Deck 10: The Organization of Global Business

Question 1

The organizational structure that results from combining functional and divisional structures is called a geographic region structure.

Answer 1

False

Question 2

The functional organizational structure has three main advantages: It promotes economies of scale, promotes in-depth skill development, and helps eliminate competition from the market.

Answer 2

False

Question 3

A market structure is a particular kind of divisional structure that groups products into separate divisions according to the needs of different customers.

Answer 3

True

Question 4

The varying functions of ExxonMobil's Upstream, Downstream, and Chemical subunits demonstrate its product organizational structure.

Question 5

While many major corporations have a global presence, stateless corporations are different because _____.

A) they have no board of directors
B) they are socially responsible
C) they are more concerned with human rights
D) they are usually more profitable
E) they attempt to transcend nationality altogether

Question 6

Global businesses with a hybrid structure are said to be organized by more than one dimension at the top level.

Question 7

C.K. Prahalad an expert in the field and professor at the University of Michigan suggests that stateless corporations represent the third stage of globalization.

Question 8

According to C.K. Prahalad, the first stage of globalization is _____.

A) when global firms set up operations in other countries
B) when companies produce goods in one country and export them to other countries
C) when global businesses establish foreign subsidiaries to handle the exports from their home countries
D) when stateless corporations locate their core corporate functions and top executives in different countries
E) when multinational companies headquarter in their home country

Question 9

Under a matrix structure, the functional managers and the divisional managers have equal authority within the organization.

Question 10

There are four stages of globalization: Global companies produce goods in one country and export them to other countries, foreign subsidiaries are established to handle the exports from their own countries, operations are set up in other countries, the corporation locates their core corporate functions and top executive in different countries in order to achieve competitive advantage.

Question 11

At GM, North American Operations, GM Acceptance Corporation, International Operations, and Hughes Electronics are examples of the company's subsidiaries.

Question 12

C.K. Prahalad postulates that stateless corporations represent the _____ stage of globalization.

A) first
B) second
C) third
D) fourth
E) fifth

Question 13

The reason why some organizations reject a functional organizational structure is because they believe it renders them unable to respond to environmental changes that require coordination between functional areas, and because it offers each employee a restricted view of the organizations primary goal.

Question 14

According to C.K. Prahalad, the fourth stage of globalization is _____.

A) when global firms set up operations in other countries
B) when companies produce goods in one country and export them to other countries
C) when global businesses establish foreign subsidiaries to handle the exports from their home countries
D) when stateless corporations locate their core corporate functions and top executives in different countries
E) when multinational companies headquarter in their home country

Question 15

Research shows that separating domestic and international operations is a smart strategic decision that has virtually no drawbacks.

Question 16

Lenovo, the Chinese computer manufacturer, is a corporation where it is difficult to identify one country as the home country. Lenovo can be described as a _____ corporation.

A) domesticated
B) stateless
C) divided
D) hybrid
E) matrix

Question 17

A global defense contractor needs deep functional skills as well as the ability to coordinate across the functions of each contract or project. For this example, the organizational structure that would best suit their needs would be a matrix structure.

Question 18

According to Ms. Bartz, former CEO of Yahoo!, organizational structure promotes innovation.

Question 19

The first step a domestic firm takes when entering an international arena is usually to create an international division.

Question 20

A market structure is also called area structure.

Question 21

CEMEX has three divisions: North American, South America and the Caribbean, and Europe, Asia, and the Middle East. CEMEX has a _____ structure.

A) matrix
B) product
C) geographical region
D) market
E) hybrid

Question 22

A defense contractor may need deep functional skills as well as the ability to coordinate across the functions for each contract or project. This contractor ought to use a _____ structure.

A) functional
B) product
C) geographical region
D) market
E) matrix

Question 23

A basic problem of the matrix structure is _____.

A) it does not promote economies of scale.
B) it cannot help the organization to acquire the latest and most scale-intensive machinery.
C) it is difficult to determine the responsibility and authority relationships between the functional and divisional managers.
D) it does not ensure that organizations will engage in socially responsible efforts.
E) it does not encourage collaboration, efficiency, and quality within the function.

Question 24

The initial step toward globalization is ______.

A) domestication
B) creating a statelessness
C) creating a wholly owned subsidiary
D) exporting
E) developing foreign manufacturing base through joint venture

Question 25

Of the following, which is NOT listed in the text as a purpose of organizational structure?

A) It allows the members of the organization to perform a wide variety of activities based upon a division of labor that leads to specialization of functions.
B) It permits the organization members the coordination of their activities.
C) It permits the organization members to create hierarchical supervision.
D) It determines the boundaries of the organization and regulates its interfaces with the environment and its interactions with other organizations.
E) It allows the members of an organization to develop a cohesive company culture.

