Deck 13: Implementing Strategy in Companies That Compete Across Industries and Countries

Question 1

Divisional battles may lead to battles over transfer pricing.

Answer 1

True

Question 2

Companies pursue a global diversification and differentiation strategy when they want to minimize costs.

Answer 2

False

Question 3

The more interdependent the divisions in a multidivisional structure,the greater are the bureaucratic costs associated with obtaining the potential benefits from a particular strategy.

Answer 3

True

Question 4

When implementing an international strategy,many companies create global divisions that they add to their existing divisional structures.

Question 5

In a multidivisional structure,corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates.

Question 6

A joint venture occurs when two equal-sized firms agree to blend their operations,creating one larger firm.

Question 7

A firm that is pursuing a globalization strategy will typically use a global-area structure.

Question 8

Firms pursuing related diversification typically rely more on output control than on culture control.

Question 9

An approach to internal new venturing that has been championed by those who believe that the best way to encourage new-product development is to integrate this effort into the rest of the organization is the creation of a new-venture division.

Question 10

Unfortunately,different divisions in a firm with a multidivisional structure are not given authority to adopt their own organizational structures.

Question 11

The organizational hierarchy is flatter in a multidivisional structure than in a product or functional structure.

Question 12

Few integrating mechanisms are needed when a company uses a global-area structure.

Question 13

Companies pursue a localization strategy when they want to maximize responsiveness to the unique needs of customers in each country.

Question 14

It is important for corporate managers to be able to identify high-performing and underperforming divisions and to take corrective action as necessary.

Question 15

When a firm implements a global strategy with a global product group structure; it will be more responsive to the unique needs of each local country.

Question 16

In a related multidivisional structure,the idea of corporate culture is meaningless.

Question 17

Vertical integration is a less expensive strategy to manage than is unrelated diversification.

Question 18

In a firm with a multidivisional structure,corporate managers oversee the actions of divisional managers.

Question 19

In the multidivisional structure,each division typically contains only a partial set of value chain activities.

Question 20

Competition for resources is one of the drawbacks of the multidivisional structure.

Question 21

Which structure has been adopted by most large,complex U.S.companies?

A) Multidivisional
B) Product
C) Product team
D) Market
E) Functional

Question 22

In a multidivisional structure,which form of control is used to compare the relative performances of different divisions?

A) Output control
B) Financial control
C) Control through culture
D) Bureaucratic control
E) Adaptive control

Question 23

To expand its global sales,the U.S.-based foods maker ConAgra purchased a firm that processes grains in the United Kingdom.ConAgra plans to manage the new business by allowing it to continue as before,with little integration into the rest of the firm.Based on this information,which strategy is ConAgra pursuing?

A) Stuck in the middle
B) Transnational
C) International
D) Global standardization
E) Localization

Question 24

The multidivisional organization structure offers all of these advantages except:

A) enhanced corporate financial control.
B) enhanced strategic control.
C) enhanced growth.
D) stronger competition for resources.
E) all of these are advantages of multidivisional organizational structure.

Question 25

A camera manufacturer that has separate divisions for making personal cameras,movie cameras,and film acquired a small film developer and a car battery supplier.Which of the following structures is most appropriate for this firm?

A) Functional
B) Matrix
C) Geographic
D) Multidivisional
E) Product team

Question 26

To foster the development of the matrix-in-the-mind concept and promote cooperation,companies are increasingly making use of the integrating capabilities of information technology (IT).

Question 27

The head of the finance function at ABC International employs a larger staff than is required for efficiency to reduce work pressures inside the department and to bring the manager higher status.This is known as organizational slack.

Question 28

Implementation problems can arise in unrelated acquisitions when managers from the acquiring company apply inappropriate structure and controls to manage the new business.

Question 29

One problem with a mishandled merger is that skilled managers who feel they have been demoted will work together to sabotage the organization.

Question 30

Transfer pricing is used most commonly in a

A) functional structure.
B) product team structure.
C) multidivisional structure.
D) matrix structure.
E) geographic structure.

Question 31

Historically,car companies such as Ford and GM used global-area structures to manage their overseas operations.

