Unit 4 - D080

franchising

A system where a business grants an entrepreneur the right to use their products, names, and processes in exchange for a percentage of the profits

licensing

A type of contract that allows one party to use another's property as their own without paying royalties for a designated length of time

brand

A type of product made by a particular company under a particular name

organizational chart

A visual map of the roles and relationships within an organization and how functions and responsibilities are divided

Geert Hofstede created a framework for analyzing national culture based on six dimensions

power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence

United states

ranks the highest in individualism according to Hofstede's cultural dimensions.

China

ranks the highest in long-term orientation according to Hofstede's cultural dimensions.

Brazil

ranks the highest in uncertainty avoidance according to Hofstede's cultural dimensions.

multinational corporation (MNC)

A company that operates in two or more countries

training

A focused educational program with a specific goal

strategic plan

A formal agreement on priorities, focus, and goals

Cultural dimension

A framework for cross-cultural communication, developed by Geert Hofstede that shows the effects of a society's culture on the values of its members, and how these values relate to behavior.

greenfield

A new business built where no prior business existed, either physically or metaphorically or both

Teams structure

A newer type of organizational structure that includes a group of workers, with complementary skills, all working toward a common goal, such as a specific project Advantages Advantages of this structure include increased creativity and productivity and mutual accountability. This structure generates a variety of expertise. Disadvantages More difficult to motivate individual employees when only team accomplishments are rewarded. Increased risk for interpersonal conflicts.

licensor

A person or company who owns a product but provides it to someone else as part of an agreement

third-country national

A person who is in transit and/or applying for visas in countries that are not their country of origin.

expatriate

A person who lives outside of their own native country.

economies of scale

A proportionate savings in costs gained by an increased level of production

standardization strategy

A strategy for international commerce that does not customize products for local markets

multidomestic strategy

A strategy of international commerce that customizes products to each country

When expanding internationally to a country with a lower average income, a company made efforts to reduce the price of its product, even though it eliminated some of the benefits the product has in other markets. This allowed for greater sales in the new market. Which strategy is being used by this company?

Adaptation Product adaptation is when a product is changed to be more appealing in a specific market.

strategic alliances

An agreement between two companies to cooperate on the mutually beneficial project

host-country national

An employee of an organization who is the citizen of the country in which the foreign subsidiary is located.

specific strategic business unit (SBU)

An independent division within a large company with responsibility for specific products or activities

transnational strategy

An international commerce strategy that combines the aspects of standardization and multidomestic strategies

export strategy

An international commerce strategy that focuses on shipping domestic products to other countries

Functional/departmental structure

An organizational structure dividing employees into departments based on business functions Advantages Grouping employees with shared skills and knowledge by function allows greater operational efficiency and specialization. Each group of specialists can operate independently, with management acting as the point of cross-communication between functional areas. Disadvantages The different functional groups may not communicate with one another, potentially decreasing flexibility and innovation. Functional structures may also be susceptible to tunnel vision.

Divisional structure

An organizational structure grouping employees into departments based on products, processes, or geographic regions Advantages Divisions work best for companies with a wide variety of products or geographic regions. The divisional structure affords the company greater operational flexibility. In addition, the failure of one division does not directly threaten the other divisions. In the multidivisional structure, subsidiaries benefit from the use of the brand and capital of the parent company. Disadvantages Some disadvantages of this structure include operational inefficiencies from separating specialized functions—for example, finance personnel in one division do not communicate with those in another division. Disadvantages of the multidivisional structure can include increased accounting and tax implications.

Matrix structure

An organizational structure that simultaneously groups people and resources by function and by product. Advantages This structure allows team members to share information more readily across task boundaries. Matrix structures also allow for specialization that can both increase depth of knowledge and assign individuals according to project needs. Disadvantages There is increased complexity in the chain of command when employees are assigned to both functional and project managers. This can result in a higher manager-to-worker ratio, which can, in turn, increase costs or lead to conflicting employee loyalties. Blurred authority in a matrix structure can result in reduced agility in decision-making and conflict resolution.

due diligence

The reasonable steps or research necessary before making an informed decision or evaluation

subsidiaries

Companies completely owned or controlled by a parent company

decentralized companies

Companies with structures that distribute the authority to make decisions to lower levels of employees who are closer to the problem

centralized companies

Companies with structures that limit decision-making to higher levels in the organizational hierarchy

guanxi

Concept in China that describes a connection based on reciprocity

A company wants its expatriates to receive the best training to adapt to the local environment in the host country. What is the goal of this training?

Cultural agility The goal of choosing the correct training is to provide the expatriate with cultural agility to best integrate into the host nation's culture.

Matrix

allows for specialization

A company is considering establishing a subsidiary in a new host country and wishes to prepare its expatriates to adapt to the local environment. How should this company prepare its expatriates?

Cultural training This will help prepare the company and its employees for integrating with new ethnic groups in a new culture.

