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You seem to have a good handle on a sensible way to organise your departments and locations but personally I wouldn't break inheritance on folders, instead I'd manage access at the Web Level simply because Webs are intended to have some independence for administration and effectively securing content seems to be the most pressing problem here. Don't be ...


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Target audience and permission are different. If you use target audience for each location, a user can still access documents from other location through the SharePoint search.



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