Choice of a Regional Structure Over a Functional Structure (AQA Paper 2 2019, Q3.2)

Here is a suggested answer to a past exam question on why a multinational business may have chosen a regional rather than a functional organisational structure.

Question: Analyse why Galin has chosen a regional organisational structure rather than a functional one [9 marks]

Possible response

One reason is that competition is different in each region. Galin is a large and complex business with a wide product and brand portfolio. A regional structure may be best for Galin to be able to respond to the "significant differences in market conditions" and be competitive in each region. For example, Galin may face strong regional competitors with who understand local customer preferences in market segments such as personal care or household cleaning. A regional structure may be more effective than a functional structure to enable Galin to recruit marketing managers who have expertise about market conditions in each region, thereby allowing Galin to ensure its products are priced, branded and distributed effectively. This is particularly important for the consumer product markets in which Galin operates where, if it had a functional structure, management might develop inappropriate brand names or products that do not comply with local regulations.

Note: the required range for this question is singular. So only one point is required to meet the demands of the scope of the question.