•    There is duplication of resources especially human resources.