Question 32

A joint venture can be dangerous to a company if its partner is acquired by a competitor.

Question 33

Which of the following structures results in the creation of an office of corporate headquarters staff?

A) Functional
B) Product team
C) Geographic
D) Matrix
E) Multidivisional

Question 34

A company pursuing unrelated diversification

A) relies more on output controls than on bureaucratic controls.
B) needs to create an internal transfer pricing scheme.
C) has a low need for integration among divisions.
D) should have a product team structure.
E) should use a centralized decision-making process.

Question 35

The wasteful duplication of functional resources is most likely to arise with a

A) functional structure.
B) product team structure.
C) matrix structure.
D) multidivisional structure.
E) geographic structure.

Question 36

A major impact of information technology (IT)on strategic implementation has been its effects on a company's ability to pursue strategic outsourcing to strengthen its business model.

Question 37

Often global companies use the services of foreign intermediaries or brokers to find suppliers that best fit their input requirements.

Question 38

Which of the following strategies results in the highest bureaucratic costs?

A) Localization
B) International
C) Global standardization
D) Transnational
E) Unrelated diversification

Question 39

In a multidivisional structure

A) support functions, such as accounting, are centralized at the top of the organization.
B) corporate headquarters staff have operating responsibility over the divisional managers.
C) divisional managers have overall corporate strategic responsibility.
D) corporate headquarters is responsible for overseeing the company's long-term multibusiness model and for providing guidance for interdivisional projects.
E) financial controls are necessarily weak given the resource duplication from one division to another.

Question 40

The two main innovations in a multidivisional structure (over a functional or product structure)are

A) a matrix structure at the divisional level and a flat structure at the corporate level.
B) a product structure at the divisional level and a functional structure at the corporate level.
C) the organization of business units or companies in each industry in which it competes into one or more divisions and the creation of corporate-level positions to oversee the activities of divisional managers.
D) self-contained divisions with operating responsibility and a group of divisional managers with collective strategic responsibility.
E) a matrix structure at the divisional level and a functional structure at the corporate level.

Question 41

Problems in effectively managing the multidivisional structure include

A) distortion of information.
B) competition for resources.
C) transfer pricing.
D) all of these.
E) none of these.

Question 42

In its U.S.operations,Japanese-based Sony has decentralized almost all of its tasks to an independent firm that it created and which it owns.Based on this information,which entry mode is Sony using in the United States?

A) Internal new venture
B) Acquisition
C) Joint venture
D) Divestiture
E) Merger

Question 43

PepsiCo bought many of its bottlers.Which entry mode is PepsiCo using to enter the bottling industry?

A) Joint venture
B) Internal new venture
C) Acquisition
D) Divestiture
E) Merger

Question 44

To expand its global sales,U.S.-based Miller Brewing Company purchased a firm that processes grains in Brazil.Miller plans to manage the new business by allowing it to continue as before,with little integration into the rest of the firm.Based on this information,which entry mode is Miller using in Brazil?

A) Acquisition
B) Internal new venture
C) Joint venture
D) Divestiture
E) Merger

Question 45

Which of the following factors must be considered in choosing the structure and control systems for managing a global business?

A) How to distribute and allocate responsibility and authority between managers at home and abroad
B) The selection of the organizational structure that groups divisions both at home and abroad
C) The selection of the right kinds of integration and control mechanisms
D) The selection of the right kinds of organizational culture
E) All of these

Question 46

Which structure is the best for sharing information and learning across countries?

A) Global-area
B) International division
C) Global product group
D) Global matrix
E) Simple

Question 47

The control issue in managing the multidivisional structure is

A) how much authority should be centralized at corporate headquarters.
B) how much authority should be decentralized to the divisions.
C) how much authority should be given to each functional unit.
D) how much authority should be centralized at corporate headquarters and decentralized to the divisions.
E) how much authority should be given to corporate division heads.

Question 48

The U.S.firm Hewlett-Packard (HP)built twelve worldwide manufacturing facilities in several different countries,but its research and development (R&D)and marketing are centralized in the United States.Based on this information,which entry mode is HP using in its various locations?

