Organizational Response to Customer Dispersion

Concentration, the degree to which factors are distributed in the environment, can have differing effects on an organization's activities. Whether factors are concentrated in one or several locations, managers must be able to identify their location and develop methods for using them. When factors are concentrated in one location, transportation costs can be reduced because members need not travel to multiple locations to get them. When factors are dispersed, or evenly distributed in the environment, the cost of learning about those factors increases, as does the cost of transportation to and from the factors.

Thus, organizations in a concentrated environment will realize more efficiency in their operations is necessary than organizations in a dispersed environment.

Many firms have responded to customer dispersion by providing mail-order services. Sears, of course, developed this idea before the turn of the century through its catalogs. Some companies, such as Lands' End and many seed stores, use mail order almost exclusively to reach their customers. On the other hand, political lobbyists spend most of their time in Washington, D.C., because that is where most of the political factors are concentrated. Many brokerage firms locate in New York City because of the concentration of financial markets. And steel companies prefer to locate in the upper Midwest because ore and labor are concentrated in this region.