Deck 9: Entry Strategies and Organizational Structures

Question 1

Franchise agreements typically require payment of a fee up front and then a percentage of the revenues.

Answer 1

True
Explanation: Franchise agreements typically require payment of a fee up front and then a percentage of the revenues. In return, the franchisor provides assistance and, in some instances, may require the purchase of goods or supplies to ensure the same quality of goods or services worldwide.

Question 2

One of the primary advantages of global area division structures is the ease with which product emphasis can be reconciled with a geographic orientation.

Answer 2

False
Explanation: The primary disadvantage of a global area division structure is the difficulty encountered in reconciling a product emphasis with a geographic orientation. A second drawback is that new R&D efforts often are ignored by division groups because they are selling goods that have reached the maturity stage.

Question 3

One of the major drawbacks of a global product division structure is that it disallows line and staff managers within the division to gain expertise in the technical and marketing aspects of the products assigned to them.

Answer 3

False
Explanation: A global product division permits line and staff managers within the division to gain expertise in the technical and marketing aspects of the products assigned to them. It also provides a direct line of communication from the customer to those in the organization who have product knowledge and expertise, thus enabling research and development (R&D) to work on the development of products that serve the needs of the world customer.

Question 4

A franchise is an agreement that allows one party to use an industrial property right in exchange for payment to another party.

Question 5

An international alliance is composed of two or more firms from different countries.

Question 6

The primary reason for the use of wholly owned subsidiaries is a multinational company's (MNC's)desire for total control and the belief that managerial efficiency will be better without outside partners.

Question 7

Companies that spend a relatively large share of their revenues on research and development (R&D)are likely to be licensees,and those that spend very little on R&D are more likely to be licensors.

Question 8

An international division structure of an organization puts a great deal of burden on the CEO for monitoring the operations of a series of overseas subsidiaries as well as domestic operations.

Question 9

The global structural arrangement differs from the international division structure because,while both have an international scope,the former focuses on greater expansion and integration among international operations.

Question 10

An advantage of a global area division structure is that it allows the division manager to cater to the tastes of the local market and make rapid decisions to accommodate environmental changes.

Question 11

One of the main objectives of developing the structure for joint ventures is to help the partners address and effectively meld their different values and organizational preferences.

Question 12

One disadvantage of a global product division structure is that division managers may pursue currently attractive geographic prospects for their products and neglect other areas with better long-term potential.

Question 13

Multinational companies (MNCs)have found that cross-functional coordination results in people spending more time within their functions and thus becoming more knowledgeable regarding developments that are occurring in their specialized areas.

Question 14

Firms that pursue a global product division structure typically have products that are in the maturity stage of the product life cycle.

Question 15

Specialization is the use of defined structures and systems in decision making,communicating,and controlling.

Question 16

In most companies,mutual adjustment is achieved by assigning people to a specific project and having them meet face to face and work out a plan of action of designing the new product.

Question 17

Over the last few years,there has been a major increase in the number of "electronic freelancers"-individuals who work on a project for a company,usually via the Internet,and move on to other employment when the assignment is done.

Question 18

Wholly owned subsidiaries face a low risk with large investments in one area.

Question 19

An advantage of a global functional division structure is that only the CEO can be held accountable for the profits.

Question 20

Centralization is a management system in which important decisions are made at the top.

Question 21

Global structures of multinational companies (MNCs)come in three common types:

A) vertical, horizontal, and flat.
B) product, area, and functional.
C) mixed, transnational, and nontraditional.
D) authoritarian, democratic, and socialist.

Question 22

Which of the following globalization versus local responsiveness combinations best fits the telecommunications industry?

A) High pressure for globalization and high pressure for local responsiveness
B) High pressure for globalization and low pressure for local responsiveness
C) Low pressure for globalization and low pressure for local responsiveness
D) Low pressure for globalization and high pressure for local responsiveness

Question 23

Which of the following globalization versus local responsiveness combinations best fits the cement manufacturing industry?

A) Low pressure for globalization and low pressure for local responsiveness
B) Low pressure for globalization and high pressure for local responsiveness
C) High pressure for globalization and low pressure for local responsiveness
D) High pressure for globalization and high pressure for local responsiveness

Question 24

Which of the following routes is a multinational company (MNC)likely to choose in order to quickly expand resources or construct high-profit products in a new market?

