Deck 6: Designing Organizations for the International Environment

Question 1

Which of the following is a new entity that is created when two or more separate firms come together to share development and/or production costs?

A) wholly owned subsidiaries
B) joint ventures
C) consortia
D) licensing agreements

Answer 1

B

Question 2

Which term refers to the number and variety of products and services a company offers, as well as the number and variety of regions, countries, and markets it serves?

A) economies of scale
B) market potential
C) scope
D) development stage

Answer 2

C

Question 3

Which factor motivates companies to expand internationally and is related to labour and raw materials?

A) cheaper production
B) smaller number of distribution channels
C) economies of scale
D) economies of scope

Answer 3

A

Question 4

Which of the following is a characteristic of the global matrix organizational structure?

A) It increases horizontal coordination, but decreases vertical coordination.
B) It balances the interests of both product standardization and regional customization
C) It commonly utilizes matrix bosses as functional and product heads.
D) It divides the world into regions with each division reporting to the CEO.

Question 5

CHART 6.1

Refer to Chart 6.1. Which of the following best describes the organization depicted in Chart 6.1?

A) Law, engineering, and finance are considered to be product groups.
B) The regional directors are also responsible for product groups.
C) Global product heads fulfill the function of full-time staff integrators.
D) Global product heads are usually accountable for profit and loss of their product in worldwide sales.

Question 6

In what stage of the international evolution of a company are the worldwide geographic or product structures most likely to appear?

A) domestic
B) international
C) multinational
D) global

Question 7

Which component of the global organizational challenge is being faced by an organization that has to create a structure to operate in numerous countries that differ in economic development, language, political systems and government regulations, cultural norms and values, and infrastructure?

A) the problem of transferring knowledge across a global firm
B) dealing with greater complexity and differentiation
C) the need for integration
D) the need for KSAs

Question 8

Which type of strategy would encourage production design, assembly, and marketing tailored to the needs of each country?

A) focused
B) multidomestic
C) globalization
D) joint venture

Question 9

In what stage does a specific division replace the export department, requiring the need to hire specialists to handle sales, service, and warehousing abroad?

A) domestic
B) international
C) global
D) multinational

Question 10

Which of the following is a characteristic of the global product organizational structure?

A) It utilizes country managers who are accountable for profit and loss of every product.
B) It fits well with customization of production or marketing.
C) It may result in competition among product divisions.
D) It will ensure that all countries are covered well.

Question 11

Which types of organizations operate with the entire world as their marketplace?

A) multidomestic firms
B) domestic organizations
C) governmental agencies
D) global companies

Question 12

What type of strategy is being followed when a company such as Coca-Cola decides to use the same product design and advertising strategy throughout the world?

A) multidomestic
B) consortia
C) focused
D) globalization

Question 13

Chart 6.2

Refer to Chart 6.2. Which structure is shown?

A) global functional
B) domestic hybrid
C) global matrix
D) global product

Question 14

What does building a global presence enable an organization's operations to achieve?

A) economies of scale
B) economies of scope
C) factors of production
D) its international development stage

Question 15

With what kind of products does the global product structure work best?

A) products that are technologically dissimilar
B) products that can be standardized for marketing worldwide
C) products that are obsolete in one country, but not in another
D) products that are cheap and easy to produce

Question 16

CHART 6.1

Refer to Chart 6.1. Which structure is shown?

A) global geographic
B) global matrix
C) global product
D) global functional

Question 17

Chart 6.2

Refer to Chart 6.2. How would you relate the structure diagrammed in organizational chart 6.2 to a global geographic structure?

A) The firm shown above is not as far along in developing opportunities for multidomestic strategy as the global geographic structure would be.
B) Product managers differ in that, in the chart above, the product heads are line managers primarily accountable for their product domestically, whereas, in the global geographic structure, product heads are staff advisers.
C) The structure shown is better than the global geographic structure.
D) The global geographic structure is more domestically oriented than the one above.

Question 18

Which of the following is a characteristic of the global geographical organizational structure?

A) It is most useful for new product lines.
B) It works well for products with rapidly changing technologies.
C) It works best if there are similar needs for the product across countries.
D) It may make product planning on a global scale challenging.

Question 19

Which of the following is a popular approach to sharing development and production costs and penetrating new markets?

A) consortia
B) licensing
C) joint ventures
D) franchising

Question 20

Which of the following is the term for groups of independent companies that come together to share skills, resources, costs, and access to one another's markets?