Question 26

A business subunit that consists of a collection of functions or departments that share responsibility for producing a particular product or service is known as a(n)_____.

A) partition
B) division
C) structure
D) union
E) formation

Question 27

A special case of the divisional structure where products are grouped into separate divisions according to their similarities or differences is called a _____ structure.

A) matrix
B) product
C) geographical region
D) divisional
E) hybrid

Question 28

At GM, several subunits share responsibility for producing automobiles. These consist of: North American Operations, GM Acceptance Corporation, International Operations, and Hughes Electronics. This is an example of an organization with _____.

A) partition
B) divisions
C) stateless position
D) union
E) formation

Question 29

Bayer AG clustered all of its business operations into six groups under an umbrella company called Bayer World. Each of these six groups have included several subgroups comprised of product categories such as as dyestuffs, fibers, or chemicals. At the same time, each of its administrative and service functions were placed under Bayer World into one of several functional groups, such as marketing, human resources, plant administration, or finance. In addition, top executives who had headed functional groups in the past, were given authority over different geographical regions, which, like the product groups, were supported by and intertwined with the functional groups. The final result of the new organizational structure divided the original nine functional areas into 19 multidisciplinary, interrelated business groups. The new organizational structure that Bayer AG adopted was a _____structure.

A) divisional
B) functional
C) matrix
D) product
E) hybrid

Question 30

At IBM, there are five divisions: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. IBM utilizes a _____ structure.

A) matrix
B) product
C) geographical region
D) market
E) hybrid

Question 31

There are typically _____ organizational structures for global business.

A) two
B) three
C) four
D) five
E) six

Question 32

A basic problem of the _____ structure is it is difficult to determine the responsibility and authority relationships between the functional and divisional managers.

A) divisional
B) functional
C) matrix
D) product
E) hybrid

Question 33

Of the following, which is NOT an advantage of an international division?

A) It permits global businesses to concentrate all international efforts in one location.
B) If the international division is at the same organizational level as domestic operations, it signals to international customers their importance to the company.
C) It ensures that the company will be more profitable.
D) It fosters a global mindset in the people working within the division.
E) It facilitates the key process of designing products that cater to local tastes.

Question 34

Of the following, which is NOT an advantage of the functional structure?

A) It promotes economies of scale.
B) It can help the organization to acquire the latest and most scale-intensive machinery.
C) It promotes in-depth skill development of employees.
D) It ensures that organizations will engage in socially responsible efforts.
E) It encourages collaboration, efficiency, and quality within the function.

Question 35

Hilton Hotels Corporation has the following divisions which cater to different customer classes around the world: Hilton, Hilton Garden Inn, Doubletree, Embassy Suites, Hampton, and Timeshares. Hilton Hotels Corporations has a _____ structure.

A) matrix
B) product
C) geographical region
D) market
E) hybrid

Question 36

At ExxonMobil, divisions include Upstream, Downstream, and Chemical. The Upstream division includes exploration, development, production, and gas and power marketing. The Downstream division includes refining and supply, fuels and marketing, and lubricants. ExxonMobil utilizes a _____ structure.

A) matrix
B) product
C) geographical region
D) market
E) hybrid

Question 37

Limited Clothing Inc. has a corporate headquarters with three divisions: North American Division, European Division, and Asia Division. Limited Clothing Inc. has a _____ structure.

A) matrix
B) product
C) geographical region
D) market
E) hybrid

Question 38

According to the text, ConocoPhillips placed their ethics office in which part of the organization structure?

A) Research and development department
B) Manufacturing department
C) Maintenance department
D) Audit and finance department
E) Human resources department

Question 39

Of the following, which is NOT a disadvantage of an international division?

A) Managers in the international division may feel like "second class" citizens.
B) Designing products with both domestic and international appeal may be difficult.
C) Core competencies and knowledge may not be shared.
D) It may be difficult to capture learning-curve savings.
E) It fosters a global mindset in the people working within the division.

Question 40

Global businesses with a narrow product line or a highly integrated product mix, such as aircraft manufacturers or oil and gas firms typically use a _____ organizational structure.

A) functional
B) product
C) geographical region
D) matrix
E) hybrid

Question 41

A functional structure is one where an organization:

A) groups people together because they hold similar positions in a company, perform a similar set of tasks, or use the same kind of skills.
B) groups products into separate divisions according to their similarities or differences.
C) groups products into separate divisions according to the needs of the different geographical regions the company serves.
D) groups products into separate divisions according to the needs of different customers.
E) is said to be organized by more than one dimension at the top level.

Question 42

________ is a particular kind of divisional structure that groups products into separate divisions according to their similarities or differences.