An employee feels empowered to make decisions to solve customer problems independent of seeking manager approval and uses flexibility to meet customer needs. Which decision-making structure is being used by this employee?

Decentralized Decentralized decision-making structure is when lower-level employees, like the one mentioned, make decisions. This type of decision-making may be inconsistent.

human resources (HR) management (HRM)

Department within an organization responsible for employment issues

Managers in an international company are arranging jobs so similar tasks are coordinated. Which activity is being completed by this company?

Departmentalization When a company divides its work based on specific tasks or jobs, it is referred to as departmentalization.

division of labor

Dividing organizational activities into smaller tasks

An employee has assumed an expatriate role and is studying textbooks to learn about cultural differences in order to function smoothly in the new setting. Which helpful secondary source training is the expatriate using?

Documentary Documentary training uses traditional methods such as textbooks and the classroom environment to focus on educating expatriates about cultures. The expatriate is studying textbooks to learn about cultural differences in order to function smoothly in the new setting.

A company has decided that a foreign direct investment should be made during the next quarter to strengthen the organization. Which method should be used for this purpose?

Establishing a greenfield venture In a greenfield venture, a company creates a subsidiary in another nation from the beginning. International markets are commonly entered through this means, and subsidiaries are considered foreign direct investment strategies.

A company operating in a foreign country hires and conducts business according to the cultural practices in its home country. Which approach to human resource management is used by this company?

Ethnocentric When a company uses the same human resource policies and practices in the host country as it uses in the home country, it is using an ethnocentric approach.

A company's chief executive officer (CEO) emphasizes to other executives in the foreign country's joint venture that the CEO's culture should take precedence over other cultural systems since it is superior. Which type of viewpoint is the CEO demonstrating regarding culture?

Ethnocentrism Ethnocentrism is the viewpoint that one's culture is superior to others and should be used as a measure. The CEO is demonstrating this viewpoint in the scenario.

A company wants to gain market share but does not want to establish operations in other countries nor tailor its products to the other countries. Which entry strategy should the company use to meet this goal under these conditions?

Export The scenario describes a company that is strictly domestic but wants to earn additional revenue by sending the product overseas. Normally, a company in the other country must import the product for sale.

An employee who is scheduled to become an expatriate has successfully passed the survival training stage. What type of training is used by the company after passing this stage?

Field simulation When an employee has been through the other stages of training, field simulation training is next.

collectivist

Focused on the good of the group or society over the individual

A company would like to use a human resource approach that leads to more fluid movement among employees and creates diversity in the workforce. Assignment decisions are made jointly by the headquarters and the field offices. Which human resource approach should be used by this company?

Geocentric A geocentric approach coordinates the best employees worldwide, leading to diversity and employee movement.

departmentalization

Grouping a business's people, tasks, and resources into units

Ethnocentric

HR strategy of hiring only people from the home country for key positions in foreign subsidiaries

Polycentric

HR strategy that gives local hiring control to foreign subsidiaries

Geocentric

HR strategy that takes a whole-world view of the company, hiring the best people for positions regardless of location

An international company wants to establish links between the people at the same level of the organization to form committees. What is the name for this type of link in a company?

Horizontal Horizontal links are links between people at the same level in an organization to accomplish tasks, such as forming committees.

A U.S. employee believes that each individual is responsible for one's own success and finds it challenging to work in cultures that emphasize collaborative approaches to decision-making. Which aspect of Hofstede's cultural dimensions is exemplified by this employee?

Individualism Individualism describes the extent to which individuals take responsibility for their own destinies and choose their own goals over a company's goals. The U.S. employee believes that each individual is responsible for personal success, which represents individualism.

A country that values spontaneity and freedom to satisfy human desires provides its citizens business opportunities to prosper in these areas. Which of Hofstede's cultural dimensions is the country exhibiting?

Indulgence This dimension seeks to emphasize pleasure and spontaneity. Because the culture focuses on self-enjoyment, people become entrepreneurial in how to achieve pleasure. The United States rates high on this dimension.

Indulgence versus restraint

Indulgence versus restraint One of Hofstede's six dimensions of national culture. It measures the degree of freedom and spontaneity that is valued.

Secondary sources

Information that has been passed on from an original source or interpreted

A company owner is considering manufacturing using a global standardization strategy to achieve economies of scale. Why is this strategy effective?

It manufactures the same product for all markets. Standardizing products globally means that regardless of the place of manufacture, the product can be sold in any market.

conglomerates

Large corporations made up of several combined companies, often formed through mergers and takeovers

vertical and horizontal linkages

Lines on an organizational chart showing the relationships within an organization

A fast food company seeks to expand internationally and changes its menu to appeal to the new country's food tastes. Which action is being sought by the company by making this change?

Local responsiveness The company is responsive to its local environment when it adapts it products and services to local consumer tastes.

An individual is considering entering the global market via a franchise. Which outcome should be expected by the individual if this approach is used?

Majority of financial risk In opening a new location, the franchisee typically takes most of the financial risk.