A) Franchising
B) Licensing agreements
C) Mergers and acquisitions
D) Basic export and import operations

Question 25

A _____ is a business arrangement under which one party allows another to operate an enterprise using its trademark,logo,product line,and methods of operation in return for a fee.

A) license
B) franchise
C) certificate of proprietary usage
D) joint venture

Question 26

An important feature of wholly owned subsidiaries is that:

A) they face a low risk with large investments in one area.
B) they are very efficient with entering multiple countries or markets.
C) they offer higher profits, clearer communications, and shared visions to a multinational company (MNC).
D) they involve reduced risk and involvement for a multinational company (MNC).

Question 27

A structural arrangement that handles all international operations out of a division created for this purpose is referred to as a(n)_____.

A) worldwide organizational structure
B) global matrix structure
C) international division structure
D) overseas network structure

Question 28

Pressure by local government for continued growth of international sales encourages on-site _____.

A) maintenance
B) supply and distribution operations
C) manufacturing operations
D) safety operations

Question 29

A structural arrangement in which domestic divisions are given worldwide responsibility for product groups is referred to as a(n)_____.

A) international division structure
B) global product division structure
C) global area division structure
D) global functional division structure

Question 30

Which of the following provides the most benefits when the need for product specification or differentiation is high?

A) International division
B) Global product division
C) Global area division
D) Global functional division

Question 31

Identify a true statement about export arrangements in the context of initial division structure.

A) Manufacturing firms with technologically advanced products usually avoid an export arrangement as a first choice.
B) Firms can reduce the risk and size of investment in establishing significant international operations using an export arrangement.
C) If a company has a broad product line, the export manager usually reports directly to the head of marketing and international operations are coordinated by this department.
D) If a company has a narrow product line, the export manager will head a separate department and often report directly to the president.

Question 32

An important feature of an equity joint venture is that:

A) it is characterized by one group's merely providing a service to another.
B) it involves a financial investment by a multinational company (MNC) in a business enterprise with a local partner.
C) it organizes worldwide operations based primarily on function and secondarily on product.
D) it provides the most benefits when the need for product specification or differentiation is high.

Question 33

All of the following types of companies are likely to adopt an international division structure except:

A) companies with limited geographic diversity.
B) companies with a large number of executives with international expertise.
C) companies still in the developmental stage of international business.
D) companies with small international sales.

Question 34

Identify the two types of joint ventures.

A) Equity and nonequity ventures
B) Proprietary and public ventures
C) Statutory and unofficial ventures
D) External and internal ventures

Question 35

Advantages of alliances and joint ventures include all of the following except _____.

A) improvement of efficiency
B) collusion or restriction in competition
C) access to knowledge
D) mitigation of political factors

Question 36

Which of the following statements is true about licensing?

A) In a typical arrangement, the licensor will allow the licensee to use a patent, a trademark, or proprietary information in exchange for a fee.
B) Companies that spend a relatively large share of their revenues on research and development (R&D) are likely to be licensees.
C) Licenses are uncommon among large firms seeking to acquire technology to bolster an existing product.
D) A license is a very high-cost way of gaining and exploiting foreign markets.

Question 37

Identify a true statement about alliances and joint ventures.

A) They prevent partners from achieving economies of scale and scope that would be easy for a firm operating alone to accomplish.
B) They are likely to be less favored as a means of doing business in emerging countries.
C) They fail to help partners overcome the effects of local collusion or limits being put on foreign competition.
D) They have become popular in recent years because of the significant operational benefits they offer to both multinational companies (MNCs) and their local partners.

Question 38

Which of the following statements is true about an international division structure of an organization?

A) It puts a great deal of burden on the CEO for monitoring the operations of a series of overseas subsidiaries as well as domestic operations.
B) It prevents the company from developing an overall, unified approach to international operations as well as a cadre of internationally experienced managers.
C) Companies still in the development stages of international business involvement are least likely to adopt an international division structure.
D) Companies that use an international division structure include those with small international sales, limited geographic diversity, or few executives with international expertise.