Question 43

"For a global business, organizational structure is not important." Do you agree with this statement? Defend your position.

Question 44

Any combination of different organizational structures is generally referred to as a ________.

Question 45

A geographic region structure is one where an organization:

A) groups people together because they hold similar positions in a company, perform a similar set of tasks, or use the same kind of skills.
B) groups products into separate divisions according to their similarities or differences.
C) groups products into separate divisions according to the needs of the different geographical regions the company serves.
D) groups products into separate divisions according to the needs of different customers.
E) is said to be organized by more than one dimension at the top level.

Question 46

A ______ is a business subunit that consists of a collection of functions or departments that share responsibility for producing a particular product or service.

Question 47

According to C.K. Prahalad, global businesses establish foreign subsidiaries to handle the exports from their home country in which stage of globalization?

A) First
B) Second
C) Third
D) Fourth
E) Fifth

Question 48

A ________ refers to one type of organizational structure in which functions are grouped together to serve the needs of products, markets, or geographical regions.

Question 49

A _______ is a new phase in the evolution of the multinational corporation, where work is sourced wherever it is most efficient and the corporation transcends nationality altogether.

Question 50

_________ is an organizational structure that groups people together because they hold similar positions in a company, perform a similar set of tasks, or use the same kind of skills.

Question 51

_________ is a particular kind of divisional structure that groups products into separate divisions according to the needs of the different geographical regions the company serves.

Question 52

Some companies are global and so well integrated into the countries where they have a presence, that it is difficult, if not impossible, to identify one country as the home country for these corporations. such companies are called _____.

A) domestic
B) stateless
C) divided
D) hybrid
E) matrix-based

Question 53

Also called customer structure or customer class structure, a ______ is a particular kind of divisional structure that groups products into separate divisions according to the needs of different customers.

Question 54

The formal system of task and authority relationships that control how people coordinate their actions and use resources to achieve organizational goals is referred to as the _______.

Question 55

Are export departments important for global businesses? How do they differ from international divisions? Explain.

Question 56

A market structure is one where an organization:

A) groups people together because they hold similar positions in a company, perform a similar set of tasks, or use the same kind of skills.
B) groups products into separate divisions according to their similarities or differences.
C) groups products into separate divisions according to the needs of the different geographical regions the company serves.
D) groups products into separate divisions according to the needs of different customers.
E) is said to be organized by more than one dimension at the top level.

Question 57

According to C.K. Prahalad, global firms set up operations in another country in which stage of globalization?

A) First
B) Second
C) Third
D) Fourth
E) Fifth

Question 58

An organizational structure in which people are grouped simultaneously by function and by division is known as a ________.

Question 59

A product structure is one where an organization:

A) groups people together because they hold similar positions in a company, perform a similar set of tasks, or use the same kind of skills.
B) groups products into separate divisions according to their similarities or differences.
C) groups products into separate divisions according to the needs of the different geographical regions the company serves.
D) groups products into separate divisions according to the needs of different customers.
E) is said to be organized by more than one dimension at the top level.

Question 60

An ______ is a tool that people use to coordinate their actions to obtain something they seek or value.

Question 61

Mirkhani Mining Supplies is the industry leader in the production of underground mining equipment. The company has its headquarters in South Africa and has been in operation there since its inception in 1987. Mirkhani is known worldwide for the safety features it incorporates in its equipment. This company conducts its operations with the safety of the underground miner as its guiding objective.
Mirkhani Mining was recently called in to respond to the latest mine accident in China. Mirkhani not only provides safe mining equipment, it also makes superior mine rescue equipment. The company will be receiving a global award for freely rendering the use of its rescue equipment to China during a mine collapse. Mirkhani Mining Supplies will be recognized around the globe as saving the lives of forty underground miners in China. The company states, "Saving those lives is better than receiving a billion dollars for mining machinery."
Which of the following structure type best identifies the structure Mirkhani Mining Supplies would be using if it grouped its products and services into separate divisions based on the needs of different areas served by the company?

A) Matrix structure
B) Hybrid structure
C) Globalized structure
D) Market structure
E) Geographical region structure

Question 62

Mirkhani Mining Supplies is the industry leader in the production of underground mining equipment. The company has its headquarters in South Africa and has been in operation there since its inception in 1987. Mirkhani is known worldwide for the safety features it incorporates in its equipment. This company conducts its operations with the safety of the underground miner as its guiding objective.
Mirkhani Mining was recently called in to respond to the latest mine accident in China. Mirkhani not only provides safe mining equipment, it also makes superior mine rescue equipment. The company will be receiving a global award for freely rendering the use of its rescue equipment to China during a mine collapse. Mirkhani Mining Supplies will be recognized around the globe as saving the lives of forty underground miners in China. The company states, "Saving those lives is better than receiving a billion dollars for mining machinery."
All of the following characteristics would be seen if Mirkhani Mining Supplies was considered a stateless corporation except which one?