A) joint ventures
B) cartels
C) alliances
D) consortia

Question 21

Managers and organizations all over the world are very reluctant to cooperate to achieve competitive advantage on a global scale.

Question 22

A joint venture is a separate entity created with two or more active firms as sponsors.

Question 23

Which of the following characteristics distinguishes the transnational organization from other forms of global organizations?

A) Assets and resources are dispersed worldwide into highly specialized operations that are linked through interdependent relationships.
B) Structures are stable.
C) Subsidiary managers initiate strategy and innovations that become strategy for the corporation as a whole.
D) Unification and coordination are achieved primarily through corporate culture, shared vision and values, and management style rather than through formal structures and systems.

Question 24

The international stage of international development means that exporting is taken seriously and that the company deals with the competitive issues of each country separately.

Question 25

To meet new competitive threats, many manufacturing firms are emphasizing their ability to customize their products to meet specific needs, which requires a greater emphasis on global responsiveness.

Question 26

The globalization strategy means that product design, manufacturing, and marketing strategy are standardized throughout the world, whereas a multidomestic strategy means that competition in each country is handled independently of competition in other countries.

Question 27

In parts of Mexico, laundry detergent is used to wash dishes, not clothes, which is an example of the need for a multidomestic strategy.

Question 28

What kind of major challenge do managers face as organizations become more differentiated, with multiple products, divisions, departments, and positions scattered across numerous countries?

A) knowledge transfer
B) differentiation
C) integration
D) development

Question 29

Building a global presence expands an organization's scale of operations, enabling it to realize economies of scale.

Question 30

Which model reflects the ultimate in both organizational complexity, with many diverse units, and organizational coordination, with mechanisms for integrating the varied parts?

A) transformative
B) transnational
C) global
D) multidomestic

Question 31

An organization in the second stage of international evolution (international stage) will usually have a domestic structure with an export department.

Question 32

Which of the following, if present to a high degree, means that people accept inequality among institutions, organizations, and people?

A) uncertainty avoidance
B) power distance
C) employee empowerment
D) integration

Question 33

Which statement best describes Mandel-Campbell's description of Canada's approach to competing globally?

A) Canada has competed effectively internationally.
B) Canada needs policies to encourage entrepreneurial action.
C) Canada needs to do more research to understand and address globalization.
D) Canadian companies have not had the gumption necessary for international success.

Question 34

Which of the following characterizes the transnational model?

A) using shared vision and values to achieve coordination in this horizontal structure
B) being one step short of the matrix in exploiting both global and local advantages for the corporation as well as multiple interrelated competitive issues
C) having a single headquarter and a single centre of control for each country and for each product line
D) not having a single corporate headquarter, but a clear hierarchical responsibility

Question 35

Lawrence Incorporated used global teams as part of its internationalization, enabling them to be more locally responsive to different regional markets, consumer preferences, and political and legal systems. Which of the following issues did this structure address?

A) the differentiation challenge
B) units gaining influence within the global firm
C) codification of organizational knowledge throughout the global firm
D) lack of ability to gain economies of scope

Question 36

As companies begin to explore international opportunities, they typically start with an international division that grows into an export department.

Question 37

In the third stage (multinational stage) of international development, a company typically shifts its interest from domestic activity to exporting.

Question 38

Which of the following kinds of formal positions do organizations create to coordinate information and activities related to key customer accounts?

A) functional manager
B) transnational team
C) network coordinator
D) division network

Question 39

Having a presence in multiple countries provides firms with more marketing power and synergy compared to the same-size firm that has a presence in fewer countries.

Question 40

Functional structures are found more frequently in a worldwide business than in a domestic business.

Question 41

A transnational team is a work group comprising multinational members whose activities span multiple countries.

Question 42

Low uncertainty avoidance means that people have a high tolerance for the unstructured, the unclear, and the unpredictable.

Question 43

High uncertainty avoidance means that people accept inequality in power among institutions, organizations, and people.

Question 44

Functional managers coordinate across functions, whereas country managers coordinate among countries.

Question 45

Hybrid structures are typical in highly volatile environments.

Question 46

The transnational model reflects the ultimate in both organizational complexity, with many diverse units, and organizational coordination, with mechanisms for integrating the varied parts.

Question 47

A growing number of global consumers are rejecting the notion of homogenized products and services, and calling for greater response to local preferences.

