Monday, February 9, 2015

Territoriality in Business

Territoriality in Animals

Territoriality is a common animal behavior where a group of animals from the same species defend their territory against intruders usually of the same species as well. This phenomenon helps such groups of animals maintain control over resources present in such area and thus be better able to survive, grow and reproduce. Territoriality is one form of competition among members of the same species.


In the business world, competition is a norm and so is territoriality. Territoriality in the business world can manifest in a number of different forms. One of the most popular ways in which territoriality is practiced in the business world is through the concept of franchising. A franchisor may offer geographic master franchises to larger franchisees which then may 'slice' them down into smaller franchises also separated location wise. This concept helps the franchisor, the master franchisees and the smaller franchisees under them thrive each within its own territory without competing with its sister franchisees.

Free Trade

The franchising system is one manifestation of the concept of territoriality in the business world. Another manifestation of territoriality can be seen on a higher level in the economy of nations. A country may decide to protect itself from the invasion of cheap merchandise from other countries by adding customs. This practice, although still practiced, is now being reduced. The fight for the so called free trade and open borders for the exchange of goods and services without restrictions has been lead by developed countries that have the power to compete with their advanced products and services.

Territoriality in Business

Aside from franchising, there are formal and informal ways for enforcing the practice of having a territory for a business. An example of a formal practice is for instance mandating a minimal distance between pharmacies. Other informal ways for protecting a territory also exist. A large business may defend its 'territory' by a sudden drastic reduction of prices to collapse a new small fledgling business trying to enter the market within the territory of that large business. In some places, even force can be illegally used to 'convince' competitors to back off from a business's long established territory.