Deck 11: Organizational Design and Control

Question 1

Production coordination poses difficult problems in many regionalized organizations,which has led many companies to assign many specialized product managers who have line authority.

Answer 1

False

Question 2

The initial choice of organizational structure after discarding the international division is usually a hybrid based on product and market factors.

Answer 2

False

Question 3

Organizational change refers to the way that an organization formally arranges its various domestic and international units and activities,and the relationships among these various organizational components.

Answer 3

False

Question 4

The regionalized organization appears to be popular with companies that manufacture products with a rather low technological content.

Question 5

Most companies establish worldwide organizations based on product,region,function,or customer classes.

Question 6

Changes in an international company's strategy may require changes in the organization's design,but not the reverse.

Question 7

The type of structure that simplifies the task of directing worldwide operations because every country in the world is clearly under the control of someone who is in contact with headquarters is global product.

Question 8

coordinating the activities of departments to enable the firm to meet its overall objectives.

Question 9

Both multinational and global companies use regionalized organizations.

Question 10

Organizational structure deals with how an international business should be organized in order to ensure that its worldwide business activities are integrated.

Question 11

A company's organizational structure helps to determine where formal power and authority will be located within the organization.

Question 12

The international division is a division in the organization that is responsible for all non-home country activities and reports to the domestic division.

Question 13

The product global corporate form eliminates the duplication of product and area specialists.

Question 14

In designing an international organization,it is essential that the structures and systems being implemented are not merely consistent with each other,but also with the strategy the company and its competitors are using.

Question 15

Few international companies are organized by function at the top level.

Question 16

A company's international operating environment,both currently and as it is expected to be in the future,is the primary determinant of its organizational structure.

Question 17

The disadvantage of an organization divided into geographic regions is that each region must have its own product and functional specialists.

Question 18

An evolving structure for an international organization over time is normal,as the company's involvement in foreign markets increases over time.

Question 19

Global firms that organize by function at the top level have functional managers that report directly to the area heads.

Question 20

A structure organized by more than one dimension at the top level is a matrix organization.

Question 21

In a firm without a global product policy,the preference of the operations management people in the home office has always been to localize the product or at least the production process in as many overseas plants as possible.

Question 22

The rapidly changing business environment caused by increased global competition,customer preference for custom-made rather than mass-produced products,and faster technological change is pressuring companies to make greater use of global product structures.

Question 23

According to the text,an organization which coordinates economic activity to deliver value to customers using resources outside its traditional boundaries is an integrated corporation.

Question 24

All decisions are made at either the IC headquarters or at the subsidiary level.

Question 25

The more familiar,or the more similar,conditions in the host country are perceived to be,the more likely headquarters is to rely on subsidiary management.

Question 26

As the 21^stCentury evolves,it is expected that managers will make greater use of the dynamic network structure to integrate the smaller units into an operation better coordinated by a large central headquarters organization.

Question 27

A business entity with a clearly defined market,specific competitors,the ability to carry out its business mission,and a size appropriate for control by a single manager is a strategic operating unit.

Question 28

According to the text,every successful company uses procedures to put its plans into effect,evaluate,correct,and reward.

Question 29

Moving executives around an IC system can increase confidence and mutual reliance.

Question 30

Companies controlled by other companies through ownership of enough voting stock to elect majorities on the board of directors are called subsidiaries or affiliates.

Question 31

Hybrid organizations are often the result of a regionally organized company having introduced a new and different product from what the regionally organized form is accustomed to handling.

Question 32

A matrix organization involves two or more dimensions,such as area and product,in which managers are at the same level but do not have overlapping responsibilities.

Question 33

Strategic business units are an organizational form in which geographic divisions have been defined as though they were distinct,independent businesses.

Question 34

A form of organization characterized by lateral decision processes,horizontal networks,and a strong corporatewide business philosophy is a horizontal corporation.

