Question 1

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 increase their market share and reduce their dependence on one specific market. This approach is focused on offering unique products or services tailored to local markets, rather than solely minimizing costs.

Question 2

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

Accepted Answer

In a Multidivisional structure, each division typically contains a full set of value chain activities, allowing them to operate independently.

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

This statement is true. In a multidivisional structure, the more interdependent the divisions are, the more coordination is required to execute a strategy successfully. This coordination often involves bureaucratic costs related to planning, communication, and decision-making, which can reduce the potential benefits of a particular strategy.

Question 4

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 tailoring products or services to meet the specific preferences and requirements of customers in different countries or regions. This approach allows companies to better understand local markets and gain a competitive advantage by effectively addressing the needs of their target audience.

Question 5

A finn that is pursuing a globalization strategy will typically use a worldwide-area structure.

Accepted Answer

A firm pursuing a globalization strategy typically uses a global product division structure, not a worldwide-area structure, which is more common for localization strategies.

Question 6

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 7

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 helps managers make informed decisions to allocate resources and improve overall company performance. Taking corrective action can prevent underperforming divisions from negatively impacting the success of the company.

Question 8

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

Accepted Answer

The answer of Finns pursuing related diversification typically rely more...

Question 9

When a finn implements a global strategy with a worldwide product divisional structure, it will be more responsive to the unique needs of each local country.

Accepted Answer

A worldwide product divisional structure implies a standardized product approach across different countries, which may not necessarily be responsive to unique local needs. A regional structure may be more appropriate in this case.

Question 10

Few integrating mechanisms are needed between divisions when a company uses a worldwide-area structure.

Accepted Answer

A worldwide-area structure organizes divisions based on geographic regions, which often operate independently, reducing the need for integrating mechanisms between them.

Question 11

The head of the finance function at Beta LLC.employs a larger staff than is required to reduce work pressures inside the department without adding to productivity.This is an example of organizational slack.

Accepted Answer

This statement describes a situation where there is intentional excess capacity or resources to reduce workload and increase flexibility, which is the definition of organizational slack. Therefore, the statement is true.

Question 12

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

Accepted Answer

A Multidivisional structure typically has more layers of management compared to a product or functional structure, making it less flat.

Question 13

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

Accepted Answer

Vertical integration involves acquiring and controlling more stages of the production process, such as raw materials sourcing, manufacturing, distribution, and retail. This requires significant investments in assets, operations, and management, which can be more costly and risky than diversification into unrelated businesses that may not require as much expertise, infrastructure, or coordination. Moreover, vertical integration may involve more regulatory scrutiny, dependence on external suppliers or customers, and limited flexibility to adapt to changing market conditions or technologies. Therefore, while vertical integration can offer benefits such as increased efficiency, quality, control, and differentiation, it also entails higher costs and complexities than unrelated diversification.

Question 14

Transfer pricing may lead to divisional battles in a multidivisional company.

Accepted Answer

Transfer pricing involves setting prices for goods or services exchanged between different divisions of the same company. This can lead to conflicts between divisions as they compete for the most favorable prices. Each division may try to maximize its own profits and minimize costs, which can result in disagreements and tensions within the company.

Question 15

Different divisions in a finn with a Multidivisional structure are not given authority to adopt their own organizational structures.

Accepted Answer

Different divisions in a multidivisional structure are given the authority to adopt their own organizational structures, as long as they align with the overall goals and strategies of the organization. This allows for greater flexibility and responsiveness in meeting the unique needs of each division.

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 in maintaining consistency and alignment across the divisions. While each division may have its own subculture, there should be an overarching corporate culture that guides decision-making and behavior.

Question 17

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 have the ability to analyze and compare the financial performance of different divisions. This includes comparing costs and profits in order to make strategic decisions and allocate resources more effectively. Therefore, the statement is true.

Question 18

In a finn with a Multidivisional structure, corporate managers oversee the actions of divisional managers.

Accepted Answer

In a Multidivisional structure, corporate managers have overarching authority and responsibility over each division within the organization, and they use this authority to coordinate and oversee the actions of the divisional managers operating within each division.

Question 19

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

Accepted Answer

Adding global divisions to existing divisional structures is a common approach for companies implementing an international strategy, as it allows them to effectively manage operations across different regions and markets.

Question 20

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

Accepted Answer

In a multidivisional structure, divisions compete for resources such as funding, staff, and other resources needed to support their operations. This can lead to internal rivalry and conflicts between divisions, which can negatively impact organizational performance.

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