MGT302 - EXAM #3 LaRosa

Rank from highest to lowest the need for coordination among these types of companies. Place the strategy with the highest need at the top and work down to the lowest need at the bottom of the list.

1. transnational 2. global 3. international 4. localization

When competing globally firms have ____ major strategic stances that they can adopt.

4

Companies typically face two types of competitive pressures when entering global markets. What are these two pressures?

Be locally responsive Reduce costs

Budgets and capital spending are the most important _____ in subunits within multinational firms.

Bureaucratic Controls

Which of the following countries would be most likely to form a regional convergence with the United States?

Canada

What is the ultimate reason international strategies eventually fail?

Competition

The most obvious example of the push for local responsiveness based on a region is the _____.

EU

What is the term used for when one company enters markets before its competitors?

Early entry

Formulating strategy, deciding how to allocate resources within a firm, and evaluating the performance of managers and giving feedback are examples of control systems.

False

The key disadvantages of the worldwide area structure is that it limits local responsiveness.

False

True or false: In a localization strategy, decision-making is centralized at headquarters because firms are not pressured for local responsiveness.

False, Reason: A localization strategy has firms operating with worldwide area structures, where operating decisions are decentralized to functionally self-contained country subsidiaries.

True or false: Location economies refer to the distribution point of a company's products.

False, Reason: Location economies are those that arise from performing a value creation activity in the optimal location for that activity.

True or false: A company would typically experience a decrease in profit growth if it should decide to disperse value creation activities to different locations as a way to perform those activities more efficiently.

False, Reason: One way to increase profits is to source location economies to those where functions are performed most efficiently.

Which organizational structure is typically the first one used by firms?

Functional

McDonald's local franchises in France have begun to offer more elegant seating areas and an upscale menu. This was done in response to slow growth rates in the area. Impressed with the increased sales at these stores, McDonald's executives are considering making these changes elsewhere. In this instance, what aspect of creating value is demonstrated?

Leveraging subsidiary skills

Lillian's company makes chocolate candy bars. They make one type of candy for the US market and make another type of candy that isn't quite as sweet for the European market because consumers there prefer that. What type of strategy does Lillian's company use to sell its products?

Localization

What strategy increases the value of a product in the local market through customization for different national tastes and preferences?

Localization

What are the three components of a firm's organizational structure?

Location of decision-making responsibilities within the organization The formal division of the organization into subunits The establishment of integrating mechanisms to coordinate the activity in the subunits

What are the two ways a firm can create more value for its products?

Make product more attractive to consumer Lower production costs

Which of the following is defined as the social rules and guidelines that prescribe appropriate behavior in a particular situation?

Norms

What are the three decisions firms must consider when looking at foreign expansion?

On what scale to enter markets Which markets to enter When to enter markets

According to the text, what elements must a firm coordinate to achieve maximum performance?

Organizational architecture, strategy and its environment

Select the four control systems that are used in multinational firms.

Output Personal Bureaucratic Cultural

The attractiveness of a country as a potential market should be assessed by balancing what three items associated with doing business in that country?

Risks Costs Benefits

How can a firm increase its profitability and rate of profit growth by expanding internationally? Choose all that apply.

Sell products to the international market Source activities where they are performed most efficiently Realize greater cost economies

McDonald's is increasingly finding that its foreign franchisees are a source of valuable new ideas. Which aspect of creating value is McDonald's taking advantage of in this instance?

Subsidiary skills

Which strategy encompasses a high level of interdependence of subunits for some operation decisions combined with high degrees of centralization for others?

Transnational

A strong organizational culture may not lead to high performance.

True

The need for coordination is high in transnational firms.

True

True or false: In order to succeed, a firm's organizational strategy must be consistent with its strategy.

True, Reason: A "fit" between strategy and architecture is necessary for a firm to achieve high performance.

True or False: Colin's coffee company made a licensing deal with Folger's brand coffee. This is an example of a strategic alliance.

