Deck 6: Designing Organizations for the International Environment

Question 1

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

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

Answer 1

A

Question 2

____ 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

____ are groups of independent companies that join together to share skills, resources, costs, and access to one another's markets.

A) Joint ventures
B) Franchising
C) Licensing
D) Consortia

Answer 3

D

Question 4

In the ____ stage, an international division has replaced the export department, and specialists are hired to handle sales, service, and warehousing abroad.

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

Question 5

____ is a popular approach to sharing development and production costs and penetrating new markets.

A) Consortia
B) Licensing
C) Joint ventures
D) Franchising

Question 6

Which of these operates in truly global fashion, and the entire world is their marketplace?

A) Multidomestic firms
B) Domestic organizations
C) Governmental agencies
D) Global companies

Question 7

Which stage is export-oriented and in a competitive position?

A) Multinational
B) Global
C) Domestic
D) International

Question 8

All of the following, except ____, are typical alliances used for global expansion.

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

Question 9

Which of the following means that product design, manufacturing, and marketing strategy are standardized throughout the world?

A) Globalization strategy
B) Standardization strategy
C) Multidomestic strategy
D) Transnational strategy

Question 10

When a company such as Coca-Cola decides to use the same product design and advertising strategy throughout the world, it is following the ____ strategy.

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

Question 11

One of the earliest, and still one of the most powerful, motivations for U.S. companies to invest abroad relates to ____: obtaining raw materials, labor, and other resources at the lowest possible cost.

A) factors of production
B) economies of scope
C) economies of scale
D) technological factors

Question 12

Reference Organization Chart 6.1. Comparing the structure that is diagramed 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 coordinators are staff advisors.
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 13

Yum! Brands, which owns Pizza Hut, Taco Bell, KFC, and Long John Silver's, gets ____ of its profits from overseas.

A) 15 percent
B) 33 percent
C) 55 percent
D) 70 percent

Question 14

In the ____ stage of international evolution, explosion occurs as international operations take off.

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

Question 15

The worldwide geographic or product structures are most likely to appear during the ____ stage of international evolution.

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

Question 16

Which of the following strategies should an organization pursue if the forces for national responsiveness and the forces for global integration are high?

A) Export
B) Multidomestic
C) Globalization
D) Globalization and multidomestic

Question 17

Reference Organization Chart 6.1. This structure is:

A) global functional structure.
B) domestic hybrid.
C) global matrix.
D) global product division.

Question 18

Reference Organization Chart 6.2. In this organization:

A) law, engineering, and finance are considered product groups.
B) because this organization is too complex, it would be better to return to a functional structure.
C) global product heads provide the function of a full-time staff integrator.
D) global product heads are usually accountable for profit and loss of their product in worldwide sales.

Question 19

Which of the following is not a primary factor that motivates companies to expand internationally?

A) Cheaper production factors
B) Smaller number of distribution channels
C) Economies of scale
D) Economies of scope

Question 20

A ____ strategy would encourage production design, assembly, and marketing tailored to the specific needs of each country.

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

Question 21

All of the following are characteristics that distinguish the transnational organization from other global organization forms except:

A) assets and resources are dispersed worldwide into highly specialized operations that are linked together 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 22

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

Question 23

The transnational model is characterized by:

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) has a single headquarters and a single center of control for each country and for each product line.
D) there is no single corporate headquarters, but there is a clear hierarchical responsibility.

Question 24

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

Question 25

Some organizations create formal ____ positions to coordinate information and activities related to key customer accounts.

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

Question 26

____ are typical in highly volatile environments.

A) Hybrid structures
B) Global geographic structures
C) Global matrix structures
D) Transnational structures

Question 27

The second stage of international evolution, "International Stage," will usually be structured with a domestic structure with an export department.

Question 28

All of the following are reasons why many organizations tap only a fraction of the potential that is available from cross-border transfer of knowledge and innovation, except:

A) Barriers of language, cultural, and geographic distances.
B) Lack of trust among people at different locations.
C) Divisions sometimes view knowledge and innovation as power and want to hold onto it.
D) Economies of scope can increase a company's market power as compared to competitors.

Question 29

The global matrix structure:

A) will increase horizontal coordination, but will decrease vertical coordination.
B) works best when there is pressure for decision making that balances the interests of both product standardization and geographical localization.
C) commonly utilizes matrix bosses as functional and product heads.
D) is usually found in firms that have reached the "international stage" of international evolution.