A) Acquisition
B) Internal new venture
C) Joint venture
D) Divestiture
E) Merger

Question 49

America Online blended its operations with those of Time Warner to create AOL Time Warner.America Online is using which entry mode to enter the broadcast industry?

A) Acquisition
B) Internal new venture
C) Merger
D) Divestiture
E) Joint venture

Question 50

Reasons why a firm might benefit from the creation of a separate new-venture division include all of the following except

A) better protection of the division's autonomy.
B) less scrutiny from top managers.
C) removal from day-to-day pressures of the firm.
D) ease in developing a culture that fosters innovation.
E) development of a science-based business model.

Question 51

A global strategy

A) involves an appropriate mix of centralization and decentralization.
B) centralizes all functions at the optimal global locations.
C) centralizes only the research and development (R&D) and marketing functions.
D) is the most complex strategy.
E) maximizes local responsiveness.

Question 52

All of the following strategies can be employed by companies as they begin to market their products and establish production facilities overseas except:

A) Localization
B) International
C) Global
D) Transnational
E) Divestiture

Question 53

When a firm's managers are very concerned about the possibility of losing control of proprietary know-how,which entry mode should the firm avoid?

A) Acquisition
B) Internal new venture
C) Joint venture
D) Divestiture
E) Merger

Question 54

A localization strategy

A) involves an appropriate mix of centralization and decentralization.
B) centralizes all functions.
C) centralizes only the research and development (R&D) and marketing functions.
D) is the most complex strategy.
E) is oriented toward local responsiveness.

Question 55

In its African operations,Sony Corporation performs most functions at its Japanese headquarters but markets through cooperative relationships with local distributors.In the United States,Sony has decentralized almost all of its tasks to an independent firm that it owns.Based on this information,which strategy is Sony pursuing?

A) Localization
B) Transnational
C) International
D) Global standardization
E) Stuck in the middle

Question 56

The easiest and cheapest type of diversification strategy for a company to manage is

A) related diversification.
B) unrelated diversification.
C) vertical integration.
D) horizontal diversification.
E) none of these.

Question 57

For its South American operations,Caterpillar performs most functions at its U.S.headquarters but markets through cooperative relationships with local distributors.Based on this information,which entry mode is Caterpillar using in South America?

A) Internal new venture
B) Joint venture
C) Merger
D) Acquisition
E) Intrapreneurship

Question 58

The U.S.firm Intel,a maker of semiconductor chips,built twelve worldwide manufacturing facilities in several different countries,but its research and development (R&D)and marketing are centralized in the United States.Based on this information,which strategy is Intel pursuing?

A) Localization
B) Transnational
C) International
D) Global standardization
E) Stuck in the middle

Question 59

Which of the following strategies is most likely to facilitate the transmission of a company's norms and values and,hence,the development of a global corporate culture?

A) Focus
B) Localization
C) International
D) Global standardization
E) Transnational

Question 60

An international strategy

A) centralizes only the research and development (R&D) and marketing functions.
B) centralizes all functions.
C) involves an appropriate mix of centralization and decentralization.
D) is the most complex strategy.
E) maximizes local responsiveness.

Question 61

A company that makes and sells the same product in many different countries often groups its overseas divisions into ____ to simplify the coordination of products across countries.

A) world regions
B) horizontal areas
C) six areas
D) local regions
E) none of these

Question 62

In joint venturing,two or more companies typically agree to

A) merge within twelve months.
B) divide their lists of customers.
C) pool specific resources and capabilities.
D) divide a specific market between the two companies.
E) pool the results of entrepreneurship at each company.

Question 63

Explain the benefits of the multidivisional structure for managing a firm that competes in several industries.

Question 64

At the level of organizational structure,control,and culture,____ has given strategic managers many new options in implementing strategies.

A) research and development
B) marketing research
C) outsourcing
D) benchmarking
E) information technology

Question 65

The global-product strategy is weak when it comes to

A) manufacturing of products.
B) distribution of products.
C) responsiveness to customers.
D) all of these.
E) none of these.

