Geographic Organizational Structure

A geographical organizational structure organizes people within an organization by geographic location. This structure creates specific divisions for each location. Each division acts as if it is its own company, combining different types of personnel for various business functions. For example, each division may have its own marketing department, production department, sales department, distribution department and more. Geographic organizational structures often provide local divisions with the autonomy to operate as they would like. Divisions can understand and respond to local preferences and demand but still follow the overall business policy. Businesses with these structures are often better equipped to develop efficient regional, national and international operations.

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. Amazon’s organizational structure  incorporates geographic divisions. The company establishes groups on their physical geographic locations and related business goals. It’s the best example of geographic organization.

Amazon is particular about its organizational structure. They were the very first type of organizational structure and most big businesses still use them today, especially those with a global reach. In Amazon.com, the hierarchy is expressed in terms of a global system of clear lines of authority that heavily influence the firm’s operations.

For example, Jeff Bezos sits at the top exercising ultimate control over all senior executives and managers, who in turn apply directives through the sectors under their control either at their own discretion or at the direction of Jeff Bezos. These directives impact all relevant offices of the company all over the world.  

It is central hierarchies like this that enable complete managerial control over entire organizations, even where there are multiple product lines, services, and divisions.

The strongest part of Amazon’s org structure is its function-based global groups. Each major business function has its own dedicated group that is headed by an executive-level manager, such as a CEO or SVP. By structuring the company in this way, Amazon can efficiently and successfully manage its e-commerce operations throughout the entire organization. This structure also enables Amazon to more easily establish operations in new and emerging markets.

Geographic divisions and their sub-divisions

A geographic group company bases groups on their physical geographic locations and related business goals. For example, Amazon.com Inc., the e-commerce arm of the company, uses these divisions to make it easier to manage the e-commerce business based on the distinctions of these regions, their regulatory framework, and any challenges such as logistics. The strategic advantage of splitting elements of the company into geographic divisions is that it enables Amazon to better and more accurately address issues or problems relevant to each region, and to do so efficiently, considering the regional markets themselves. Despite Amazon’s size, however, the company only has two geographic divisions: 1) North America and 2) International.

Amazon’s org structure works because it is highly effective at supporting international growth in a variety of different markets. The company’s continued success in expanding and growing its many areas of operation are testament to it working well. close communication with local customers, Amazon has been successful in creating strong collaborative teams at each location and the company can better serve local needs and tailor their approach to the local market.

The major advantage to Amazon of its overall hierarchical structure is that it enables Amazon.com, Inc. to quickly and effectively address and implement directives from senior managers, executives, and stakeholders’ business extensively. At the same time, global and geographic divisions are advantageous in supporting the focus on different the many different facets of the business and geographic locations come with their own challenges and economic conditions which Jeff Bezos handles efficiently. The culture of employees is respected by the management. In my opinion the key to success of geographic structure of organization is respect the local culture. 

Strong leadership is when you can encourage, motivate, inspire and challenge your team to produce their best work. Strong leadership connects a team together through a common purpose and builds relationships in the workplace that allow for effective communication, more creativity and better problem-solving skills.

Geographic organizational structures work best with strong leadership. The leader needs to be a visionary and good in decision making. Geographic organizations are far and wide therefore the entire organization sharing the same vision is most important. Daimler AG, for instance, has its headquarters in Stuttgart, Germany, and has manufacturing facilities in several European locations, and has sales divisions all over the world. Daimler AG promotes equal opportunities and a culture of appreciation and respect. They believe that people are more motivated and productive when they can bring their whole selves to work

A geographical structure can offer several operational and strategic advantages, including close communication with local customers, strong collaborative teams at each location and the ability to better serve local needs and tailor their approach to the local market.