Question 1

LG 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
B) cooperative form of the multidivisional
C) competitive form of the multidivisional
D) strategic business unit multidivisional

Accepted Answer

LG is most likely using the competitive form of the multidivisional structure, as it involves managing a portfolio of businesses in different industries using financial controls, which is typical for companies with diverse operations.

Question 2

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

A worldwide geographic area structure focuses on adapting to local or cultural differences, allowing national interests to dominate in decision-making.

Question 3

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that:
A) it is difficult to achieve global efficiency.
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 often prioritize standardization and efficiency over local responsiveness, making it challenging to adapt to specific local market needs and preferences.

Question 4

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 of the following scenarios 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 that 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

The highest-performing division is likely to receive the most capital allocation because it has demonstrated the ability to exceed goals and create more wealth, aligning with shareholder interests.

Question 5

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...

Question 6

Implementing the multidomestic 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 in a multidomestic strategy allows for tailoring products to meet local market demands, as local managers have the autonomy to make decisions that best suit their specific market conditions.

Question 7

The primary disadvantage of the multidomestic 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 multidomestic strategy focuses on tailoring products to local markets, which can limit the potential for global efficiency due to a lack of standardization and economies of scale.

Question 8

It is easiest to identify the company that functions as the strategic center firm in:
A) horizontal complementary strategic alliances.
B) vertical complementary strategic alliances.
C) corporate-level cooperative partnerships.
D) international cooperative partnerships.

Accepted Answer

In vertical complementary strategic alliances, the strategic center firm is often more identifiable as it typically coordinates activities and resources between suppliers and buyers within the supply chain.

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

The need for the organization to combine local responsiveness with economies of scale is most critical in a __________ strategy.
A) multidomestic
B) transnational
C) global
D) focus

Accepted Answer

A transnational strategy seeks to achieve both local responsiveness and economies of scale by balancing global integration and local adaptation.

Question 11

Goldenrod National has three divisions, GR1, GR2, and GR3.Each division operates with complete independence.What type of multidivisional structure does Goldenrod use?
A) Cooperative
B) Matrix
C) Competitive
D) SBU

Accepted Answer

Goldenrod National uses a competitive multidivisional structure, as each division operates with complete independence, indicating they compete with each other rather than cooperate.

Question 12

Which of the following is NOT a primary task of the strategic center firm in a strategic network?
A) Strategic outsourcing
B) Encouraging friendly rivalry among network members
C) Allocating internal capital
D) Supporting development of new core competencies

Accepted Answer

Allocating internal capital is typically an internal function of a firm rather than a primary task of a strategic center firm in a strategic network.

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.Each of those divisions operates independently and makes decisions based on national interests where they are located.This company probably uses the __________ strategy.
A) network
B) multidomestic
C) global
D) transnational

Accepted Answer

The company operates independently in each country and makes decisions based on national interests, which is characteristic of a multidomestic strategy.

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 underperforming 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

Transector likely uses the competitive form of the multidivisional structure, where divisions are evaluated based on their financial performance, leading to pressure on managers to meet targets.

Question 15

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

In the competitive form of the multidivisional structure, the focus is on performance appraisal, resource allocation, and long-range planning, but not on integration, as divisions operate independently to compete with each other.

Question 16

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) multidomestic; worldwide geographic area
D) competitive; strategic business unit multidivisional

Accepted Answer

IKEA's international strategy is best described as transnational, which involves adapting products and marketing strategies to local markets while maintaining global coordination. The appropriate organizational structure to implement this strategy is the combination structure, which combines elements of both centralized and decentralized structures.

Question 17

As illustrated by Textron Inc., when a firm uses the __________ structure hierarchy, the headquarters might rely on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets and then allocate cash flow to the different divisions accordingly.
A) functional
B) cooperative
C) competitive
D) SBU

Accepted Answer

In a competitive structure hierarchy, strategic controls are used to set targets, and financial controls are used to monitor performance, allowing the headquarters to allocate resources based on divisional performance.

Question 18

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

Accepted Answer

Firms that frequently acquire and divest assets often use a competitive multidivisional structure, which allows them to manage a diverse portfolio of businesses effectively.

Question 19

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so.It also promotes longer-term contracts with suppliers and enables engineers in the supplier companies to have better communication with Toyota.This is an example of a(n):
A) worldwide product divisional structure.
B) functional structure.
C) SBU multidivisional structure.
D) strategic network.

Accepted Answer

Toyota's approach exemplifies a strategic network, where the company collaborates closely with its suppliers, providing support and fostering long-term relationships to enhance mutual success.

Question 20

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

A multidomestic strategy involves tailoring products and services to local markets, which typically requires less formal coordination among units and allows for more autonomy and flexibility in decision-making.

Quiz 11: Organizational Structure and Controls

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

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

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.

Implementing the multidomestic strategy requires decentralization to:

The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited:

It is easiest to identify the company that functions as the strategic center firm in:

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.

The need for the organization to combine local responsiveness with economies of scale is most critical in a __________ strategy.

Goldenrod National has three divisions, GR1, GR2, and GR3.Each division operates with complete independence.What type of multidivisional structure does Goldenrod use?

Which of the following is NOT a primary task of the strategic center firm in a strategic network?

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 firms and divest assets are MOST likely to use the __________ structure.

A multidomestic strategy would be associated with: