Question 1

Divisional battles may lead to battles over transfer pricing.

Accepted Answer

Divisional battles can arise when different divisions of a company compete for resources or have conflicting goals. One area of potential conflict is transfer pricing, which involves determining the price at which different divisions of a company buy and sell goods or services to each other. If divisions believe that transfer prices are unfair or not in their best interests, this can lead to disputes and potentially harm the overall performance of the company.

Question 2

Companies pursue a global diversification and differentiation strategy when they want to minimize costs.

Accepted Answer

Companies pursue a global diversification and differentiation strategy when they want to enhance their competitiveness and expand their markets. This strategy often involves higher costs due to the need for adapting to different cultures, regulations, and consumer preferences.

Question 3

The more interdependent the divisions in a multidivisional structure,the greater are the bureaucratic costs associated with obtaining the potential benefits from a particular strategy.

Accepted Answer

As the interdependence among divisions in a multidivisional structure increases, there is a greater need for communication, coordination, and decision-making across the various divisions. This can result in increased bureaucratic costs, such as the time and resources required for meetings, reports, and approvals. However, these costs may be necessary to realize the potential benefits of a particular strategy that requires collaboration among different divisions.

Question 4

When implementing an international strategy,many companies create global divisions that they add to their existing divisional structures.

Accepted Answer

This is because global divisions allow companies to focus exclusively on their international operations and work together to pursue global objectives.

Question 5

In a multidivisional structure,corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates.

Accepted Answer

In a multidivisional structure, corporate managers can compare the performance of one division against another in terms of its cost structure or the profit it generates. This is possible because each division operates independently and has its own financial statements, allowing for easy evaluation and comparison.

Question 6

A joint venture occurs when two equal-sized firms agree to blend their operations,creating one larger firm.

Accepted Answer

A joint venture can involve two firms of different sizes and does not necessarily result in one firm becoming larger. It is a partnership between two firms to pursue a specific project or business activity while maintaining their separate identities.

Question 7

A firm that is pursuing a globalization strategy will typically use a global-area structure.

Accepted Answer

A firm pursuing a globalization strategy typically uses a global product structure, focusing on standardizing products across international markets rather than organizing by geographic areas.

Question 8

Firms pursuing related diversification typically rely more on output control than on culture control.

Accepted Answer

Firms pursuing related diversification often rely more on culture control to ensure that different business units align with the overall corporate strategy and share resources effectively.

Question 9

An approach to internal new venturing that has been championed by those who believe that the best way to encourage new-product development is to integrate this effort into the rest of the organization is the creation of a new-venture division.

Accepted Answer

The answer of An approach to internal new venturing that...

Question 10

Unfortunately,different divisions in a firm with a multidivisional structure are not given authority to adopt their own organizational structures.

Accepted Answer

In a multidivisional structure, divisions typically have the authority to adopt their own organizational structures to better meet their specific needs and goals.

Question 11

The organizational hierarchy is flatter in a multidivisional structure than in a product or functional structure.

Accepted Answer

The answer of The organizational hierarchy is flatter in a...

Question 12

Few integrating mechanisms are needed when a company uses a global-area structure.

Accepted Answer

A global-area structure divides operations by geographic regions, which can reduce the need for integrating mechanisms as each region operates semi-autonomously, focusing on local market needs.

Question 13

Companies pursue a localization strategy when they want to maximize responsiveness to the unique needs of customers in each country.

Accepted Answer

A localization strategy involves adapting a product or service to meet the specific needs and preferences of customers in different countries or regions. This allows companies to better connect with customers and gain a competitive advantage in local markets.

Question 14

It is important for corporate managers to be able to identify high-performing and underperforming divisions and to take corrective action as necessary.

Accepted Answer

Identifying high-performing and underperforming divisions is crucial for corporate managers to make informed decisions about allocating resources, setting goals and objectives, and addressing any issues that may be hindering performance. Failing to identify underperforming divisions and take corrective action can impact the overall success of the company.

Question 15

When a firm implements a global strategy with a global product group structure; it will be more responsive to the unique needs of each local country.

Accepted Answer

When a firm implements a global strategy with a global product group structure, it focuses on standardization of products and processes across countries to achieve economies of scale and cost savings. This may lead to less responsiveness to the unique needs of each local country.

Question 16

In a related multidivisional structure,the idea of corporate culture is meaningless.

Accepted Answer

In a related multidivisional structure, corporate culture is still important because it helps to unify the various divisions and ensure that they are all working towards the same goals and representing the corporation in a consistent manner.

Question 17

Vertical integration is a less expensive strategy to manage than is unrelated diversification.

Accepted Answer

The answer of Vertical integration is a less expensive strategy...

Question 18

In a firm with a multidivisional structure,corporate managers oversee the actions of divisional managers.

Accepted Answer

In a multidivisional structure, there are separate divisions with their own managers, but corporate managers are responsible for overseeing their actions and ensuring that they are in line with the overall objectives of the organization.

Question 19

In the multidivisional structure,each division typically contains only a partial set of value chain activities.

Accepted Answer

In the multidivisional structure, each division is specialized in certain value chain activities while other activities are handled by other divisions or shared by the corporate headquarters. Therefore, each division typically contains only a partial set of value chain activities.

Question 20

Competition for resources is one of the drawbacks of the multidivisional structure.

Accepted Answer

In a multidivisional structure, divisions may compete for resources such as funding, personnel, and equipment. This can lead to inefficiencies and conflicts between divisions.

Quiz 13: Implementing Strategy in Companies That Compete Across Industries and Countries