Question 39

Identify a true statement about a nonequity venture.

A) It is characterized by one group's merely providing a service to another.
B) It provides the most benefits when the need for product specification or differentiation is high.
C) It involves a financial investment by a multinational company (MNC) in a business enterprise with a local partner.
D) It organizes worldwide operations based primarily on function and secondarily on product.

Question 40

In a company that has a narrow product line,the export manager usually reports directly to the head of _____.

A) purchasing
B) personnel
C) production
D) marketing

Question 41

Subsidiaries that are located anywhere in the world where they can benefit the organization are called _____.

A) chaebols
B) keiretsus
C) specialized subunits
D) dispersed subunits

Question 42

Which of the following is a feature of a global functional division?

A) Easy coordination of manufacturing and marketing
B) An emphasis on functional expertise
C) Easy management of multiple product lines
D) A lack of centralized control

Question 43

A multinational structural arrangement that combines elements of function,product,and geographic designs while relying on a network arrangement to link worldwide subsidiaries is referred to as a _____.

A) transnational network structure
B) cross-cultural matrix structure
C) transnational divisional structure
D) cross-cultural network structure

Question 44

In which type of multinational structure is bureaucratic control considered unimportant?

A) Global product division structure
B) Global area division structure
C) Matrix structure
D) International division structure

Question 45

A structure that is a combination of a global product,an area,or a functional arrangement is referred to as a(n)_____ organizational structure.

A) assimilated
B) transnational
C) mixed
D) team-based

Question 46

Individuals who work for a company,usually via the Internet,and move on to other employment when their assignment is done are known as _____.

A) purchasing agents
B) marketing managers
C) international outsourcers
D) electronic freelancers

Question 47

Which of the following organizes worldwide operations based primarily on function and secondarily on product?

A) International division structure
B) Global product division structure
C) Global area division structure
D) Global functional division structure

Question 48

Interdependent relationships are:

A) designed to tap specialized expertise or other resources in a company's worldwide subsidiaries.
B) subsidiaries that are located anywhere in the world where they can benefit the organization.
C) used to share information and resources throughout dispersed and specialized subunits.
D) designed to take advantage of low factor costs.

Question 49

Which of the following statements is true about global product divisions?

A) A global product division structure prevents line and staff managers within the division from gaining expertise in the technical and marketing aspects of the products assigned to them.
B) A global product division structure provides a direct line of communication from the customer to those in the organization who have product knowledge and expertise.
C) The products in a global product division are in the maturity stage and require very little promotion and marketing.
D) Managers of a global product division depend heavily on corporate headquarters to run the operation.

Question 50

Which of the following statements is true about transnational network structures?

A) A major drawback of transnational network structures is that they focus on goods that are proven winners and now are marketed conveniently worldwide.
B) It is easy to draw a transnational network structure in the form of an organization chart because it is simple and constant.
C) They may use more than one strategy to supplement inefficient operations, but they are still fairly centralized in the sense that decisions are balanced between the main headquarters and international subsidiaries.
D) They are convoluted integrations of business functions and communications where decisions are made at the local level, but each grouping informs headquarters and sometimes each other.

Question 51

The output control in which profit responsibility is shared with product and geographic units is characteristic of a(n)_____.

A) global area division structure
B) international division structure
C) matrix structure
D) transnational network structure

Question 52

An important feature of the global area division structure approach is that:

A) it is generally used by companies that are growing businesses and have broad product lines.
B) it prevents division managers from catering to the tastes of the local market and making rapid decisions to accommodate environmental changes.
C) it often signals a major change in company strategy because now international operations are put on the same level as domestic operations.
D) it focuses on a product set and discovers where it can survive and subsequently distributes it to that region.

Question 53

The decision-making control in which local units are given autonomy is characteristic of a(n)_____.

A) global area division structure
B) international division structure
C) global product division structure
D) transnational network structure

Question 54

Specialized operations are:

A) designed to tap specialized expertise or other resources in a company's worldwide subsidiaries.
B) subsidiaries that are located anywhere in the world where they can benefit the organization.
C) designed to take advantage of low factor costs.
D) used to share information and resources throughout dispersed and specialized subunits.

