There are several scenarios for which you can use Territory Management (TM).
Territory Management is used most for reporting and for the determination of the employee responsible within business transactions.
You start by creating a hierarchical territory structure that describes your sales areas. You can describe the territories using attributes like sales organization, country of the Business Partner (BP) and postal code of the BP.
After creating your territory structure you can assign positions of the organizational model to your territories. The system will determine Business Partner assigned to the positions and link them to the territory. This way you are able to link persons to their responsible territories.