Question 1

In establishing a firm's organizational structure, a fundamental issue is ________.

Accepted Answer

In establishing a firm's organizational structure, a fundamental issue is how much decision-making responsibility the firm should retain at headquarters. This is because decisions made at headquarters affect all branches or subsidiaries of the firm, and too much centralization can lead to inefficiencies and delayed decision-making. On the other hand, too much decentralization can lead to a lack of coordination and consistency across the organization. Therefore, finding the right balance is crucial in optimizing the firm's performance.

Question 2

Armaz Inc., a manufacturing company, has its headquarters located in Texas, U.S., and subsidiaries in India, China, and Vietnam. Which of the following decisions will be the LEAST decentralized?

Accepted Answer

The decision about hiring a marketing manager in the United States would be the least decentralized as it involves the headquarters in Texas and is a decision about the domestic market. The other decisions involve the subsidiaries in foreign countries and are likely to be more decentralized.

Question 3

Marketing the same product worldwide is most appropriate for the ________ industry.

Accepted Answer

Electronics is a standardized industry with similar customer preferences and needs all over the world. The technology used in the industry is the same worldwide, so marketing the same product worldwide is most appropriate for electronics.

Question 4

Extra Clean Strategy (Scenario)
Extra Clean Soap Company has been manufacturing soap products, such as dishwashing liquid, bath soap, and shampoo, for over 20 years from its facility and headquarters in Dublin, Ireland. A recent opportunity allowed Extra Clean to purchase soap companies in Taiwan and India. Extra Clean is now servicing both foreign and domestic markets with its products and manufacturing in all three locations. Recent reports from managers in the foreign facilities indicate that Extra Clean sales in Taiwan and India are low due to a lack of local responsiveness. Extra Clean managers from Ireland, India, and Taiwan are having a teleconference in an attempt to devise a strategy to improve the profitability of Extra Clean.
-Which of the following questions would be most important for Extra Clean managers to evaluate the integration-responsiveness framework?

Accepted Answer

The integration-responsiveness framework focuses on the balance between centralization and decentralization in decision-making. Therefore, it is most important for Extra Clean managers to evaluate the appropriate balance between headquarters and country managers to improve local responsiveness and profitability in the foreign markets. Options A, B, and C do not relate directly to the integration-responsiveness framework.

Question 5

Which of the following is a characteristic of a transnational strategy to internationalization?

Accepted Answer

The characteristic of a transnational strategy is to have a balance between local responsiveness and central control. While decision making is delegated to local managers, there is still central control to ensure coordination and consistency across markets. There may be pressure on headquarters staff to coordinate and manage the global strategy. International business is not viewed as separate from domestic business but as integrated and interdependent.

Question 6

Armaz Inc., a manufacturing company, has its headquarters located in Texas, U.S., and subsidiaries in India, China, and Vietnam. Which of the following decisions will be the most centralized?

Accepted Answer

The decision about building factories in Cambodia requires a significant investment and involves strategic planning for the company's operations, making it a decision that is likely to be made at the headquarters level. The other decisions listed are more operational in nature and can be made at the subsidiary level.

Question 7

A firm would be compelled to seek global integration when it has to ________.

Accepted Answer

Global integration is sought when a company wants to capitalize on converging consumer trends and universal needs to achieve economies of scale and scope, lower costs, and increase profitability. This involves standardizing processes and products across markets to benefit from the global economy's efficiencies. The other options listed (adjusting to cultural differences, catering to local customer needs, and accommodating differences in distribution channels) are more aligned with local responsiveness, which is a different strategy from global integration.

Question 8

Extra Clean Strategy (Scenario)
Extra Clean Soap Company has been manufacturing soap products, such as dishwashing liquid, bath soap, and shampoo, for over 20 years from its facility and headquarters in Dublin, Ireland. A recent opportunity allowed Extra Clean to purchase soap companies in Taiwan and India. Extra Clean is now servicing both foreign and domestic markets with its products and manufacturing in all three locations. Recent reports from managers in the foreign facilities indicate that Extra Clean sales in Taiwan and India are low due to a lack of local responsiveness. Extra Clean managers from Ireland, India, and Taiwan are having a teleconference in an attempt to devise a strategy to improve the profitability of Extra Clean.
-Which of the following most likely supports Extra Clean implementing a multidomestic strategy instead of a global strategy?

Accepted Answer

A multidomestic strategy is suitable when local responsiveness is needed, and managers lacking internationalization experience may find it easier to adapt to local markets rather than implementing a standardized global strategy.

Question 9

A firm's subsidiary is the primary contributor to ________.