Question 35

Advantages of the virtual corporation concept include that it allows a company to build competence from the ground up and to increase management's control over the corporation's activities.

Question 36

A virtual corporation is also called a network organization.

Question 37

An organization in which top-level divisions are required to heed input from a staff composed of experts of another organizational dimension in an attempt to avoid the double-reporting difficulty of a matrix organization but still mesh two or more dimensions is called a hybrid organization.

Question 38

The matrix overlay organizational form attempts to eliminate some of the problems of the matrix organization.

Question 39

In a typical matrix organization based on area and product dimensions,country managers will be responsible to both the area managers and the product line managers.

Question 40

The horizontal organization has been characterized as anti-organization because its designers try to remove the constraints imposed by the conventional organizational structure.

Question 41

The increasing pace of change and intensity of competition in many markets of the world,as well as continued differences across many markets,are causing even large experienced companies to delegate at least some decision-making authority to subsidiary managers.

Question 42

Organizational design

A)is a process that deals with how an international business should be organized in order to ensure that its business activities are integrated globally.
B)must consider the size of an organization and the complexity of its business operations.
C)must be able to evolve over time in order to enable the organization to respond to change.
D)is a process that deals with how an international business should organize to ensure its business activities are integrated globally.It considers the size and complexity of its business operations and should also evolve over time to enable the organization to respond to change.
E)finds easy ways to departmentalize and take advantage of the efficiencies gained from specialization of labor.

Question 43

Subsidiary detriment occurs when a small loss for a subsidiary results in a greater gain for the total IC.

Question 44

Regarding the structure of international companies:

A)Managers have to consider the nature of their company's international operating environment,both currently and how it is expected to change in the future.
B)Managers have to consider the nature of their competitors' international strategies,both currently and how they are expected to change in the future.
C)Gains from increased specialization of labor may at times be nullified by the increased cost of coordination.
D)Gains from increased specialization of labor may at times be doubled by the increased cost of coordination.
E)Managers have to consider the nature of their company's international operating environment,both current and its expected change in future.They also should note that gains from increased specialization of labor may at times be nullified by the increased cost of coordination.

Question 45

Global companies:

A)that use geographic regions as primary basis consider the division in which the home country is located as just another division for purposes of resource allocation and a source of management personnel.
B)do not have international divisions.
C)are large companies with numerous overseas manufacturing facilities.
D)are organized on the basis of products and do not have other organizing dimensions in a pure organization.

Question 46

The primary dimensions that need to be considered when designing the structure of an international company are:

A)product and technical expertise,geographic expertise,and functional expertise.
B)product and technical expertise,customer expertise,and functional expertise.
C)geographical expertise,functional expertise,and customer expertise.
D)product and technical expertise,geographic expertise,customer expertise,and functional expertise.
E)product and technical expertise,geographic expertise,customer expertise,and social expertise.

Question 47

For controls to be effective,all operating units of an IC must provide headquarters with timely,accurate and complete reports,including those dealing with financial,technological,market opportunity,and political and economic information.

Question 48

According to the text,which of the following dimensions provide the basis for organizational subdivisions at the secondary,tertiary,and still lower levels?

A)capital.
B)domestic or international.
B)national subsidiary.
C)function.
D)national subsidiary,domestic or international,and function.

Question 49

Decisions that work to the detriment of the subsidiary may be beneficial to the enterprise.

Question 50

In designing the organizational structure,management know two concerns,__________ and __________ run counter to each other.

A)effective way to departmentalize,coordinating activities
B)earning profits,paying taxes
C)hiring employees,reducing labor costs
D)sales growth,research and design expenditures
E)sales growth,hiring employees

Question 51

In larger,older organizations more decisions are made at the subsidiaries.

Question 52

According to the text,which of the following dimensions provide the basis for organizational subdivisions at the secondary,tertiary,and still lower levels?

A)process and customer class..
B)political setup.
C)customer class.
D)economic matrix.
E)capital.