A) It is almost impossible to identify the home country of the company
B) It requires the company to maintain its own individuality within the host country
C) It represents a new phase in the evolution of multinational companies
D) It sends work to wherever it is performed most efficiently
E) It allows the company to transcend international boundaries without difficulty

Question 63

Mirkhani Mining Supplies is the industry leader in the production of underground mining equipment. The company has its headquarters in South Africa and has been in operation there since its inception in 1987. Mirkhani is known worldwide for the safety features it incorporates in its equipment. This company conducts its operations with the safety of the underground miner as its guiding objective.
Mirkhani Mining was recently called in to respond to the latest mine accident in China. Mirkhani not only provides safe mining equipment, it also makes superior mine rescue equipment. The company will be receiving a global award for freely rendering the use of its rescue equipment to China during a mine collapse. Mirkhani Mining Supplies will be recognized around the globe as saving the lives of forty underground miners in China. The company states, "Saving those lives is better than receiving a billion dollars for mining machinery."
As the growth of Mirkhani Mining Supplies has taken place, which one of the following is least likely to be a step it has taken in its international advancement?

A) Development of an export division
B) Collaboration between the sales department and the export division
C) Use of advanced marketing techniques for its products within its home country of South Africa
D) Adaptation of its products to better fit the needs of its customers
E) Development of an international division

Question 64

Differentiate between functional and divisional organizational structures. Provide an example of each.

Question 65

How are hybrid structures different from matrix structures? Explain.

Question 66

Scenario - Windmere Technologies
Windmere Technologies has been in operation since 1984. Today, Windmere is actually considered to be a globally-based firm with corporate offices in thirteen foreign nations. There is not one office of this company with higher authority or more decision making power than any other of the thirteen in operation. Windmere Technologies is recognized as a business leader in all thirteen nations in which it has corporate offices. According to the CEO of the company, "Windmere considers the world to be its home base." The management has done a good job of creating its organizational structure where people are grouped simultaneously by function and by division.
Windmere is best known for its work in creating alternative energy sources. As this is of vital concern to all nations of the world today, Windmere's ideas and products are welcomed by all nations. This business takes in revenues in excess of $8 billion per year and expects it to substantially increase in the future.
Which one of the following organizational structures best identifies the one currently used by Windmere Technologies?

A) Functional structure
B) Matrix structure
C) Divisional structure
D) Market structure
E) Geographical region structure

Question 67

Scenario - Windmere Technologies
Windmere Technologies has been in operation since 1984. Today, Windmere is actually considered to be a globally-based firm with corporate offices in thirteen foreign nations. There is not one office of this company with higher authority or more decision making power than any other of the thirteen in operation. Windmere Technologies is recognized as a business leader in all thirteen nations in which it has corporate offices. According to the CEO of the company, "Windmere considers the world to be its home base." The management has done a good job of creating its organizational structure where people are grouped simultaneously by function and by division.
Windmere is best known for its work in creating alternative energy sources. As this is of vital concern to all nations of the world today, Windmere's ideas and products are welcomed by all nations. This business takes in revenues in excess of $8 billion per year and expects it to substantially increase in the future.
Which one of the following best describes Windmere Technologies claim that the world is its home base?

A) A hybrid structure
B) A functional structure
C) A matrix organization
D) A stateless corporation
E) A geographical regional structure

Question 68

Describe the different types of divisional structures using visual diagrams.

Question 69

Scenario - Windmere Technologies
Windmere Technologies has been in operation since 1984. Today, Windmere is actually considered to be a globally-based firm with corporate offices in thirteen foreign nations. There is not one office of this company with higher authority or more decision making power than any other of the thirteen in operation. Windmere Technologies is recognized as a business leader in all thirteen nations in which it has corporate offices. According to the CEO of the company, "Windmere considers the world to be its home base." The management has done a good job of creating its organizational structure where people are grouped simultaneously by function and by division.
Windmere is best known for its work in creating alternative energy sources. As this is of vital concern to all nations of the world today, Windmere's ideas and products are welcomed by all nations. This business takes in revenues in excess of $8 billion per year and expects it to substantially increase in the future.
Which one of the following would Windmere Technologies not claim as a purpose of its organizational structure?

A) Serves as a barrier to interactions with other organizations
B) Determines the boundaries of the organization
C) Regulates its interactions with the environment
D) Utilizes a division of labor system that leads to departmentalization
E) Integrates mechanisms such as formal rules and procedures