A company decides to focus on economies of scale to decrease production costs and increase revenues. Why is this strategy effective?

Manufacturing in large quantities keeps costs low. Manufacturing in large quantities means more work can be done efficiently and at a savings. This reduces productions costs and increasing revenues.

unity of command

One employee should only report to one person

power distance

One of Hofstede's six dimensions of national culture. It describes how formal and authority-focused a society is.

short-term orientation

One of Hofstede's six dimensions of national culture. It focuses on immediate gratification and fulfilling current social obligations.

Uncertainty avoidance

One of Hofstede's six dimensions of national culture. It measures how comfortable a society is with uncertainty.

Long-term orientation

One of Hofstede's six dimensions of national culture. It measures how focused a society is on traits such as perseverance and shame.

Individualistic

One of Hofstede's six dimensions of national culture. It measures how focused people are on their immediate circle at the expense of the greater group.

Masculinity versus femininity

One of Hofstede's six dimensions of national culture. It measures how the society views traits that it considers masculine or feminine.

An international company has created a diagram to show the division of labor between departments. What is the name of this diagram?

Organizational chart Companies use an organizational chart to depict the division of labor in the organization.

flat structures

Organizational structures with few layers

tall structures

Organizational structures with many levels

Geographic departmentalization

Organizing a company's people, tasks, and resources based on a geographic region Allows for adaptation to the local needs pf a multinational corporation

Functional departmentalization

Organizing a company's people, tasks, and resources based on business functions such as marketing, production, and sales uses traditional type of organizational structure with silos

Product departmentalization

Organizing a company's people, tasks, and resources based on goods or services promotes efficiency in production lines

Market departmentalization

Organizing a company's people, tasks, and resources based on the type of customer served focuses on distinct customer needs

Primary sources

Original information that could be firsthand accounts, raw data, or artifacts

A country's corporate culture requires that most of the decisions be made by senior management, and entry-level positions are viewed as having much less status and respect. Which of Hofstede's cultural dimensions is being used by this country?

Power distance Power distance is high in the country described above, in which most of the authority and respect are at the upper ranks.

Managers at an international business are deciding the method by which it will be organized. The business is highly diversified, manufacturing a number of different components and parts for its industrialized customers. Which departmentalization structure should be used by this company?

Product When an organization is built around the products or services it sells, it is using a product departmentalization structure.

John is the president of a company that is based in Atlanta. This company, which manufactures office items that stick to walls, furniture, and other items, has been very successful in its first five years, so John decides that he would like to expand the business globally and has chosen to start in the Philippines. What is one of the first things he should do?

Research the history and politics of the Philippines It is critical to understand the culture, history, and politics of the Philippines before opening a business there.

exporting

Sending goods to another country to sell

distributor

Someone who supplies goods to businesses

ethnocentrism

The belief that one's own culture is most important

Global integration

The degree to which a company is able to use the same products and methods in multiple countries

Local responsiveness

The degree to which a company must customize its products and methods to meet the conditions in other countries

centralization

The degree to which decision-making authority is concentrated at higher levels in an organization and business functions controlled in a central location

organizational structure

The formal way a company divides labor, groups employees, and assigns responsibilities

value chain

The process by which a company adds value to product, such as production, marketing, and service

Glocalization

The process of adapting to local markets while maintaining a global identity

product adaptation

The process of changing a product in some way so it is more acceptable or desirable in a particular market

standardization

The process of making everything conform to expectations and guidelines for consistency

repatriation

The process of transitioning employees back to their home countries

A chief executive officer (CEO) of a Scandinavian company sought to expand operations in Japan through a joint venture. When the CEO asked the Japanese business owner whether she was committed to the venture, the business owner responded with a flat-toned "yes." The outcome the CEO expected did not happen, and the joint venture failed. What was the CEO's misinterpretation in this communication?

The response indicated agreement. In Japan, the word "yes" can mean things other than agreement, including "maybe" or "I understand you."

Which Latin American phrase (translated into English) typifies how time is viewed, which can make conducting business frustrating to Northern European companies seeking to expand in Latin America?

Time is space. Latin America views time as being subordinate to relationships and situations. Individuals in Latin America will be late to a meeting if an earlier meeting requires time for relationship development or connections need to be made.

A car company wants to expand internationally but encounters much international competition to reduce cost while responding to local needs. Which strategy should the company use to meet this goal under these conditions?

Transnational This strategy is one in which a company must be nimble to respond to cost pressures while customizing products to local markets. Transnational strategies have to deal with the problems of standardization (cost) and multidomestic strategies (local responsiveness).

A company's chief executive officer (CEO) wants to expand the company into China and is reviewing the Chinese word guanxi, the basis of all business in that country. Which English meaning must the CEO understand in regards to this Chinese concept?

You owe me one.

Teams

increases creativity and productivity

cultural agility

the ability to understand multiple local contexts and work within them to obtain consistent business results.