Deck 12: Corporate Governance and Control of Global Operations

Question 1

A decentralized, independent strategy is symbolic of a

A) multidomestic strategy.
B) global strategy.
C) transnational strategy.
D) geocentric strategy.

Answer 1

A

Question 2

The use of external experts is common in the international division structure.

Answer 2

False

Question 3

A centralized, globally scaled strategy is symbolic of a

A) multidomestic strategy.
B) global strategy.
C) transnational strategy.
D) geocentric strategy.

Answer 3

B

Question 4

The legal system is one of the internal governance mechanisms.

Question 5

Which of the following is not consistent with establishing a product line focus in the MNEs organizational structure?

A) The product line is wide.
B) Products are subject to rapid technological change.
C) Production and logistics need to be coordinated.
D) Country and regional expertise is of prime importance.

Question 6

A global strategy

A) involves the development of global markets, market by market.
B) involves the integration of activities worldwide.
C) is not able to capitalize on firm-specific advantages as easily as does the multidomestic strategy.
D) generally results in each subsidiary establishing its own accounting system but sending the information back to the home office for global consolidation.

Question 7

A grid/matrix organization would be most common in a domestic structure.

Question 8

In practice, control is shifting form the formal to the more informal ways of coordinating activities.

Question 9

The German Scoreboard has become a useful measurement tool internationally for corporate governance.

Question 10

A geographic organizational structure works best when

A) there are narrow, relatively simple product lines.
B) when product lines are rapidly changing.
C) product expertise is more important than country expertise.
D) the company needs economies of scale.

Question 11

A strategy where corporate assets are dispersed, interdependent and specialized is symbolic of a

A) multidomestic strategy.
B) global strategy.
C) transnational strategy.
D) geocentric strategy.

Question 12

As firms become more global, they tend to rely more on

A) organizational structure to control operations.
B) the decentralization of decision making in order to control foreign operations.
C) informal accounting procedures.
D) lateral relations and informal communication.

Question 13

The process of socialization that crosses national lines is an example of

A) structural mechanisms.
B) informal mechanisms.
C) organizational structure.
D) formalization of policies.

Question 14

A multidomestic strategy

A) allows each subsidiary abroad to operate relatively independently of other subsidiaries.
B) occurs when an MNE pits itself against competitors on a global basis.
C) results in highly centralized decision-making.
D) does not allow products to vary from one market to another.

Question 15

Research on international firms shows a lack of association between the proportion of outside directors and firm performance.

Question 16

An advantage of an international division structure over a domestic structure is the minimization of the transfer pricing problem.

Question 17

Structural and formal mechanisms include

A) task forces and meetings that cut across organizational lines.
B) networking and personal contacts.
C) the socialization of individuals in the organization.
D) organizational structure.

Question 18

The problem with defining international business structures with centralization versus decentralization is that the very terms connote a mutually exclusive situation.

Question 19

A transnational strategy is not as likely to be as effective as multi-domestic strategy.

Question 20

Sarbanes-Oxley Act of 2002 requires management to issue a yearly report with their assessment of the effectiveness of internal controls.

Question 21

Outside the United States, concentrated ownership

A) is positively associated with performance
B) is negatively associated with performance
C) has no association with performance
D) only occurs with state ownership

Question 22

For IT, economies of scale result in

A) worldwide innovation.
B) local differentiation.
C) global integration.
D) lateral relations.

Question 23

For global innovators,

A) information flows are reciprocal rather than sequential.
B) information flows are sequential from the parent company to the global innovator.
C) information flows are sequential from the global innovator to the parent company.
D) information flows are relatively infrequent and unimportant.

Question 24

The need to achieve economies of scale is an example of the forces for

A) worldwide innovation
B) local differentiation.
C) global integration.
D) lateral relations.

Question 25

Internal governance mechanisms include
I).ownership structure
II).legal system

A) only I
B) only II
C) either I or II
D) neither I or II

Question 26

Sarbanes-Oxley Act of 2002

A) has costs in excess of benefits
B) does not apply to foreign subsidiaries
C) will have the IT function as an important part of compliance
D) requires management to eliminate financial misstatements

Question 27

Shareholders

A) directly control MNE operations
B) vote to hire and fire management
C) receive dividends and management appoints the board of directors
D) vote for board of directors who hire and fire management

Question 28

The knowledge-flows framework for an integrated player results in

A) reciprocal flows.
B) sequential flows from the subsidiary to the parent but not vice-versa.
C) routine but not non-routine flows.
D) lateral relations.

Question 29

Which of the following reflects information flows of a global innovator?

A) High outflow of knowledge from the local subsidiary to the rest of the corporation and high inflow of knowledge from the rest of the corporation to the local subsidiary.
B) High outflows and low inflows.
C) Low outflows and high inflows.
D) High outflows and high inflows.

Question 30

Organizational structure is part of

A) informal control mechanisms.
B) structural mechanisms.
C) organizational culture.
D) lateral relations.

Question 31

The external takeover market is an effective control mechanism
I).in the US
II).in the UK
III) throughout the world

A) only for I
B) only for II
C) either I or II
D) III is the best answer

Question 32

As a domestic firm evolves into an MNE,
__a) reporting and communication flows change.
__b) the organizational structure becomes more simplified.
__c) it changes from a product emphasis to an international division structure.
__d) the existing organizational structure cannot be changed because of the ensuing confusion.

Question 33

COSO characteristics of internal control include
I).effectiveness and efficiency of operations
II).reliability of financial reporting

A) only for I
B) only for II
C) neither I or II
D) both I and II

Question 34

The Scoreboard for German Corporate Governance

A) is used only in Germany
B) rates the quality of governance
C) reflects a civil law approach
D) is based on 1 to 5 quality ratings

Question 35

Most board of directors have

A) ten members
B) an audit committee
C) a majority of management representation
D) union representatives

Question 36

The COSO monitoring component

A) assesses the quality of the system's performance over time
B) assures that no fraud will occur
C) sets the tone of the organization
D) is required by FASB

Question 37

The movement of business data electronically between or within firms in a structured, computer-processable data format is known as

A) decentralization.
B) globalization.
C) Electronic Data Interchange.
D) routine transfers.

Question 38

Organizational culture is part of the

A) structural mechanisms of control.
B) informal control mechanisms.
C) centralization vs. decentralization dilemma.
D) organizational structure dimension.

Question 39

If a subsidiary in a global company is considered to be an integrated player,

A) it tends to receive but not share knowledge.
B) its information flows would be reciprocal.
C) it is probably organized around geographic lines of business.
D) it would be multidomestic rather than transnational.

Question 40

The Sarbanes-Oxley Act of 2002

A) is not required for foreign firms registered on US exchanges.
B) prohibits real time financial statements on the Internet.
C) is also required for IFRS
D) requires annual internal control report that is assessed by an independent auditor.

Question 41

Responsiveness to local conditions results in

A) global integration.
B) differentiation.
C) worldwide innovation.
D) a common corporate culture.

Question 42

To be globally competitive, MNEs need an information system that provides a significant flow of information
I).from parent to affiliate
II).from affiliate to parent
III) between affiliates

A) only I
B) only II
C) either I or II
D) I, II and III