Accepted Answer

The answer of A firm's subsidiary is the primary contributor...

Question 10

Which of the following is a disadvantage of a multidomestic strategy?

Accepted Answer

The answer of Which of the following is a disadvantage...

Question 11

Which of the following characterizes a multidomestic strategy?

Accepted Answer

A multidomestic strategy involves adaptation of products and services to meet local needs, which is characteristic of subsidiary managers having autonomy to make decisions based on local conditions. The other options are not consistent with this strategy - B is more aligned with a global standardization strategy, C is more indicative of a centralized structure, and D is contradictory as it suggests standardization rather than adaptation.

Question 12

A ________ strategy is characterized by substantial control over country operations by headquarters in order to increase efficiency and integration.

Accepted Answer

A global strategy involves substantial control over country operations by the headquarters to enhance efficiency and integration across different markets, focusing on achieving economies of scale and creating uniform products or services.

Question 13

Which of the following gives headquarters considerable authority and control over the firm's activities worldwide?

Accepted Answer

A centralized approach gives headquarters considerable authority and control over the firm's activities worldwide. This approach involves decision-making being centralized at the headquarters, which then pass on instructions to subsidiaries and branches globally. This enables a company to maintain consistency in its operations and branding across different countries and markets.

Question 14

A firm's headquarters is the primary contributor to ________.

Accepted Answer

Headquarters is responsible for making decisions related to the allocation of capital within the organization. This includes setting budgets and determining investment priorities.

Question 15

In which of the following are substantial autonomy and decision making authority delegated to a firm's subsidiaries around the world?

Accepted Answer

A decentralized approach involves delegating significant autonomy and decision making power to subsidiaries around the world. This allows for better adaptation to local markets and greater efficiency in decision making. Global strategy and transnational strategy may still maintain some level of centralization and control from the headquarters. Nationalization refers to the government taking ownership or control of a company, which is not relevant to the question.

Question 16

In the ________ strategy, a firm views international business as separate from, and secondary to, its domestic business.

Accepted Answer

In the home replication strategy, a firm focuses primarily on its domestic business and views international business as separate and secondary.

Question 17

Which of the following is an advantage of a multidomestic strategy?

Accepted Answer

The advantage of a multidomestic strategy is minimal pressure on headquarters staff. This is because decision-making is decentralized and subsidiaries have a high level of autonomy. The other options are not advantages of a multidomestic strategy. Standardized organizational culture and minimum redundancy are advantages of a global standardization strategy, while low operating costs are an advantage of a transnational strategy.

Question 18

Extra Clean Strategy (Scenario)
Extra Clean Soap Company has been manufacturing soap products, such as dishwashing liquid, bath soap, and shampoo, for over 20 years from its facility and headquarters in Dublin, Ireland. A recent opportunity allowed Extra Clean to purchase soap companies in Taiwan and India. Extra Clean is now servicing both foreign and domestic markets with its products and manufacturing in all three locations. Recent reports from managers in the foreign facilities indicate that Extra Clean sales in Taiwan and India are low due to a lack of local responsiveness. Extra Clean managers from Ireland, India, and Taiwan are having a teleconference in an attempt to devise a strategy to improve the profitability of Extra Clean.
-Which of the following most likely supports Extra Clean implementing a transnational strategy?

Accepted Answer

Extra Clean could reduce the number of global suppliers by implementing a transnational strategy, which involves balancing global integration and local responsiveness. This would allow Extra Clean to standardize certain aspects of its operations while also adapting to local market needs. By reducing the number of global suppliers, Extra Clean could also benefit from economies of scale and potentially reduce costs.

Question 19

To establish positive relationships with country managers, senior corporate managers should ________.

Accepted Answer

Inviting local managers to discuss their experiences at regional and global conferences can help establish positive relationships with country managers. This shows that senior corporate managers value the input and perspective of local managers, which can lead to mutual trust and respect. Transferring employees to maintain a centralized power structure may be seen as imposing control and minimizing decision-making at the local level, which can harm relationships with country managers. Encouraging subjective ethical and moral standards across different countries may be difficult to achieve and may not necessarily help establish positive relationships with country managers. Minimizing decision-making at the local level can also harm relationships with country managers, as they may feel that their input and expertise is not valued.

Question 20

Which of the following is true about foreign units of a company using a multidomestic strategy?

Accepted Answer

In a multidomestic strategy, foreign units are decentralized and given autonomy to operate independently to better respond to local market conditions and customer preferences. This allows for greater flexibility and customization, but may also lead to inefficiencies and inconsistency in terms of overall strategy and brand image.

Quiz 12: Strategy and Organization in the International Firm