Question 55

A _____ is designed to help multinational companies (MNCs)take advantage of global economies of scale while also being responsive to local customer demands.

A) global matrix structure
B) transnational network structure
C) worldwide divisional structure
D) cross-cultural matrix structure

Question 56

A feature of global area division structures is that they:

A) often ignore research and development (R&D) efforts because they are selling goods that have reached the maturity stage.
B) fail to focus on goods that are proven winners and now are being marketed conveniently worldwide.
C) focus on latest technologically superior goods that will win the market in the long run.
D) are characterized by strong centralized management and control system.

Question 57

Which of the following statements is true about cultural control mechanism in a global area division?

A) Cultural control mechanism is treated like all other multinational company (MNC) structural divisions.
B) Local subsidiary culture is often the most important.
C) Cultural control mechanism is possible for some companies but not always necessary.
D) Culture must support the shared decision making.

Question 58

In which of the following multinational company (MNC)structures is tight process bureaucratic control used to maintain product quality and consistency?

A) Transnational network structure
B) Global area division
C) Matrix structure
D) Global product division

Question 59

At the center of a _____ are nodes,which are units charged with coordinating product,functional,and geographic information.

A) cross-cultural matrix structure
B) worldwide divisional structure
C) transnational network structure
D) global product division structure

Question 60

Which of the following is an advantage of a mixed organization structure?

A) As the matrix design's complexity increases, coordinating the personnel and getting everyone to work toward common goals often become difficult.
B) It allows an organization to create the specific type of design that best meets its needs.
C) Too many groups go their own way.
D) Coordination of manufacturing and marketing often becomes difficult.

Question 61

Some countries make greater use of formalization than others; in turn,this affects _____.

A) the day-to-day organizational functioning
B) specialization
C) the differences between the levels in hierarchy
D) quality circles

Question 62

Describe the commonly cited advantages of alliances and joint ventures.

Question 63

Describe the common conditions under which licensing is used.

Question 64

_____ can be best defined as the use of defined structures and systems in decision making,communicating,and controlling.

A) Localization
B) Acclimatization
C) Formalization
D) Indigenization

Question 65

Which of the following statements is true about vertical specialization?

A) Examples of vertical specialization include jobs in areas such as customer service, sales, recruiting, training, purchasing, and marketing research.
B) It is characterized by distinct differences between the levels in hierarchy such that those higher up are accorded much more status than those farther down.
C) When there is a great deal of vertical specialization, personnel will develop functional expertise in one particular area.
D) It assigns jobs so that individuals are given a particular function to perform, and people tend to stay within the confines of this area.

Question 66

In a study of U.S.and Japanese firms in Taiwan,objective formalization was measured by _____.

A) the use of informal controls
B) the extent to which goals were vague and unspecified
C) the number of different documents given to employees
D) the use of culturally induced values in getting things done

Question 67

Multinational companies (MNCs)realize there are two dimensions of formality-informality that must be considered:

A) internal and external.
B) international and national.
C) horizontal and vertical.
D) functionality and centralization.

Question 68

What is franchising? Explain with examples how it can result in a highly profitable business.

Question 69

What are the basic components of the structural framework of a transnational network?

Question 70

Specialization in an international context can be classified into _____.

A) diagonal and vertical specializations
B) vertical and parallel specialization
C) horizontal and vertical specializations
D) diagonal and parallel specializations

Question 71

As an organizational characteristic,_____ is the assigning of individuals to specific,well-defined tasks.

A) interpretation
B) concentration
C) formalization
D) specialization

Question 72

Explain alliances and joint ventures.

Question 73

In an international context,the value of centralization will vary according to:

A) the local environment and the goals of an organization.
B) the global market and the universal values.
C) the job routinization in a host country.
D) the vertical specialization and flatter designs.

Question 74

The assignment of jobs so that individuals are given a particular function to perform,who tend to stay within the confines of this area,is referred to as _____.

A) diagonal specialization
B) parallel specialization
C) vertical specialization
D) horizontal specialization

Question 75

Pushing decision making down the line and getting the lower-level personnel involved is referred to as _____.

A) centralization
B) decentralization
C) horizontal specialization
D) vertical specialization