Deck 14: The Organization of International Business

Question 1

In a worldwide area structure, each area tends to be a self-contained, largely autonomous entity with its own set of value creation activities.

Answer 1

True
Explanation: Under the worldwide area structure, the world is divided into geographic areas. An area may be a country or a group of countries. Each area tends to be a self-contained, largely autonomous entity with its own set of value creation activities.

Question 2

In a worldwide product divisional structure, each division is a self-contained, largely autonomous entity with full responsibility for its own value creation activities.

Answer 2

True
Explanation: In a worldwide product division each division is a self-contained, largely autonomous entity with full responsibility for its own value creation activities.

Question 3

The worldwide product division structure facilitates local responsiveness.

Answer 3

False
Explanation: The main problem with the worldwide product division structure is the limited voice it gives to area or country managers, since they are seen as subservient to product division managers. The result can be a lack of local responsiveness, which can lead to performance problems.

Question 4

A knowledge network is a network for transmitting information within an organization that is based on formal organizational structure.

Question 5

New processes that might lead to a competitive advantage can be developed anywhere within the organization's global network of operations.

Question 6

It is difficult to ascertain accountability in the global matrix structure.

Question 7

Organizational structure refers to the totality of a firm's organization.

Question 8

The need for coordination between units is greatest in firms pursuing a localization strategy.

Question 9

A decentralized organization allows managers to respond to environmental changes more quickly than in a centralized organization.

Question 10

The choice between centralization and decentralization is not absolute.

Question 11

A manager receives a bonus because the national operating subsidiary, that she is in charge of, exceeds its performance target. This is an example of an incentive.

Question 12

An organizational culture can be strong but bad.

Question 13

Norms are abstract ideas about what a group believes to be good, right, and desirable.

Question 14

Direct contact between subunit managers is the simplest integrating mechanism.

Question 15

Firms pursuing a localization strategy tend to operate with an array of formal and informal integrating mechanisms.

Question 16

Beyond the initial functional division of the organization, further horizontal differentiation may be required if the firm significantly diversifies its product offering, which takes the firm into different business areas.

Question 17

Bureaucratic control involves personal contact with subordinates.

Question 18

Performance ambiguity lowers the cost of control.

Question 19

The basic principle behind incentive systems is to ensure that the incentive scheme for an individual employee is linked to an output target that he or she has some control over and can influence.

Question 20

National regulations including local content rules and policies pertaining to layoffs might act as a source of inertia.

Question 21

In a _____ all roles are viewed as integrating roles.

A) worldwide area structure
B) process structure
C) worldwide product division structure
D) global matrix structure

Question 22

In a _____, individual managers belong to two hierarchies (a divisional hierarchy and an area hierarchy) and have two bosses (a divisional boss and an area boss).

A) worldwide product division structure
B) classic matrix structure
C) worldwide area structure
D) performance structure

Question 23

A _____ tends to be adopted by firms that are reasonably diversified and originally had domestic structures based on product divisions.

A) worldwide product division structure
B) global matrix structure
C) worldwide area structure
D) performance structure

Question 24

Which of the following is more difficult for a leader?

A) To change an established organizational culture
B) To import an organizational culture
C) To create an organizational culture from scratch in a new venture
D) To export an organizational culture

Question 25

In a company using _____, employees tend to control their own behavior, which reduces the need for direct supervision.

A) bureaucratic controls
B) cultural controls
C) personal controls
D) output controls

Question 26

The need for coordination is high in:

A) firms trying to pursue localization strategies.
B) international firms.
C) firms trying to profit from location and experience curve economies.
D) domestic corporations.

Question 27

By centralizing decision making, a firm:

A) allows managers to respond to environmental changes more quickly.
B) runs the risk of not being able to respond to environmental changes quickly.
C) can avoid the duplication of activities that occurs when similar activities are carried on by various subunits within the organization.
D) often has issues with duplication of activities that occurs when similar activities are carried on by various subunits within the organization.

Question 28

A firm's _____ determines where in its hierarchy the decision-making power is concentrated.

A) organizational architecture
B) vertical differentiation
C) organizational structure
D) horizontal differentiation

Question 29

Refreezing an organization should happen quickly.

Question 30

The _____ tends to be adopted by firms with a low level of diversification whose domestic structures are based on functions.

A) global matrix structure
B) worldwide product division structure
C) performance structure
D) worldwide area structure

Question 31

Firms pursuing a global standardization strategy must cope with a higher level of _____, and this raises their costs of control.

A) vertical differentiation
B) cultural division
C) horizontal differentiation
D) performance ambiguity

Question 32

A firm pursuing a(n) _____ will have a strong incentive to decentralize decision-making.

A) localization strategy
B) transnational strategy
C) global standardization strategy
D) international strategy

Question 33

It is important to realize that organizational change will occur regardless of the commitment of senior managers to it.

Question 34

In firms pursuing a(n) _____, some operating decisions are relatively centralized, while others are relatively decentralized.