Question 53

As their overseas operations have increased in importance,companies have felt the need to:

A)eliminate the international division.
B)establish worldwide organizations based on product,function,region,or customer classes at the top level.
C)lower production costs by setting up in-bond plants.
D)to eliminate the international division and establish worldwide organizations based on product,function,region,or customer classes at the top level.
E)increase production costs by setting up in-bond plants.

Question 54

Organizational structure

A)Refers to the way that an organization formally arranges its various domestic and international units and activities,and the relationships among these organizational components.
B)Helps to determine where formal power and authority will be located within the organization.
C)Is primarily created and evolved by senior management.
D)Refers to ways an organization arranges its various domestic and international units and activities,and the relationships among these.It helps determine where formal power will be located and is created and evolved by senior management.
E)Helps determine direct investment plans for the entire fiscal within the organization. Organizational structure refers to the way an organization formally arranges its various domestic and international units and activities,and the relationships among these.It also helps determine where formal power and authority will be located and is primarily created and evolved by senior management.

Question 55

Subsidiary management morale is one element in determining where decisions would be made.

Question 56

Companies that adopted the global organizational form felt that this organization would:

A)permit them to obtain cheaper labor.
B)be more capable of developing strategies to confront new global competition.
C)enable them to get lower interest rates to finance expansion.
D)permit them to obtain specialized labor.
E)enable them to get lower debit rates when marching towards finance expansion.

Question 57

All the reasons for making decisions at IC headquarters,at 100 percent owned subsidiary headquarters,or cooperatively do not apply in joint venture situations.

Question 58

With less than 50 percent of the voting stock,or even with no voting stock,an IC can still have control.

Question 59

In some cases,an international company legally can keep more profit after taxes by allocating work and prices.

Question 60

Pricing that is established for transactions between members of the enterprise is called transfer pricing.

Question 61

An organization in which top level divisions are required to heed input from a staff composed of experts of another organizational dimension in an attempt to avoid the double-reporting difficulty of a matrix organization but still mesh two or more dimensions is known as a:

A)hybrid organization.
B)matrix organization.
C)matrix overlay.
D)network corporation.
E)virtual corporation.

Question 62

The international structural stages model suggests that a typical evolutional path for an international company's structure would be:

A)from international division to geographical area division to worldwide product division.
B)from international division to worldwide product division to geographical area division.
C)from geographical area division to worldwide product division to global matrix.
D)from functional division to horizontal company to virtual corporation.
E)from international division to worldwide product division to global matrix.

Question 63

Disadvantages of the regionalized organization structure include:

A)the increased complexity of directing worldwide operations.
B)its inappropriateness for use in global companies.
C)its duplication of area and product specialists.
D)each region must have its own product and functional specialists.
E)the increased complexity of directing local operations.

Question 64

Proponents of the horizontal corporation:

A)claim that lateral relationships inhibit innovation and new-product development.
B)state that this approach to organizing helps to place more decision-making responsibility in the hands of middle managers and other skilled professionals.
C)enhances increased control and supervision by upper management.
D)claim that horizontal relationships espouse innovation and new-product development.
E)enhances decreased control and supervision by upper management.

Question 65

Problems with the matrix structure include:

A)two or more managers must agree on decisions,which can lead to slow decision making.
B)special divisions often must be established to serve heterogeneous customer segments.
C)global branding and production coordination are hindered.
D)local branding and production coordination are hindered.
E)special divisions often must be established to serve homogenous customer segments.

Question 66

Where are decisions made?

A)IC headquarters.
B)subsidiary headquarters.
C)cooperatively by IC and subsidiary.
D)IC headquarters,subsidiary headquarters,and sometimes cooperatively by IC and subsidiaries.
E)Virtual corporations Decisions are made in IC headquarters,subsidiary headquarters,and sometimes cooperatively by IC and subsidiaries.

