Deck 9: Entry Strategies and Organizational Structures

Question 1

A structural arrangement in which domestic divisions are given worldwide responsibility for product groups is referred to as a global area division structure.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

One disadvantage of the global product division structure is the necessity of duplicating facilities and staff personnel within each division.

Answer 3

True

Question 4

A disadvantage of the international division structure is that it separates a firm's domestic and international managers, which can result in two different camps with divergent objectives.

Question 5

A license is a structural arrangement in which domestic divisions are given worldwide responsibility for product groups.

Question 6

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

Question 7

A structure under which global operations are organized on a geographic rather than a product orientation is referred to as a global area structure.

Question 8

An advantage of the 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 9

Companies in the mature stage of international business involvement are the most likely to adopt an international division structure.

Question 10

Franchising provides the franchisor with a new stream of income and the franchisee with a time-proven concept and products that can be quickly brought to market.

Question 11

Companies that are in growing businesses and have broad product lines most often use a global area division structure.

Question 12

An overseas operation that is totally owned and controlled by an MNC is a wholly owned subsidiary.

Question 13

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 14

A joint venture is an agreement in which two or more partners own and control an overseas business.

Question 15

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

Question 16

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

Question 17

Formalization is an organizational characteristic that assigns individuals to specific, well-defined tasks.

Question 18

The primary reason for the use of licensing agreements is a desire by the MNC for total control over its products in overseas markets.

Question 19

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

Question 20

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

Question 21

Pressure by local foreign government for continued growth of international sales encourage on-site:

A)Maintenance
B)Supply and distribution operations
C)Manufacturing operations
D)Safety operations

Question 22

Aircraft manufacturing fits which of the following globalization versus local responsiveness combination?

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

Question 23

This is an agreement that allows one party to use an industrial property right in exchange for payment to the other party.

A)Franchise
B)Joint venture
C)License
D)Certificate of proprietary usage

Question 24

A common first choice among manufacturing firms, especially those with technologically advanced products, would be to develop a(n):

A)Domestic policy
B)Export arrangement
C)Cartel arrangement
D)Import quota

Question 25

The primary reason for the use of _____ is a desire by the MNC for total control and the belief that managerial efficiency will be better without outside partners.

A)Licensing agreements
B)Franchising
C)Wholly owned subsidiaries
D)Joint ventures

Question 26

This is an agreement in which two or more partners own and control an overseas business.

A)Franchise
B)Wholly owned subsidiary
C)Licensing agreement
D)Joint venture

Question 27

The nonequity venture:

A)Is characterized by one group merely providing a service for another
B)Provides the most benefits when the need for product specification or differentiation is high
C)Involves a financial investment by the MNC in a business enterprise with a local partner
D)Organizes worldwide operations based primarily on function and secondarily on product

Question 28

Clothing manufacturing fits which of the following globalization versus local responsiveness combination?

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

Question 29

The equity joint venture:

A)Is characterized by one group merely providing a service for another
B)Involves a financial investment by the MNC in a business enterprise with a local partner
C)Organizes worldwide operations based primarily on function and secondarily on product
D)Provides the most benefits when the need for product specification or differentiation is high

Question 30

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 31

The products sold by firms that adopt a global product division structure are generally in the _____ stage of the product life cycle.

A)Introduction
B)Growth
C)Maturity
D)Decline

Question 32

According to the text, all of the following types of companies are likely to adopt the 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 33

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 34

The two types of joint ventures are:

A)Equity and non-equity ventures
B)Proprietary and public ventures
C)Statutory and unofficial ventures
D)External and internal ventures

Question 35

Companies still in the development stages of international business involvement are most likely to adopt the:

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

Question 36

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 37

The structural arrangement that allows a company to develop an overall, unified approach to international operations and helps the firm develop a cadre of internationally experienced managers is an advantage of a(n):

A)Mixed organization structure
B)Global area division structure
C)Global product division structure
D)International division structure

Question 38

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 39

These agreements typically require payment of a fee upfront and then a percentage of the revenues.

A)Franchise
B)Wholly owned subsidiary
C)Export
D)Joint venture

Question 40

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 41

A global area division structure most often is used by companies that are in _____ businesses and have _____ product lines.

A)Growing; broad
B)Mature; narrow
C)Growing; narrow
D)Mature; broad

Question 42

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 43

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 44

A global functional division structure is used primarily by:

A)Service companies
B)Extractive companies
C)Light manufacturing companies
D)Heavy manufacturing companies

Question 45

At the center of the _____ 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 46

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 47

In which of the following MNC structures are tight process bureaucratic controls used to maintain product quality and consistency?

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

Question 48

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 49

All of the following are advantages of the global functional division structure except:

A)An emphasis on functional expertise
B)A tight centralized control
C)A relatively lean managerial staff
D)The chief executive officer is held accountable for the profits

Question 50

Bureaucratic control is not very important in which type of multinational structure?

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

Question 51

Interdependent relationships are:

A)Designed to tap specialized expertise or other resources in the 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 the dispersed and specialized subunits
D)Designed to take advantage of low factor costs, while others are responsible for providing information on new technologies or consumer trends

Question 52

A _____ is designed to help 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 53

Which of the following is an advantage of a global area division structure?

A)The structural arrangement helps a firm manage a diverse product line
B)The structural arrangement helps a firm cater to local needs in foreign markets
C)The marketing, production and finance divisions of the firm can be coordinated on a product-by-product global basis
D)The structural arrangement helps a firm develop an overall, unified approach to international markets

Question 54

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 55

A structure under which global operations are organized on a geographic rather than a product basis is referred to as a(n):

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

Question 56

In terms of cultural control in a global area division:

A)It is treated like all other MNC structural divisions
B)Local subsidiary culture is often the most important
C)It is possible for some companies, but not always necessary
D)Culture must support the shared decision making

Question 57

The difficulty encountered in reconciling a product emphasis with a geographic orientation is the primary disadvantage of a(n):

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

Question 58

That division managers may pursue currently attractive geographic prospects for their products and neglect other areas with better long-term potential is a major drawback of the:

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

Question 59

Specialized operations are:

A)Designed to tap specialized expertise or other resources in the 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, while others are responsible for providing information on new technologies or consumer trends
D)Used to share information and resources throughout dispersed and specialized subunits

Question 60

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 61

Which basic value is not common in Asian firms?

A)Group
B)Trust
C)Confrontation
D)Fluid

Question 62

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

Question 63

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

A)Interpretation
B)Concentration
C)Formalization
D)Specialization

Question 64

The assignment of work to groups of departments where individuals are collectively responsible for performance is referred to as:

A)Horizontal specialization
B)Vertical specialization
C)Lateral specialization
D)Parallel specialization

Question 65

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

A)Formalization
B)Specialization
C)Concentration
D)Interpretation

Question 66

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

A)Centralization
B)Decentralization
C)Horizontal specialization
D)Vertical specialization

Question 67

Explain the transnational network structure.What are its three subcomponents?

Question 68

The assignment of jobs so that individuals are given a particular function to perform and 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 69

Explain alliances and joint ventures.

Question 70

"Companies still in the developmental stages of international business involvement are most likely to adopt the international division structure".Why?

Question 71

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

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

Question 72

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 73

Discuss the organizational characteristics of formalization, specialization and centralization.

Question 74

What is a mixed organization structure? Are mixed organization structures gaining in popularity? If so, why?

Question 75

Specialization in an international context can be classified into:

A)Diagonal and vertical specialization
B)Vertical and parallel specialization
C)Horizontal and vertical specialization
D)Diagonal and parallel specialization