True, Reason: Strategic alliances include licensing arrangements, formal joint ventures, informal cooperative arrangements, and cross-shareholding deals.

True or false: The communication strategy of a company is a key component to maintaining culture within the organization.

True, Reason: Communication strategy is one of four mechanisms companies use to maintain culture.

Which of the following is a common motive in most strategic alliance agreements?

a means of market access

If subunit A relies on subunit B located in a different country to complete its work, but subunit B fails to do its job and as a result both subunits fail, it demonstrates the idea of performance _____.

ambiguity

The organizational ____ of a company consists of the people, culture, processes and controls inherent within any company.

architecture

Universal needs exist with which of the following products? Choose all that apply.

bulk chemicals, petroleum and steel personal computers and handheld calculators

Turnkey projects would be commonly associated with which of the following industries? (check all that apply)

chemical petroleum-refining metal-refining

The majority of operating decisions are made by the ______ for firms operating within a global standardization strategy.

company headquarters

Daniel's company adopted an international strategy when it introduced the single-cup coffeemaker. However, just nine months later, his company regretted the decision because four other companies came up with a similar product and began selling it at a lower cost and with additional features. What is the main reason Daniel's company's international strategy failed?

competitors

Collecting data to decrease performance ambiguity is costly and time consuming, thereby raising the cost of ______.

control

Many chain restaurants look to McDonald's as the leader in management of fast-food operations. This status demonstrates McDonald's

core competence

A global standardization strategy aims to increase profits by implementing _____.

cost reductions

A firm should follow the transnational strategy when it is faced with pressures for _____. (check all that apply)

cost reductions local responsiveness

The control systems used in international firms include: personal, bureaucratic, output and _____.

cultural

Which two of the following are types of primary activities found in many businesses?

customer service production

The importance of local responsiveness in pursuing a localization strategy leads firms to adopt a _______ decision making model.

decentralized

A business should follow an international strategy when it _____. (check all that apply)

does not face pressures to customize a product based on local preference does not face cost pressures

After analyzing the profit projections for next year, Cassie reminded the group that production costs would continue to decline on those products that had been in production for five years. What concept was Cassie referring to?

experience curve

Not having to establish manufacturing operations overseas and being able to work to achieve experience curve and location economies are advantages of ______.

exporting

Which entry mode did many Japanese automakers use to gain access to US markets?

exporting

Fast food restaurants like McDonald's and Pizza Hut which have sold their trademark to thousands of operations around the world are good examples of _____.

franchising

What are the six modes companies use to enter foreign markets?

franchising wholly-owned subsidiaries joint ventures exporting licensing turnkey projects

Kelly started her small business two years ago and has been so successful that she is now developing into a large business and is creating purchasing, marketing, and manufacturing positions within the company. Kelly's business demonstrates the ________ organizational structure.

functional

Centralization of decision making will be used in a ________ strategy because the dispersed global activities of the firm that create value need to be tightly coordinated.

global standardization

When a firm adopts a low-cost strategy on a global scale that comes from economies of scale, learning effects, and location economies it is using a ______ strategy.

global standardization

What four mechanisms are used to maintain culture?

hiring practices reward strategies socialization processes communication strategy

Dividing an organization formally into subunits is called ________.

horizontal differentiation

The processes and systems used to coordinate the subunits of an organization are called _____________.

integrating mechanisms

Firms that follow a(n) ______ strategy maintain centralized control over the firm's core competencies, but decentralize most other operating decisions.

international

The strategy in which businesses centralize functions such as R&D and marketing functions, but decentralize operating decisions to subsidiaries is the _______ strategy.

international

When Xerox first introduced the photocopier, it was able to implement an international strategy because _______.

it did not have any competition

When the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson came together to make mobile phones, they became known as Sony-Ericsson. They were sharing consumer electronics expertise and technological leadership in the communications sector. This is an example of a _____.

