Question 1

Toyota heavily uses a strategic network of vertical relationships. Toyota enables engineers in supplier firms to communicate easily with companies with whom Toyota has contracts for services. This results in the suppliers and the Toyota (the strategic center firm) being more
A) interdependent.
B) rivalrous.
C) creative.
D) complementary.

Accepted Answer

The use of a strategic network of vertical relationships, with easy communication between suppliers and the strategic center firm, leads to increased interdependency between the two parties.

Question 2

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to
A) make the partners' true loyalties and intentions unclear.
B) make the role of the strategic center firms more critical to alliance success.
C) distribute the alliances along several segments of the airline industry value chain.
D) be most effective when the alliances are with airlines headquartered in different nations.

Accepted Answer

The answer of Airlines have forged a number of complementary...

Question 3

Unilever is changing from a multidomestic strategy to a transnational strategy. In order to implement this change, Unilever must move to the ____ organizational structure.
A) combination
B) worldwide product divisional
C) worldwide geographic area
D) strategic business unit multidivisional

Accepted Answer

The answer of Unilever is changing from a multidomestic strategy...

Question 4

Discuss the difference between strategic and financial controls.

Accepted Answer

The answer of Discuss the difference between strategic and financial...

Question 5

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that
A) it is difficult to achieve economies of scale.
B) the firm must develop centers to offer after-sales service to customers.
C) it is difficult to respond effectively to local market needs and preferences.
D) achieving economies of scale with this strategy/structure combination is nearly impossible.

Accepted Answer

The global strategy and worldwide product divisional structure tend to ignore local market needs and preferences which can lead to ineffective response to these needs. This can hinder the success of the strategy and structure combination.

Question 6

The need for organizational employees to be able to function effectively in a culturally-diverse environment is most critical in a ____ strategy.
A) multidomestic
B) transnational
C) global
D) focus

Accepted Answer

A transnational strategy requires employees to function effectively in culturally-diverse environments as it involves balancing global efficiency with local responsiveness, necessitating a deep understanding of various cultures.

Question 7

Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a Food Service Division. Ichabod Industries probably uses the ____ organizational structure.
A) horizontal complementary strategic alliance
B) competitive multidivisional
C) strategic business unit multidivisional
D) hybrid combination

Accepted Answer

The answer of Ichabod Industries has a Latin American Division,...

Question 8

Megaline, Inc., follows the competitive form of the multidivisional structure. It has five divisions. One division has not met the rate-of-return goals for the past year. One division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office is making decisions about where to allocate capital in the next year. Which scenario is the MOST likely?
A) The poorest performing division will get the highest capital allocation so that it can fix its problems and achieve the rate-of-return goal next year.
B) The highest performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year.
C) The average performing divisions which met the rate-of-return goals will receive the highest allocation because their performance exactly matched corporate requirements.
D) All divisions will receive the same capital allocation for the next year because this organizational structure rewards divisional managers based on achievement of strategic goals.

Accepted Answer

In a competitive form of multidivisional structure, capital allocation decisions are usually made based on the rate of return of each division. The highest performing division (which exceeded the rate-of-return goals) is likely to receive the highest capital allocation because it has the potential to create more wealth for the shareholders in the next year. The poorest performing division may not receive a high allocation because it has not met the goals for the past year, and allocating more capital may not necessarily solve its problems. The average performing divisions may receive a fair allocation based on their performance, but the highest performing division is likely to receive more capital because it has exceeded expectations. Therefore, option B is the most likely scenario.

Question 9

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network?
A) strategic outsourcing
B) encouraging friendly rivalry among network members
C) allocating internal capital
D) supporting development of new core competencies

Accepted Answer

The answer of Which of the following is NOT a...

Question 10

The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited
A) centralization.
B) coordination across divisions.
C) ability to meet local market needs.
D) potential for global efficiency.

Accepted Answer

The answer of The primary disadvantage of the multidomestic strategy...

Question 11

The CEO of Transector, Inc., set a 6.5 percent rate-of-return target for all divisions for the past year. Now, at the end of the year, three of Transector's seven divisions have not met this rate-of-return goal. The division managers of these three under-performing divisions have all secretly contacted executive placement firms to investigate openings at other firms, because they know their future at Transector is in jeopardy as financial performance is all-important at Transector. Transector probably uses the ____ structure.
A) competitive form of the multidivisional
B) SBU form of the multidivisional
C) worldwide geographic area
D) distributed strategic network

Accepted Answer

The answer of The CEO of Transector, Inc., set a...

Question 12

It is easiest to identify the company that functions as the strategic center firm in
A) horizontal complementary strategic alliances.
B) vertical complementary strategic alliances.
C) corporate-level cooperative partnerships.
D) international cooperative partnerships.