A) global standardization strategy
B) transnational strategy
C) localization strategy
D) international strategy

Question 35

_____ can be defined as the amount of time top management must devote to monitoring and evaluating subunits' performance.

A) Performance ambiguity
B) The formal matrix
C) The costs of control
D) Differentiation

Question 36

Firms pursuing a(n) _____ have a low need for coordination between subunits.

A) global standardization strategy
B) localization strategy
C) transnational strategy
D) international strategy

Question 37

Regardless of a firm's domestic structure, its international division tends to be:

A) organized on economy.
B) decentralized.
C) organized on geography.
D) centralized.

Question 38

A firm's organizational culture refers to the:

A) norms and value systems that are shared among the employees of an organization.
B) formal organizational structure of the company.
C) control systems and incentives in place.
D) human resources component.

Question 39

_____ is a type of control that tends to be most widely used in small firms.

A) Personal control
B) Output control
C) Bureaucratic control
D) Cultural control

Question 40

_____ gives top-level managers the power and authority to be able to bring about needed major organizational changes.

A) Personal control
B) Decentralization
C) Bureaucratic control
D) Centralization

Question 41

Centralization:

A) gives top management time to focus on critical issues by delegating more routine issues to lower-level managers.
B) can give top-level managers the means to bring about needed major organizational changes by concentrating power and authority in one individual or a management team.
C) permits greater flexibility because decisions do not have to be "referred up the hierarchy" unless they are exceptional in nature.
D) can be used to establish relatively autonomous, self-contained subunits within an organization.

Question 42

A firm's _____ determines where in its hierarchy the decision-making power is concentrated.

A) integrating mechanism
B) vertical differentiation
C) knowledge network
D) horizontal differentiation

Question 43

Which of the following would be a typical responsibility of a product division in a worldwide product divisional structure?

A) Operating decisions
B) Overall strategic development of the firm
C) Financial control of the various divisions
D) Decisions regarding legal issues

Question 44

Firms pursuing a(n) _____ are more centralized than enterprises pursuing a localization or international strategy.

A) localization strategy
B) international strategy
C) global standardization strategy
D) transnational strategy

Question 45

Which of the following terms refers to the metrics used to measure the performance of subunits and make judgments about how well managers are running those subunits?

A) Key processes
B) Control systems
C) Knowledge networks
D) Job assignments

Question 46

Which of the following decisions is typically centralized at a firm's headquarters?

A) Production decisions
B) Human resource management
C) Marketing decisions
D) Overall firm strategy

Question 47

Historically, Unilever measured the performance of national operating subsidiary companies according to profitability. In this example, profitability is a(n) _____.

A) control system
B) process
C) integrating mechanism
D) incentive

Question 48

A firm that needs greater flexibility should choose _____ for its decision-making.

A) horizontal differentiation
B) decentralization
C) localization strategy
D) control systems

Question 49

Which of the following is an argument favoring decentralization?

A) It can facilitate coordination.
B) It can help ensure that decisions are consistent with organizational objectives.
C) It can give top-level managers the means to bring about needed major organizational changes.
D) It permits greater flexibility.

Question 50

The manner in which decisions are made and work is performed within the organization is known as the firm's _____.

A) organizational culture
B) incentives
C) control systems
D) processes

Question 51

Integration mechanisms are the:

A) formal division of the organization into subunits.
B) mechanisms that enable each subunit to operate independently.
C) mechanisms for coordinating subunits.
D) location of decision making responsibilities within a structure.

Question 52

What is horizontal differentiation?

A) The mechanisms that enable each subunit to operate independently
B) The formal division of the organization into subunits
C) The location of decision-making responsibilities within a structure
D) The mechanisms for coordinating subunits

Question 53

Organizational structure includes several elements. Which of the following is one of them?

A) The establishment of integrating mechanisms to coordinate the activities of subunits.
B) The horizontal decision-making that occurs daily, for example, on the plant floor to improve operations.
C) The manner in which decisions are made and work is performed by individuals.
D) The informal division of the organization into cultural groups.

Question 54

The norms and values systems that are shared among the employees of a company are referred to as _____.

A) processes
B) control systems
C) incentives
D) organizational culture

Question 55

Centralization and decentralization differ because:

A) centralization hinders coordination, while decentralization facilitates coordination.
B) centralization prevents top-level managers from making required organizational changes, while decentralization gives top-level managers greater power to make organizational changes.
C) centralization ensures that decisions are consistent with organizational objectives, while decentralization can result in decisions at variance with organizational goals.
D) centralization promotes flexibility, while decentralization reduces flexibility.

Question 56

The emphasis on local responsiveness in firms pursuing a localization strategy creates strong pressures for:

A) centralizing all decisions regarding marketing, R&D, and human resource management.
B) decentralizing operating decisions to foreign subsidiaries.
C) centralizing all operating decisions.
D) global learning.