Question 48

The global product structure works best when pressure for decision-making balances the interests of both product standardization and geographical localization, and when coordination to share resources is important.

Question 49

Case 6.0
It was reported in the Wall Street Journal that Ford Motor Co. was reorganizing to place its functions such as product development, sales, and engine/transmissions under their own executives with global authority. Alexander Trotman, chairman and CEO, wanted to create a structure that would avoid costly duplication in different parts of the world and that would foster Ford's development of models such as its Mondeo (Europe) and Contour (U.S.), which could sell worldwide with few modifications. Trotman wanted a company that was strong internationally in product development, manufacturing, and purchasing and that could take advantage of Ford's geographical strengths throughout the world.
The company had been organized geographically into three relatively independent divisions-Ford North America, Ford of Europe, and Ford Asia/Pacific. The new products cited above, Mondeo and Contour, sapped $6 billion in development costs because of expensive coordination time between the sometimes-conflicting European and North American divisions. Elimination of duplication was a goal of the new structure.
Simultaneously a new "program team facility" was being constructed so that all of Ford's new product development would be by teams. The new coupe Mustang was born from an experimental cross-functional team that designed the product in less than three years compared to Ford's normal four-to-five-year development cycle. Trotman emphasized that he wanted to change the process, not just the structure, by which new products were developed. Ford apparently found the team process convincing because the Mustang was developed on a budget about 30% lower than budgets for comparable projects.
SOURCE: Summarized from "Ford to Realign with a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pp. A3-A4.
Refer to Case 6.0. Comment on any difficulties Ford might encounter in adopting the philosophy and behaviour of a horizontal corporation as the company made the structural change CEO Trotman outlined.

Question 50

Case 6.0
It was reported in the Wall Street Journal that Ford Motor Co. was reorganizing to place its functions such as product development, sales, and engine/transmissions under their own executives with global authority. Alexander Trotman, chairman and CEO, wanted to create a structure that would avoid costly duplication in different parts of the world and that would foster Ford's development of models such as its Mondeo (Europe) and Contour (U.S.), which could sell worldwide with few modifications. Trotman wanted a company that was strong internationally in product development, manufacturing, and purchasing and that could take advantage of Ford's geographical strengths throughout the world.
The company had been organized geographically into three relatively independent divisions-Ford North America, Ford of Europe, and Ford Asia/Pacific. The new products cited above, Mondeo and Contour, sapped $6 billion in development costs because of expensive coordination time between the sometimes-conflicting European and North American divisions. Elimination of duplication was a goal of the new structure.
Simultaneously a new "program team facility" was being constructed so that all of Ford's new product development would be by teams. The new coupe Mustang was born from an experimental cross-functional team that designed the product in less than three years compared to Ford's normal four-to-five-year development cycle. Trotman emphasized that he wanted to change the process, not just the structure, by which new products were developed. Ford apparently found the team process convincing because the Mustang was developed on a budget about 30% lower than budgets for comparable projects.
SOURCE: Summarized from "Ford to Realign with a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pp. A3-A4.
Refer to Case 6.0. Describe how Ford's proposed structural changes are different from the usual progression through the stages resulting from international development. Describe how Ford's proposed structural changes parallel the new designs for domestic and global advantage.

Question 51

The product-based structure works best when a division handles products that are technologically similar and can be standardized for marketing around the world.

Question 52

With a global geographical structure, each division's manager is responsible for planning, organizing, and controlling all functions for the production and distribution of its products for any market around the world.

Question 53

Network coordinators would enable a manufacturing organization to provide knowledge and integrated solutions across multiple businesses, divisions, and countries for a large customer.

Question 54

The management philosophy of a transnational model is based on interdependence rather than either full divisional independence or total divisional dependence on headquarters for decision making and control.

Question 55

The "not invented here" syndrome makes some managers reluctant to tap into the know-how and expertise of other units.

Question 56

The global geographical structure divides the world into geographical regions, with each geographical division reporting to the CEO.

Question 57

The GLOBE findings are notably different from Hofstede's.

Question 58

In many instances, companies will need to respond to both global and local opportunities simultaneously, in which case the global matrix structure can be used.

Question 59

European companies tend to have international units that have a high level of independence.