Accepted Answer

In vertical complementary strategic alliances, the strategic center firm is the company that functions at the center of the value chain and coordinates the activities of the participants involved in the alliance.

Question 13

A multidomestic strategy would be associated with
A) high levels of coordination.
B) low levels of formalization.
C) many integrative mechanisms.
D) interdependent divisions.

Accepted Answer

The answer of A multidomestic strategy would be associated with
A)...

Question 14

After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts. In doing this, Icon Images is hoping to
A) reduce transaction costs.
B) increase negotiating leverage with suppliers.
C) become less dependent on its suppliers.
D) move toward horizontal alliances with its suppliers.

Accepted Answer

By agreeing to longer-term contracts, Icon Images can reduce transaction costs associated with constantly renegotiating and reevaluating short-term contracts.

Question 15

Galatea Foods was founded in Greece by Galatea Chronos in 1978, and the company spread rapidly through Western Europe. Ms. Chronos retains the office of CEO. The Spanish division is headed by her oldest son. The North European division is headed by her only daughter, and the French-Italian division is headed by Ms. Chronos' brother. This company probably uses the ____ strategy.
A) network
B) multidomestic
C) global
D) transnational

Accepted Answer

The company's structure consists of individual divisions headed by family members in different regions of the world, indicating a multidomestic strategy. The company is decentralized, with each division having a high degree of autonomy in decision-making.

Question 16

In Japan, the center firm in a strategic network of vertical relationships might be expected to undertake all of the following EXCEPT
A) reducing its transaction costs by promoting longer-term contracts with subcontractors.
B) enabling engineers in upstream companies to have better communication with those companies with whom it has contracts for services.
C) encouraging subcontractors to modernize their facilities and providing them with technical and financial assistance to do so.
D) decreasing communications between network members to reduce communication costs.

Accepted Answer

Decreasing communications between network members would not be expected as it goes against the principle of maintaining close relationships and communication within the strategic network. The other options would all be expected as ways to improve efficiency and quality within the network.

Question 17

McDonald's operates through a franchising system wherein the head office uses strategic and financial controls to ensure that the franchisees are creating the greatest possible value. This is an example of a(an):
A) worldwide product divisional structure.
B) strategic network.
C) SBU multidivisional structure.
D) simple structure.

Accepted Answer

A strategic network refers to a system where a central organization (like McDonald's head office) uses strategic and financial controls to manage and ensure value creation across its network of franchisees.

Question 18

In the competitive form of the multidivisional structure, the focus of headquarters is on all the following EXCEPT
A) integration.
B) performance appraisal.
C) resource allocation.
D) long range planning.

Accepted Answer

The answer of In the competitive form of the multidivisional...

Question 19

Implementing the multidomestic strategy requires decentralization
A) to facilitate the tailoring of products to the demand in local markets.
B) to develop economies of scale.
C) in order to achieve economies of scope.
D) to reduce bureaucracy and speed up decision-making.

Accepted Answer

The multidomestic strategy involves customizing products and services to meet the specific needs of local markets. Decentralization allows for greater flexibility and responsiveness to local market demands.

Question 20

A worldwide geographic area structure is an organizational form in which
A) multiple alliances across the globe link complementary businesses.
B) standardized products are offered across country markets.
C) national interests dominate and management adapts to local or cultural differences.
D) responsiveness to local demand is combined with economies of scale.

Accepted Answer

The answer of A worldwide geographic area structure is an...

Quiz 11: Organizational Structure and Controls

Toyota heavily uses a strategic network of vertical relationships. Toyota enables engineers in supplier firms to communicate easily with companies with whom Toyota has contracts for services. This results in the suppliers and the Toyota (the strategic center firm) being more

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to

Unilever is changing from a multidomestic strategy to a transnational strategy. In order to implement this change, Unilever must move to the ____ organizational structure.

Discuss the difference between strategic and financial controls.

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that

The need for organizational employees to be able to function effectively in a culturally-diverse environment is most critical in a ____ strategy.

Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a Food Service Division. Ichabod Industries probably uses the ____ organizational structure.

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network?

The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited

It is easiest to identify the company that functions as the strategic center firm in

A multidomestic strategy would be associated with

After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts. In doing this, Icon Images is hoping to

In Japan, the center firm in a strategic network of vertical relationships might be expected to undertake all of the following EXCEPT

McDonald's operates through a franchising system wherein the head office uses strategic and financial controls to ensure that the franchisees are creating the greatest possible value. This is an example of a(an) :

In the competitive form of the multidivisional structure, the focus of headquarters is on all the following EXCEPT

Implementing the multidomestic strategy requires decentralization

A worldwide geographic area structure is an organizational form in which