Question 57

To unfreeze the established culture of an organization, the company:

A) must take bold steps such as shaking up the management structure in order to implement change.
B) is best served by taking incremental steps.
C) should employ the existing structural organization to integrate changes.
D) implement a rewards or incentive program.

Question 58

Which of the following is an argument favoring centralization?

A) It permits greater flexibility.
B) Motivational research favors it.
C) It can avoid the duplication of activities.
D) It gives top management time to focus on critical issues by delegating routine issues to lower-level managers.

Question 59

Global learning based on the multidirectional transfer of skills between subsidiaries and the corporate center is a central feature of a firm pursuing a(n) _____ strategy.

A) localization
B) global standardization
C) transnational
D) international

Question 60

Because of inertia forces, _____ is often no change.

A) big bang change
B) cultural change
C) shock therapy change
D) incremental change

Question 61

A _____ encourages fragmentation of the organization into highly autonomous entities.

A) worldwide area structure
B) global matrix structure
C) worldwide product structure
D) global network structure

Question 62

The need for coordination between subunits is lowest in firms pursuing a(n) _____.

A) localization strategy
B) international strategy
C) global strategy
D) transnational strategy

Question 63

There is low interdependence, performance ambiguity, and costs of control in firms pursuing a(n) _____.

A) localization strategy
B) international strategy
C) transnational strategy
D) global strategy

Question 64

_____ control is achieved by comparing actual performance against targets and intervening selectively to take corrective action.

A) Personal
B) Output
C) Bureaucratic
D) Cultural

Question 65

Regardless of a firm's domestic structure, its international division tends to be organized on _____.

A) product
B) geography
C) people
D) economy

Question 66

Control through a system of rules and procedures that directs the actions of subunits is _____.

A) personal control
B) bureaucratic control
C) output control
D) cultural control

Question 67

Which of the following is a problem that arises due to an international division structure?

A) In an international division structure, a firm's international division tends to be organized on products.
B) The heads of domestic functions are presumed to be able to represent the interests of all countries to headquarters.
C) The heads of foreign subsidiaries are not given as much voice in the organization as the heads of domestic functions or divisions.
D) The dual-hierarchy structure can lead to conflict and perpetual power struggles between the areas and the product divisions.

Question 68

In which of the following organizational structures are the domestic operations and foreign operations isolated from each other leading to coordination problems?

A) Global matrix structure
B) International division structure
C) Worldwide product division structure
D) Worldwide area structure

Question 69

In the classic global matrix structure, horizontal differentiation proceeds along two dimensions. These dimensions are:

A) hierarchy and overall strategy.
B) target returns and sales potential.
C) marketing strategy and sales potential.
D) product division and geographic area.

Question 70

Which of the following is true regarding a worldwide area structure?

A) It tends to be favored by firms with a high degree of diversification.
B) It inhibits local responsiveness.
C) It tends to be favored by firms with a domestic structure based on functions.
D) Decision-making responsibilities are centralized.

Question 71

Which control system is most widely used by small firms?

A) Personal
B) Output
C) Bureaucratic
D) Cultural

Question 72

Which of the following statements is true about a product divisional structure?

A) In a product divisional structure, the responsibility for the financial control of the firm is typically decentralized.
B) A product divisional structure tends to be organized on geography.
C) In a product divisional structure, each product division is set up as a self-contained, largely autonomous entity with its own functions.
D) In a product divisional structure, the responsibility for operating decisions is typically centralized.

Question 73

Firms pursuing a(n) _____ attempt to create value by transferring core competencies from home to foreign subsidiaries.

A) localization strategy
B) international strategy
C) transnational strategy
D) global strategy

Question 74

_____ refers to giving a person in each subunit responsibility for coordinating with another subunit on a regular basis.

A) Global learning
B) Liaison roles
C) Knowledge network
D) Matrix Structures

Question 75

Which of the following is true of a strong corporate culture?

A) Almost all managers share a relatively consistent set of values and norms that have a clear impact on the way work is performed.
B) A strong culture leads to high performance.
C) Outsiders see firms with a strong culture as being autocratic and inflexible.
D) A strong culture is always a good culture.

Question 76

The need for coordination between subunits is highest in firms pursuing a(n) _____.

A) localization strategy
B) international strategy
C) global strategy
D) transnational strategy

Question 77

In practice, the dual-hierarchy in a global matrix structure:

A) lessens all forms of conflict.
B) makes it easy to ascertain accountability.
C) results in extremely quick decision making.
D) can lead to perpetual power struggles.

Question 78

A(n) _____ is valuable because it can be used as a nonbureaucratic conduit for information flows within a multinational enterprise.

A) liaison network
B) matrix structure
C) organizational structure
D) knowledge network

Question 79

A(n) _____ tends to be adopted by firms that are reasonably diversified.

A) worldwide area structure
B) international division structure
C) worldwide product division structure
D) global matrix structure

Question 80

The worldwide product division structure:

A) is weak in local responsiveness.
B) inhibits the realization of location economies.
C) inhibits the realization of experience curve economies.
D) limits the transfer of core competencies between areas.