Can you create a subgroup within a subgroup?

Our plan to address this need is through group tags and group search.  Let's say that you have a sales organization (East Sales) with 3 groups that are underneath it (North, Central, South).   When you create the three sub-groups, you would add East-Sales as a group tag.  This way, you can keep the structure of the site flat but still connect them all as one entity. 

We have given much thought to nested sub-groups.  The issue with this is setting permissions, managing visibility of posts, etc.. We felt the tags give you much more freedom to connect groups in multiple ways and still accomplish what nested groups hope to accomplish.  Tagging also helps with re-organizations, changing group focus, etc.. What do you think?