Geographical organizational structure involves grouping of the activities according to regional or geographical locations. The territorial divisions become a complete administrative unit to cater to the need of the localities. The Regional Manager will practically be the chief controller of his region. He is given full powers of managing his own region or zone. His office functions as a head office for all practical purposes. The functions pertaining to finance, marketing, personnel and production development of low-level employees are completely vested in the zonal office which has separate departments of these functions to guide and control the respective activities of the zone. The zonal office may have several divisional offices for executive functions. The area population and size of business in a zone will decide the number of divisional offices, their functional activities, and amount of authority and responsibility to be vested in the divisional managers. The divisional managers may have several branch managers to manage the affairs of each branch in the division. The branch managers will be the real managers to manage the affairs of the company. The production and business are performed by the branch offices which understand the local requirements and sensitiveness of people. They can utilize the local conditions and can capitalize on the local situations, raw materials and market.
The most effective and useful form of divisional functional organization can be observed in the case of commercial banks. The decentralization of commercial banks have given very useful results as the efficiency, effectiveness and economy of the bank functioning have increased. There is enough scope for utilization of the existing resources of the corporation as well as market potentials in the field. Coordination and control are exercised by the Central Office. Each branch unit is effectively managed as per the local conditions.