Question 67

The regionalized organization:

A)has the advantage that it avoids duplication of product and functional specialists.
B)seems to be popular with companies that have diverse products,each with different product requirements,competitive environments,and political risks.
C)often encounters problems with global product planning.
D)seems to be popular with companies that have diverse products,each with different product requirements,competitive environments,and political risks and often encounters problems with global product planning.
E)seems to be popular with companies that have only one product,with specific requirements,and no political risks.

Question 68

The common characteristic of multinationals that are organized by function at the upper level is a narrow:

A)and highly integrated product mix.
B)and highly integrated customer list.
C)variation of prices in the product mix.
D)research and development effort.
E)and very low integrated product mix.

Question 69

The horizontal corporation:

A)often draws teams from different departments to solve a problem or deliver a product.
B)has been characterized as "antiorganization."
C)puts greater decision making responsibility in the hands of middle managers.
D)puts very little decision making responsibility in the hands of middle managers.
E)often uses a single team to solve a problem or deliver a product.

Question 70

The __________ organization has evolved from management's attempt to mesh product and regional and functional expertise while maintaining clear lines of authority.

A)hybrid
B)matrix
C)global
D)functional
E)network

Question 71

Reengineering is:

A)the redesign of the company's products to improve the quality.
B)significant reduction of middle management.
C)the empowerment of employees.
D)the empowerment of investors.
E)significant increase in middle management.

Question 72

According to the text,companies are now accepting:

A)the need for frequent reorganization and the need for reducing the size of middle management.
B)the need for frequent reorganization.
B)the need for reducing the size of middle management.
C)the use of pagers and mobile phones for faster communication.
D)the need for social acculturation.

Question 73

__________ are organizational forms in which product divisions are defined as though they were independent businesses.

A)Free-form management units
B)Strategic business companies
C)Strategic business units
D)Matrix overlays
E)Virtual corporations

Question 74

A structure organized by more than one dimension at the top level is known as a:

A)hybrid organization.
B)matrix organization.
C)matrix overlay.
D)network corporation.
E)virtual corporation.

Question 75

The potential benefits of the virtual corporation concept include:

A)It permits greater flexibility than is associated with more typical corporate structures.
B)Virtual corporations form a network of static relationships that allow them to take advantage of the competencies of other organizations.
C)This form of organization increases management's control over the corporation's activities.
D)It permits less flexibility than is associated with more typical corporate structures.
E)the redesigning of the company's products to improve quality. One of the potential benefits of the virtual corporation concept is that it permits greater flexibility than is associated with more typical corporate structures.

Question 76

Companies controlled by other companies through ownership of enough voting stock to elect board-of-directors majorities are known as:

A)affiliates.
B)joint ventures.
C)subsidiaries.
D)strategic alliances.
E)horizontal corporation.

Question 77

The regionalized organization seems to be popular with companies that:

A)operate in many diverse foreign regions.
B)favor licensing as a form of market entry.
C)manufacture products with a low technological content requiring strong marketing ability.
D)manufacture products incorporating high technology in industrialized regions.
E)favor new product development as a form of market entry.

Question 78

The use of a global product organization structure:

A)frequently represents a return to pre-export department times.
B)has domestic product divisions responsible for the worldwide operations such as marketing and production of products under their control.
C)helps to avoid duplication of area experts.
D)frequently represents a return to post-export department times.
E)frequently represents a return to pre-export department times and has domestic product divisions responsible for the worldwide operations such as marketing and production of products under their control.

Question 79

A hybrid organization may result from:

A)the firm's acquiring a company with distinct products and distribution channels.
B)management's attempt to mesh product and regional expertise.
C)management's problems with a matrix organization.
D)a firm's use of SBUs.
E)a firm's use of FDIs.

Question 80

Control activities are the efforts to:

A)put plans into effect.
B)learn if plans are working as intended.
C)make corrections.
D)to put plans into effect,learn if plans are working as intended,and make corrections.
E)enhance increased control and supervision by upper management.