Question 66

Which of the following companies is the best example of an organization that formally encourages and supports entrepreneurship?

A) Toyota
B) Smith & Wesson
C) General Motors
D) 3M
E) Nestlé

Question 67

Business-to-business (B2B)networks link firms to

A) buyers.
B) suppliers.
C) regulators.
D) competitors.
E) buyers and suppliers.

Question 68

Taj is employed at Global Tech,an organization that operates within the technology industry.He is an experienced corporate manager who assumes the responsibility for managing complex transfers between two or more divisions.Taj is in a(n)_____ role.

A) global
B) division
C) direct contact
D) iasion
E) integrating

Question 69

When a company uses a network structure to implement outsourcing,

A) many firms along the value chain can easily cooperate.
B) bureaucratic costs are increased.
C) the cost of the outsourced functions increases.
D) organizational culture is an important control mechanism.
E) many firms along the value chain can easily cooperate and bureaucratic costs are increased.

Question 70

Implementation of a global matrix provides a company with which of the following advantages?

A) Decentralizes control to overseas managers
B) Provides overseas managers with considerable flexibility
C) Allows overseas managers the flexibility to manage local issues
D) Allows corporate executives to exercise control when needed
E) All of these

Question 71

The set of strategic alliances that an organization creates with suppliers,manufacturers,and distributors to produce and market a product is called a(n)

A) network structure.
B) outsourcing network.
C) structure alliance.
D) oligopoly.
E) suppliers' network.

Question 72

Ownership of the company created by a joint venture

A) is split 50/50 between the two joint-venturing companies.
B) is usually a matter to be negotiated between the companies engaged in the venture.
C) automatically goes to the largest company engaged in the venture.
D) automatically goes to the smallest company engaged in the venture.
E) none of these.

Question 73

When the decision has been made to enter a new industry,which entry mode is most commonly used and what issues must managers address with this mode of entry?

Question 74

Starbucks' Frappuccino is distributed by Pepsi.Nestle and Coca-Cola announced an agreement with Beverage Partners Worldwide through which Coca-Cola will distribute and sell Nestle's Nestea throughout the globe.These are examples of which of the following?

A) Joint venture
B) New-venture division
C) Merger
D) Acquisition
E) Internal venture

Question 75

The most widely used vehicles that companies can use to enter new industries or countries are

A) mergers and acquisitions.
B) joint ventures and strategic alliances.
C) mergers and joint ventures.
D) acquisitions and strategic alliances.
E) product development and market penetration.

Question 76

Mohawk Industries Inc.is the largest designer,maker,and seller of carpets in the United States.In a separate division,the firm's product line also includes floor tile,pillows,and bed linens.Mohawk has a strong emphasis on cost reduction.If the firm wishes to sell more products overseas,what strategy would you recommend,and why?
Mohawk Industries Inc.is the largest designer,maker,and seller of carpets in the United States.In a separate division,the firm's product line also includes floor tile,pillows,and bed linens.Mohawk has a strong emphasis on cost reduction.If the firm wishes to sell more products overseas,what strategy would you recommend,and why? Based on your response,recommend an organizational structure for Mohawk to use as it globalizes.Explain why the structure you recommend is the most appropriate one for Mohawk.

Question 77

Joint ventures are best suited for projects that

A) are small in size.
B) each company could undertake by itself.
C) are routine in nature.
D) neither company could do on its own.
E) none of these.

Question 78

When Toyota first decided to manufacture and market cars in the United States,it entered into a ____ with General Motors.

A) strategic alliance
B) joint venture
C) global partnership
D) trade agreement
E) contingency plan

Question 79

Which of the following is not a consequence of the increased ability of managers to use information technology as they implement strategies?

A) Flatter hierarchies
B) Greater centralization
C) More timely information
D) Increased use of outsourcing
E) Enhanced innovation capabilities

Question 80

Consider the information given in the previous question (#79)and your answer to that question,and then recommend an organizational structure for Mohawk to use as it globalizes.Explain why the structure you recommend is the most appropriate one for Mohawk.