joint venture

Nora's company spent billions of dollars to acquire the financial investment operations of a company in Sweden. This would be an example of a _____ scale entry.

large

Marcia's US based company entered the European market long after its competitors had established themselves. This is known as ________ entry.

late

The two components of the experience curve are _____. Choose those that apply.

learning effects economies of scale

Stanley invented a new way to make a book out of photos taken with a smart phone. He made an arrangement with Shutterfly which granted the company the right to use his idea in exchange for a 10% royalty fee each time his concept was sold. This is an example of a ____ agreement.

licensing

A _____ strategy has firms operating with worldwide area structures, where operating decisions are decentralized to functionally self-contained country subsidiaries.

localization

The level of integration and coordination of subunits is lowest for firms following a(n) _____ strategy and highest for firms following a transnational strategy.

localization

What are the four main strategic postures that firms can use when competing globally?

localization strategy global standardization strategy transnational strategy international strategy

Firms face competitive pressures when they venture into the global marketplace. Companies face pressure for cost reductions and to be _____.

locally responsive

Trina's company has moved all sewing and piece-work capabilities to a plant in Thailand in order to reduce costs. Her company is taking advantage of a(n) _____ economy.

location

Identify three components of a business that make up its operations.

marketing human resources research and development

Nora's company is considering going into a foreign market. They have determined which markets to go into and the timing for going into them. What other basic entry decision do they need to make?

on what scale should they go in

The different value creation activities found in a firm are called _____.

operations

The totality of a firm's organization is called _____.

organizational architecture

The basic principle of an incentive scheme for an individual employee is to link the incentive to a(n) _____ target.

output

What are the two types of activities found within a company's operations?

primary support

The marketing and product development teams at Katrine's company meet once each month to brainstorm ideas. This monthly meeting is an example of a(n) _____ used at Katrine's company.

process

The manner in which decisions are made and work is performed within a company is referred to as _____.

processes

Most firms that pursue a global standardization strategy would rely on a worldwide _____ division structure.

product

When a company makes a commitment to enter a market on a large scale, this implies a _____ entry.

rapid

Core competencies are typically expressed in ________ that other firms are unable to duplicate.

skills within a firm

A company's _____ is defined as the actions that managers take to attain the goals of the company.

strategy

Heather's goal for the company this year is to sell its product line internationally. She feels this will increase profits within the next three years by as much as 30%. Heather is developing a ____ for the company.

strategy

Muriel's company has separate product divisions for each product line. These product divisions are part of the company's _____.

structure

An employee who works on the factory floor should be given an incentive that motivates the employee to influence the performance of ______.

the team on the floor

A business should follow the ____ strategy when it experiences pressures for cost reduction AND local responsiveness.

transnational

It is more important in firms employing a(n) _____ strategy to have a common culture.

transnational

The _____ strategy may use a mix of centralization and decentralization depending on the pressures for local responsiveness and the need to coordinate a dispersed value chain and transfer core competencies. There is a high need for coordination when using this strategy.

transnational

Bruce works as a contractor and agrees to oversee every aspect of a new plant a US company is building in Norway. Next week he enters the final phase of the project as he organizes the training of all company personnel. This is an example of a(n) ____ project.

turnkey

Consumers through-out the world have the same use for sugar -- it is used as a sweetener in every country. Sugar is an example of a(n) ____ need.

universal

The potential for risk is higher when considering a foreign market with a politically _____ nation.

unstable

Bryan's company wanted to gain a greater market share on its bicycle products so it built in greater functionality to the bikes and created an after-service customer call center. Which aspect of value creation is Bryan's company concerned with?

value

The abstract ideas about what a group believes to be good, right, and desirable are known as _____.

values

When Kent's US-based firm acquired an established European investment firm, it used that firm to promote its financial products. Kent's company owns 100% of the stock of the European firm and is an example of a ____.

wholly owned subsidiary