Question 1

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...

Question 2

In the ______ multidivisional structure there is complete independence among the firm's divisions.
A) cooperative
B) matrix
C) competitive
D) SBU

Accepted Answer

In a competitive multidivisional structure, each division operates independently and competes for resources and market opportunities, leading to complete independence among the divisions.

Question 3

IKEA is a global furniture retailer with more than 300 outlets in 39 countries and regions. IKEA focuses on lowering its costs as well as understanding customer needs, especially younger ones. IKEA's international strategy is best described as ______, and the appropriate organizational structure to implement this strategy is the ______ structure.
A) transnational; combination
B) global; worldwide product divisional
C) multi-domestic; worldwide geographic area
D) competitive; strategic business unit multidivisional

Accepted Answer

IKEA's focus on lowering costs and understanding customer needs indicates a transnational strategy, which involves balancing global integration with local responsiveness. A combination structure is appropriate for implementing this strategy, as it allows for both centralized decision-making and local adaptation.

Question 4

The primary disadvantage of the multi-domestic 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 multi-domestic strategy...

Question 5

In the ______ structure hierarchy, the headquarters relies on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets.
A) functional
B) cooperative
C) competitive
D) SBU

Accepted Answer

In a competitive structure hierarchy, the headquarters uses strategic controls to set rate-of-return targets and financial controls to monitor divisional performance, focusing on competition among divisions.

Question 6

In the competitive form of the multidivisional structure, the focus of headquarters is on all of 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 7

Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the ______ structure.
A) matrix
B) competitive multidivisional
C) hybrid combination
D) horizontal complementary strategic alliance

Accepted Answer

The competitive multidivisional structure is most suitable for firms such as Textron Inc. that frequently acquire and divest other firms. This structure involves creating separate divisions or units within the company that compete with each other as if they were independent firms. Each division is responsible for its own profits and losses, and strategic decisions are made at the divisional level. This allows Textron Inc. to easily integrate new acquisitions into the organization and quickly divest underperforming units.

Question 8

The most centralized and most costly form of the multidivisional structure is the:
A) integrated.
B) competitive.
C) SBU.
D) cooperative.

Accepted Answer

The cooperative form of the multidivisional structure is the most centralized and costly because it requires significant coordination and integration across divisions, often involving shared resources and centralized decision-making processes.

Question 9

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 10

TheLG Company has units operating in significantly different industries and uses financial controls to manage its portfolio. LG is most likely using the ______ structure.
A) combination-matrix
B) cooperative form of the multidivisional
C) competitive form of the multidivisional
D) strategic business unit multidivisional

Accepted Answer

The competitive form of the multidivisional structure is used by companies with units in different industries, focusing on financial controls to manage their portfolio.

Question 11

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy?
A) Competitive form with related-constrained strategy
B) Cooperative form with unrelated strategy
C) SBU form with related-linked strategy
D) Competitive form with related-linked strategy

Accepted Answer

The answer of Which of the following multidivisional structures is...

Question 12

The need for the organization to combine local responsiveness and efficiency is most critical in a ______ strategy.
A) multi-domestic
B) transnational
C) global
D) focus

Accepted Answer

The transnational strategy aims to achieve both local responsiveness and efficiency simultaneously. This is because the transnational strategy involves a high level of integration and coordination across borders while also allowing for adaptation to local markets. The other options, multi-domestic and global strategies, may prioritize one of these factors over the other, and a focus strategy is focused on a narrow segment of the market rather than balancing responsiveness and efficiency.

Question 13

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) multi-domestic
C) global
D) transnational

Accepted Answer

Galatea Foods is a multinational company with divisions headed by family members in different regions. This is typical of a multi-domestic strategy, which allows for decentralized decision-making and customization of products to local markets. A global strategy would involve more centralized decision-making and standardized products across markets, while a transnational strategy would involve a balance of both centralized and decentralized decision-making. A network strategy is focused on collaboration and partnerships with other companies.

Question 14

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 15

A firm pursuing an unrelated diversification strategy will utilize a ______ structure.
A) network
B) cooperative form multidivisional
C) competitive form multidivisional
D) functional

Accepted Answer

A competitive form multidivisional structure is the most appropriate for a firm pursuing an unrelated diversification strategy. This structure allows each division to compete against the others and does not require cooperation between divisions. It also allows for a high degree of autonomy for each division, which is important when pursuing unrelated diversification. A network structure is appropriate for a firm with a low degree of diversification, a cooperative form multidivisional structure is appropriate for a firm pursuing a related diversification strategy, and a functional structure is appropriate for a firm with a single product or service offering.

Question 16

A multidomestic strategy would be associated with:
A) high levels of coordination.
B) informal coordination among units.
C) many integrative mechanisms.
D) interdependent divisions.

Accepted Answer

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

Question 17

Megaline, Inc., with five divisions, follows the competitive form of the multidivisional structure. One division has not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office must decide 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 the multidivisional structure, the emphasis is on individual division performance and competition among the divisions. Therefore, it is most likely that the highest-performing division will receive the highest capital allocation in order to support its continued success and maximize wealth creation for the shareholders. Allocating more capital to the poorly performing division may not necessarily solve its underlying issues and could even lead to further losses. Allocating more capital to the average-performing divisions may not provide enough incentive for them to strive for higher levels of performance. Allocating equal capital to all divisions does not take into account their individual performance levels and would not incentivize top-performing divisions to continue to excel.

Question 18

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

Accepted Answer

Decentralization allows for more localized decision making, which can facilitate tailoring products to the demand in local markets. Decentralization does not necessarily aid in the development of economies of scale or scope, and while it may reduce bureaucracy, this is not a primary goal of the multi-domestic strategy.

Question 19

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 overlook the local market needs and preferences as the company focuses on global standardization. This can lead to a lack of responsiveness and customization to local customer demands, resulting in reduced competitiveness.

Question 20

The fewest integrative devices are used in the ______ structure.
A) simple
B) competitive multidivisional
C) SBU
D) network

Accepted Answer

The answer of The fewest integrative devices are used in...

Quiz 11: Organizational Structure and Controls

A worldwide geographic area structure is an organizational form in which:

In the ______ multidivisional structure there is complete independence among the firm's divisions.

The primary disadvantage of the multi-domestic strategy and worldwide geographic area structure relates to limited:

In the ______ structure hierarchy, the headquarters relies on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets.

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

Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the ______ structure.

The most centralized and most costly form of the multidivisional structure is the:

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.

TheLG Company has units operating in significantly different industries and uses financial controls to manage its portfolio. LG is most likely using the ______ structure.

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy?

The need for the organization to combine local responsiveness and efficiency is most critical in a ______ strategy.

A firm pursuing an unrelated diversification strategy will utilize a ______ structure.

A multidomestic strategy would be associated with:

Implementing the multi-domestic strategy requires decentralization to:

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

The fewest integrative devices are used in the ______ structure.