Question 60

Case 6.0
It was reported in the Wall Street Journal that Ford Motor Co. was reorganizing to place its functions such as product development, sales, and engine/transmissions under their own executives with global authority. Alexander Trotman, chairman and CEO, wanted to create a structure that would avoid costly duplication in different parts of the world and that would foster Ford's development of models such as its Mondeo (Europe) and Contour (U.S.), which could sell worldwide with few modifications. Trotman wanted a company that was strong internationally in product development, manufacturing, and purchasing and that could take advantage of Ford's geographical strengths throughout the world.
The company had been organized geographically into three relatively independent divisions-Ford North America, Ford of Europe, and Ford Asia/Pacific. The new products cited above, Mondeo and Contour, sapped $6 billion in development costs because of expensive coordination time between the sometimes-conflicting European and North American divisions. Elimination of duplication was a goal of the new structure.
Simultaneously a new "program team facility" was being constructed so that all of Ford's new product development would be by teams. The new coupe Mustang was born from an experimental cross-functional team that designed the product in less than three years compared to Ford's normal four-to-five-year development cycle. Trotman emphasized that he wanted to change the process, not just the structure, by which new products were developed. Ford apparently found the team process convincing because the Mustang was developed on a budget about 30% lower than budgets for comparable projects.
SOURCE: Summarized from "Ford to Realign with a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pp. A3-A4.
Refer to Case 6.0. Identify the strategy in the textbook that Ford appears to be adopting. Describe advantages and disadvantages of that strategy for Ford. Why do you think CEO Trotman moved to that strategy?

Question 61

List the reasons most organizations tap only a fraction of the potential available from the cross-border transfer of knowledge.

Question 62

Select any organization with which you are familiar-your college or university, the car dealership down the road, an organization where you work, etc. Analyze the global forces that influence the organization you selected. How should the organization respond to those global forces in order to gain international competitive advantage?

Question 63

Case 6.0
It was reported in the Wall Street Journal that Ford Motor Co. was reorganizing to place its functions such as product development, sales, and engine/transmissions under their own executives with global authority. Alexander Trotman, chairman and CEO, wanted to create a structure that would avoid costly duplication in different parts of the world and that would foster Ford's development of models such as its Mondeo (Europe) and Contour (U.S.), which could sell worldwide with few modifications. Trotman wanted a company that was strong internationally in product development, manufacturing, and purchasing and that could take advantage of Ford's geographical strengths throughout the world.
The company had been organized geographically into three relatively independent divisions-Ford North America, Ford of Europe, and Ford Asia/Pacific. The new products cited above, Mondeo and Contour, sapped $6 billion in development costs because of expensive coordination time between the sometimes-conflicting European and North American divisions. Elimination of duplication was a goal of the new structure.
Simultaneously a new "program team facility" was being constructed so that all of Ford's new product development would be by teams. The new coupe Mustang was born from an experimental cross-functional team that designed the product in less than three years compared to Ford's normal four-to-five-year development cycle. Trotman emphasized that he wanted to change the process, not just the structure, by which new products were developed. Ford apparently found the team process convincing because the Mustang was developed on a budget about 30% lower than budgets for comparable projects.
SOURCE: Summarized from "Ford to Realign with a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pp. A3-A4.
Refer to Case 6.0. What sort of structure was Ford using before the proposed change?

Question 64

List and discuss the characteristics that distinguish the transnational organization from other global organization forms.

Question 65

Compare and contrast the global product division structure and global matrix structure.

Question 66

What are the three primary segments of the global organizational challenge? Discuss each.

Question 67

Under what conditions should an organization consider a global geographical structure as opposed to a global product structure?

Question 68

Discuss the global geographical structure.

Question 69

Describe the stages of international evolution in terms of their strategic orientation.

Question 70

When should a company begin using an international division? What problems are likely to be solved by adopting this structure? As the company progresses in its international development, what problems will likely not be solved by this structure?

Question 71

Discuss the national value systems.

Question 72

Discuss the global matrix structure. Give an example.

Question 73

Discuss each of the motivations for global expansion.

Question 74

Compare and contrast the globalization strategy and the multidomestic strategy. Give an example of effective use of each strategy.

Question 75

Which type of international strategic alliance, if any, would you recommend for a business that wanted to gain entry into China? Explain the reasons behind your choice.

Question 76

What are the international strategic alliances that companies can choose from to expand globally? Discuss and give an example of each.

Question 77

Why are global companies sometimes described as stateless corporations?

Question 78

The most advanced and competitive use of global teams involves simultaneous contributions in three strategic areas. List these three areas.

Question 79

Discuss the three primary approaches to coordination and control as represented by Japanese, North American, and European companies.