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Exam technique advice

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

  • Levels: A Level
  • Exam boards: AQA

Here is a suggested answer to the 9-mark question asking students to analyse why the case study business chose a regional organisational structure rather than a functional organisational structure.

ANSWER 1

The need for Galin to be able to respond to the significant differences in market conditions and external environment in each region is likely to be a key reason why it chose a regional organisational structure. For example, it is likely that Galin will face strong domestic competitors in each region who have detailed understanding of customer needs and wants - and are therefore better able to adapt their marketing mix to make it effective. A regional structure is more likely to allow Galin to employ marketing management with similar market expertise and allow Galin to ensure their products are responsive to local needs. This is particularly important in FMCG markets in which Galin operates where it would be too easy for management in a functional structure to come up with, for example, inappropriate brand names or products that do not comply with local regulations.

Whilst a functional structure might be more cost-effective option for Galin (for example by spreading the cost of HR management or research and development across all regions), the benefits of this would likely be outweighed by the costs of lack of regional market expertise. Accordingly, a functional structure isn’t as relatively effective as a regional structure. For example, if Galin wants to have operations such as factories and sales offices in each region, then it needs to have the right operational expertise based in those areas who can better respond to changes in, for example, labour market regulations.

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