Question 30

In one survey, 70 percent of global companies reported that the most important function of corporation headquarters was to:

A) make shareholders happy.
B) provide enterprise leadership.
C) provide extensive training.
D) develop new goals and visions for the company frequently.

Question 31

The global product structure:

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

Question 32

The global geographic division structure:

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

Question 33

The ____ 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 34

Which of the following is not a primary segment of the global organizational challenge?

A) The problem of transferring knowledge across a global firm
B) Greater complexity and differentiation
C) The need for integration
D) The need for KSAs

Question 35

Reference Organization Chart 6.2. This structure is:

A) Global geographic division structure
B) Global matrix structure
C) Global product division structure
D) Global functional structure

Question 36

____ teams are cross-border work groups made up of multiskilled, multinational members whose activities span multiple countries.

A) Management
B) Global
C) Functional
D) Focus

Question 37

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

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

Question 38

The global product structure works best when a division handles products that:

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

Question 39

Four primary factors motivate companies to expand internationally: profitability, economies of scale, economies of scope, and low-cost production factors.

Question 40

As organizations become more differentiated, with multiple products, divisions, departments, and positions scattered across numerous countries, managers face a tremendous ____ challenge.

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

Question 41

A company typically shifts its interest from domestic activity to exporting in the 3rd stage (multinational) of international development.

Question 42

Stage two is the global stage which means the company takes exports seriously and begins to think multidomestically.

Question 43

Truly global companies no longer think if themselves as having a single home country and have been called stateless corporations.

Question 44

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

Question 45

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

Question 46

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

Question 47

If the forces for national responsiveness and the forces for global integration are high, then a multidomestic strategy with a global geographic structure would be the best fit.

Question 48

With a global geographic division 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 49

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 50

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 51

Innovation refers to the quality of collaboration across organizational units.

Question 52

Hybrid structures are typical in highly volatile environments.

Question 53

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

Question 54

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

Question 55

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

Question 56

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

Question 57

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

Question 58

The global product division 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 59

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

Question 60

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 61

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 62

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

Question 63

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

Question 64

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

Question 65

Why has globalization and global experience in management become so important to organizations?

Question 66

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 developing 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 that could take advantage of where Ford's strength was around 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 product cited above, the 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 borne 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 comparable project budgets.
SOURCE: "Ford to Realign With a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pages A3-A4.
Reference Case 6.0. Describe how Ford's proposed structural changes are rather different from the usual progression resulting from international development. Describe how Ford's proposed structural changes parallel the new designs for domestic and global advantage.

Question 67

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

Question 68

Select any organization with which you are familiar--your college, the Toyota dealership down the road, a corporation 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 69

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

Question 70

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

Question 71

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 developing 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 that could take advantage of where Ford's strength was around 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 product cited above, the 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 borne 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 comparable project budgets.
SOURCE: "Ford to Realign With a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pages A3-A4.
Reference Case 6.0. Draw out an organization chart showing the structure that Ford had been using; place in your chart the functional departments and geographic departments that are mentioned in the case. Then, in contrast, draw out an organization chart showing the relationships proposed in this case; again place in your chart the functional departments and geographic departments that are mentioned in the case. Label each organization chart.

Question 72

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

Question 73

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 developing 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 that could take advantage of where Ford's strength was around 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 product cited above, the 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 borne 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 comparable project budgets.
SOURCE: "Ford to Realign With a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pages A3-A4.
Reference Case 6.0. In a general sense, what do you see as the primary differences between horizontal corporations and functionally organized corporations? Apply your observations to the Ford case and comment on any difficulties you might see in Ford being able to adopt the philosophy and behavior of a horizontal corporation as they made the structural change CEO Trotman outlined.

Question 74

Compare and contrast the typical alliances: licensing, joint ventures, and consortia.

Question 75

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

Question 76

Discuss each of the motivations for global expansion.

Question 77

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 developing 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 that could take advantage of where Ford's strength was around 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 product cited above, the 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 borne 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 comparable project budgets.
SOURCE: "Ford to Realign With a System of Global Chiefs," The Wall Street Journal, March 31, 1994, pages A3-A4.
Reference Case 6.0. Identify the strategy given in our textbook that Ford appeared to be adopting. Describe advantages and disadvantages of that strategy for Ford. Why do you think CEO Trotman moved to that strategy?

Question 78

A transnational team is a work group made up of multinational members whose activities span multiple countries.

Question 79

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 80

Many large international companies are moving toward a multidomestic model of organization.